“The world’s already huge debt load smashed the record for the highest debt-to-GDP ratio before 2019 was even over.
“In fact, it broke that record in the first nine months of last year. Global debt, which comprises borrowings from households, governments and companies, grew by $9 trillion, to nearly $253 trillion, in the first nine months of last year, according to the Institute of International Finance.
“That puts the global debt-to-GDP ratio at 322%…
“Such massive worldwide debt is a real risk for the global economy, especially because the IIF expects levels to rise even further in 2020.
“”Spurred by low interest rates and loose financial conditions, we estimate that total global debt will exceed $257 trillion” in the first quarter of 2020, the IIF said.
“The Federal Reserve lowered interest rates three times last year, and the European Central Bank’s benchmark rate is still at its post-financial crisis lows.
“Despite favorable borrowing conditions, the refinancing risk is massive.”
“Recession fears are again on the rise, with the vast majority of chief financial officers bracing for an economic downturn in 2020…
“…historical data shows that trends of declining optimism among America’s financial executives can sometimes be a harbinger for looming market sell-offs.”
“Consumer debt is within touching distance of $2 trillion at America’s biggest banks, lead by credit card spends. Wall Street is celebrating… Wall Street expects big banks to post big profits on the interest from consumer credit balances soaring at unnerving record highs.
“Is this the ‘macroprudence’ America was promised after the last financial crisis? Or reckless brinkmanship in the face of a looming recession?”
“Argentina’s peso, the world’s weakest currency for the past two years, has nowhere to go but down as the nation struggles to rein in runaway consumer price increases, according to the currency’s most accurate forecaster in 2019’s fourth quarter.”
“Almost half of UK businesses expect there will be an economic recession this year, while one in three believes the contraction could be as much as 4 per cent, according to a survey of senior directors.
“The research, based on 250 senior executives at medium-large sized businesses across the UK, also revealed that well over a third (37 per cent) also expect to see a global recession or international global crisis in 2020.”
“A flood of poor data hit the headlines this morning, threatening to plunge the UK into recession. With the global economy on thin ice, Britain may be the black swan event that brings it all crashing down.
“As the 6th largest economy on the planet, Britain has the ability to trigger a domino effect on the global stage. Its close ties to Germany (4th largest economy), France (7th), and Italy (8th) contribute to the systematic risk underlying the markets.”
“Matteo Salvini, Italy’s opposition leader, is agitating against the ESM treaty …In 2012 eurozone leaders vowed to break the “doom loop” by which national governments and their banking systems could drag each other down…”
“All roads to solving the political and economic crises in Lebanon appeared to be blocked on Monday.
“Queues reappeared in front of banks after the weekend, as people waited to withdraw the maximum amount allowed. The permitted amount for withdrawals has been decreasing weekly and has now reached $100.”
“China’s apparent demand for oil — that’s production plus net imports and changes to stockpiles — may grow about 2.4% this year to 671.3 million tons, the researchers said, compared to a 5.2% rise for 2019.
“It would be the slowest pace since the global financial crisis of 2008, according to historical data from BP Plc, and a potential headwind for global prices given China’s heft in the market.”
“With interest rates at historic lows central banks are… running out of the ammunition needed to combat a downturn.
“Debt levels have risen globally since 2010. The ratio of debt to global GDP rose from 120% in 1970 to just over 200% in 2010 and now stands at over 230%. Previous periods of rapid debt accumulation ended in financial crises.
“These all add up to serious headwinds, and risks, for the global economy.”
“A depressing consensus prevailed among economists at the recent American Economic Association annual meetings: the developed world is stuck with low growth, low inflation and low interest rates for years to come. Even worse, there is no consensus on why.“
““Debt is “the match that lights the fire of every crisis”, in the words of Aaron Ross Sorkin, chronicler-in-chief of the meltdown which nearly collapsed the world’s financial system more than a decade ago…
“Experts say the biggest potential flashpoints are in the world’s two largest economies.
“In China, the debt mountain of state-backed companies has soared and defaults are on the rise. In the US, the stock of leveraged loans – the high-risk credit offered to debt-laden companies which carries a higher chance of default – has shot past the trillion-dollar mark.”
“As things stand, the next recession may be impossible to get out of. And the odds of avoiding a recession are low.
“The only way out is for the Fed to guarantee inflation “whatever it takes.” Nothing else has worked. So why not try a more active fiscal policy? Why not load the helicopters with cash and dump it out over Main Street?
“…In short, helicopter money could have far less potency and far greater unintended negative consequences than its supporters expect.”