“The fear is palpable. Central bankers and policy strategists gathered at the intimate ‘euro Davos’ on Lake Como are shell-shocked by the collapse of bond yields and recessionary warnings across the world.
“Monetary ammunition is exhausted or running low across the G10 economic universe. The US Federal Reserve has been stripped of key tools needed to fight a financial crisis. It may not be able to rescue the international system as did in 2008.
“The eurozone is sliding into a ‘Japanese’ deflationary quagmire but without Japan’s political cohesion and without a fiscal machinery to step into the breach.”
“Disappointing indicators show similar picture in US, China and Europe … The headline readings slipped back significantly at the end of last year and are at their lowest levels for both advanced and emerging economies since 2016, the year of the weakest global economic performance since the financial crisis.”
“UK Business confidence has crashed to the lowest point since 2012, and the economy is only growing because firms are stockpiling ahead of Brexit, according to a key sentiment indicator.
“The BDO optimism index… fell faster in March that at any time since the bleakest days in the aftermath of the Lehman Brothers collapse in 2008. The figures suggest that the UK economy could struggle to post any positive growth in 2019, BDO said.”
“The recovery after the eurozone financial crisis was never that strong. But in the last year or so, the region has been hit by adverse trade winds.
“It matters particularly to Germany, which is Europe’s leading goods exporter and number three globally (after China and the US). There are several factors. China’s economic slowdown has weakened demand for foreign goods and it’s an important market for Germany.”
“A cocktail of negative interest rates, over exposure to sovereign borrowing and expanding debt bubbles has left European banks susceptible to shocks, laying the ground for a fresh credit crunch on the continent, experts have warned. Financial institutions in the EU and the US leveraged loan market are two of the greatest threats to the global credit markets…”
“Turkish companies are struggling to get off the hamster wheel of debt as foreign borrowings run near record highs. The reason: a plunge in the lira that has driven up the cost of their obligations in dollars and euros. Banks are being left to carry the burden amid a surge in demand from some of the country’s industrial giants to restructure their liabilities — on top of a jump in bad loans.
“Lenders are also pulling back on providing new credit as the financial system comes under increasing pressure from the recession and an inflation rate of almost 20 percent.”
“Jordan is talking to the World Bank about a $1 billion soft loan as it seeks to cut the cost of its debt repayments and revive an economy strained by more than a million Syrian refugees.”
“With [Pakistan’s] inflation at its highest in five-and-a-half years, we are only seeing the beginnings of a period of double-digit inflation.
“The rupee is losing value every other day, adding to this inflation, and will depreciate a great deal more, whether, or especially when, the government gives in to yet another IMF programme.”
“An economist believes falling Malaysian trade figures are an indication of a looming global recession, and says the federal government should begin making preparations to meet the challenge. Barjoyai Bardai of Universiti Tun Abdul Razak said the dip in Malaysian export and import figures for February were in line with a contraction in global trade…
“Malaysia’s export-oriented industries would be affected by the slowdown in global demand because of the country’s position in the global manufacturing supply chain and as a commodity exporter.”
“The state-run Korea Development Institute on Sunday said Korea is slowly going into recession. The KDI said Sunday that the economy is “in a phase of gradual slowdown” as demand both overseas and at home shrinks.
“Until last October, the institute had said Korea’s economy was improving. According to market researcher CEO Score, investment at 855 subsidiaries of Korea’s top 60 businesses fell 3.1 percent last year to W98.5 trillion (US$1=W1,139).”
“China’s central auditing authority has sounded the alarm on a surge of dangerous debt at small banks across the nation, elevating the query of whether or not Beijing will proceed to bail out struggling lenders or finally enable some to go bankrupt…
“Many massive banks have introduced NPLs beneath management, however metropolis industrial banks and rural monetary establishments, which make up greater than 26 per cent of China’s whole banking property, have continued to file greater charges of soured loans as financial progress cools.”
“Chinese investment in Australia dropped by more than 36 per cent in 2018, to its second lowest level since the global financial crisis of 2008.
“The latest report from KPMG and the University of Sydney Business School found that Chinese firms invested a total of $8.2 billion in Australia last year, down from $13 billion the year before.”
“In an interview with the Australian Financial Review (AFR), the International Monetary Fund (IMF) Lead Economist expressed his take on the Australian housing market contraction…
““Australia’s housing market contraction is worse than first thought.” …Leaving the economy in what he called a “delicate situation”.”
“”Your momma!” Brazil’s normally buttoned-down Economy Minister Paulo Guedes snapped, after the lawmaker called him a “Tchutchuca” this week.
“The word, plucked from a racy hit song, broadly refers to an attractive, promiscuous girl. You read that right, grown men (and upper-class lawmakers at that) are calling each other sluts and trading yo’ mamma jokes on the congressional floor. This is not indicative of a political regime that’s going to manage the threat of a recession and potential currency crisis well.”
“…the global outlook is once again darkening. World trade growth is at its weakest since 2009, the protectionism that the London summit eschewed has reared its head, and central banks have responded to faltering growth by scaling down plans to raise interest rates…
“The IMF’s real headache is that the flaws in the global economy exposed by the financial crisis were papered over rather than properly dealt with.
“A decade of cheap money has resulted in a build-up of debt, excessive speculation, asset price growth and a sense that the bubble is about to burst. It’s Groundhog Day, in other words.”
“As the saying goes, “the definition of insanity is doing the same thing over and over and expecting different results.” We are doing exactly that by continuing to lever up the global economy and expecting sustainable economic growth without 2008-style crises.
“With global debt up an incredible $100 trillion since the global financial crisis, anyone who thinks that another crisis is far-fetched is incredibly naive. Unfortunately, I believe that the next one will be even worse simply due to the fact that we have an additional $100 trillion worth of debt to deal with now.”