Offshore profits ‘will not fully recover’
Wednesday 10th June 2009, 3:00PM BST.
JERSEY and other offshore centres are unlikely to recover the level of profits of the recent boom years.
That’s the message from John Authers, global investment editor of the Financial Times, who was guest speaker at a seminar on Monday organised by Impact Training.
Mr Authers, who is based in New York, charted the recent economic crisis from a mainly United States perspective, tracing the problems back to the post-war years of the 1950s when consumer debt first started to rise.
He said that the profits seen by the financial services sector in recent years had been ‘unsustainable’ and had been fuelled by sub-prime mortgage-backed securities and a climate of cheap credit and drastic over-confidence in which lenders had little idea of the level of risk they were taking.
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Wise words. The Waterfront development is predicated on the unsustainable level of finance industry profits from what was a bubble period, an aberration.
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I think it is fair to say that the days of easy profits are over for a long time.
There is a huge overhang of commercial bonds, CDO’s etc on the balance sheet of almost every financial institution worldwide.
Long term some of this is going to come good but there are still big write offs in the pipeline.
There will be profits for the smart and lucky but the days of a rising stock market lifting all boats are over!
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Good, practical, realistic, common sense advice which, because it was free and not paid for by using expensive consultants (at taxpayers expense)will no doubt be ignored by our politcians …
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1. Dave – Agreed completely.
But I think rapid decline is on the doorstep, Oil prices are bound to skyrocket as peak oil approaches or is it already here? Nothing has been done to prepare us for this problem which dwarfs the recession. In fact most people probably don’t even know what it is.
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Doom mongers. The recovereh is now here, it is time to buy and spend, happy days are here again.
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It will be best to wait and see on the recovery front.
Maybe things are looking better but banks will be shaking out jobs for the next six months at least.
RBS and Lloyds are looking to get quite a bit smaller as they concentrate on their key functions to boost profitability.
I would say that the UK is heading along the bottom or maybe going up a bit, Jersey is still heading in to recesssion, the bottom is a way off yet.
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Reading between the lines this guy is saying no more boom and bust through greed. Stable and steady growth is good. The growth the entire world experienced over the last 5 – 10 years was unsustainable. Although I have no idea what Annie Du Feu is on about regarding “peak oil” but the fact that oil was rocketing is only proof that the elastic band had to snap.
We don’t want to be in this position again. I for one would rather modest growth over the next 10 years than make massive gains only to be threatened by another credit crunch.
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John Authers absolutely knows his stuff – wish I had heard his presentation – quite a coup to have got him over to Jersey.
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