“The world stands on the brink of a food crisis worse than any seen for at least 50 years, the UN has warned as it urged governments to act swiftly to avoid disaster.
“Better social protections for poor people are urgently needed as the looming recession following the coronavirus pandemic may put basic nutrition beyond their reach, the UN secretary general, António Guterres, said on Tuesday.
““Unless immediate action is taken, it is increasingly clear that there is an impending global food emergency that could have long-term impacts on hundreds of millions of children and adults,” he said. “We need to act now to avoid the worst impacts of our efforts to control the pandemic.””
“The head of the International Monetary Fund called on private creditors to join the Group of 20 in providing debt relief for the world’s poorest nations, saying that the alternative to suspension and restructuring is defaults.
“Failure to provide relief and restructuring “would lead to inevitably a much worse option, which is disorderly defaults,” Georgieva said.”
“The Luanda airport is just one of hundreds of megaprojects that have supercharged African economies over the past decade. Angola alone has built Kilamba, a satellite city outside the capital that’s home to 80,000 people, two other airports, a state-of-the-art library that was abandoned halfway through construction, and four soccer stadiums seating as many as 50,000 spectators. Across the continent, governments have spent at least $77 billion annually since 2013, erecting everything from critical infrastructure such as bridges and hospitals to sumptuous presidential villas and soaring monuments celebrating national heroes.
The building binge has been fueled by at least $600 billion in loans, leaving African governments struggling with record debt. The obligations were manageable—barely—when countries in the region were expanding by as much as 10% annually. But with the coronavirus pandemic shutting down trade and hammering commodity prices, the debt bill threatens to unravel years of progress in fortifying economies and fighting poverty.
“South Africa will not be spared a global solvency crisis… The problem is that balance sheets have been impaired for households, businesses and governments
https://www.businesslive.co.za/bd/opinion/2020-06-09-sa-will-not-be-spared-a-global-solvency-crisis/
“The coronavirus pandemic has dragged the UK into the “most severe economic downturn in modern times” with the economy set to contract over seven per cent this year, new forecasts suggest.
“[It] is unlikely to fully recover from the impact of Covid-19 until a vaccine or effective treatment for the virus is available…”
https://www.cityam.com/coronavirus-uk-economy-set-for-most-severe-downturn-in-modern-times/
“Britain must be braced for widespread riots this summer, a government adviser says, warning poorer people and areas will be hit harder by the coronavirus fallout.
“Police and the government are being urged to prepare now for the risk of “serious public disorder” on the scale of the 2011 riots…”
Well, this is just a tiny bit creepy:
“Tony Blair has called for governments around the world to give each resident a digital identity to enable the resumption of normal activity and ensure retraining for citizens to promote economic recovery.”
“German exports tumbled 24% month-on-month in April to 75.7 billion euros ($85.5 billion), official data showed on Tuesday, June 9, as Europe’s top economy felt the full effects of coronavirus lockdowns worldwide.
Compared with a year earlier, exports slumped 31.1% in April – “the biggest fall in a single month since foreign trade statistics began in 1950,” the federal statistics authority Destatis said in a statement.”
https://www.rappler.com/business/263353-germany-exports-imports-april-2020
“European Central Bank officials are drawing up a scheme to cope with potentially hundreds of billions of euros of unpaid loans in the wake of the coronavirus outbreak, two people familiar with the matter told Reuters…
“The ECB declined to comment on whether it was working on a bad bank scheme.”
“The European Central (ECB) Governing Council member Olli Rehn said on Tuesday, deflation risks are elevated in the euro area.”
https://www.fxstreet.com/news/ecbs-rehn-deflation-risks-are-elevated-in-euro-area-202006090916
“Japan’s machinery orders slumped in April at their quickest pace in nearly two years, as a drop in demand and company profits caused by the coronavirus pandemic paralysed businesses spending.
“Separate data showed May wholesale prices fell at the fastest annual pace in nearly four years, keeping alive market fears Japan may slide back into deflation.”
https://finance.yahoo.com/news/japans-machinery-orders-wholesale-prices-023622763.html
“China’s producer prices fell by the sharpest rate in more than four years, underscoring pressure on the manufacturing sector as the COVID-19 pandemic reduces trade flows and global demand.”
“Collapse in Gambling Totally Crushes Macau’s Overall Economy…
“Other places so dependent on tourism face a similar fiasco. But Macau had already been badly hit by China’s crackdown on corruption and capital flight.”
https://wolfstreet.com/2020/06/09/collapse-in-gambling-totally-crushes-macaus-overall-economy/
“A year ago, Hayman Capital Management’s Kyle Bass wrote about “the quiet panic in Hong Kong” and warned of an “impending crisis” in the region.
“Now, amid mounting unrest, he’s putting his clients’ money — and then some — on a bet that the local currency will collapse.”
“Too big to fail is a saying we have not heard too often since big overseas banks were rescued with taxpayers’ money during the global financial crisis. Perhaps “too important to fail” is a more apt saying about the nearly HK$30 billion (US$3.87 billion) government bailout of Cathay Pacific Airways announced on Tuesday.
“There was no real alternative.”
“Global aviation body the International Air Transport Association (IATA) today said that the coronavirus crisis will see the world’s airlines make record losses of over £$100bn over 2020 and 2021.
“At a press conference this afternoon, director general Alexandre de Juniac said: “The losses this year will be the biggest in aviation history—over $84bn in 2020…”
https://www.cityam.com/airlines-face-84bn-loss-in-worst-year-in-aviation-history/
“India is not simply a victim of the havoc wrought by the pandemic. Its problems predate the virus.
“One crucial weakness is a slow-burning crisis in the financial system: a long history of bad lending decisions and poor governance has contributed to deep pain at banks, shadow banks and mutual funds.”
https://www.ft.com/content/16ca035b-72ae-4e38-8843-b39485a22fc6
“Saudi financial support to Yemen’s economy, worth over $2.2 billion since March 2018, has been crucial in helping Yemen to escape economic collapse.
“With this financial support coming to an end, and no alternative financing in place, Yemen could see the riyal lose almost half its value over the coming six months…”
“Occidental Petroleum Corp. is reviewing options for its Middle Eastern assets as it seeks ways to reduce its debt pile, people familiar with the matter said.
“Houston-based Occidental is considering reducing its stakes in oil and natural gas fields in Oman, according to the people, who asked not to be identified because the information is private.”
https://www.worldoil.com/news/2020/6/9/oxy-debates-selling-down-middle-east-assets-to-reduce-debt
“The U.S. shale oil industry may collapse due to the sharp fall in oil prices because of coronavirus, a new influential report predicts.
The demand and price of oil tumbled due to the economic slowdown and has since begun to recover, but Australian think tank the Institute for Economics and Peace (IEP) warns a low price will [also] affect political regimes in the Middle East, especially in Saudi Arabia, Iraq and Iran.”
“The coronavirus crisis and a very mild winter in the northern hemisphere have put global natural gas demand on course for the biggest annual fall on record, the International Energy Agency said in its annual outlook on Wednesday.
“Global gas demand is expected to fall by 4%, or 150 billion cubic meters (bcm), to 3,850 bcm this year – twice the size of the drop following the 2008 global financial crisis.”
“A supply chain finance program is commonly set up by a corporate buyer with a bank or alternative provider to allow suppliers to get paid early for an invoice, usually at a discount. This method, known also as payables finance or reverse factoring, is particularly valuable for SMEs, who can access more affordable funding because the cost is based on their buyer’s credit rating.
“As cash-strapped companies seek liquidity during the coronavirus crisis, demand for this type of financing has surged.. Credit rating agencies, meanwhile, warn that supply chain finance poses certain risks, which could be exacerbated during the pandemic.”
“Banks face “very significant losses” as borrowers default in the recession and markets will need reform once the pandemic ends, a top Bank of England official warned as he revealed that hedge funds brought the world to the brink of a financial crisis in March.
“Sir Jon Cunliffe, deputy governor for financial stability, said that banks have functioned well and proved resilient, but the same could not be said for the shadow banking sector of hedge funds, insurers and money markets funds…
“He revealed that highly leveraged hedge funds, which arbitrage differences in Treasury bond and derivative prices, became “an amplifier of stress” as companies sold Treasuries in a dash for cash early in the pandemic.”
“Price moves triggered margin calls that made hedge funds forced sellers of $90 billion of Treasuries in March, driving prices lower, which in turn put pressure on pension funds, insurance companies and ultimately super-safe money market funds.”
“A market rally built on shaky foundations – “Recovery in equity prices is driven in part by absence of alternatives.
“…While it is not the purpose of a central bank to support equity investors, any suggestion that policy will not remain dovish for the foreseeable future could lead to a sell-off… it is far too soon to declare the economic crisis over, whatever equity investors might think.”
https://www.ft.com/content/2f0c5f56-aa5a-11ea-a766-7c300513fe47
“The coronavirus pandemic is likely to lead to greater political instability and unrest around the world, according to a new report from the Institute for Economics & Peace (IEP), released today…
“Recent days have seen political protests gather momentum in many western countries…
“Such demonstrations are likely to become more frequent in future, according to Serge Stroobants, director for Europe and the Middle East and Africa at the IEP.”
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