Global Banking - Regulator Envy.

(cross posted at kickin it with cg and motley moose)

Amid a global economic meltdown - Canada - with its highly regulated banking system has become the envy of the world.  In a survey by the World Economic Forum in October, with the financial crisis and bank failures that have shaken world markets - Canada was voted to have to world's soundest banking system followed by Sweden, Luxembourg and Australia.

Britain, which once ranked in the top five, has slipped to 44th place behind El Salvador and Peru, after a 50 billion pound ($86.5 billion) pledge this week by the government to bolster bank balance sheets.  The United States, where some of Wall Street's biggest financial names have collapsed in the fall, rated only 40, just behind Germany at 39, and smaller states such as Barbados, Estonia and even Namibia, in southern Africa.

The World Economic Forum's Global Competitiveness Report based its findings on opinions of executives, and handed banks a score between 1.0 (insolvent and possibly requiring a government bailout) and 7.0 (healthy, with sound balance sheets).  Canadian banks received 6.8, just ahead of Sweden (6.7), Luxembourg (6.7), Australia (6.7) and Denmark (6.7).  UK banks collectively scored 6.0, narrowly behind the United States, Germany and Botswana, all with 6.1. France, in 19th place, scored 6.5 for soundness, while Switzerland's banking system scored the same in 16th place, as did Singapore (13th).

The Globe and Mail's Report on Business created a neat little chart that summarizes how some banks around the world are doing:  

Ranked tops in the world by the World Economic Forum for soundness of banks. Canada's big five lenders all reported healthy profits in their most recent quarter, generally beating analysts' expectations. Tightly regulated, with cash-spewing retail banks that can offset losses in other areas of the business.

United States
There are 252 problem banks being tracked by the government's bank insurance program. In 2008, 25 banks failed, including household names like Washington Mutual. The government has rolled out numerous programs and spent at least $1-trillion (U.S.) in a bid to prop up the financial system, but there are no sure signs that the bailouts are working. The Federal Deposit Insurance Co. is now on track to seize 100 failed banks in 2009.

The big economies in South America have had little trouble with bank failures resulting from stumbles on risky assets such as subprime mortgages. Still, they won't be immune to rising defaults from slowing economies, which will be a test of how far financial regulation and bank management have come in recent years.  

The banking system of this tiny island nation -- which boasts a population half the size of Winnipeg -- represents probably the most spectacular rise and fall of the global financial meltdown. In 2003, Iceland's three main banks had just a few billion dollars of assets, but by 2006 this hit $140-billion (U.S.). Today, all three have failed and been nationalized in a bailout that's cost about $330,000 per citizen, leading to the collapse of the country's currency and economy.  

Sweden faced a banking crisis in the 1990s, and was forced to remake its financial sector. This time around, while one bank has failed because of toxic assets, the country has mostly dodged the problems and Sweden's banking sector was ranked second only to Canada's for stability by the World Economic Forum. Exposure at some big banks to Eastern Europe could lead to loan losses.

The British government has been forced to bail out big lenders such as Lloyds Banking Group, Northern Rock Plc and Royal Bank of Scotland, which have been crippled by forays into risky mortgage products before the property market in the UK and in the U.S. fell apart.

The country's reputation as the home of the quiet, prudent banker is in shambles after gambles by Swiss giants UBS AG and Credit Suisse led to massive losses totalling more than $65-billion (U.S.). The government is now looking to write new rules to keep the financial sector out of trouble.

Austria has historically been the bridge between Western Europe and Eastern Europe. In recent years some of its largest lenders focused on expansion in such countries as Czech Republic, Romania and the Ukraine. Lending to the Central and Eastern European region amounts to almost 70 per cent of Austria's gross domestic product, according to Moody's. That was great when those countries were booming, but Eastern Europe is hurting badly and now many loans are likely to go bad.

Spain's banking system has held up better than most with banks reporting gains in profit in large part because of strict regulatation when it comes to high risk assets, a legacy of a banking crisis in the 1970s. As a result, big Spanish banks like Banco Santander focus mostly on low-risk retail banking. Still, there are signs it may not last. The country's swooning property market could lead to loan defaults, and the government and some bank executives warn that the domestic banking sector may have to be restructured should the global financial crisis deepen.

Namibia has the highest-ranked banking system in Africa for stability, well ahead of Spain, the U.S. and Britain. According to the International Monetary Fund, the country's banks entered the financial crisis very profitable and well capitalized. And while the country is being buffeted by the global troubles, the resource-based economy is still expected to grow 1 per cent this year, according to Namibia's central bank.

The Russian government has already invested about $11-billion to try to aid banks, and is looking at another $55-billion stimulus package to restart the economy and support the country's ailing banking system. Lenders are suffering from a fast downturn in the oil-powered economy of Russia.  

China's big banks have avoided troubles with subprime and other toxic assets, and may benefit as the government unveils a big stimulus package designed to keep the country's economy growing quickly. If that doesn't work, though, expect the banks to face bigger loan losses.

Japan's response to the banking bust of the 1990s was a `What not to do' lesson. The country put off dealing with bad loans and propped up bad banks for too long. Just as the country finally started to take big steps to fix the problem, this financial crisis cropped up. So far, Japanese banks have avoided the worst of it, signalling perhaps they've learned from experience.  

Ranked fourth by the World Economic Forum for soundness of banks, Australia's system shares many attributes with Canada's. It's centralized, with a few big players that are making money. The big problem for Australia is an economic one: its banks may not be big enough to take up the slack as global lenders cut back on lending, leaving the country's borrowers in the lurch.  

Maybe government regulation is the way to go - don't you think?

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1300 Gazans, 13 Israelis dead, for what? election politics?

Israel and Hamas have both declared ceasefires, just in time for Obama's inauguration, with nothing resolved. Hamas rocket fire continues. Israel's air attacks continue. Israel's deadly siege continues. And the U.S. mass media continues to ignore the primary reason for the continuing conflict, the siege.

Hamas ceases fire in Gaza, gives Israel week to go


Hamas announced an immediate ceasefire by its fighters and allied groups in the Gaza Strip on Sunday, senior Hamas official Ayman Taha said, adding that the Islamists gave Israel a week to pull out its troops.

"Hamas and the factions announce a ceasefire in Gaza starting immediately and give Israel a week to withdraw," Ayman Taha, a Hamas official in Cairo for talks with Egypt on a truce deal.

Hamas also demanded that Israel open all of the Gaza Strip's border crossings to allow in food and other goods to meet the "basic needs for our people".

Reuters: The Palestinian death toll published by medics from the Hamas-run Health Ministry stood at 1,300, among them at least 410 children. Another 5,300 people have been wounded.

Al Jazeera: At least 13 Israelis have died, three of them civilians.

Israel is said to prefer a [unilateral] ceasefire to entering into an Egyptian-brokered ceasefire with Hamas, which rules the Gaza Strip, unnamed sources said.

A unilateral truce would allow Israel to avoid agreeing concessions with Hamas, such as easing the 18-month-old blockade of the Gaza Strip, which has prevented medical aid and basic supplies from reaching the Palestinians. . . .

Below are more reports on the rubble of a vast and ugly excercise in collective punishment, but first a devastating moral analysis of why the invasion took place:

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Gaza Dying: 13 Israelis, 846 Gazans (235 children)


Reuters: A total of 846 Palestinians and thirteen Israelis --- three civilians killed by rocket fire and 10 soldiers --- have been killed since the offensive began on Dec. 27.

Al Jazeera: The Palestinian death toll in the Gaza Strip has risen to 854 and more than 3,350 injured as the Israeli offensive entered its third week.

CNN: More than 800 Palestinians have been killed in the attacks, including 235 children, and about 3,300 people have been wounded, according to Palestinian medical sources. Thirteen Israelis, including 10 soldiers, have died since the operation began.

Mads Gilbert, a Norwegian doctor working at Shifa hospital in Gaza City, told Al Jazeera: "We have been to many war zones, but the special thing is that the 1.5 million Gaza population are completely locked in.

"The civilian population has no way to hide. The population density is so high you can not do attacks like this without knowing that you are attacking the civilians.

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Blame Game vs. 792 Gazans, 13 Israelis dead [graphic]


It's been confusing bringing the facts to a few people here and there and to receive what seemed like incoherent responses. But now I get it, the standard rhetorical strategy for defending Israel's assault on Gaza is to engage in a blame game.

That is not what matters to me. I want to stop the killing now, so that no more than 805 die. And however difficult it is for some, such an effort needs to focus primarily on the party, Israel, that has so far killed 98.8% of the victims (795/805, making the three Israeli soldiers killed by friendly fire an Israeli responsibility).

As for the blame game, I've called it a classic "which came first the chicken or the egg" game. In other words, unsolveable (and backward-looking; solutions to the I/P mess are found in forward-looking and unpreconditioned negotiations). I've also noted that the blame gamers decide that one side provoked the other side, and in this rhetorical move the provoker is to be blamed and the provokee held blameless, which is perhaps the point of the move. We saw this at the Bush White House this morning:

White House press conference:

Q . . . I do have another question on Gaza. Today the head of the World Food Program said that 80 percent of the people in Gaza need urgent food assistance. Hundreds of people have died, many of them children. The Red Cross and the U.N. have both come out and said, we can't get in there; we don't have enough time in these limited cease-fires to administer the kind of humanitarian aid that is critical. At what point does this become, from the administration's perspective, a humanitarian crisis?

MR. STANZEL: Well, it is a humanitarian crisis. It's a war zone. And war zones are very difficult.

The Israeli officials have indicated their concerns. We have expressed our deep concerns about the situation with innocent lives being lost. But again, this is a problem, unfortunately, that was brought on by Hamas. Hamas, on December 19th, refused to extend the cease-fire. . . .

Well, doesn't that sound a lot like two or three commenters here at mydd?


There's more...

How war on Gaza aids Al Queda (see Baladia)

Sorry this is just a cut-and-paste job, but the perspective of Paul Rogers (of opendemocracy) needs to be heard by everyone, peaceniks and realpolitikers alike. He states that while likely the chief benefit for Al Queda from the Gaza war is in the damage done to Hosni Mubarak's regime in Egypt (see "Cairo's balancing act over Gaza"), there is also the following (emphasis added) to weigh:

But the advantage al-Qaida might gain from the Gaza war of 2008-09 may go further. For an emerging and widespread public interpretation of the conflict across the middle east draws on evidence of the more than seven years of "war on terror" to place what is happening in Gaza in a wider context, in a way that can be used to reinforce the movement's worldview.

What is happening in Gaza, according to this general perspective, is that it is not an Israeli war but a joint operation by the United States and Israel. Thus, the F-16 strike aircraft and the Apache helicopter-gunships are seen less as Israeli aircraft but as American aircraft with Israeli markings. This in turn feeds into the wider perception of a generalized war against Islam being conducted by a crusader-Zionist opponent that must be resisted by all means possible. From this outlook, it is Hamas that is on the frontline of the moment and deserving of increased support.

This is a deeply embedded worldview. What makes it more potent is that it is grounded in many elements of US-Israeli cooperation that are clear and beyond controversy. As a number of columns in this series have reported, the military connections between Washington and Tel Aviv that predated the war in Iraq that began in 2003 were hugely boosted as US forces ran full-tilt into an urban insurgency in Iraq.

There's more...


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