“…should we be worried about another crisis?
“Yes, the authors say, in a final chapter that is downright scary.
“…crises will still happen, and when they do, the firefighting abilities of policymakers will have been gravely compromised. Interest rates are too low for cutting them further to do much good. Fiscal stimulus, which BGP (Bernanke, Geithner and Paulson) agree was crucial, will be much harder to sell given high levels of debt. And Congress has taken away much of the authority that made extraordinary measures possible in the crisis. In other words, it’s hard to imagine BGP’s modern successors carrying out the kind of rescue operation the authors managed a decade ago.
“And it’s not even clear whether they would try, or at any rate have any idea what they’re doing. The authors are too nice to say this, but today’s top economic officials seem to be systematically drawn from the ranks of those who got everything wrong during the crisis. The failure of Bear Stearns was the first solid indication of how much trouble we were in; Donald Trump has just chosen David Malpass, Bear’s chief economist at the time, to head the World Bank. Larry Kudlow, now the administration’s top economist, ridiculed “bubbleheads” who claimed that housing prices were out of whack, then praised Paulson for refusing to bail out Lehman — just hours before financial markets went into full meltdown.
“In other words, we seem to have learned the wrong lessons from our brush with disaster. As a result, when the next crisis comes, it’s likely to play out even worse than the last one. Isn’t that a happy thought?”
“U.S. factory production stalled in March as motor-vehicle output declined, adding to signs of headwinds for manufacturing and economic growth around the world.
“Manufacturing output was unchanged from February after falling a revised 0.3 percent, Federal Reserve data showed Tuesday.”
“Volkswagen AG, Nissan Motor Co. and Guangzhou Automobile Group Co. are among the carmakers increasingly counting on Chinese government tax cuts to stimulate demand and help the world’s biggest auto market rebound from its worst slump in a generation.
“The unanswered question is when that will happen.”
“The signs of improvement [as China’s GDP stabilises] most likely do not stem from a sudden burst of confidence in the strength of the country’s economy among Chinese business leaders. Instead, the positive glimmers are largely a product of the hundreds of billions of dollars that Beijing has pumped into the country’s economy in recent months and the loans that officials have pressed state-run banks to make.
“All of that comes at a cost, and it raises a question about how willing Beijing is to spend to keep growth going.”
“Japan’s exports fell for a fourth straight month in March as China-bound shipments slumped again, reinforcing growing anxiety that weak external demand may have knocked the economy into contraction in the first quarter…
“The data reinforces worries that weak external demand may hurt company profits and in turn curb business expenditures, workers’ wages and consumer spending in a broad hit to growth.”
“The Bank of Japan is ready to deploy monetary policy tools if a financial crisis threatens to destabilize the country’s banking system, its deputy governor Masayoshi Amamiya said on Wednesday.”
“Singapore’s electronics exports slumped in March by the most since 2013, an ominous sign that it will take longer for the city state to shake off a regional demand slowdown from earlier this year.
“Electronics shipments dropped 26.7 percent from a year ago, weighing down overall non-oil domestic exports, which fell 11.7 percent. That was far worse than the 2.2 percent contraction forecast by economists in a Bloomberg survey.”
“The Central Bank of Argentina is selling the dollars it borrowed from the International Monetary Fund (IMF) to replenish the nation’s distressed budget. The ongoing currency crisis has nearly bankrupted Argentina yet again, while many households find themselves on the brink of survival…
“The auctions come after the Argentine economy shrank 6.2 per cent year-on-year in the first quarter of 2019, its worst since 2009. Last year, the nation’s GDP contracted 2.5 per cent, while the unemployment rate rose to 9.1 per cent amid sweeping closures of businesses and manufacturing facilities across all sectors of the national economy.”
“More than two dozen heavily-armed men stormed into the centre of Guararema early on a recent morning, rousing the Brazilian town’s residents with the sound of broken glass, explosions – and then gunshots. Brandishing high-powered rifles, wearing bullet-proof vests and carrying several kilos of dynamite, the gang pulled up in front of the town’s main police station. It then set upon an adjoining branch of Banco do Brasil, shattering its windows and doors with crowbars.
“In a coordinated 3 a.m. attack, police said, other gang members hit a Banco Santander Brasil branch two blocks away. They detonated the dynamite in an attempt to blow up ATM machines and vaults in both banks. Such attacks have become commonplace in Brazil.”
“Ratings agency Moody’s warned South Africa again on Tuesday that growing government debt linked to bailouts of state firms would continue to pressure the country’s investment grade status.
“Moody’s was the last of the big three ratings agencies to give South Africa an investment-grade rating, so markets are sensitive to any pronouncement it makes on the fiscal and economic strength of Africa’s most industrialised economy.”
“Egypt is not on the verge of a severe economic downturn, the Cabinet has assured. News of a looming economic crisis as a result of terms of the International Monetary Fund (IMF) and increasing interest rates on debt is baseless, the Information and Decision Support Center (IDSC) said in a report Tuesday.”
“The Lebanese government has yet to disclose its budget for 2019 but protesters are already in the streets fearing the “difficult and painful” reforms it is expected to announce as it tries to get spending in control and rein in public debt.
“Retired army officers blocked several highways with burning tires on Tuesday, a preemptive warning to the government against any cuts to their pensions that might be part of its effort to reduce one of the world’s heaviest public debt burdens.”
“[Turkey] is experiencing its first recession in a decade. Last summer’s currency crisis, in which the Turkish lira lost 40 per cent of its value, has started to affect households through double-digit inflation, deteriorating living standards, and increasing unemployment.”
“[In the UK] Years of cuts to services and local councils in the name of post-financial crisis austerity have combined with welfare cuts, spiralling rents and inadequate social housing to tip growing numbers of families into distress. …
“…that grievances felt in many post-industrial cities in the north — that they feel abandoned…”
“The global financial system faces an existential threat from climate change and must take urgent steps to reform, the governors of the Bank of England and France’s central bank have warned, writing in the Guardian.
“In an article published in the Guardian on Wednesday aimed at the international financial community, Mark Carney, the Bank’s governor, and Villeroy de Galhau, the governor of the Banque de France, said financial regulators, banks and insurers around the world had to “raise the bar” to avoid catastrophe.”