“…the debt picture is precarious. The global debt to gross domestic product ratio is unsustainable, at over 320 per cent. Perhaps more worrying is that China’s role as a creditor now means debt concerns are not just economic, but also geopolitical. China is one of the top lenders to the US — which gives the country’s political class enormous leverage — and also now the largest lender to emerging economies.
“Strained US-China relations, and the fact that China is also the largest trading partner and foreign direct investor for many advanced and developing countries, will limit the scope for negotiations to restructure or even a call for debt moratoriums. This strengthens Beijing’s position in setting trade terms. A debt stand-off between the US and China would have considerable contagion effects around the world, as US government treasuries remain the risk-free reference rate for most debt issuers.”
https://www.ft.com/content/e35932f0-c923-4c3a-9d9d-12554f442f2e
“The U.S. economy likely grew at a record 30%-plus annual pace in the third quarter, the government is expected to report on Thursday. Great news, right?
“Well, yes, but it will tell us very little about how fast the U.S. is growing right now and will still show a gaping hole in the economy.”
“U.S. States Face Biggest Cash Crisis Since the Great Depression:
“The drop in tax revenue has led to a total shortfall expected in the hundreds of billions of dollars—greater than 2019’s K-12 education budget for every state combined, or more than twice the amount spent that year on state roads and other transportation infrastructure.”
““Congress has adjourned until after the election, which means a stimulus package is not coming until then, if it comes this year at all.
“And that could have consequences, because dominoes are falling every day as the pandemic continues.”
https://www.marketplace.org/2020/10/27/what-happens-after-mall-defaults-on-its-loans/
“Without further unemployment relief from the federal government, most unemployed workers are drawing down their savings, which could be completely exhausted in the coming weeks, according to a new study.
“…savings are expected to be completely exhausted between early October and early December.”
“In an August survey of nursing homes nationwide [US], more than half said they were operating at a loss, and nearly three-quarters said they could not last another year if things did not change.
““It’s horrible,” said Lorri Senk, the administrator at Clove Lakes, where revenues have fallen by half, even with the infection rate now close to zero, because patients are afraid to go there.”
https://www.nytimes.com/2020/10/29/nyregion/nursing-home-workers-pandemic-jobs.html
“Analysts have become significantly more pessimistic about the UK economy, saying the surge in coronavirus cases and new restrictions will weigh on the recovery as the year runs into 2021.”
https://www.cityam.com/uk-economy-experts-cut-forecasts-as-coronavirus-cases-surge/
“Coronavirus has had a “devastating” impact on the UK’s pubs and will exacerbate the decline in the number of independent breweries – for the first time in nearly two decades…
“Thousands of pubs and breweries that survived the first lockdown are now fighting to stay afloat amid a slump in business following ongoing restrictions and curfews that could “make or break” the industry…”
https://www.theguardian.com/world/2020/oct/29/covid-has-devastated-uk-pub-industry-says-camra
“UK Coach companies have again warned they face collapse if they do not receive urgent help from the government following a slump in business amid the coronavirus outbreak.
“Many firms are paying thousands of pounds in finance deals for vehicles that are not bringing money in. One worried boss said his fleet could be repossessed in the coming weeks.”
https://www.bbc.co.uk/news/uk-england-tyne-54724747
“One in five young [UK] workers who were furloughed have lost their jobs even before a bleak winter that is expected to see surging unemployment, new research has revealed.
“Youth unemployment is thought to have hit 20pc – the highest since the aftermath of the financial crisis…”
“Heathrow says it has been overtaken as Europe’s busiest airport for the first time by Paris Charles de Gaulle because of a slump in demand for air travel.”
https://www.bbc.co.uk/news/business-54716289
“193 European Airports face insolvency in the next coming months due to the travel crisis caused by the travel restrictions amid the Coronavirus pandemic…
““These airports between them facilitate 277 thousand jobs and €12.4 billion of European GDP,” the association notes in a press release.”
https://www.schengenvisainfo.com/news/193-european-airports-may-go-bankrupt-in-coming-months/
“The day after Christine Lagarde presents the European Central Bank’s latest monetary policy decision on Thursday, new figures are expected to show the eurozone sank into its third consecutive month of deflation…
“The challenge for the ECB president is that, with the eurozone sliding towards another downturn and governments still bickering over the details of the EU’s €750bn recovery fund, doubts are rising over the central bank’s ability to pull the economy out of the slump.”
https://www.ft.com/content/f3b0c5a2-6caa-4b27-9395-92cc48298da8
“As the European Union seeks to disburse funds from its 750 billion-euro ($888 billion) recovery program as soon as next year, some of the countries hardest hit by the pandemic are struggling to work out how to best keep their finances in check once they take on billions of euros of new loans.
“Spain, Greece and Portugal plan to focus on the grant portion first, which doesn’t need to be paid back, while they work out how to access the 360 billion euros of loans the EU will make available…”
“Anti-lockdown protests continue across Europe as governments impose further lockdowns and business closures to fight the surge of coronavirus infections
“Italian Prime Minister Giuseppe Conte set curfews in Rome, Naples and Milan, while Spain has been plunged into a ‘six-month’ nationwide state of emergency.”
“Lira woes reverberate on Turkish streets: People struggle to cope with soaring prices as currency plunges to a record low…
““Everything is expensive,” said Emine Sahin, 54, who was accompanying her two-year-old grandson on a trip to a playground. “Whether it’s fruits, vegetables or clothing, all of it is affected by the price of the currency.””
https://www.ft.com/content/cc2e0f34-8b17-41e3-8452-651d150e2ef2
“The overhang of bad loans in the Indian banking sector has been a major factor behind the economic slowdown in the country.
“The problem pre-dates the covid crisis.”
“Across China, Beijing has willy-nilly injected capital into failing lenders, forced state-owned enterprises to step in as shareholders and consolidated yet more institutions in a bid to stave off system-wide contagion…
“China’s more than 4,000 regional banks, mainly city and rural commercial institutions, held almost 77 trillion yuan in assets, or roughly a quarter of the industry total as of June.
“As more of these banks succumb to bad balance sheets and troubled funding markets, fear is growing that the People’s Bank of China lacks a coherent strategy for dealing with them.”
“Oil prices fell more than 5%, sending Brent to a four-month low on Wednesday as surging coronavirus infections in the United States and Europe lead to renewed lockdowns and expectations that unsteady economic demand will worsen.”
“IEA now sees global energy industry investment on the upstream (exploration and production) side falling by 35% this year, a slightly steeper drop than their prior analysis in May.
“”This somewhat weaker outlook stems from cuts of around 45% by shale companies in the United States, which have experienced a surge of bankruptcies, layoffs and shut-ins, as well as a 50% jump in financing costs,” IEA notes.”
https://www.axios.com/global-investment-slump-energy-3b6de33b-3165-4a38-bb7d-c36ba74befaa.html
“Global demand currently is not supportive for OPEC+ easing the oil production cuts on January 2021, Ibrahim Al-Buainain, president and chief executive of Aramco Trading, told Gulf Intelligence on Wednesday.
“OPEC and its Russia-led partners will likely consider “a lot of demand issues” before tapering their cuts, he said in an interview…”
“Iraq may be the world’s third-biggest oil exporter, but its economy is cratering after the coronavirus pandemic sapped global demand for energy and caused prices to collapse.
“The state’s finances are so dire it can’t pay teachers and civil servants on time, threatening a repeat of the upheaval that last year brought down the government and saw hundreds of protesters killed.”
“…there is little evidence of a sustained recovery for Colombia’s economically crucial oil industry. Significantly weaker oil prices, the COVID-19 pandemic and a deteriorating internal security environment are weighing on Colombia’s oil industry.
“Major oil and natural gas discoveries remain elusive, which is a worrying development for Colombia because of its economic dependence on oil and limited proven reserves.”
https://oilprice.com/Energy/Crude-Oil/Will-Colombias-Struggling-Oil-Industry-Ever-Recover.html
“Since April, Gabon has been under a health state of emergency. The Central African country is facing a major economic hit as a result of Covid-19 lockdown measures and the fall in oil prices.
“Port Gentil [its oil capital] has lost millions of euros over the last six months and is relying on public investment to survive.
“Three weeks of protests in Nigeria that provoked a violent response from the military have been followed by a looting spree, highlighting the divide between the nation’s rulers and its poverty-stricken citizens.
“The fault lines were evident before the discord surfaced on Oct. 5. About half of Nigeria’s 200 million people live on less than $2 a day despite the nation being Africa’s largest oil producer, and 55% are either jobless or under-employed.”
“The Group of 20 major economies should move quickly and decisively to reduce the debts of heavily indebted countries or risk a “lost decade” in terms of global development, World Bank chief economist Carmen Reinhart said on Wednesday.
“”Proposals need to be bold in terms of delivering debt reduction for the debtors, because if not… the risks of a lost decade are very big.””
https://uk.reuters.com/article/uk-g20-debt-idUKKBN27D2KC
“South Africa risks default with government’s rate of borrowing.
“Government is borrowing at the rate of R2.1 billion a day, a rate that puts us on a path of potential default. Finance Minister Tito Mboweni warns that SA has to avoid the fate of countries such as Argentina and Ecuador that defaulted on their sovereign debt this year.”
https://www.moneyweb.co.za/in-depth/budget/sa-risks-default-with-governments-rate-of-borrowing/
“Almost 100,000 children under the age of five are at risk of dying in Yemen as the country slides back into a hunger crisis.
“An analysis by UN agencies says the coronavirus pandemic, economic problems and conflict have led to the highest levels of malnutrition ever recorded in parts of the country.”
“International tourist arrivals fell by 70% worldwide in the first eight months of 2020 compared to the previous year, due to the covid-19 pandemic, the World Tourism Organization (WTO) announced on Tuesday (27).
“The northern summer months, usually the high tourist season in the northern hemisphere, were catastrophic: the arrival of tourists plummeted 81% in July at an annual rate and 79% in August, according to this Madrid-based UN agency.”
“There is a high risk the resurgence in coronavirus cases halts the global economic recovery by year-end, according to Reuters polls of around 500 economists, a majority of whom expected the rebound next year to be weaker than previously thought.
“Governments and central banks around the world have pledged trillions of dollars of stimulus, helping most economies out of deep recessions. But a second wave of infections in places that eased lockdowns is now underway, leading to more restrictions.”
“…the re-regulation of banking had incentivized the movement of some banking-like activity into open-ended or levered funds and vehicles… there was concern that in the U.S. the Financial Stability Oversight Council (FSOC) and other regulators have somewhat forgotten about shadow banking vulnerabilities.
“Serious disruptions in private credit markets most certainly could cause systemic contagion and stress.”
“The Lockdown Meltdown Is Coming for Everything:
“Even haven assets such as gold are being sold. Previous volatility spikes suggest the situation won’t turn around quickly.”
You can read the previous ‘Economic’ thread here and visit my Patreon page here. I’ll be back tomorrow with a ‘climate’ thread.
Another wonderful day of economic collapse. Debt exploding, unemployment at near-record highs, fair comparisons to the worst of the great depression, people running out of savings, the eurozone collapsing, and more lockdowns on their way.
On the positive side, oil and gas continue to crash and burn!
Thanks, again!
You are welcome! JP