Confidence. It’s the number one driver of business. Without it, business managers tend to hold off on new investments, keep inventories lean, and hold on to cash. That’s what happened in the United States in 2008, as sinking confidence led to a vicious circle whereby more and more companies shed workers and slashed orders, because their key customers had done so. Could a similar spiral play out in Europe? It’s too early to tell. Much will depend on how banks react in this current environment. If they cut off lending to small and medium-sized businesses, as happened… Read More
Confidence. It’s the number one driver of business. Without it, business managers tend to hold off on new investments, keep inventories lean, and hold on to cash. That’s what happened in the United States in 2008, as sinking confidence led to a vicious circle whereby more and more companies shed workers and slashed orders, because their key customers had done so. Could a similar spiral play out in Europe? It’s too early to tell. Much will depend on how banks react in this current environment. If they cut off lending to small and medium-sized businesses, as happened here roughly 18 months ago, then that could trigger yet another recession on the Continent. #-ad_banner-# That’s why it is so important to track the actions of leading European banks. We already know that major banks in Ireland and Spain have begun to retrench, which bodes ill for the economies of those countries. But what about the likes of Deutsche Bank (NYSE: DB), UBS (NYSE: UBS) and Barclay’s (NYSE: BCS)? Those leading financial institutions’ actions will determine whether credit flows or shrinks. France’s Credit Agricole is a clear example. The bank recently announced that it… Read More