“When the financial system was about to collapse in 2007-08, central banks were quick to step in and to buy falling assets. This avoided a complete economic meltdown. However, at present on world financial markets, monetary policy is not combating risk but adding to it. Central banks have become major creators of possible economic shocks.
“Highly accommodative monetary policy can contribute to crisis through excessive debt. This happened in 2007-08. Inordinately easy monetary policy, with long-running negative interest rates in real terms, allowed too much leverage. Eventually, asset bubbles started to burst. We are facing a similar problem today. Global non-financial debt has grown 40% since the crisis, and debt quality has deteriorated.”
“Consider that the four big U.S. bank holding company swaps dealers:
“Citibank, JPMorgan Chase, Goldman Sachs and Bank of America handle close to 90% of U.S. swaps trades, representing a combined notional value of $300 trillion, while consumers stagger under debt and defaults mount higher than pre-2008.”
Personal insolvencies in Canada increased last year to the highest level and at the fastest rate since the financial crisis while business insolvencies rose for the first time in nearly two decades, government figures show.“
“The Office of the Superintendent of Bankruptcy reported Monday 137,178 Canadians filed for bankruptcy or modified repayment terms with creditors last year, a 9.5 per cent increase over 2018.”
Puerto Rico’s fragile economy is facing an uncertain future after the island’s governor rejected a settlement announced late Sunday with bondholders that would reduce the U.S. territory’s public debt by 70%.“
“The settlement is the biggest one to date since the island’s government announced in 2015 that it was unable to pay its more than $70 billion public debt load and filed for the largest U.S. municipal bankruptcy in May 2017.”
It’s becoming ever clearer that eurozone manufacturing is in recession even if the eurozone economy as a whole is just about managing to keep growing. “
“This isn’t a problem that really has any solution. There are no policy levers to pull here to solve it.”
Even before the coronavirus outbreak, troubles have been coming to the European economy not as single spies but in battalions. “
“Worse yet, these troubles have come at a time that the European Central Bank is running out of monetary policy ammunition… All of this does not bode well for either the European or the global economies…”
This issue [dwindling auto sales globally] pre-dates the Coronavirus:
“Sale of passenger cars, a key barometer of vehicles sales, continued to decline in November despite significant discounts by automakers.
“This indicates that the sector is yet to recover from the worst auto slowdown in India in more than a decade.”
“”Even if we open, there won’t be any business,” said Li Yinping, a cocktail bar owner in Beijing, who says staff from outside the capital are holding off on returning.
“Across Beijing and in cities around the nation, many small shops run by out-of-towners remain locked up — transport restrictions and official advice to stay home dissuading them from travelling back to work.”
Nissan is the latest car maker to temporarily shut one of its factories as it can’t get parts from China. “
“The firm will halt production for two days at a plant in Japan which makes the Serena and X-Trail models. Global car brands are facing similar disruptions…”
The Australian dollar tumbled to its weakest level since the financial crisis as investors continued to weigh the impact of the coronavirus on economic growth in China, Australia’s biggest trading partner. “
“The currency, typically regarded as a proxy for Chinese economic growth, fell to the lowest level against the greenback since March 2009.”
The ongoing coronavirus outbreak could cause the biggest slowdown in global economic growth since the 2008 financial crisis, according to analysts at UBS… The bank’s analysts are expecting a “sharp drop” in global growth to around 0.6% for the first quarter…”“
[Bear in mind that although 0.6% is a positive reading, the global economy is in recession when growth falls below 3%].
The coronavirus epidemic could spread to about two-thirds of the world’s population if it cannot be controlled, according to Hong Kong’s leading public health epidemiologist…“
“Even if the general fatality rate is as low as 1%, which Leung thinks is possible once milder cases are taken into account, the death toll would be massive.