“Minsky Moment” crises occur because investors, engaging in excessively aggressive speculation, take on additional credit risk during prosperous times, or bull markets.
“The International Monetary Fund has been issuing global warnings of high debt levels and slowing global economic growth, which has the potential to result in Minsky Moment crises around the globe…
“At some point, a reversion process will take hold. It is when investor ‘psychology’ collides with ‘leverage and the problems associated with market liquidity. It will be the equivalent of striking a match, lighting a stick of dynamite, and throwing it into a tanker full of gasoline.
“…the next “Minsky Moment” is inevitable. All that is missing is the catalyst to start the ball rolling.
An unexpected recession would more than likely do the trick.
Argentine Vice President Cristina Fernandez de Kirchner said on Saturday that the government will not pay “even half a cent” of its debt back to the International Monetary Fund before the country has exited recession.“
““The first thing we have to do in order to be able to pay is to exit the “recession,” Fernandez de Kirchner said.”
Italy’s central bank governor sees “significant” risks to the country’s fragile economy, with global headwinds such as the coronavirus outbreak adding to an already subdued outlook.“
““Gross domestic product growth will still be very low this year,” European Central Bank Governing Council member Ignazio Visco said on Saturday.”
The virus that has spread through much of China has yet to be confirmed in Africa but global health authorities are worried about the threat to the continent where an estimated 1 million Chinese now live, as some health workers on the ground warn they are not ready to handle an outbreak.”“
“African countries face “wall” of sovereign debt repayments. South Africa led the way for such borrowing in 1995, but since the global financial crisis in 2008, issuance has surged from neighbouring nations. Twenty-one African countries now have outstanding sovereign eurobonds…”
The Australian dollar has plunged to lowest point in more than a decade as the coronavirus outbreak sparked fears of a major economic slowdown in China.“
“The currency sunk to 66.71 US cents late on Monday morning, the weakest it had been since March 2009 at the height of the global financial crisis.”
Organizers scrambled on Sunday to shore up the Singapore Airshow, which is going ahead under a cloud of health and economic concerns after dozens of exhibitors pulled out of Asia’s largest aerospace gathering due to coronavirus fears.“
“Few deals are expected at the biennial event…”
““There currently is no advice from WHO to restrict travel or trade,’’ IATA said.
““But it is clear that demand has fallen on routes associated with China, and airlines are responding to this by cutting capacity for both domestic and international China.”
“IATA had earlier reported that 2019 was the worst year for [air] freight demand since 2009 and expressed concern about the impact of the coronavirus.”
Uncertainty about work resuming at factories in China is setting in, with provinces or cities posting different dates for an extended shutdown as the coronavirus outbreak continues to spread.“
“Authorities had initially said operations could pick up again on Monday, but the already-extended delay in reopening could be dragged out even further for many factories — including Apple’s largest manufacturer Foxconn.
“Even if businesses were up and running again, their workers would still have to fulfill quarantine requirements of around two weeks.”
“China’s consumer inflation hit a more than eight-year high in January as government restrictions on movement to stem the spread of the new coronavirus drove residents to stock up on essentials.”
Just as it looked like Beijing was starting to get a handle on its regional banking crisis, a much more severe threat is engulfing the world’s largest banking system as a deadly new virus hits the country’s economy.“
“The impact of the spreading coronavirus risks bringing to life the worst-case economic scenarios contained in China’s annual banking stress tests.”
[Some economists are] warning that if the virus continues to spread and Chinese activity remains deeply disrupted for months, a contraction of the global economy is not impossible, particularly as central banks have little effective monetary ammunition for emergencies.“
“There is a risk that an adverse feedback mechanism and limited space for policy response could push the global economy towards recession,” said Christian Keller, the head of economics research at Barclays.”