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The pandemic is further widening the fissures between the two largest economies while undermining the foundations of economies throughout the world.

“The responses of central banks and governments to the virus mean it will leave legacies of staggering levels of debt and governments’ intervention within already-leveraged economies, higher levels of unemployment and social stress and an unwinding, to some degree, of global supply chains…”

https://www.smh.com.au/business/the-economy/what-the-global-economy-will-look-like-after-the-pandemic-20200520-p54upp.html


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“Clearly, the timing of renewed trade tension could not be worse,” wrote economists from S&P Global Ratings in a research note earlier this month.

“”The threat of higher tariffs and the intensifying technology cold war could yet disrupt technology trade and investment, de-powering what still promises to be an engine for recovery in 2020.””

https://edition.cnn.com/2020/05/19/economy/us-china-trade-war-resume-coronavirus-intl-hnk/index.html


China’s decision to impose tariffs on Australian barley imports has highlighted how reliant some sectors are on Chinese demand, with wool producers now “particularly exposed” by the threat of a further escalation in trade tensions.”

https://www.theguardian.com/business/2020/may/20/australian-wool-producers-particularly-exposed-if-trade-tensions-with-china-rise


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“This time it’s different. China is the place where the pandemic began and, for all the triumphalism from Beijing, the Chinese economy is in no way back in business.

“The stimulus tools available during the GFC—cheap money from a shadow finance sector and large-scale infrastructure spending—don’t make sense this time because the finance sector is now its own source of risk, and infrastructure oversupply won’t deliver a healthy economy.

“More significantly, Chinese consumer confidence is broken.”

https://www.aspistrategist.org.au/china-wont-save-the-global-economy-this-time/


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The coronavirus lockdown has pummelled the US economy, with some 30m jobs destroyed and trillions of dollars of output and wealth lost.

“Compounding the havoc is an economic malady that has gone unnoticed: one of the most severe deflations in modern history. Unlike coronavirus, it shows no signs of abating.”

https://www.ft.com/content/c0cff3e0-913b-11ea-bc44-dbf6756c871a


U.S. homebuilding dropped by the most on record in April and permits for future construction tumbled, underlining fears that the coronavirus crisis would lead to the deepest economic contraction in the second quarter since the Great Depression.”

https://www.reuters.com/article/us-usa-economy/us-housing-starts-post-record-decline-permits-slump-idUSKBN22V21J


“…if the federal government doesn’t act… furloughs will turn into permanent layoffs and the country will face an extended period of high unemployment that will do sweeping and unrelenting damage to the economy—and the people and businesses in it.”

https://www.newsweek.com/coronavirus-recession-will-become-long-depression-unless-federal-policymakers-act-now-opinion-1504967


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…moribund companies in industries deeply scarred by the pandemic will just keep borrowing.

“Market watchers such as Deutsche Bank AG chief economist Torsten Slok fear that a new breed of so-called zombie companies — firms that don’t earn enough to cover interest payments and are kept alive in part by central bank largess — could have profound and painful consequences for everyone from workers to investors for years to come.”

https://www.bloombergquint.com/business/america-s-zombie-companies-are-multiplying-and-fueling-new-risks


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One has to regret Federal Reserve Chairman Jerome Powell’s seemingly partial diagnosis of our present daunting economic challenge, especially considering his key role in defusing the crisis.

“In Powell’s view, our economic predicament has nothing to do with the possibility that years of ultra-easy U.S. monetary policy might have contributed to the creation of worldwide asset and credit market bubbles.

“Rather, he seems to believe that our economic challenge is solely the result of the supply side shock delivered to the economy by the coronavirus pandemic. “

https://thehill.com/opinion/finance/498573-the-federal-reserves-everything-bubble


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Sweden’s highly contested response to Covid-19 left much of the economy open. Even so, the country is now headed for its worst recession since World War II.

“Scandinavia’s biggest economy will shrink 7% this year, Finance Minister Magdalena Andersson said on Tuesday. Shortly after she spoke, the debt office revealed an historic 30-fold spike in borrowing to cover emergency spending amid record job losses.”

https://www.bloombergquint.com/global-economics/sweden-in-very-deep-economic-crisis-despite-soft-lockdown


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“…UK environment secretary, George Eustice…acknowledged that only about a third of workers from eastern European countries who would normally come to the UK for the work were here already and only “small numbers” would continue to travel.

““One thing is clear and that is that this year we will need to rely on British workers to lend a hand to help bring that harvest home,” he said.”

https://www.theguardian.com/business/2020/may/19/quarantine-shortage-fruit-pickers-immigration-bill-coronavirus-britain


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The industrial group Rolls-Royce is to cut 9,000 jobs, almost a fifth of its workforce, as the coronavirus crisis takes its toll on the aviation industry.

“The jet engine manufacturer said it is targeting £1.3bn in annual cost savings to weather the protracted downturn caused by the Covid-19 pandemic that has grounded much of the world’s airlines.”

https://www.theguardian.com/business/2020/may/20/rolls-royce-to-cut-9000-jobs-worldwide-as-covid-19-takes-toll


“Recently the share prices of the UK’s largest banks have collapsed, in common with those of many other companies. Banks such as RBS, Barclays and HSBC have seen their share price fall to levels not seen since the 2008 financial crisis. Some market-watchers suspect the sellers know something we don’t…”

https://www.bbc.co.uk/news/business-52691369


The UK chancellor has warned of a “severe recession the likes of which we haven’t seen” as official figures showed a record rise in unemployment claims. Rishi Sunak told a parliamentary committee that there was “more hardship to come…””

https://news.sky.com/story/coronavirus-uk-jobless-claims-surge-by-856-500-in-april-11990753


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Post-Brexit talks with the EU have turned sour, after the UK escalated tensions by accusing Brussels of only offering a “low-quality” trade deal.

“Downing Street’s chief negotiator, David Frost, said the agreement on offer amounts to “unprecedented oversight” of laws and institutions from 1 January 2021.”

https://news.sky.com/story/brexit-trade-talks-have-turned-sour-as-uk-attacks-low-quality-deal-on-offer-11991307


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This’ll help cratering car sales.

European-built cars imported to the UK from 2021 are set to become around £1,500 more expensive after the government confirmed that these vehicles would be subject to a 10 per cent tariff from 1 January.”

https://www.thisismoney.co.uk/money/cars/article-8336985/European-cars-1-500-expensive-Brexit-10-import-tariffs.html


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Riot police were deployed in force as youths set cars ablaze in some low-income housing estates in the Paris suburbs overnight, online news reports and postings on Twitter showed on Wednesday, amid tensions heightened by the coronavirus lockdown.”

https://www.usnews.com/news/world/articles/2020-05-20/riot-police-deployed-as-youths-set-cars-ablaze-in-paris-suburbs


Spanish public debt rose in March to a record high of 1.224 trillion euros ($1.34 trillion), mainly lifted by the financing of government measures to smooth the impact of the coronavirus outbreak, Bank of Spain data showed on Tuesday.”

https://uk.reuters.com/article/spain-economy-debt/spanish-public-debt-rises-to-record-high-in-march-bank-of-spain-idUKL8N2D13NE


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Ueli Maurer [Swiss Finance Minister] has warned that the financial crisis following Covid-19 and the resulting instability in Europe are a danger for Switzerland.

“In an interview with public broadcaster RTSexternal link on Tuesday, he said that he is concerned about the repercussions on Switzerland of a possible debt crisis in certain countries, especially Italy.”

https://www.swissinfo.ch/eng/repercussions_swiss-finance-minister-concerned-about-covid-19-debt-crisis-in-europe/45771552


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Our analysis suggests that most Emerging Market economies will face a painful adjustment of fiscal balances in the aftermath of the COVID crisis

“Six countries will likely need to make especially painful adjustments relative to the projected 2021 outcome: South Africa, Saudi Arabia, Kenya, Nigeria, Brazil, and Ghana.”

https://voxeu.org/article/post-covid-dealing-emerging-market-debt-overhang


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Turkey was recovering from its first recession in a decade when the coronavirus hit. Now the economy is on the brink again, and President Recep Tayyip Erdogan is running out of options.

“With a risk of mass unemployment, a collapse in tourism and an unstable currency, “the situation is extremely bad”, said Atilla Yesilada, an economist at GlobalSource Partners think tank.”

https://middle-east-online.com/en/erdogan-running-out-options-save-economy


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Argentina is currently engaged in intense negotiations with its creditors over at least $65 billion in government debt… that is mostly in dollars, and mostly owned by foreigners.

“Argentina’s 45 million residents, as well as hundreds of millions of people on this planet, have a large stake in the outcome of these negotiations. With vital foreign exchange earnings plummeting in the world recession, how much will be used for essential imports such as medicine or food, and how much to pay off debt?”

https://www.nytimes.com/2020/05/19/opinion/argentina-debt-negotiation-coronavirus.html


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Ecuador said Tuesday it is closing several embassies and state enterprises to save money amid an economic crisis provoked by the coronavirus pandemic.

“”We will close … embassies and diplomatic offices,” President Lenin Moreno said in a speech on television and radio as he presented a plan to save more than $4 billion.”

https://news.yahoo.com/ecuador-close-embassies-state-firms-over-virus-crisis-150619905.html


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Isolationist Turkmenistan, which proudly claims to be COVID-19-free, has nonetheless been affected by the pandemic.

A recent closure of its borders due to pandemic concerns has halted imports, reportedly leading to food shortages.

“The provincial situation became so dire before the borders were reopened that, on April 4, residents in the city of Mary (190 miles east of Ashgabat) apparently marched on the local government headquarters to protest rising food prices.”

https://jamestown.org/program/food-shortages-in-turkmenistan-lead-to-rationing-in-state-stores/


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North Korea is probably having difficulty importing grain due to the COVID-19 pandemic, while continuing to experience a shortage in food production, South Korea’s Ministry of Unification said Tuesday.

““COVID-19 is likely to have significantly hampered North Korea in importing resources from outside,” a Unification Ministry official said.”

https://newsinfo.inquirer.net/1277578/covid-19-worsening-food-shortage-in-north-korea-unification-ministry


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Mass euthanasia of livestock, millions of gallons of dumped milk, piles of fresh vegetables left to rot in the sun: Images of farmers dumping their products stand in stark contrast to those showing mile-long lines for food banks.

“Over 36 million Americans are now unemployed, and food insecurity—which affected one in six Americans before COVID-19—will likely increase. Yet farmers say getting food into the hands of those who need it most is exceptionally difficult and often beyond their control.”

https://www.nationalgeographic.com/science/2020/05/covid-19-disrupts-complex-food-chains-beef-milk-eggs-produce/


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“…it would be truly extraordinary if governments locked down their economies into depressions to protect against a virus which is truly scary for inhabitants of nursing homes but should not be scary for the population at large, particularly for those aged under 50. Yet that is what will happen if these lockdowns persist in their present form for an extended period.”

https://grizzle.com/economic-lockdown-money-supply-growth/


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