BB&T, GXS to Deliver Financial Supply Chain Management

Supply Chain Management is the effort to improve the quality in which a company provides its product to its clients. It is based on three factors Strategy, Production and Logistics. Each of these steps provides a way for a company to be more efficient. BB&T (Branch Banking and Trust) has adjusted its supply management to its customers a more efficient way of doing all of their banking worldwide with real-time invoices and payment options online.

Banking systems: offshoring Vs. outsourcing

I found an article on Businessweek.com written on March 10th, 2009 called “Banks: Offshoring, Not Outsourcing.” This article talks about how big European banks are starting to prefer setting up their own offshore operations to keep data and funds safe.
Two of Europe’s biggest banks are veering away from outsourcing and increasing regulatory scrutiny by investing in their own offshore operation.

A global new deal?

I found an article on CNN.com written on February 19, 2009 called “Brown: world needs ‘global New Deal’.” Prime Minister Gordon Brown of the United Kingdom stated this referring to the global economic crisis.
The leaders of the largest European countries met to discuss a common position on the world’s financial crisis. “We need a global New Deal — a grand bargain between the countries and continents of this world — so that the world economy can not only recover but… so the banking system can be based on… best principles,” Brown said referring to the 1930s American plan to fight the Great Depression.

Gross: Nationalization would fail

Recently, Bill Gross, the “bond king”, stated that any effort made by the U.S. government to nationalize floundering banks wouldn’t work because of the high number there are of them. There are over 7500 credit unions that would have to be flushed by government hands. Regulators are overwhelmed as it is.

Income Distribution in the European Union

There was recently a meeting held in Berlin where leaders from France, Germany, the UK, Italy, the Netherlands and Spain gathered to discuss the issues that will be brought up during the G20 meeting in April. During this meeting they discussed many issues in order to have a unified front during the G20 meeting where Mirek Topolanek, the Prime Minister of the Czech Republic, will represent the European Union.

The Domino Effect of the U.S. Sub-prime Mortgage Crisis

Though this was bound to happen sooner or later, the current financial crisis is coming as quite a shock for not only citizens in the U.S., but all around the world. Because the European banks also invested in the faulty mortgage paper, they are now suffering from a lack of liquidity as well. The bankruptcy filing of Lehman Brothers on September 15th is when European businesses and consumer confidence took a plunge. The banks are hesitant to loan out cash as readily as before, because of the lack of liquidity. Banks are safely protecting some of their cash by leaving less to lend to businesses for working capital by investing into the European Central Bank. When businesses are short of working capital, their production drops, therefore, lowering GDP (gross domestic product). Consumer confidence, overall, lowers when businesses are not producing, thus diminishes any chance of growth. Business decline combined with lack of consumer confidence creates a downward spiral. “Worries about the future are curbing household spending, countering any relief Europeans got from the sharp fall in oil prices from their July peak of $147.27 a barrel. Business investment, which drives purchases of the high-value goods and services that are a European specialty, is ebbing fast amid the insecurity (Herald Tribune 11 October, 2008).” Many of these European banks are holding back to the point of frustration for businesses. Many of these are solid businesses with great track records that are the backbone of the economy; however, the banking situation is making it nearly impossible for them to borrow any money. The banks may even be creating part of the problem by this credit tightening.
Dovetailing into the issue of economic insecurity and lack of consumer confidence is the falling oil prices. On July 11, 2008, oil prices were at an all time high of $147.27 per barrel. Last Friday, the price per barrel fell to $78.61. Investors sold equity in oil companies to invest into safer government securities. With the financial crisis, spending less, traveling less, consuming less, and the increased slowdown in global economy, there will be less demand. OPEC (Organization of Petroleum Exporting Countries) is said to be announcing the cutting of supply next month to hopefully help stabilize the price of a barrel. The smaller the demand, the lower the price. It’s remarkable to see this playing out in real life, and seeing how the cause and effect of supply and demand, and risk and aversion to risk affect our daily lives.
The catastrophe of the financial crisis in the U.S. has created a complete domino effect within the U.S., as well as in Europe. Though the bailout was supposed to restore confidence for the people and for banks, it remains to be seen how little or how much it will affect the problem. This is something that is certainly going to take time to iron out, but in the meantime, the global economy is truly struggling. “Most economists and many business leaders now predict that a European recession is nearly certain this year, and may well continue into 2009 (Herald Tribune, 11 October, 2008).”

Hayley