Paul Sheehan, bringer of second hand wisdom. That well known economist, Paul Sheehan, is back in the forecasting game, this time forecasting gloom and dole for the Australian economy because a foreign exchange strategist at the French bank, BNP Paribas, says so. It could very well happen. Mr Sheehan has considerable expertise in bringing us the views of others, unfiltered through his own brain.

Hans Redeker, the head of foreign exchange strategy at BNP Paribas and the subject of Sheehan’s story, is a guru, according to Sheehan. It’s a pity then Paul didn’t read more widely before putting finger to keyboard. If he had he would have found that BNP was totally unprepared for the credit crunch when it erupted on August 9, 2007, in Europe. That’s when BNP refused to stand behind off balance sheet investment vehicles it had.

BNP Paribas told investors they would not be able to take money out of two of its funds because it cannot value the assets in them, owing to a “complete evaporation of liquidity” in the market. It was the first major signal that all wasn’t well, after Bear Stearns hedge funds collapsed in July and signalled that there was a major problem unfolding.

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I would have preferred Mr Sheehan to have quoted a warning from Mr Redeker about the impending credit crunch. You’d want a strategist to be forecasting something like that, to help his or her employer. Mr Sheehan might be quoting selectively. We have no way of knowing. Australia does have a problem or two. But at last count, Mr Redeker’s fellow French bankers were responsible for the Societie Generale rort in which with one man lost 4.9 billion euros, another sole trader lost 250 million euros at Credit Agricole and on Friday, news of another 600 million euros lost by Groupe Caisse d’Epargne, France’s third-largest mutual savings bank.

In spite of Mr Redeker’s undoubted forecasting abilities, Europe’s biggest investment bank (to quote Mr Sheehan) didn’t see the credit crunch arriving on its doorstep. — Glenn Dyer

The sky is blue and the smokestacks are sorely missed. Only weeks ago it seemed China might provide an island of growth that would keep Australia afloat while the rest of the world fell apart. How could a Wall Street credit crisis knock over a country with closed capital accounts, where shops do not take credit cards and where people buy apartments with suitcases of cash? What could go wrong domestically when incomes are rising, employment is high, inflation is falling and a few hundred million people are hauling themselves from poverty and into their first car and a white-tiled two-storey village house?

China’s real estate market was slow, but it would recover because 12 million urban migrants needed new homes each year. The sharemarket had collapsed, but that did not matter because it had risen so fast and relatively few people were exposed. Construction had softened and car sales were weak but that is what you would expect when much of northern China was shut down for three months to clear the Olympic air. The economy would bounce back with all that pent-up demand. And if for some reason the story did not pan out, then the Government would unlock its vast budget vaults, remove its lending controls and immediately kick the economy back to life. But that is not happening. — John Garnaut, BusinessDay

Signs of a pullback emerge in Hollywood. Paramount Pictures’ abrupt decision to delay two major holiday films — including one with Oscar aspirations — may be an early sign of Hollywood’s retrenchment in the midst of the U.S. economic crisis …

Paramount, a unit of Viacom Inc., announced the delays as part of a new business strategy in which it is cutting costs by reducing the number of films released each year from 25 to 20. To achieve that in 2008, the studio had to delay a couple of films, which puts off most of the cost of marketing and distributing the movies until next year …

The new plan “is definitely responsive to the current economic climate,” Mr. Moore said. He added that the studio has been eager to implement the new plan for some time but first had to resolve a number of outstanding issues, including the recent departure of DreamWorks’ principals, before instituting the cutbacks. — Wall Street Journal

British retailers fear worst Christmas in a generation. Homebase, Debenhams, Burton and DSG International, the electronics retailer, are all likely to show just how bad trading is on the high street when they report results this week. Analysts are now predicting the worst Christmas since the early 1980s as the public rein back spending as fears for job security grow …

The Office for National Statistics has warned, ahead of its monthly report on Friday, that retail sales figures for September may not accurately reflect the state of UK high streets. So it will publish a margin of error in the figures. The warning is an admission that its retail sales data may not be a reliable guide to retail trends – something economists have long suspected. Moody’s forecast of a 1.8 per cent year-on-year increase in sales for September is unlikely to show the real effects of market volatility and falling share prices on major brands. — The Independent

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