“In my 2010 book, Crisis Economics, I defined financial crises not as the “black swan” events that Nassim Nicholas Taleb described in his eponymous bestseller but as “white swans”. According to Taleb, black swans are events that emerge unpredictably, like a tornado, from a fat-tailed statistical distribution. But I argued that financial crises, at least, are more like hurricanes: they are the predictable result of builtup economic and financial vulnerabilities and policy mistakes.
“There are times when we should expect the system to reach a tipping point – the “Minsky Moment” – when a boom and a bubble turn into a crash and a bust. Such events are not about the “unknown unknowns” but rather the “known unknowns”.
“Beyond the usual economic and policy risks that most financial analysts worry about, a number of potentially seismic white swans are visible on the horizon this year. Any of them could trigger severe economic, financial, political and geopolitical disturbances unlike anything since the 2008 crisis…
“Financial markets, meanwhile, remain blissfully in denial of the risks, convinced that a calm if not happy year awaits major economies and global markets.”
The Federal Reserve has doled out tens of billions to calm the short-term lending markets after they went haywire in September. “
“But initiatives by the U.S. Treasury Department — to ensure it always has enough cash to pay its bills as the deficit soars to a trillion dollars — could make it harder for the Fed to prevent a repeat.”
“The build-up of corporate bonds has hit unprecedented levels since the 2008 financial crisis and created a global stock of outstanding debt with a lower rating quality and higher payback requirements compared with past cycles, the OECD said.”
Rail blockades have brought Canada’s manufacturing industry to a virtual standstill, and the industry will start seeing plant closures and temporary layoffs soon if it continues, the group that represents the industry says. “
“Rail and transport protests are hurting a key cog of Canada’s economy at a time when it can hardly afford the hit…”
“A Dubai-based operator of ports and terminals around the world is returning to full state ownership with a proposed transaction and a subsequent delisting from Nasdaq Dubai.
“This could be one of the latest signs that the oil-rich countries in the Middle East are still struggling to shore up budgets and finances in the aftermath of the 2014 oil price crash.”
Japan’s exports fell in January from a year earlier for the 14th consecutive month, and economists expect the coronavirus outbreak to weigh on demand in the months ahead. “
“The country’s exports fell 2.6% on year in January, the Ministry of Finance said Wednesday, compared with a 6.3% drop in December and 7.0% contraction forecast by a FactSet poll of economists.”
The coronavirus outbreak in China could be about to affect menus in Japan. “
“China is Japan’s biggest foreign supplier of vegetables, and imports have slumped. The agriculture ministry says imports of processed onions dropped 88 percent year-on-year in the first week of February. Leek imports were down 81 percent and carrots down 76 percent.”
COVID-19, has raced across the globe, infecting tens of thousands of people and killing more than 2,000, predominantly in China. “The illness, now officially labeled
“Countries have closed their borders to Chinese travelers; airlines have slashed flights and limited routes. Points of transit across Asia—train stations, bus depots, airports—have seen traffic plummet, and some are nearly deserted.”
“As the second-largest national economy in the world, China both lies at the heart of global supply chains and is a key consumer market relied on by manufacturers.
“The outbreak has opened up vulnerabilities in global supply chains.”
“European stock markets are set to open in positive territory Wednesday, helped by gains in Asia, as market participants expect central bank largesse to mitigate the damage caused by the outbreak of the coronavirus in China.
““Any investor concern around impact on demand globally from the virus will be offset by expectations that global central banks will ride to the rescue,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.”
“How can central banks and the outside world tell that their vaunted independence is under threat?
“In view of clouds over the world economy and controversy over whether monetary policy can counter lower growth, central bankers believe political pressure can become a major factor hindering their ability to fulfil their mandates.”
Mexico’s central bank cut interest rates to 7% last week, marking the 800th interest rate cut by a central bank since the Lehman Brothers’ bankruptcy in September 2008, Bank of America Global Research notes.“
“What’s happening: The number of rate cuts from central banks have picked up steam since last year when the global economy’s growth rate stumbled to its slowest since the financial crisis.”
“It is not unusual for these organizations [like the World Bank and IMF] to be optimistic: after all, they do not want to be seen as naysayers, or prophets of doom, especially if their pronouncements are later denounced as self-fulfilling prophecies.
“But ‘talking up the economy’ can have grave consequences, as with the 2008-2009 global financial crisis (GFC). Then, the IMF revised its forecast upward in July 2007, a month before the US ‘sub-prime’ mortgage crisis morphed into the worst global downturn since the Great Depression of the 1930s.
“Meanwhile, the OECD was confident that any US ‘soft-landing’ would be offset by robust European economic performance. Such forecasts fostered a false and ultimately dangerous sense of invulnerability and complacence before the storm broke.”