“After the 2007-09 financial crisis, the imbalances and risks pervading the global economy were exacerbated by policy mistakes. So, rather than address the structural problems that the financial collapse and ensuing recession revealed, governments mostly kicked the can down the road, creating major downside risks that made another crisis inevitable. And now that it has arrived, the risks are growing even more acute.
“Unfortunately, even if the Greater Recession leads to a lacklustre U-shaped recovery this year, an L-shaped “Greater Depression” will follow later in this decade, owing to 10 ominous and risky trends.”
“President Donald Trump on Tuesday tried to calm mounting fears of a food crisis by telling Americans ‘there is no shortage of meat.’
“…The president took to twitter to try and calm concerns, retweeting a post from The Counter, a nonprofit that examines the nation’s food supply.”
“The Fed hasn’t even started buying corporate bonds.
“Yet the mere perception of Fed backing helps risky firms borrow anew… The Fed encourages extremely risky behavior then bails out the risk takers… , this moral hazard bailout is the Third Major Transfer From the Middle Class to the Wealthy in 20 years.”
https://www.fxstreet.com/analysis/no-junk-debt-is-too-risky-thank-you-fed-202004281901
“…in the US… corporate debt rose from $3.3tn before the crisis to $6.5tn last year. There has been a marked decline in the quality of that corporate debt because investors’ search for yield in a period of ultra-loose monetary policy has tilted the balance of power in favour of debtors against creditors…
“A big driver behind this accumulation of corporate debt has been the share buyback phenomenon.”
https://www.ft.com/content/b3817772-ff39-42f5-af0e-4744fa07389b
“According to an Associated Press analysis of U.S. Department of Labor data, nearly 7 out of every 8 Floridians who managed to file claims during the three weeks from mid-March until early April were waiting to have them processed – the worst rate in the country.”
“The Canadian economy is likely in its deepest recession on record and will only recover modestly over the coming year as it takes a direct hit from the coronavirus outbreak and a collapse in oil prices, a Reuters poll of economists showed.”
“…if you want real confirmation that the world is now on a war footing look no further than the bond markets. Statistically, the level of borrowing now being incurred by western governments is comparable only to wartime financing regimes…
“[But] time round, the borrowing is being incurred in the context of an enforced curtailment of production.”
“France’s economy is set to shrink by 8.6% this year in Bloomberg Economics’ central forecast…
“The damage to the economy and public finances would then last much longer, with GDP plunging 14.4% in 2020 and debt shifting to an upward path above 120% of GDP from 2021 -– following Italy’s trajectory.”
“Rating agency Fitch cut Italy’s credit rating to “BBB-minus” on Tuesday, just one notch above junk, saying the downgrade reflects the impact of the coronavirus pandemic on the euro zone’s third largest economy…
“Fitch changed Italy’s outlook to stable from negative.”
““The magnitude of Hong Kong’s economic recession in the first quarter could be worse than 2008’s global economic tsunami, or the impact of the Asian financial crisis [1997-1998],” Chan said.
“Chan also said the pandemic’s impact to the city’s economy had been “more serious and long-lasting” than thought.”
“Over the next 12 months, around 2.5 trillion yuan ($353.1 billion) of new non-performing loans will be generated in China’s banking system…
“…according to CLSA Ltd. Employees and owners will feel the pain and household incomes will be hit, weakening consumer credit.”
“To fight the coronavirus, developing economies from Colombia to Indonesia are turning to a playbook that’s become familiar in the rich world since 2008: central banks are buying government debt…
“The danger for emerging markets, which often rely on short-term foreign capital, is that they’ll end up scaring it away — and reviving inflation — by flooding the system with newly created cash.”
https://finance.yahoo.com/news/copying-rich-world-virus-plan-010000575.html
“Meanwhile, global economic conditions that raised Latin America two decades ago now conspire against it. The virus’s effect on demand for raw materials is acute, particularly for the major oil producers in the region…
“Investors are now fleeing emerging markets… Low interest rates mean that the region’s currencies are no longer attractive to carry traders, and so they have sold off drastically. Brazil’s real is at an all-time low. Once inflation is taken into account, the decline of the Mexican peso has been even more severe.”
“Sudan’s annual inflation rate has topped 80%, the government said on Tuesday, April 28,
“…the country grapples with an acute economic crisis…
“Many Sudanese still queue for hours to buy staple foods or gas up their car.”
https://www.rappler.com/business/259352-inflation-rate-sudan-march-2020
“At least a dozen Lebanese banks across the country have been torched and vandalised during the second consecutive night of angry protests fuelled by frustration over the national currency’s unfettered depreciation.
“Hundreds of demonstrators took to the streets and dozens were arrested by security forces.”
https://www.aljazeera.com/news/2020/04/banks-targeted-lebanon-night-molotov-200429060510405.html
“Research firm DigiTimes has published a report that projects a massive 15% decrease in global smartphone sales, bringing the numbers down to 1.15 billion units. Brands that have a larger presence in the United States and Europe, where lockdown was implemented and are most likely to experience recession this year, will bear the maximum brunt.”
https://www.techradar.com/in/news/worldwide-smartphone-sales-in-a-slump
“Car sales have collapsed around the world as the coronavirus pandemic has drained demand, with carmakers braced for significant losses.”
https://www.cityam.com/nissan-set-for-first-loss-since-2008-financial-crisis/
“Benchmark oil prices are close to record lows, but the rates you see on screens are not telling the whole story.
“With the coronavirus pandemic expected to cut oil demand by as much as one-third in April and May, and with storage tanks around the world fast filling up, crude prices in the physical market have fallen even faster.”
https://www.ft.com/content/934f1ea9-5f96-43a7-94dc-a0cdbfde53f5
“Alongside a more cautious consumer we are likely to see slower business spending as ongoing uncertainty will inhibit the willingness to make major investment commitments.
“Higher savings and lower investment would reinforce slower growth and lower interest rates.”
https://www.cityam.com/economies-in-free-fall-as-hopes-fade-for-a-v-shaped-recovery/
“What will life look like in the post-pandemic world? More to the point, will the surge in government debt pose any problems? According to experts, the answer to this question is a resounding “yes” as excessive debt causes economic growth to decline.”
“The scale of the financial disarray reflects in part the size of the economic shock. It is also a reminder of what the late Hyman Minsky taught us:
“…debt causes fragility. Since the global financial crisis, indebtedness has continued to rise.”
https://www.ft.com/content/098dcd60-8880-11ea-a01c-a28a3e3fbd33
“While the stock market euphorically front-runs the Fed and a V-shaped recovery, the reality is the crash has only just begun. To understand why, look at income and debt. Income – earned and unearned – is in free-fall, while debt – which must be serviced by income – is exploding higher.
“Bailouts are not a permanent substitute for income.”
https://seekingalpha.com/article/4340437-crash-only-just-begun
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