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Brace for the worst'
by Daily Nation
Posted: Oct 20, 2009 19:20 UTC
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PORT-OF-SPAIN - Brace for things to get worse.
That is the advice of Steve Bideshi, managing director and group chief executive officer of CL Financial.
While Bideshi only assumed the post four months ago, he admitted that CL Financial failed to plan for the worst and did not institute the requisite "stress tests".
He advised other private sector businesses not to fall into the same dilemma.
Bideshi, one of the panellists at the Institute of Chartered Accountants of Trinidad and Tobago meeting at the Hilton Trinidad on Sunday, also warned the business sector to brace itself for a "subdued rate of growth in 2010 and 2011".
He based his predictions on three economic factors that arose as a result of the global economic crisis.
"We will see a slow recovery of the United States and [British] banks," he said, explaining that foreign-based banks had accumulated "toxic assets" as a result of the global economic crisis and the liquidation process would take a long time.
"We will see commodity prices driven more by the economic fundamentals of supply and demand and less financial leverage, and we will see a more frugal US consumer, who has started to save in an environment of static wage growth," he said.
Bideshi said that while the frequency of financial failure was nothing new, the negative global growth, and historic rising unemployment had resulted in a risk averse global capital market.
Minister in the Ministry of Finance, Mariano Browne, said the country needed to develop strategies to prevent the recurrence or at least mitigate the worst effects of the next financial crisis.
"Despite the tremendous efforts of improving accounting measurement techniques and the fairly detailed standards to deal with the plethora of new financial instruments, it lacked the predictive power and did not prepare the world for the fairly cataclysmic events that took place in most money markets," he said. (The Express)
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