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“After the briefest and weakest of economic recoveries, Italy has succumbed to its third recession in a decade. This risks further undermining Italian support for the euro, particularly considering that Italian living standards today are below those enjoyed 20 years ago when the country adopted the single currency.

“Ahead of European Parliament elections in May, Italy’s populist government is becoming more radical. This is unlikely to revive investor confidence in the country. The government is openly attacking Banca d’Italia independence. Deputy Prime Minister Matteo Salvini has called for the central bank’s leadership to be removed for failing to prevent Italy’s banking crisis. This week, he threatened to seize control of the country’s gold reserves and sell them to fund further government spending…

“With public debt at around 130% of GDP, the economy must grow if investors are to be persuaded that the country’s finances are sustainable. This is crucial for the Italian government now that its gross borrowing needs are close to a staggering $275bn a year.

“Stuck within the euro straitjacket, the Italian government lacks the macroeconomic tools for stimulating the economy. As part of a single currency, it is the European Central Bank – not the Banca d’Italia – which manages Italy’s interest rate and exchange rate policy. As such, Italy is precluded from devaluing its currency to restore international competitiveness. At the same time, with a budget deficit that will be swollen by recession, the Italian government cannot resort to fiscal pump priming without destabilising its bond market and incurring the ire of its European partners…

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“All of this is of the utmost concern for the global economy. The Italian economy is around 10 times the size of Greece’s and it has a government debt in excess of $2.5tn. In addition, it has a populist government whose economic policies are at odds with those of its European partners. That will make it all the more difficult for the Italian government to obtain a bail-out package if investor appetite for its debt evaporates.

“Hopefully, the Italian government will heed the early warning signs coming out of the market and start seriously reforming the economy. If not, the world should brace itself for another, more vicious round of the European sovereign debt crisis.”

https://seekingalpha.com/article/4240878-italy-headed-vicious-debt-crisis


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“France is one of the most present countries in Italy, controlling over 1,900 businesses and 250,000 employees, while Italy administers only a little over a thousand companies in the central European country.

“After the latest events between Paris and Rome, Air France decided to reconsider its role in the Alitalia’s rescue plan… Now the future of the Italian company is every day less clear, just like the one Italy is going towards if it keeps defying its European allies.”

https://www.forbes.com/sites/annalisagirardi/2019/02/13/the-economic-consequences-of-the-france-italy-diplomatic-crisis-might-be-worse-than-expected/#53f1e9b267e8


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“Ford today warned that leaving the EU without a deal would be ‘catastrophic’ – amid claims the car giant is preparing to move production out of the UK.

“The company has added its voice to those sounding the alarm about the prospects of Britain crashing out next month. The chances of a no-deal outcome appear to be rising with talks in Westminster and Brussels still mired in deadlock.”

https://www.dailymail.co.uk/news/article-6700273/Ford-warns-no-deal-Brexit-catastrophic.html


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“The German economy stalled in the final quarter of last year, narrowly escaping recession, as the fallout from global trade disputes and Brexit threatened to derail a decade-long expansion in Europe’s economic powerhouse…

“With growth unchanged in the fourth quarter, the economy escaped recession — defined as two or more consecutive quarters of contraction — after it shrank by 0.2 percent in the third quarter. Germany’s economy grew at its weakest rate in five years in 2018.”

https://www.reuters.com/article/us-germany-economy-gdp/german-economy-stalled-in-fourth-quarter-just-escaping-recession-idUSKCN1Q30RP?il=0


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“”Hmmm…I wonder why not all Americans have benefited from the strong labor market? It’s almost like politicians talk nonstop about jobs in order to avoid talking about wages or something…

“We are barreling head-first into another economic collapse driven by Wall Street exploiting the fact that four out of five Americans live paycheck to paycheck, and those are the kinds of people who need these “subprime loans.””

https://www.pastemagazine.com/articles/2019/02/the-2008-subprime-housing-crisis-may-be-repeating.html


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“The Australian dollar is looking vulnerable and is headed back below US70c according to some analysts as the reserve Bank of Australia is forced to cut interest rates to breath some life into the economy and push inflation to within their preferred target rate.

“Over the last few weeks we have seen a range of disappointing data from Australia such as poor GDP figures and inflation numbers which has caused the RBA to change their tone in recent speeches by adding the option of a rate cut to the table.”

https://www.fxstreet.com/analysis/australian-dollar-headed-for-post-crisis-lows-201902140743


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“Thousands took to the streets in 50 Argentine cities and towns Wednesday (Feb 13) demanding that the government declare a “food emergency” and put an end to suffocating price increases.

“”We are losing work, food, education, housing … it’s desperation that is emerging among our people,” said Osvaldo Ulacio, 60, as he marched in the capital Buenos Aires.”

https://www.channelnewsasia.com/news/world/argentines-protest-in-push-for–food-emergency–declaration-11241560


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“Gaziantep, a city of 1.5 million in Turkey’s southeast, ranks among the areas worst hit by the country’s economic turmoil.

“It had long been one of Turkey’s main centres of textile manufacturing, but following a nearly 30-percent decline in the lira, 20-percent inflation, and economic contraction, the industry is under severe strain.”

https://ahvalnews.com/southeast-turkey/turkeys-economic-crisis-crushes-famed-carpet-industry


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“…as China’s economy posts its slowest annual growth in 28 years amid the Sino-U.S. trade war, Chinese vulture funds are finding themselves mired in their own liquidity squeeze.

“The industry’s woes not only hamper Chinese banks’ ability to quickly offload bad debts to make room for fresh lending, but also increase financial risks in the system and threaten social stability as tens of thousands of retail investors lose their savings in vulture fund investments.”

https://uk.reuters.com/article/us-china-debt-managers-insight/chinas-bad-debt-managers-risk-becoming-bad-credits-themselves-idUKKCN1Q230X


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“A $10 trillion meltdown in China would be a pretty big issue. No wonder the government is acting upon it but at a high cost.

“For example, the peer-to-peer lending markets that had millions of Chinese workers’ yuan savings collapsed last summer, driving thousands of people into mental breakdowns.”

https://www.equities.com/news/the-next-global-financial-meltdown-is-just-around-the-corner


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“A major reason for the current predicament faced by central bankers is that the world economic recovery we have seen since 2009 hasn’t followed a traditional path. Accepted economic theory would suggest that, by now, low interest rates and rapid employment gains ought to have driven up inflation to much higher levels than we see today.”

[Energy and resource constraints playing a significant role there].

https://www.fidelity.co.uk/markets-insights/investors-view/central-banks-count-cost-slowing-growth/


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