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Welcome to the First Global Economic Depression of Our Lifetimes

We could well be looking at multiple defaults, which in turn could lead to the global financial crisis that policymakers are currently struggling to avoid, compounding global economic woes even further.”

https://time.com/5837442/first-global-depression-our-lifetimes/


Economists are slashing forecasts for Canadian output again as the country haltingly reopens with large parts of the economy still shut down.

Canada’s economy will shrink by 42% annualized in the three months through June 30 from the prior quarter, according to the median forecast in a Bloomberg survey of economists. The magnitude is staggering, with the expected decline almost five times the largest quarterly contraction during the 2008-09 financial crisis.”

https://business.financialpost.com/pmn/business-pmn/economic-contraction-in-canada-seen-five-times-worse-than-2009


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These 7 economic signals flashed red this week, showing the continued damage being inflicted by coronavirus [on the US economy].”

https://www.businessinsider.sg/economic-indicators-show-continued-impact-coronavirus-recession-economy-downturn-lows-2020-5-2


Stunning aerial pictures show hundreds of aircraft parked in a desert ‘boneyard’ after airlines including Delta and United placed them in long-term storage as flight operations are cut to around 5% of normal operations due to the coronavirus.”

https://www.dailymail.co.uk/news/article-8327011/Hundreds-planes-parked-Arizona-desert-giant-boneyard-airbase-remain-storage.html


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Economic analysts are souring on the prospect of a quick recovery that would see the economy bounce back once the coronavirus pandemic is brought under control

““The worry and increasing likelihood is that the downside is becoming the baseline again,” said Beth Ann Bovino, S&P Global’s chief economist for the U.S.”

https://thehill.com/policy/finance/498090-hopes-dim-on-quick-economic-recovery


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America’s food banks — charities across the country that provide donated food for the hungry — are being pressed into service as never before as unemployment surges during the coronavirus crisis and many working-class and middle-class families seek help for the first time.

Feeding America, the largest US hunger relief organisation, representing 200 food banks across the country, said it had experienced a 70 per cent increase in those seeking food assistance since the crisis began. Roughly 40 per cent of the people wanting food are first-time visitors, it said. In April alone, the group said it served 433m meals.”

https://www.ft.com/content/fe657560-854d-4cbc-8ccd-b376483d034a


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Close to 800,000 Americans across the country may wind up homeless by the summer as the coronavirus pandemic forces unemployment figures to resemble numbers not seen since the Great Depression.”

https://www.dailymail.co.uk/news/article-8326541/800-000-people-end-HOMELESS-summer-COVID-19-unemployment-hits-14-7-cent.html


Post-Brexit talks have hit an impasse six weeks before a legally binding deadline expires ruling out any extension to the transition period.”

https://www.thetimes.co.uk/article/change-tack-or-we-won-t-make-a-brexit-trade-deal-david-frost-tells-michel-barnier-s6q25zg8c


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In its 21 years of official existence, the Eurozone has already been through two brutal crises — the Global Financial Crisis and one of its own doing, the Euro Debt Crisis — that nearly tore the bloc apart.

“Now, it is in the grip of another one that is already exacting a larger toll than the first two, despite having barely begun.”

https://wolfstreet.com/2020/05/17/third-mega-crisis-in-12-years-eurozone-economy-plunges-at-fastest-rate-on-record/


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Carmakers are negotiating with the EU and UK for subsidies to help boost demand for new vehicles, but campaigners are concerned that the stimulus could end up paying for pollution unless emissions restrictions are imposed.

“The carmakers argue that subsidies would help kickstart demand as lockdown measures ease and factories reopen, preventing tens of thousands of job losses amid a global slump in car orders.”

https://www.theguardian.com/business/2020/may/17/carmakers-press-for-eu-and-uk-subsidies-after-slump-in-demand


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Goldman Sachs expects India will experience its deepest recession ever after a poor run of data underscored the damaging economic impact of lockdowns in the world’s second-most populous nation.

Gross domestic product will contract by an annualized 45% in the second quarter from the prior three months…”

https://www.bloomberg.com/news/articles/2020-05-17/goldman-sees-worst-india-recession-with-45-second-quarter-slump


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Despite CPI growth, China’s greater risk remains low demand and deflation as the government seeks to speed up production before foreign markets recover and supply chains are restored.

“Figures released Friday suggest that production is picking up speed while consumption continues to lag behind.”

https://www.eurasiareview.com/18052020-chinas-economic-recovery-faces-deflation-risk-analysis/


China has asked trading firms and food processors to boost inventories of grains and oilseeds as a possible second wave of coronavirus cases and worsening infection rates elsewhere raise concerns about global supply lines.”

https://uk.reuters.com/article/us-health-coronavirus-china-food/china-urges-food-companies-to-boost-supplies-on-fears-of-further-covid-19-disruption-idUKKBN22T052


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Japan’s economy slipped into recession for the first time in 4-1/2 years, GDP data showed on Monday, putting the nation on course for its deepest postwar slump as the coronavirus crisis takes a heavy toll on businesses and consumers.

“The world’s third-largest economy shrank for the second consecutive quarter in the three months to March.” [In other words, Japan’s economy was contracting pre-coronavirus].

https://www.thehindu.com/news/international/japan-slips-into-recession-worst-yet-to-come-as-pandemic-wreaks-havoc/article31611770.ece


Profit at Japan’s regional banks may fall even more than forecast this fiscal year because the lenders haven’t fully accounted for the impact of the coronavirus-fueled economic slump on loan quality, according to Mitsubishi UFJ Morgan Stanley Securities Co.”

https://www.bloombergquint.com/business/japan-s-regional-banks-may-be-underestimating-profit-decline


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The COVID-19 economic crisis has increased the risk of defaults and restructurings of sovereign bonds, as it has coincided with the closures of mines, a hibernation in the tourism industry, and an oil price war that has decimated the oil markets.”

https://www.jdsupra.com/legalnews/covid-19-economic-crisis-impending-10326/


Ambulance workers are threatening to go on hunger strike in Russia, saying they have not received bonuses that President Putin promised for fighting coronavirus.”

https://www.thetimes.co.uk/article/coronavirus-russian-ambulance-crews-threaten-putin-with-hunger-strike-nhwgpfqsz


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Saudi Arabia is facing an unprecedented budget crunch because of the collapse of the oil markets and the global economic turmoil caused by the Covid-19 pandemic, which has reduced oil demand for the foreseeable future.

““I have no doubt, this is the end of an era. The era of the Persian Gulf having all this money is over,” said Bruce Riedel, a senior fellow at Brookings in Washington…”

https://www.theguardian.com/world/2020/may/18/the-end-of-an-era-oil-price-collapse-may-force-saudis-to-rein-in-arms-spending


The crash in international crude prices has not only burnt small Chinese investors who bought wealth management products from one of China’s largest banks but also a listed oil and gas firm that announced last week that it would default on a US$248 million bond.”

https://sg.news.yahoo.com/chinese-oil-firm-mie-defaults-102504803.html


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A large proportion of companies in Asia Pacific have been facing issues of unpaid receivables and late payments over the last three years, an industry survey found… Nearly 36% of respondents said they minimized exposure to less creditworthy customers, the most common method employed by companies to mitigate risks associated with trading at a time of heightened economic uncertainty, the survey found…

“Simply put, we consider this is the worst recession since WWII (World War 2),” Euler Hermes said in its report.”

https://www.cnbc.com/2020/05/18/asia-pacific-companies-face-unpaid-receivables-and-delayed-payments.html


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Dividend payouts could tumble by nearly $500 billion this year, a steeper drop than during the global financial crisis, as the worst global recession in decades is forcing companies to preserve cash.

“The damage to dividends could endure well beyond the coronavirus pandemic, analysts say, as companies around the world facing a historic collapse in revenue consider permanently shoring up their cash buffers.”

https://edition.cnn.com/2020/05/17/investing/dividend-payouts-after-coronavirus-recession/index.html


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“The blanket coverage by the Fed is broad, and that is driving the market. And expectations are that we’re going to have this nice V-shaped recovery and life is going to return to normal as we knew it before the pandemic. And my own view is that neither of those are likely to be true.

The recovery is unlikely to be V-shaped, and we’re unlikely to return to the pre-pandemic world. “

https://www.bloombergquint.com/global-economics/harvard-s-financial-crisis-experts-this-time-really-is-different


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“This is no time to be a country that relies heavily on tourism to keep its economy going. Combine that with a huge debt load and weak fiscal policies, and that’s a recipe for financial disaster…

Three countries have already defaulted on their debt this year: Argentina, Ecuador and Lebanon. More are at risk, according to Fitch Ratings.”

https://edition.cnn.com/2020/05/17/investing/stocks-week-ahead/index.html


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The covid-19 pandemic’s impact on hunger around the world could be worse than the financial crisis of 2007 and 2008 when food prices spiked calamitously, a leading food security expert warns.

“Unlike the scarcity of food during the crisis 13 years ago, the big issue this time is economic downturns hitting the ability of millions of people to afford food.”

https://www.newscientist.com/article/2243692-covid-19-pandemic-risks-worst-global-food-crisis-in-decades/


Read the previous ‘Economic’ thread here and visit my Patreon page here.

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