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Companies and governments have issued a record $9.7 trillion of bonds and other debt this year, as extraordinary support from the Federal Reserve and other central banks has fueled a borrowing bonanza…

The IIF says it isn’t clear how global debt levels can be brought back down without significantly hurting economic activity. Sonja Gibbs, the IIF’s Washington, D.C.-based head of sustainable finance, said it was concerning that credit ratings and bond spreads weren’t fully pricing in potential risks, with spreads on very risky triple-C-rated U.S. bonds nearing levels seen last year before the pandemic…

“Emerging government debt has risen nearly 10 percentage points to 61% of GDP this year, its largest one-year increase since the late 1980s, and the pandemic has made a string of financial crises more likely, said Ayhan Kose of the World Bank’s Prospects Group.

https://www.wsj.com/articles/the-world-is-bingeing-on-debtand-smashing-records-11606732203


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U.S. housing, manufacturing data suggest economic recovery slowing:

“…“Storm clouds are gathering,” said George Ratiu, senior economist at realtor. com. “This winter could pose an unusual challenge for many people across the country, unless Congress takes significant actions.””

https://uk.reuters.com/article/us-usa-economy/u-s-housing-manufacturing-data-suggest-economic-recovery-slowing-idUSKBN28A2IX


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The US Department of Labor has been both miscounting the number of people receiving unemployment benefits and underpaying those under a special program instituted to address the coronavirus pandemic, according to a government watchdog report Monday…

“Rather than provide compensation based on previous pay, states are paying out just the minimum level required. That has resulted in potential economic hardship as federal programs addressing the situation are about to run out.”

https://www.cnbc.com/2020/11/30/weekly-jobless-claims-are-inaccurate-and-the-unemployed-are-being-underpaid-watchdog-says.html


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Canadians now owe more than $2 trillion, Equifax says:

“More than three million consumers have chosen to use payment deferral programs since the start of the COVID-19 pandemic, according to Equifax. Since the start of this year, some banks have offered consumers the option to suspend their loan payments for several months, in recognition of the financial strain the pandemic has created for many households.”

https://www.cbc.ca/news/business/equifax-canada-debt-1.5822589


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Fears of debt crisis as Scots shop on credit:

The study, released ahead of Cyber Monday tomorrow, showed that 13% of people are planning to pay for Christmas on credit cards, agreed overdrafts or secured loans – with a further 3% using payday loans, unagreed overdrafts or buy now pay later products which are widely available.”

https://www.sundaypost.com/fp/fears-of-debt-crisis-as-scots-shop-on-credit/


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UK Freelancers ineligible for state aid face closing down decades-old businesses and selling homes as the pandemic sparks the worst economic contraction for 300 years

The Office for Budget Responsibility has predicted that house prices will fall by more than 8pc in the new year as the pandemic shrinks the economy by 11.3pc…

“…and cash-strapped families unable to cover mortgage payments are forced to sell.”

https://www.telegraph.co.uk/money/consumer-affairs/freelancers-face-selling-homes-mps-urge-chancellor-offer-help/


Irish real estate funds have been placed on watch by the Central Bank of Ireland amid concerns that an investor exodus could trigger a liquidity crisis, forcing a fire sale of commercial real estate into a market where values are already under pressure because of the coronavirus crisis.”

https://www.thetimes.co.uk/article/central-bank-of-ireland-raises-red-flags-over-possible-crash-of-commercial-real-estate-xxhmwrz53


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The eurozone is set to suffer the longest period of deflation since the financial crisis, heaping pressure on the European Central Bank to take more drastic action.

“The region endured a fourth straight month in dreaded deflationary territory in November as rate-setters battle to revive its inflation prospects, new figures are expected to show tomorrow.”

https://www.telegraph.co.uk/business/2020/11/30/eurozone-set-fourth-month-deflation/


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Brussels is planning to lay out a raft of proposals in a bid to make it easier for EU banks to offload soured loans as it anticipates the risk of a pandemic-related wave of corporate distress

“Europe is braced for a surge in insolvencies once national business support programmes lapse next year.”

https://www.ft.com/content/294e7af5-7eff-4d38-89f0-6985eb20abb2


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“When the coronavirus began sweeping through China and then Europe, disrupting global supply networks, Mr. Macron declared that the pandemic could be “a game changer for globalization.” He said he wanted to create opportunities to secure supply chains and reverse a decades-long trend of companies sending production to low-cost countries.

“But the jobs are continuing to leave, as multinational firms relocate production from France to countries with cheaper labor and higher productivity.”

https://www.nytimes.com/2020/11/30/business/france-globalization-jobs.html


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When coronavirus hit, Germany splashed out on Europe’s most generous package of emergency aid. Now, for the first time since the start of the pandemic, politicians are asking whether the country can actually afford such largesse.

“The debate was stirred by last week’s consultations on the 2021 budget. Olaf Scholz, finance minister, shocked MPs by nearly doubling the amount of new borrowing to €180bn. That comes on top of the €218bn of debt Germany is taking on in 2020, the largest amount in its postwar history.”

https://www.ft.com/content/8d0bdc11-2d87-4872-8302-c1ce6b7bdfd0


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“According to Banca d’Italia’s statistics department, the Italian central bank now holds €529b of government debt – which is about one fifth of all of Italy’s debt. And just to put it into context, in 2012 at the peak of the Euro crisis that figure was only hovering near €100b…

Italy remains in a fiscal and monetary pickle without a realistic escape route.”

https://www.nzinitiative.org.nz/reports-and-media/opinion/the-fiscal-mess-provoking-fears-of-an-italian-exit/


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Nigeria’s national electricity grid collapsed on Sunday, the Transmission Company of Nigeria (TCN) said in a statement.

“Power outages in Nigeria, the most-populous nation in Africa, are common, but a system collapse is unusual.”

https://energy.economictimes.indiatimes.com/news/power/electricity-grid-collapses-in-nigeria-africas-largest-economy/79484019


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Inflation in Sudan has risen to one of the highest levels in the world, and the country risks slipping into hyperinflation unless it gets its budget deficit and money supply under control, economists say…

“The government has run up enormous budget deficits by subsidising the cost of fuel, then financed the deficits by printing money. This has debased the currency…”

https://uk.reuters.com/article/us-sudan-economy-idUKKBN2890CH


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“…based on the latest IMF and World Bank analysis, six sub-Saharan African countries are now in debt distress, while 11 are at high risk of distress.

“Before the pandemic, sub-Saharan Africa’s debt load was forecast at 56.4 per cent of gross domestic product for this year; the current projection is for 65.6 per cent.”

https://www.ft.com/content/5f428a4d-bd29-44e6-a307-c97b3f325d7b


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In the past two decades, China has poured billions of dollars into the construction of ports, railways, highways and hydropower dams in Africa.

But the continent is staring at a loan drought in the medium term as China and other lenders fear debt defaults in the fallout from the coronavirus pandemic, analysts say.”

https://www.scmp.com/news/china/diplomacy/article/3111760/china-turns-cautious-lending-africa-amid-default-crisis-fears


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A state-owned Chinese group caught up in the country’s spate of defaults owes billions of dollars to lenders, raising concerns that bond market tremors could also sweep through the banking sector.

“According to a creditor document viewed by the Financial Times, almost 70 Chinese and foreign banks, as well as trust companies, had Rmb33.5bn ($5.1bn) in outstanding lending to Huachen Automotive Group as of last year.

The revelation comes as the country’s multi trillion-dollar debt markets have been rocked by defaults at government-backed companies.”

https://www.ft.com/content/ea36b93d-f1b7-47d8-96e7-0c4242b48dc9


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How property-hungry Chinese millennials and shadow banking could fuel a financial crisis:

“China’s household debt has roughly quadrupled in the past five years to 62 trillion yuan (US$9.4 trillion). While detailed statistics are sketchy, data from some banks suggest that millennials are the main driver and betting on property appreciation the main motivation.”

https://www.scmp.com/comment/opinion/article/3111911/how-property-hungry-chinese-millennials-and-shadow-banking-could


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International investors have cried foul over the sale of an insolvent finance company in India due to concerns surrounding the auction process, casting doubt on the effectiveness of the country’s overhauled bankruptcy code

“The episode has thrown a new spotlight on respect for due process in India and the speed of its bankruptcy resolution procedures at a time when the country’s economic troubles have led to a rise in distressed assets.”

https://www.ft.com/content/6d2b8ed7-66a9-4f50-b6e7-0401ccfd965b


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Why I’m losing hope in India: …it breaks my heart to have to suggest to today’s rising generation that this crisis is different than others we have weathered, that the walls are closing in again, and the opportunity set for India is shrinking, perhaps for a very long time.

The national dream of emulating China’s rapid growth is receding — by some economic yardsticks, we can’t even keep up with Bangladesh.”

https://www.bloombergquint.com/opinion/why-im-losing-hope-in-india


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The coronavirus pandemic has wiped $63bn (£47bn) of revenue from the global advertising market this year, a decline that is double the rate of the Great Recession after accounting for inflation.

“According to the latest report from the World Advertising Research Centre (WARC), traditional media suffered its worst year on record, led by sharp cuts in automotive, retail, and travel and transport ad budgets.”

https://uk.style.yahoo.com/global-ad-market-decline-2020-double-great-recession-100501449.html


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We’re making the same mistakes with Big Tech as we made with banks during the 2008 financial crisis – and consequences could be devastating.

“That’s the stark warning given by former HSBC chief, John Flint, this weekend in an article for the Financial Times in which he claimed that Big Tech poses a systemic risk to society.”

https://www.telegraph.co.uk/technology/2020/11/30/big-techs-grip-world-could-trigger-next-financial-crash/


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The Institute of International Finance recently reported that the ratio of global debt to gross domestic product will rise from 320 per cent in 2019 to a record 365 per cent in 2020

The IIF concludes starkly: “more debt, more trouble”. Financial markets have ignored these warnings.”

https://www.ft.com/content/d3562efc-904a-4799-8593-ae2d372d02ba


You can read the previous ‘Economic’ thread here. I’ll be back tomorrow with a ‘climate’ thread.

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