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Central bankers will spend 2021 trying to tame the debt monsters they made in 2020. The pandemic-induced market meltdown forced Federal Reserve Chair Jay Powell to buy corporate debt for the first time, while European Central Bank President Christine Lagarde unveiled plans to spend an unprecedented 1.85 trillion euros propping up markets.

“Yet in helping resolve the crisis, rate-setters sowed the seeds of the next one.”

https://www.reuters.com/article/us-global-cenbank-breakingviews/breakingviews-central-banks-debt-monsters-will-need-taming-idUSKBN2951B2


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Another 787,000 Americans filed for unemployment benefits in the week before Christmas, the last snapshot of 2020’s appalling jobs market before the New Year.

“Unemployment claims have been rising again in recent weeks to their highest levels since the autumn as surging coronavirus rates have slowed hiring and led to more layoffs.”

https://www.theguardian.com/business/2020/dec/31/us-unemployment-december-coronavirus


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Indiana mattress maker loses sleep over new COVID-related supply chain delays

“Lauren Taylor’s small mattress factory in northern Indiana has managed to survive during the coronavirus pandemic, with the help of a federal emergency loan…

“But as COVID-19 infections worsen again in the United States, the American-made parts her company, Holder Mattress Co., relies on are taking months to arrive, forcing customers to wait for their new beds.”

https://uk.reuters.com/article/us-usa-economy-smallbusiness-mattress/indiana-mattress-maker-loses-sleep-over-new-covid-related-supply-chain-delays-idUKKBN2930W4


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The coronavirus has wreaked havoc in Britain’s labour market, with a health crisis becoming a jobs crisis throughout 2020.

“Mass redundancies hit the headlines throughout the year, despite the government’s furlough scheme, loans and grants, as well as employment growth in a handful of sectors. Many employers buckled under the weight of the virus…”

https://uk.finance.yahoo.com/news/coronavirus-jobs-sectors-worst-unemployment-vacancies-000141248.html


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Britain’s blue-chip share index has suffered its worst year since the 2008 financial crisis, as the Covid-19 pandemic and Brexit uncertainty hit stocks during a turbulent 12 months for investors.

“The FTSE 100 index of top shares listed in London fell by 14.3% during 2020, the poorest performance among the largest international stock indices, and its biggest decline since 2008.”

https://www.theguardian.com/business/2020/dec/31/ftse-100-suffers-worst-year-since-2008-financial-crisis


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Spain’s gross domestic product has likely to contract by more than 10% this year as a consequence of the coronavirus pandemic and the restrictions imposed on economic activity to curb it, Prime Minister Pedro Sanchez said on Tuesday.

“”We are now 10% poorer than a year ago,” he told a news conference.”

https://uk.finance.yahoo.com/news/spains-gdp-contraction-likely-wider-142525520.html


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The US will impose new import taxes on some French and German goods as part of a long-running trade dispute.

“It announced tariffs on aircraft manufacturing parts along with certain non-sparkling wine, cognac and other grape brandies.”

https://www.bbc.co.uk/news/business-55494753


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China has dramatically slashed how much wheat it imports from Australia to a nine-year low amid a worsening trade war between Beijing and Canberra.

“Customs data shows the Asian superpower bought only 880 tonnes of wheat from Australia last month – the lowest November total since 2011.”

https://www.dailymail.co.uk/news/article-9094831/Beijing-slashed-Australian-wheat-imports-near-decade-low-amid-trade-war.html


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China’s top credit-rating firm was banned from rating new bonds for three months, after an investigation found it ignored red flags at a state-owned coal miner whose default last month rattled the country’s bond market

The series of events spooked investors, triggering price declines that pushed up bond yields and raised borrowing costs for other companies.”

https://www.wsj.com/articles/chinas-top-credit-rater-barred-from-new-business-for-three-months-11609319519


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“…if China were to make the RMB fully convertible, money would first flow in to take advantage of interest rates, but then it would flow out to hedge against poor fundamentals and cash out.

Then the Chinese economy could easily collapse, bringing down the political system, as happened to Indonesia or the Philippines in 1998, with the Asian financial crisis, where a similar mechanism was at play.”

https://asiatimes.com/2020/12/the-cost-of-victory-chinese-interest-rates/


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A quieter crisis seems to be gaining momentum in the financial sector. Even without a Lehman moment, it could jeopardize prospects for economic recovery for many years to come.

“The high leverage of countless firms on the eve of the pandemic will amplify the financial sector’s balance-sheet problems in the coming year.”

https://www.livemint.com/news/world/the-quiet-financial-crisis-that-is-brewing-11609432849612.html


An overwhelming majority (83%) of institutional investors in the eurozone, the UK, the US and Canada among other countries see a risk of a global financial crisis as the world deals with the economic fallout of the coronavirus pandemic, new data has revealed.”

https://uk.finance.yahoo.com/news/83-of-institutional-investors-believe-global-financial-crisis-a-real-possibility-125129281.html


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COVID-19 shook, rattled and rolled the global economy in 2020.”

Yes, it did – but we’re still here.

Happy New Year, all, and huge thanks to those who donated or subscribed. Let’s see what 2021 brings… Enjoy those fresh groceries and hot showers while you can! 

https://uk.reuters.com/article/us-global-economy-yearend-graphic/covid-19-shook-rattled-and-rolled-the-global-economy-in-2020-idUSKBN2950GH


You can read the previous ‘Economic’ thread here. I’ll be back with a ‘Climate’ thread over the weekend.

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