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Major gaps in the international debt restructuring framework are increasing risks of a systemic sovereign debt crisis, International Monetary Fund officials warn… the IMF says not enough has been done to prevent holdouts from derailing debt restructuring processes.

“Senior IMF officials, including managing director Kristalina Georgieva, say reform of the international debt architecture is urgently needed.

https://www.centralbanking.com/central-banks/financial-stability/7690996/world-faces-systemic-debt-crisis-imf-warns


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Massive Layoffs Are Underway Across the U.S., Threatening the Already Frail Recovery:

“…employment gains from reopening were easy [in the US]. Now, companies that are suffering deeper fundamental impacts from the pandemic—in sectors like travel, hospitality and energy—are now adjusting to a new normal. In many cases, that means permanent cuts.”

https://time.com/5895669/pandemic-layoffs/


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The jobs market is far bleaker than the headline stats show:

“Amid the pandemic, workers have been forced from full-time jobs into part-time positions out of necessity; others have not searched for a job in the past month because of availability, skill or personal reasons; some have put their job-searches on hold within the past four weeks despite wanting to work; and others have put their job-search on hold altogether over the past 12 months.

“BLS excludes all of these millions from its tally.”

http://ftalphaville.ft.com/2020/10/01/1601589803000/The-jobs-market-is-far-bleaker-than-the-headline-stats-show-/


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Credit-rating agency Moody’s Investors Service on Thursday downgraded New York City’s debt one notch, citing “substantial financial challenges,” faced by the metropolis amid the worst pandemic in more than a century.”

https://www.marketwatch.com/story/new-york-citys-387-billion-debt-gets-a-downgrade-by-moodys-as-it-faces-lasting-economic-economic-consequences-from-pandemic-2020-10-01


A trio of Democrat-run U.S. states could go deeper into debt with billions of dollars in new issuance to plug holes in their coronavirus-hit budgets, if a new round of federal aid fails to materialize this year.”

https://uk.reuters.com/article/us-health-coronavirus-states-debt/u-s-blue-states-build-debt-stockpiles-as-virus-aid-is-stymied-idUSKBN26M7DN


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As big U.S. commercial banks close their books on the third quarter, analysts expect them to report a 30% to 60% plunge in profits on the year-ago period due to the pandemic-induced recession and near record low interest rates.

“That slump in third quarter net income comes even though lenders are not going to make outsized provisions for expected loan losses as they did in the first and second quarters.”

https://in.reuters.com/article/usa-banks-results-preview/big-u-s-banks-to-report-profit-plunge-as-pandemic-recession-takes-hold-idUSL1N2GQ1VZ


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Corporate America, city governments and federal and local law enforcement across the country are making plans to deal with political instability, civil unrest and violence around the upcoming presidential election.

“Concerns range from isolated violent incidents to a long stretch of mass protests, violent confrontations between extremists and widespread property damage, if the outcome of the election remains unclear or is hotly contested for weeks or months.”

https://edition.cnn.com/2020/10/01/politics/extremism-violence-election-preparations-invs/index.html


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If Democratic candidate Joe Biden becomes president next January, mending U.S. trade relations won’t be anywhere near the top of his to-do list.

“He has stated unequivocally that he would not enter into any new trade agreements “until we’ve made major investments here at home, in our workers and our communities.””

https://foreignpolicy.com/2020/10/02/biden-trump-trade-wars-election-2020/


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“…whoever wins the November election will be forced to consider a much more active approach to bilateral relations with Mexico. For the United States, it is vitally important that Mexico does not fall into economic and financial crises as it has done so often in the past

“It is fair to say that nobody north or south of the Río Grande wants to see a repeat of the 1994 peso crisis…”

https://thehill.com/opinion/finance/518706-three-reasons-washington-should-care-about-mexicos-meltdown


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It’s a ghost town’: City of London market reacts to Covid slump:

““Hibernating through the winter is not an option for our economy,” warned Catherine McGuinness, policy chair at the City of London Corporation, the Square Mile’s governing body and landlord of Leadenhall market. “We are building up an economic crisis which has the potential to impact more people than the health one.

“It is vital that we protect livelihoods as well as lives.””

https://www.theguardian.com/business/2020/oct/03/city-london-market-covid-leadenhall-boris-johnson


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Nearly 300,000 jobs in the UK’s ailing hospitality trade will be lost unless the government moves quickly to save them with a sector-specific bailout, some of the industry’s largest pubs and restaurant groups have warned the prime minister.”

https://www.theguardian.com/business/2020/oct/02/uk-hospitality-industry-fears-300000-job-losses-unless-pm-helps-now


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The euro area’s seasonally adjusted unemployment rate rose for the fifth consecutive month in August, reaching a level of 8.1%, according to Eurostat

“Spain had the highest jobless rate in August among countries reporting data at 16.2%.”

https://www2.staffingindustry.com/eng/Editorial/Daily-News/Europe-Euro-area-jobless-rate-rises-for-fifth-consecutive-month-in-August-to-8.1-55342


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The eurozone is sliding further into a debt-deflation trap, risking a protracted economic depression in the southern countries and a slow-motion insolvency crisis

““The European Central Bank has completely lost control of the inflation process. It is very serious,” said Professor Ashoka Mody, the International Monetary Fund’s former deputy director in Europe…

https://www.telegraph.co.uk/business/2020/10/02/deepening-deflation-pushes-southern-europe-closer-debt-spiral/


The pile of negative yielding euro zone government bonds rose in September to just over 6 trillion euros from around 5.4 trillion a month earlier, Tradeweb data showed on Friday.”

https://finance.yahoo.com/news/euro-zones-negative-yielding-debt-070523426.html


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The European Central Bank has identified several scenarios that would require it to launch a digital euro and said it was confident of overcoming any challenges as it started a public consultation on the idea…

““A digital euro would preserve the public good that the euro provides to citizens: free access to a simple, universally accepted, risk-free and trusted means of payment,” the ECB said.”

https://www.ft.com/content/b6f0c233-0b35-45d1-896f-1c6599558d9b


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Governments trying to contain the resurgence of the coronavirus pandemic are facing increased political opposition to the measures they think are necessary to control an alarming new wave, with the number of new infections nearing all-time-highs in many countries.”

https://www.marketwatch.com/story/protect-the-economy-or-the-population-the-coronavirus-dilemma-facing-governments-as-protests-escalate-2020-09-30


Hundreds of Small Protests Mushroom Across Israel Over ‘Draconian’ Restrictions.”

https://www.haaretz.com/israel-news/.premium-hundreds-of-small-protests-mushroom-across-israel-over-draconian-restrictions-1.9201738


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Venezuela’s Food Chain Is Breaking, and Millions Go Hungry:

A report found 13% of children under 5 are stunted; oil-rich nation is ‘on the edge of an irreversible catastrophe’”.

https://www.wsj.com/articles/venezuelas-food-chain-is-breaking-and-millions-go-hungry-11601544601


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The second of three ships loaded with gasoline from Iran approached fuel-starved Venezuela on Wednesday amid simmering social unrest over a lack of goods and services that’s sparked protests across the South American nation.”

http://www.looptt.com/content/venezuela-receives-gasoline-iran-amid-surge-protests


Iran State Media Express Fear of Protests Amid International and Domestic Crises.”

https://www.ncr-iran.org/en/news/inside-source-reports/iran-state-media-express-fear-of-protests-amid-international-and-domestic-crises/


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Thousands of Iraqis gathered in the capital and the country’s south on Thursday, marking the first anniversary of the start of unprecedented protests demanding the fall of the ruling class.

“The protests, which lasted months before running out of steam, will be revived, demonstrators said, if no reform is carried out by the current government.”

https://www.aljazeera.com/news/2020/10/1/iraqis-in-baghdad-mark-anti-government-protests-anniversary


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Egyptian security forces have used teargas, batons, birdshot and on at least one occasion live ammunition, and arrested hundreds of protestors and bystanders to disperse rare scattered demonstrations over several days, Amnesty International said today.

“Sources told Amnesty International that security forces killed two men, while hundreds were subjected to arbitrary arrests and enforced disappearances.”

https://www.amnesty.org/en/latest/news/2020/10/egypt-rare-protests-met-with-unlawful-force-and-mass-arrests/


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October 1 protests hit Abuja, southern states [Nigeria]:

Following the dramatic protests, Lagos-based rights group, the Socio-Economic Rights and Accountability Project yesterday condemned attacks on peaceful activists and journalists…”

https://guardian.ng/news/october-1-protests-hit-abuja-southern-states/


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The Dubai-based construction company that helped build the world’s tallest building and other engineering marvels in the United Arab Emirates announced Thursday it would enter liquidation, the final step in a long collapse from the country s economic crisis a decade ago hastened by the coronavirus pandemic.”

https://www.independent.co.uk/news/dubai-builder-worlds-tallest-building-be-liquidated-builder-dubai-building-abu-dhabi-world-b741217.html


UAE Bets Big On Space Tech To Diversify From Oil.”

[Well done, UAE. Sensible policies for a brighter tomorrow!]

https://oilprice.com/Latest-Energy-News/World-News/UAE-Bets-Big-On-Space-Tech-To-Diversify-From-Oil.html


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Shares in BP and Shell crashed to 25-year lows as oil prices fell.

The two energy supermajors saw their shares sink as the price of Brent crude dropped back below $40 per barrel.”

https://www.thisismoney.co.uk/money/markets/article-8796015/BP-Shell-shares-hit-lowest-level-25-years.html


Lonestar Resources US Inc LONE.O filed for Chapter 11 bankruptcy protection on Thursday, joining a clutch of shale companies that have succumbed to weak crude prices as COVID-19 pandemic crimps fuel demand.”

https://uk.reuters.com/article/uk-lonestar-bankruptcy/shale-bankruptcies-pile-on-lonestar-latest-to-succumb-to-weak-demand-idUKKBN26M63I?il=0


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Oil Companies Cut More Jobs As Demand Recovery Remains Uncertain:

“Suncor Energy is cutting as much as 15 percent of its workforce—a total of 2,000 jobs—as demand destruction and low prices have created an adapt or die scenario for oil companies to contend with.”

https://oilprice.com/Energy/Energy-General/Oil-Companies-Cut-More-Jobs-As-Demand-Recovery-Remains-Uncertain.html


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Shipowners are facing rising labor costs as widespread Covid-related restrictions limit movement of seafarers and make crew swaps more expensive.

“Because relieving and replacing ship workers has become so difficult during the pandemic, daily crew costs have increased 10% from January to mid-July, up to $3,144 for capesize dry-bulk carriers, according to the Baltic Exchange…”

https://www.bloomberg.com/news/articles/2020-09-30/seafarers-stranded-by-virus-spark-a-sudden-jump-in-labor-costs


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Quite a few articles lately flagging up Commercial Mortgage-Backed Securities as a risk:

Prior to the 2008 financial crisis, credit-rating firms engaged in a “race to the bottom,” easing their grading standards for mortgage-backed securities and collateralized debt obligations to avoid losing market share…

Despite attempts by regulators in subsequent years to hold the industry to account, the problem has persisted.”

https://www.bloomberg.com/amp/news/articles/2020-10-01/ratings-shopping-never-died-in-cmbs-market-now-facing-crisis


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Emerging market debt is a bubble destined to burst. Local accommodative monetary policies are increasing financial leverage without providing concrete solutions to the economic recession.”

https://www.poundsterlinglive.com/economics/14268-emerging-market-debt-bubble-about-to-burst-thanks-to-years-of-easy-monetary-policy-in-western-economies-saxo-s-spinozzi


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“A world awash with debt: can governments learn to rule while drowning in the red?

“…If growth, inflation and sustained austerity are all implausible strategies for rapidly dealing with the debt, then one other logical avenue remains open, at least in principle: namely default.”

https://www.prospectmagazine.co.uk/magazine/debt-deficit-economy-recession-coronavirus-covid


You can read the previous ‘Economic’ thread here and visit my Patreon page here. I’ll be back with an ‘Climate’ round-up on Monday.

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