“A decade after the crash, many nations are still on emergency monetary policies, even before a new downturn strikes…
“Central banks and finance ministries had better hope that the action taken so far will be enough to avert a recession because they will soon run out of conventional policy options.
“In 2008-09, the response to the financial crisis was fivefold: the central banks cut interest rates aggressively; they pumped cheap money into their economies through QE; finance ministries bailed out the banks with taxpayers’ money; governments ran bigger budget deficits as a way of boosting growth; and international cooperation kept trade flowing.
“But today interest rates are still either zero or just about zero in most of the developed world; QE has been subject to the law of diminishing returns and has proved politically controversial; the public appetite for another round of bank bailouts is nonexistent; government debt levels are much higher than they were a decade ago; and economic nationalism is on the rise.
“Krugman said in a Bloomberg interview: “We’re clearly in worse shape. We came into the last crisis with interest rates well above zero, we came into the last crisis with debt substantially lower than it is now … and we came into the last crisis with substantially better leadership … Our current treasury secretary [Steven Mnuchin] is no Hank Paulson.
““I think we’re in much worse shape. We probably don’t have a crisis of that magnitude about to hit us – God help us if we do – but we’re in much worse shape to deal with whatever shocks come along than we were 10 years ago.””
“US politicians from both sides of of the political divide have bucked recent partisan bickering and united around an unlikely issue to lambast Wall Street for the booming practice of share buybacks… The practice sees companies with spare money repurchase their own shares from the market, putting cash directly back into investor’s pockets while at the same time improving the value of the shares…
“According to TrimTabs data, the value of stock repurchases announced by US companies surged to more than $1 trillion last year, around seven times the amount in 2009.”
“Home and automobile sales could be in for a big correction, due to “pent-down” demand. Homes and autos aren’t selling that well lately. Total vehicle sales in the US dropped to 16.70 million units in January from 17.55 million in December of 2018. While that number is still above the long-term average (1993-2019 period), it’s well-below the all-time high of 21.77 million reached in October of 2001.
“Meanwhile, sales of previously owned homes in the US dropped 6.4% to a seasonally adjusted annual rate of 4.99 million in December of 2018.”
“The current economic expansion will hit a decade in June of this year , which would match the longest on record of April 1991 to March 2001. It would also be almost twice as long as the 58 months experienced for the past 11 cycles starting in 1945… The economy has been helped by interest rates decreasing over the past 40 years…”
“The U.S. and China appear to be close to ending a tariff fight that hurt financial markets and dented economic activity worldwide, but that’s not going to stop the slowdown already seen in the global economy, experts said on Monday.”
“A Chinese state-backed borrower’s failure to make good on a payment on a dollar bond on Friday threatens to overturn assumptions that officials would step in to avert defaults by companies closely linked to local authorities.
“Qinghai Provincial Investment Group Co., an aluminum producer that was seen by some analysts as a bellwether for assessing government support due to its struggles to make payments on offshore debt last year, had failed to wire funds for a coupon payment due Feb. 22 as of late afternoon China time…”
“India’s property developers are finding it hard to borrow money, raising the prospect of a wave of debt defaults from the sector hitting shadow lenders that are trying to survive a funding crunch of their own.
“Developers have to repay about 1.29 trillion rupees a year on outstanding debt but generate less than half the amount in income that can be used for repayments, according to an analysis of about 11,000 companies by research firm Liases Foras.”
“Turkey’s latest labour force statistics for November 2018 depict an alarming picture for the country’s job market. According to figures released by the Turkish Statistical Institute on Feb. 15, the labour force in Turkey, which includes those in employment and looking for work, increased to 32 million in November 2018. Those who are unemployed but not looking for a job, including discouraged workers – people who would accept to work if there were jobs available – are not included in the numbers.”
“Sudanese President Omar al-Bashir swore in a new prime minister on Sunday as riot police confronted hundreds of demonstrators calling on the veteran leader to step-down after he imposed a state of emergency across the country…
“Protest organisers have vowed to continue with daily rallies, accusing Bashir and his officials of economic mismanagement that has led to soaring food prices and shortage of foreign currency.”
“Zimbabwe underwent a de facto devaluation on Friday as its central bank began trading a sharply discounted replacement currency, attempting to ease a cash crunch that has hobbled the economy and plunged millions deep into poverty.
“The country adopted the dollar in 2009 but, as a chronic hard currency shortage worsened, introduced a parallel system of bond notes pegged at 1:1 to the U.S. currency.”
“This commentary, being written on Thursday, February 21, 2019, is about troubling developments in Haiti and the constraints upon the Caribbean Community countries that prohibit them from playing a meaningful role in averting further violence. Since the time of writing, the feared escalation might have occurred…
“If economic conditions in Haiti worsen as a consequence of deadly protests that have been continuous since February 7, 2019, Haitians will continue to seek refuge everywhere.”
“Republican Sen. Marco Rubio shared an image Sunday showing a bloodied Muammar Gaddafi, the former authoritarian leader of Libya, in the moments before he was killed…
“…drawing criticism from some who read the Florida lawmaker’s message as one of support for United States-led regime change in Venezuela.”
“The quarterly survey [UK] revealed that sentiment declined among both business & professional services and consumer services firms.
“In the business & professional services sector – which includes accountancy, legal and marketing firms – optimism about the business situation fell at the fastest pace since financial crisis.”
“Interest rates could be slashed into negative territory for the first time in history to combat the fallout from a chaotic no-deal Brexit, a former Bank of England policymaker has warned. David “Danny” Blanchflower – who sat on the Bank’s Monetary Policy Committee from June 2006 to June 2009 – told the Press Association that policymakers may be left with little option but to take rates below zero if a no-deal Brexit sends shockwaves through the economy.”
“The risk of global recession has suddenly jumped several notches, as the accumulated damage from US President Donald Trump’s trade wars and worldwide monetary tightening is taking a bigger toll than hoped. A mounting weight of evidence suggests the world is one shock away from a contractionary vortex that would be extremely hard to control. In the US, the Federal Reserve’s instant tracking gauges of GDP growth have halved since late January. They are approaching stall speed.”
“Since 2008, the global economy has grown far too dependent on huge central bank balance sheets and accommodative monetary policy. The U.S. economic boom President Donald Trump loves to tout is largely fake, engineered by artificial policy settings. Such dependence is dangerous and, for various reasons, could well backfire…
“…central bank actions are already an implicit acknowledgement that rising debt levels are unsustainable at higher rates and under tighter liquidity conditions. In the U.S., a record 7 million Americans are 90 days or more behind on their auto-loan payments, according to the Federal Reserve Bank of New York — a significant signal of distress among low-income groups who typically prioritize such payments…
“Printing money was always going to be easier than withdrawing it later. In effect, central banks are boxed into a situation where they can’t normalize policy and must maintain low rates and abundant liquidity, lest they destabilize fragile asset markets and spur low growth and disinflation. This state of “infinite QE” risks miscalculations and major policy errors. If central banks are, as is now fashionable to state, the only game in town, then the game is lost.”
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