“The world is more fragile today than it was in 2007. That’s the opinion of former derivatives trader Nassim Taleb, whose bestseller, The Black Swan, is about how people make sense of unexpected events, especially in financial markets. True to form, he made a whole lot of money after predicting the global financial crisis more than a decade ago.
“Speaking with Bloomberg’s Erik Schatzker last week, Taleb said the reason why he has reservations about today’s economy is that it suffers from the “same disease” as before. The meltdown in 2007 was a “crisis of debt,” and if anything, the problem has only worsened.
“Indeed, debt is on the rise. By the end of the first quarter, the total amount the world owes climbed to a record $247 trillion, according to the Institute of International Finance (IIF). That’s up almost $150 trillion over the past 15 years.
“A lot of this debt, Taleb said, may have moved to different places since the financial crisis—it’s shifted from housing to governments and corporate balance sheets—but the debt “is still there.” Student loan debt in the U.S., for example, stands at about $1.5 trillion today, or nearly $33,000 per borrower. After mortgages, student debt is now the largest form of debt in the U.S.”
“The world’s major economies that entered 2018 accelerating in sync risk entering 2019 decelerating in sync. The shift is being led by China, where the economy’s weakest performance since 2009 is set to worsen unless a peace can be struck in the trade war with the U.S. Factory readings from Asia already show a fallout, with Taiwan, Thailand and Malaysia slipping into contraction territory.”
Beijing cannot risk China’s corporate powder keg blowing up. Neither can the global economy… Even China’s banking regulator has described the situation as “grim and complicated”, a sombre tone from a country often accused of being overly optimistic about the health of its economy. The world’s second-largest economy has been fuelled by eye-watering levels of corporate debt and it needed to sacrifice some of that growth to rein in a ballooning credit bubble.”
“China’s leaders have spent years convincing the world that they’re ready to handle a slower growing, more volatile economy. But President Donald Trump’s trade war against the country is adding an unexpected, so-far uncontrollable level of difficulty for policymakers and uncertainty to the global financial community. That may set China’s economy up for the worst kind of crisis it could ever face — a crisis of faith.”
“Japan’s economy was expected to shrink in the third quarter after natural disasters disrupted production and a slowdown in overseas demand undermined exports, a Reuters poll found on Tuesday…
“We need to take heed of the risk that the pace of economic recovery in October-December in Japan may be weak – depending on the global economy.””
“Iran greeted the re-imposition of U.S. sanctions on Monday with air defense drills and an acknowledgement from President Hassan Rouhani the nation faces a “war situation,” raising Mideast tensions as America’s maximalist approach to the Islamic republic takes hold.”
“A political crisis in Sri Lanka, where two prime ministers are fighting for power, is scaring away tourists and raising questions over foreign aid, ringing alarm bells for the economy as the currency slumps to record lows… Amidst warnings from politicians of a “bloodbath” if the dispute escalates, tourists are cancelling hotel bookings just as Sri Lankan beaches and major sites like the Temple of the Tooth prepare for peak season.”
“Confidence among UK businesses has fallen to its lowest level since 2008 amid a lack of progress in Brexit negotiations, according to new figures published today. The Institute of Chartered Accountants in England and Wales’ (ICAEW’s) Business Confidence Monitor index showed a sharp fall in confidence since last quarter from -0.2 to -12.3, lower than after both the 2016 referendum and last year’s general election.”
“While the Greek government waits for the latest developments on both the Macedonian front and its war of words with Turkey, the fallout from the economic crisis persistently presents more disturbing domestic problems… On the other, the long-term effects of the austerity programmes over the past eight years are so deep-rooted that poverty as a way of life (“queueing for a living”) is the real prospect for a huge percentage of the population.”
“If the recommendation to start a so-called excessive deficit procedure (EDP) is approved by the Council of the EU in December, Italy could face large fines ahead of next year’s European Parliament election.
“That would dramatically escalate the showdown over the budget between Brussels and the populist government in Rome.”
“At one point the president bizarrely told his audience that in an age of elites they are the “super-elite”. They weren’t quite sure what he meant. “We are the voice for every citizen who has ever been overlooked, neglected, ignored,” he proclaimed.”