'Last year there was a very tense mood here in Davos. This year I think we are seeing sentinment moving from stabilization to recovery, and that means I should get a chance to do some cross-country skiing.' Olli Rehn, EU Economic and Monetary Affairs Commissioner.
'The ECB has already provided extra refinancing credit to the tune of Eu900bn to commercial banks in countries worst hit during the crisis, as measure by its payment system known as Target. These banks have in turn provided the ECB with low-quality collateral with arguably insufficient risk deductions. The ECB is now in the same position as private investors. It is guaranteeing the survival of banks loaded with toxic real estate loans and government credit. So the tranquillity is artificial'.
And . . . 'The proposal for bank resolution is not a firewall but a 'fire channel' that will enable the flames of the debt crisis to burn through to the rest of European government budgets'.
Finally . . . 'Asset ownership in bank equity and bank debt trends to be extremely concentrated among the richest households in every country. Not bailing-in these households amounts to a gigantic negative wealth tax to the benefit of wealthy individuals worldwide, at the expense of Europe's taxpayers, social transfer recipients and pensioners'. Hans-Werner Sinn, of the Ifo Institute, writes in the FT.
China's Regulators on Wealth Management Products
'The banking industry's wealth management business has channelled funds that might otherwise flow into high-interest underground loans, illegal fundraising, and commodity speculation and has upheld financial stability'. China Banking Regulatory Commission's Yan Qingmin.
'Ninety nine percent of wealth-management products arae normal products, approved by the China Banking Regulatory Commission. Maybe there are a small number that are problematic but that's not a risk to the banking sector.' Fang Xinghai, DG of Shanghai financial watchdog.
Japan, FX Policies and Politics
'Europe is in no position to criticize Japan. Europe has brought about a prolonged weakness of the euro as a result of their own policies, whilst Japan has supported Europe through purchases of bonds.' Yasutoshi Nishimura, Dep Economy Minister.
'To survive and prosper Japan needs to participate in international trade without being encumbered with isolationist ultra-nationalists. Like horses in blinders, they are unable to see beyond their noses.' Sir Hugh Cortazzi, former British ambassador to Japan, and long-standing friend of Japan, worrying about having nationalist Harkubun Shimomura as Education Minister.
Australia Elections
'Australia now faces an eight-month election campaign which will mean that some significant investment decisions by business will be put on hold.' Innes Willcox, CEO of the Australian Industry Group comments on the vote to fix elections for the lower house and half the Senate for Sept 14th.
Taiwan - The Pension Problem Put in Context
'The pension system time bomb won't explode during my term . . . However, the train will definitely fall off the cliff if we don't start building a bridge right now.' President Ma Ying-jeou explains.
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