A ten item Trade credit insurance checklist to help prepare companies for 2012

By Ron Doyle

While we all are wishing for a prosperous, productive and healthy 2012, we have to be realistic. At best, the world economy will experience slow growth or possibly a regional or global recession.

The annual reports of banks should show how much actual exposure they have to toxic sovereign debt and what provisions the banking industry will need to make. The situation will undoubtedly impose a need to raise capital. As I have stated before, this demand will impact the commercial credit markets, as banks will be required to restrict lending and demand higher credit quality.

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Global recession "take two" or did we ever recover from the first? Businesses need to take action now to mitigate against trade credit and political risks still to come

By Ron Doyle

There is concern about another global recession, but have we ever recovered from the last one? Despite stimulus packages by most G-8 governments and an Economic Easing Program by the U.S. government, unemployment, the housing markets and consumer confidence have not improved.

Recession is defined as ”two consecutive quarters with negative growth”.  Therefore, a recession is over when growth of Gross Domestic Product, GDP, resumes. The fallacy with this statement is that many factors can result in growth. As we have seen in some major resource producing countries, simple price increases or devaluation of the U.S. dollar can lead to material increases in exports. Even in countries that import commodities, price increases also lead to growth.  In this situation, GDP can grow without any increase in output of goods or services or most importantly, jobs. Today in countries like China, we are seeing a decrease in production and an increase in inflation.  Employers in China are being forced to increase wages by as much as 10-20%. Manufacturing in the United States and Europe has also reduced substantially – as explained by the drop in the ISM Manufacturing PMI. The index dropped from 60.4 to 53.5 in 19 months. May showed the largest drop since 1984.

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ICBA brokers can help to insure you against the next political risk crisis

By Ron Doyle

Kevin Carmichael in his article on monetary policy in the Globe and Mail’s Report on Business of Friday, January 15, 2010, refers to the high levels of worldwide government debt, resulting from huge stimulus packages, as the biggest threat to global recovery. The article refers to the World Economic Forum Global Risk Report 2010, in which the London based group raises concerns over the high degree of interconnectedness between all areas of risk and warns that unless we address these risks they may cause the next crisis.

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