“The world is sleepwalking towards a fresh economic and financial crisis that will have devastating consequences for the democratic market system, according to the former Bank of England governor Mervyn King…
““Another economic and financial crisis would be devastating to the legitimacy of a democratic market system,” he said.
““By sticking to the new orthodoxy of monetary policy and pretending that we have made the banking system safe, we are sleepwalking towards that crisis.”
“He added that the US would suffer a “financial armageddon” if its central bank – the Federal Reserve – lacked the necessary firepower to combat another episode similar to the sub-prime mortgage sell-off.””
“Economic volatility in 2019 has seen the number of profit warnings by UK-listed firms surge to its highest since the financial crisis…
“Profit warnings jumped on the back of Brexit concerns, with almost a quarter of firms issuing warnings citing Brexit as a key factor, according to new data from accounting firm EY.”
“Despite two decades of deepening entrenchment on both sides of the Catalan question, Spaniards would be mistaken if they were to welcome the clampdown on the region’s self-determination movement.
“For, in the fight currently unfolding in the streets of Catalonia, the quality and integrity of Spanish democracy is also at stake.”
“…the ECB is trapped or lost in a situation with an economy that is moving towards a low-growth situation, the central bank runs an extreme monetary policy and is facing an emerging internal fight about the monetary policy direction – this is close to a disastrous situation for one of the world’s leading central banks…”
“Lebanon is closer to a financial crisis than at any time since at least the war-torn 1980s as allies, investors and this week nationwide protests pile pressure on the government to tackle a corrupt system and enact long-promised reforms….
“Without a foreign funding boost, Lebanon risks a currency devaluation or even defaulting on debts within months, according to interviews with nearly 20 government officials, politicians, bankers and investors.”
“The political fallout of rare anti-government demonstrations is spreading in Azerbaijan, with the European Union issuing a warning and an opposition leader saying he was beaten up by riot police following his arrest on Saturday.
“An unathorized rally by hundreds of protesters demanding freedom of assembly, which has effectively been denied since the start of 2019, ended in the worst violence the Azeri capital has seen in years.”
“The world’s fourth largest car industry is now formally in crisis mode and massive job loss is feared to impact a 35 million people working directly or indirectly in car manufacturing. Many companies, such as Maruti-Suzuki, Tata Motors and Ashok Leyland have already introduced non-working days (forced leave without pay).
“Now however, India’s economy is slowing down, revealing the weaknesses of the system. When people stop paying and the shadow banks don’t have enough funding to reimburse the money they have loaned from regular banks, a financial crisis is only months away.”
“Japan’s exports contracted for a 10th straight month in September… Exports in September slumped 5.2 percent from a year earlier, Japan’s finance ministry data showed on Monday…
“The fall was larger than a four percent drop expected by economists and marked the longest run of declines in exports since a 14-month stretch from October 2015 to November 2016.”
“…the Bank of Japan is laying the groundwork for deepening negative interest rates, analysts polled by Reuters said, with two-thirds of respondents expecting the central bank to loosen monetary policy this month.”
“In Venezuela, a crumbling economy and the collapse of even basic state infrastructure means water comes irregularly — and drinking it is an increasingly risky gamble. …
““This is a potential epidemic,” said Jose María De Viana, who headed Caracas’s water utility, Hidrocapital, until 1999.”
Bond funds holding assets worth about $1.7tn could face difficulties in repaying investors promptly if volatility increases, according to the IMF, which warned that problems in fixed-income markets could potentially destabilise the global financial system.“
“The warning coincides with mounting fears that a dangerous pricing bubble has developed in fixed-income markets where bonds worth $15tn — about a quarter of the debt issued by governments and companies globally — are trading with negative yields.
“…Creditors, in effect, pay to hold debt. This bizarre reversal of normal practice has triggered alarm bells because bonds are a core holding for institutional investors worldwide.”
“‘It’s like putting an obese patient on a high-carb diet but forcing him to take pills to suppress the side effects,” says Elwin de Groot, head of macro strategy at Rabobank.
“The patient in question is the global economy and the diet of fry-ups and cheeseburgers represents the ultra-low interest rates that have led to a mountain of corporate debt.”
“Publicly, finance ministers and central bank governors have held off on raising fears that a global recession is coming — but in private, international and national officials are not nearly so certain…
““Our difference with the IMF baseline is that we assume [trade] policies will not improve,” he said.
“His concern, shared by many officials, is that any further rounds in the trade wars would confront policymakers with the unpalatable prospect of attempting to counter recessionary forces with a nearly-empty toolbox.
“Pinelopi Goldberg, the World Bank’s chief economist, came closest to articulating these fears in public.
““Policy is supposed to remove instability, instead it is suppressing old certainties. No one knows what tomorrow will bring,” she said.”
“My base case scenario is that the current regime of fiscal and monetary policy has become exhausted. This is despite the fact that they have already gone beyond any measure of conventionality or reason.
“Therefore, in order to meaningfully boost asset prices higher from the current nose-bleed level, central banks will need to move further into the realm of unorthodoxy by deploying massive amounts of helicopter money directly to the public.”
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