No one hears much about the Bank for International Settlements but It deals with central banks worldwide and probably has as good a fix on the global economy as any single entity.

There is still an opinion war being waged between the head of money center banks. Over the weekend, the chiefs a BNP Paribas and Barclays (BCS) tried to make the case that the worst of the credit crisis has passed. In the opponent’s corner, the CFO of Merrill Lynch (MER) said that the brokerage would look at selling its pieces in Blackrock and Bloomberg. MER has nothing but lint in its pockets after record write-offs.

Daily reports on the rising prices of agricultural commodities and oil and the slowing GDP in many nations tends to favor the pessimists. If the stock market does indeed rise and fall based on what investors think the economy and corporate earnings will look like six months out, traders are predicting the racketing down of hope to continue.

When the Bank for International Settlements annual report came off the presses today, there was no good news in it. One section summarized the agency’s view: "While difficult to predict, their interaction does appear to point to a deeper and more protracted global downturn than the consensus view seems to expect."

BIS should be considered a dispassionate observer. It does not make money in the financial sector. It is third party observer with the ability to watch the global economy from above the fray.

The fray is looking worse.

Douglas A. McIntyre

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