“World’s Central Banks Have Set Us Up for Catastrophic Fall …fiat currency credibility is being tested to virtual destruction by today’s extreme levels of money printing. We have already had one bad wobble…
“…without the good offices of their central banks, governments would not be able to support the very high levels of debt they are taking on to fight the pandemic…
“…what then happens to government solvency once that moment arrives when interest rates need to rise again to bear down on increased inflation?
“People say this would be a nice problem to have in view of today’s deflationary pressures. For a high debt economy, I very much doubt it. I’m just about old enough to remember the stagflation of the 1970s after what might be thought of as a similarly delusional age of fiscal dominance and financial repression. For the economy, it was not a happy time.”
https://www.telegraph.co.uk/business/2020/12/01/worlds-central-banks-have-set-us-catastrophic-fall/
“The latest snapshots of the United States jobs market are painting a picture that is far from pretty, as evidence mounts that surging COVID-19 infections and Washington’s repeated failure to throw a financial lifeline to the nation’s struggling are undermining the economic recovery.
“The private sector created only 307,000 jobs last month, according to the ADP National Employment Report – a disappointing read that signals the recovery is slowing and leaving millions of out-of-work Americans behind.”
“Janet Yellen warned of “more devastation” in the economy if the US failed to address the fallout from the pandemic and its disproportionate toll on low-income families, after she was introduced by Joe Biden as America’s next Treasury secretary…
“Her comments were delivered amid doubts that Mr Biden will be able to implement his sweeping economic agenda, which calls for a big boost to government spending next year, partially funded by higher taxes on businesses and wealthy households.”
https://www.ft.com/content/2f32d7ab-9d15-458d-9f3e-a32171990e8f
“The Covid-19 crisis could be worse than the Great Recession for companies that had high levels of indebtedness at the start of the outbreak, according to economists at the Federal Reserve Bank of New York…
““The Covid-19 outbreak has the potential to have an even bigger effect on the economy through the channel of debt overhang than what we identified in the Great Recession,” they wrote.”
“Canada is facing an all-time record deficit of C$381.6 billion ($294.4 billion) due to measures taken by the government to counter the economic and social impact of the Covid-19 pandemic…
“Despite the high deficit, the government is preparing to spend up to an additional C$100 billion ($77.2 billion) to boost an economy that has been impact by the coronavirus crisis. “This recession is worse than 2008,” the statement said, adding, “It stands to reason we will need to invest more, not less.””
“The UK has been hit harder by the pandemic than any other developed economy except Argentina, a global watchdog says.
“The Organisation for Economic Co-operation and Development (OECD) said the British economy will be 6.4 per cent smaller at the end of next year than it was in the final three months of 2019.”
“This is no longer a health crisis, it’s a total economic catastrophe:
“…The UK economy is shrinking at its fastest pace in three centuries. Government borrowing will reach a colossal £400 billion during 2020 – £15,000 for every household. That’s well over twice the debt we took on immediately after the 2008 financial crisis.”
“Deflation in the Eurozone raises chance of half-trillion stimulus from the ECB: Economists expect as much as €500bn of extra asset purchases from Christine Lagarde next week.”
https://www.telegraph.co.uk/business/2020/12/01/deflation-raises-chance-half-trillion-stimulus-ecb/
“France’s car market, which has been hit hard by the coronavirus pandemic, is set to fall to its lowest level since 1975 this year, the CCFA French automobile federation said on Tuesday.
“The CCFA maintained its forecast for a 25% to 30% drop in the French car market in 2020, though a spokesman said the fall would be at the lower end of the range, meaning closer to 26%.”
“Unemployment in the EU has risen sharply over the last year due to the effects of the coronavirus pandemic, according to Eurostat.
“The unemployment rate for the bloc was at 7.6% in October 2020, up 1% compared to October 2019.”
“The Bank of Japan is ready to extend beyond March a range of steps aimed at easing corporate funding strains, its deputy governor said, suggesting a decision could come as early as this month as a resurgence of COVID-19 infections cloud the outlook…
“…the lingering pain from the pandemic will keep any recovery moderate and companies under financial stress, with risks to the world’s third-largest economy being skewed to downside.”
“Chinese banks’ excessive exposure to property is now the “biggest grey rhino risk” facing the stability of the financial system, a top financial regulator has warned…
“In addition to bank loans, many of China’s bonds, equities and trust investment products are also related to property development, which means the overall financial exposure to real estate is dangerously high, Guo noted.”
“Lebanon has been ravaged this year by an economic and financial crisis, the COVID-19 pandemic, and a deadly explosion at the Port of Beirut.
“Now, economists at the World Bank are warning that things will get much worse for the embattled nation before they get better, threatening the country’s stability.”
“IMF chief warns against complacency on global economy: Kristalina Georgieva says financial system more resilient than 10 years ago, but policymakers must act quickly…
““We are desperate for that because productivity has to go up, investment has to go up. We have to be decisive and we have to act together,” she said.”
https://www.ft.com/content/fda34b47-33d2-457e-a0b6-45be6001920d
“Capitalism ‘will collapse on itself’ without more empathy and love:
“The coronavirus pandemic accelerated drastic economic changes that were already underway. And one expert warns that it’s threatening the future of the free market system.
““We are barreling towards a nation with three million lords being served by 350 million serfs,” NYU Stern School of Business professor Scott Galloway told Yahoo Finance Live.”
You can read the previous ‘Economic’ thread here. I’ll be back tomorrow with a ‘climate’ thread.
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