Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (22552)	8/12/2002 4:00:49 AM
From: elmatador	Respond to of 74559

Deflation is Out of sync Prices fall. Salaries under pressure. Equity market under pressure. The governments machines cant adjust as fast and is out of synch in this deflationary environment. Governments work at tectonic plaque speed. Glacier melting speed. Hence the problems. Who has ever heard about a government deflating? How would they adjust to deflation? "...while the federal government's response to the Sept. 11 attacks continues to create jobs..."

To: TobagoJack who wrote (22552)	8/12/2002 4:23:19 AM
From: LLCF	Read Replies (2) \| Respond to of 74559

US AIR: Symptomatic of the entire US economy IMO... prices must rise to create profits needed to reinvest before the ugliness is over. Look for much more of the same, we must prune before the spring. dAK

To: TobagoJack who wrote (22552)	8/14/2002 10:19:21 AM
From: elmatador	Read Replies (1) \| Respond to of 74559

<and pretty soon it is all over the place.> Credit Suisse loss worse than expected By William Hall in Zurich Published: August 14 2002 8:48 \| Last Updated: August 14 2002 8:48 Credit Suisse, Switzerland's second biggest bank, is cutting its dividend, curbing its expansion plans, and radically overhauling the investment strategy of its troubled Winterthur Insurance unit, as it struggles to repair the damage to its balance sheet. Credit Suisse which had already warned that it would lose money in the second quarter, posted a slightly worse than expected SFr579m ($391m) net loss. For the six months it reported a net loss of SFr211m primarily because of a SFr3.9bn collapse in investment income from its Winterthur insurance operations. Credit Suisse's first half loss contrasts with the SFr2.7bn net profit reported by rival UBS, which has adopted a much more cautious attitude to risk-taking ever since its heavy hedge fund losses on Long term Capital Management four years ago. The group intends to cut its dividend "significantly" and replace Winterthur's investment chief. Credit Suisse shares have fallen over 50 per cent this year after a series of management and operational problems were compounded by fears that it would need to raise a large amount of new equity and recapitalise its Winterthur Insurance business acquired five years ago. Shareholders equity has fallen by SFr9.1bn, or 20 per cent, over the last year, to SFr36.5bn. The group, which has a Tier 1 capital ratio of 9.2 per cent, remains "adequately capitalised" but admits that the capital base of Winterthur has "declined considerably" in the first half of 2002. At end June, Winterthur's consolidated solvency margin stood at 123 per cent and was above the required 100 per cent regulatory minimum. Credit Suisse has already injected SFr1.7bn of new capital into Winterthur. Last month Lukas Mühlemann, an ex-McKinsey management consultant and architect of the group's growth strategy, bowed to growing investor discontent by agreeing to give up his role chairman so that he could "focus fully" on his role as chief executive in the "current challenging environment". The collapse in the profitability of Winterthur Insurance is the latest in a string of problems which have raised questions over Mr Mühlemann's stewardship of what used to be Switzerland's flagship bank. Mr Mühlemann also faces pressure to explain Credit Suisse's lending to BZ Group, a private investment company controlled by Martin Ebner, the Swiss financier, who was Credit Suisse's biggest shareholder. Mr Ebner has been forced to substantially reduce his Credit Suisse stake to less than 5 per cent to meet margin calls from his bankers. Credit Suisse's insurance businesses are expected to post negative results in the third and fourth quarters, and their continuing problems have overshadowed signs of improvement elsewhere in the group. John Mack, the ex-Morgan Stanley banker brought in to turn round Credit Suisse First Boston, the group's buccaneering investment bank, has increased his 2002 cost-cutting target from $1bn to $1.8bn. CSFB has returned to profit in the second quarter and it is increasing its market share. Although private banking net operating profits fell 23 per cent, to SFr486m, compared with the first quarter, Credit Suisse continues to be much more successful than UBS, its bigger rival, in collecting new funds. In the first six months of 2002 Credit Suisse Private Banking attracted SFr14.8bn of new money from wealthy customers compared with SFR6.1bn at UBS. In addition, total invested assets managed by Credit Suisse declined by 8 per cent, to SFr1293bn, in the latest three months, compared with a 11 per cent decline at UBS, which manages SFr2198bn. Shares in Credit Suisse were down over 8 per cent at SFr29.90 in late morning trading.