Each time the IMF comes up with an update, it comes up with worse numbers. Last October, it was talking of a $1.4 trillion loss in writedowns from the financial crisis — after including numbers for Europe and Japan, it’s now talking of over $4 trillion. The continuing high spreads for global bank CDOs are in line with this view that the banking crisis is not over, the rosy numbers from banks like Citigroup notwithstanding. Corporate spreads are even higher.
For the first time in 30 years, global GDP will shrink (the IMF has shaved off two percentage points from its growth estimates in January). India looks more robust but the data looks problematic. Industrial output is down, but core sector growth is up, corporate top lines and bottom lines are shrinking even as margins look healthy, capex intentions continue to outstrip project cancellations even as India Inc scrounges for cash ... With the election season on, the government’s eyes are off the economy — one sign is that real interest rates continue to remain among the highest in the world.
