Russia has lowered rates and Vietnam has raised them. This is the ninth cut since April for Moscow – they are trying to slow the appreciation of the rouble and revive lending. Hanoi has devalued the dong by more than five per cent and raised rates by a full percentage point in an effort to curb inflation. The Vietnamese move is not the start of the mooted currency war.
Rising bank failures pushed the FDIC rescue fund into debt as of September 30, 2009. The Depositors Insurance Fund (DIF) decreased by $18.6 billion during the third quarter to a negative $8.2 billion (unaudited) primarily because of $21.7 billion in additional provisions for bank failures (charts). DIF is a private, industry-sponsored insurance company, not backed by the Federal government, and deposit insurance coverage is unaffected, apparently, by the DIF balance.
Details are out on China’s bank recapitalisation: 11 banks are to raise Rmb 300bn ($43bn) to meet more stringent capital adequacy requirements and maintain loan growth. India needs to do the same: its central bank governor says public sector banks will require injections of about $4.8bn in the coming year to maintain capital adequacy ratios and facilitate loan growth. Meanwhile the UK’s central bank governor has echoed Moody’s warning that the UK deficit imperils the country’s credit rating.
And just how unlikely are the long-tail events that could tip the world economy? Too plausible for comfort: strange things do happen. For instance, a Kazakhstan sovereign wealth fund has just agreed to invest $100m over four years in a cycling team. What exactly is the yield on sport?