“Still psychologically scarred, few were keen last month to commemorate the 10th anniversary of the Dow’s rock bottom close in March 2009.
“Even so, all month long, calls to heed lessons from the last great recession echoed across the media as ominous signs pointing to another pending financial crisis loom. Last week, the US Department of Commerce revised growth forecasts downward. Growth across major European economies is either slowing or negative. And the Chinese economy, a critical global growth engine, is decelerating…
“After Lehman Brothers collapsed, central banks worldwide simultaneously reduced interest rates. In the months that followed, governments would take recourse to this time-tested monetary tool to combat the recession, using rate cuts to encourage borrowing and spending.
“Such expansionary monetary policies are battle-proven and, in tandem with prudent fiscal policies, they enabled central banks to slowly restore the global economy to health. The hard truth, however, is that governments won’t have this weapon at their disposal this time around.
“In the wake of the 2008 crisis, rates across the world were cut to zero, and the fragile recovery has kept them there. For much of the world, including the US and Europe, very low to near-zero rates mean historically little leeway for lowering.”
“Germany’s industrial sector is facing an even deeper crunch as manufacturing orders dried up in February, dashing any hope of a quick recovery for the eurozone economy.
“Exports plunged as the global economic slowdown bit hard, threatening the core of the eurozone’s industrial sector.”
“New car sales in the UK fell to their lowest level in five years as the biggest selling period of the year — the 19-registration plate change month of March — failed to lift the motor trade.
“Latest industry figures show that 458,000 new cars were registered in March, down 3.4 per cent on the same month last year and the worst level since 2014.”
“Italy will struggle to escape recession this year amid reports the Government is set to slash growth forecasts to almost zero. The economy will grow by just 0.1pc this year, according to information shown to Bloomberg by officials. That represented a severe cut from earlier predictions of a 1pc expansion.
“Relations between Rome and Brussels have become strained because of the country’s failure to cut the national debt…”
“Whoever replaces Algeria’s President Abdelaziz Bouteflika, ousted by weeks of protest, will inherit another crisis-in-the-making: the economy.
“Even before hundreds of thousands of Algerians began their campaign for political change, the government had only a few years worth of foreign currency reserves left. With the OPEC member heading into uncharted territory after Bouteflika resigned on Tuesday, the clock to financial upheaval is now ticking faster.”
“A new report by researchers at Human Rights Watch and the Johns Hopkins Bloomberg School of Public Health said U.N. chief, Secretary-General Antonio Guterres, should officially declare that Venezuela is facing a “complex humanitarian crisis”
“…The U.N. has found itself stuck in the middle of a political struggle that pits Venezuelan President Nicolas Maduro against U.S.-backed opposition leader Juan Guaido, who invoked the constitution to assume an interim presidency in January.”
“The Trump administration has finally turned its attention to housing policy. Unfortunately, the president’s Memorandum on Housing Finance Reform, issued last week, is a major disappointment.
“It will keep taxpayers on the hook for more than $7 trillion in mortgage debt. And it is likely to induce another housing-market bust, for which President Trump will take the blame.”
https://www.wsj.com/articles/the-coming-trump-housing-crisis-11554419785
“A growing number of homes in the US and China are teetering on the brink of a price slump that would drag their economies into a recession, the International Monetary Fund has warned.
“Using the latest evidence from global housing markets, the Washington-based organisation said there was a clear increase in the risk of a housing price collapse in both countries after years of ultra-low interest rates and loose lending by financial institutions.”
“Researchers have said nationwide mortgage defaults [Australia] are the highest they have been in almost two decades.
“A spokesperson from peak housing and homelessness body National Shelter, an organisation at the front line of housing stress, said too many Australians have hit rock bottom.”
https://www.abc.net.au/news/2019-04-05/researchers-warn-of-rising-mortgage-stress/10972682
“Today, the 2008 financial crash and subsequent regulatory reforms seem to have sparked a profound behavioural change — not just at UBS, but in most banks. Bank treasurers have become ruthlessly tactical in how they handle their balance sheets.
“The BIS thinks that the quarterly interest rate spikes are partly due to European banks engaging in extensive window dressing in order to make themselves look stronger. Right before quarter-end reporting days, such banks appear to shrink their balance sheets, which boosts their capital ratios. That briefly drives up interest rates.”
https://www.ft.com/content/e0325354-56c7-11e9-91f9-b6515a54c5b1
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