Recessionary Realities

The recovery hype is getting louder politically! But, what are the realities for the consumer and our financial services industry? To come out of this recession requires patience, planning and personal progress.
The consumer is the catalyst and many of them are still loosing their jobs, homes and retirement savings. They are not in a buoyant spending mood since they are licking their wounds or worrying about the basics of life. Delinquency rate and loan default increases are still the trend even in the most conservative of financial institutions. In fact, here in Canada, where we have had it better than most, bankruptcy rates keep growing on a monthly bases. It is not the general public that is chasing the stock and commodity markets again as much as it is the institutional investors trying to shore up previous losses, which could be a dangerous, artificial tactic. Where we sit, the majority of consumers have a long way to go before they see personal turnarounds.
In the financial services industry globally, there are still serious weaknesses and many institutions are on regulators' watch lists. It is unlikely that we will see more bailout money being poured into saving large or small FI's since the legacy of the initial rounds of capital injects or toxic asset acquisitions by governments have left a bad taste in the public's mind and unreasonable debt loads for future generations. The strategy around the world has been to bailout the major cancerous corporations with the belief that to not do otherwise would drive us further into recession! Some banks in reality are owned by the public and others received "loans" at rates their best customers will never see. All financial institutions have to show new leadership and focuses on the customer and business strategies that build trust and confidence.
Beware of political rhetoric meant to lift your spirits in an artificial fantasy of recovery. When the final tallies are made, the world, all nations, the financial industry and the average citizens will have greater debt burdens and less wealth plus real risk aversions great than before. We need to deal with the realities from the consumer in, and not the political encouragements that don't build solid foundations of recovery.

Pat Palmer | Monday, June 08, 2009 | Comments (0) | Trackbacks (0) | Permalink