Timothy Ash, head of emerging markets research at RBS, issued both a mea culpa and a call to arms in a note on Friday.
First, the mea culpa:
The global credit crunch has been a learning experience for us all and while many would claim to have called the crisis well I think if they are entirely honest with themselves and their investors there is literally no-one who has completely covered themselves in glory throughout the crisis.1 We have all tended to call bits of the crisis well and other bits less well. For my own claim to fame I would argue that having the advantage of having “lived” though the Kazakhstan banking crisis from August 2007, I was given a taster of what was likely to come for the rest of Emerging Europe, and turned negative on the external financing/credit growth story in CEEMEA in the autumn of 2007. This played out pretty much to my script for 2008 and into the first quarter of 2009 (albeit hardly from a PA perspective, as evidenced by the demise of the great Bear), particularly with respect to the Iceland crisis (despite being criticised by our friends in Reykjavik, and even the FT); at the time I described Iceland as Northern Rock on a sovereign scale – famous last words!.
For 2009 I misjudged the shear [sic] weight of liquidity/wall of money story, post the April G20 London summit. Up until that point global policy makers just did not get it, they were staring into the abyss, and faced financial Armageddon, but the London summit was THE turning point, in my view as not only did we see ramped up global coordination of monetary/fiscal easing but also the IMF was given the cash and mandate to prop up various troubled states, particularly in my region, with few questions (weak conditionality) asked. The wash of global liquidity certainly helped buoy markets, and helped bring global trade back from the brink post the Lehman debacle.
And the call to arms, inserted as footnote:
1. I would hope that alongside economists/bankers, that policymakers, regulators, politicians and journalists would be as honest with themselves, as we all need to learn what went wrong over the past decade in the run up to the current crisis.
Duly noted.
Related links:
The perils of instant analysis – FT Alphaville
Merrill Lynch: ‘My bad’ – FT Alphaville
In defence of City felt-ery – FT Alphaville
It’s not subprime that’s hurting the markets – it’s all those bitter journalists – FT Alphaville