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Fitch sounds alarm over government borrowing binge

“Credit ratings agency warns on impact of soaring borrowing on global growth and “toxic” issue of cancelling eurozone debt.

“Soaring public debt risks damaging global growth as investors plough money into government bonds rather than companies, a top credit ratings agency has warned.”

https://www.telegraph.co.uk/business/2021/01/12/fitch-sounds-alarm-government-borrowing-binge/


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[The invasion of the Capitol] was clearly a case of extreme political instability and a harbinger of potentially greater political violence to come…

“An outright U.S. collapse, like in the Civil War of 1860, is still extremely unlikely. But high levels of disruption could still hurt the US’s finances by posing a danger for investors in the country’s sovereign bonds.”

https://www.bloomberg.com/view/articles/2021-01-12/how-government-instability-undermines-the-u-s-economy


San Francisco’s office market is being hit so hard by the pandemic that, by some measures, it’s worse than the global financial crisis or dot-com collapse.

https://www.bloomberg.com/news/articles/2021-01-12/san-francisco-office-vacancy-rate-eclipses-financial-crisis-high


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In the major shopping corridors in Manhattan, where sidewalks are lined by ground-floor shops, retail rents have been declining for years – and not just by a little, but by 20%, 30% or even over 40%, amid ballooning vacancies. The brick-and-mortar retail meltdown, Manhattan style.

Then came the Pandemic.”

https://wolfstreet.com/2021/01/11/brick-mortar-retail-meltdown-in-stunning-manhattan-style-years-before-during-the-pandemic/


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When megaproject 20 Times Square broke ground in 2015, it looked like a sure bet.

Fast-forward five years, however, and the hotel and retail development is a mounting source of dismay, as it backs at least $1.9 billion in debt that is either in default or expected to be soon — including $750 million in commercial mortgage-backed securities bonds passed along to investors — according to three sources familiar with the matter.”

https://www.forbes.com/sites/debtwire/2021/01/12/time-running-out-for-750-million-in-cmbs-debt-backed-by-20-times-square-project/?sh=7dda19156932


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US cities are losing their allure for renters, placing early signs of strain on the $1.2tn market in bonds backed by mortgages on apartment blocks

Investors in commercial mortgage-backed securities, where loans backed by properties like apartment buildings are bundled together to underpin the sale of fresh debt, are watching closely.”

https://www.ft.com/content/67cb87c0-ef93-410f-90bc-60ffaf42af5e


UK retail sales suffered the biggest decline in 25 years last year as the closure of non-essential shops during lockdowns more than outweighed the online spending boom fuelled by Covid-19.”

https://www.theguardian.com/business/2021/jan/12/uk-retail-sales-biggest-fall-since-1995-impact-covid-lockdowns-online-boom


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About 2.2 million unemployed in ‘very difficult period’ for economy, says Bank of England governor.

Andrew Bailey talks unemployment and negative interest rates at a Scottish Chambers of Commerce event.”

https://news.sky.com/story/covid-19-boe-governor-about-2-2-million-unemployed-in-very-difficult-period-for-economy-12185707


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From 1 January [under our Brexit agreement], the UK government introduced a rule that VAT must be collected at the point of sale rather than the point of importation.

This essentially means that overseas retailers sending goods to the UK are expected to register for UK VAT and account for it to HMRC if the sale value is less than €150 (£135).

This has led to a number of Europe-based retailers deciding they will no longer deliver to the UK.”

https://www.bbc.co.uk/news/uk-england-suffolk-55593308


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Italy’s government is expected on Tuesday evening to approve a 220-billion-euro coronavirus recovery spending package – and collapse shortly afterwards over a row on how to spend the money.

“Former prime minister Matteo Renzi is widely expected to withdraw his small but pivotal Italy Alive (IV) party from the ruling centre-left coalition after complaining that the EU funds risked being wasted.”

https://www.telegraph.co.uk/news/2021/01/12/italys-government-risk-collapse-former-pm-threatens-withdraw/


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A Covid borrowing binge has made Italy and Spain highly vulnerable to another shock to investor confidence, Moody’s has warned as it sounded the alarm on the eurozone’s soaring debt piles.

The credit ratings agency gave the region’s sovereign debt a “negative” outlook for 2021, warning its governments face “a critical policy challenge” to stabilise public finances…”

https://www.telegraph.co.uk/business/2021/01/11/italy-spain-face-warning-crippling-debt/


Japanese household inflation expectations hit an eight-year low in the three months to December, a central bank survey showed on Tuesday, suggesting the coronavirus pandemic has heightened deflationary risks in the world’s third-largest economy.”

https://www.reuters.com/article/us-japan-economy-boj-survey/japans-price-expectations-weaken-as-pandemic-stokes-deflation-fears-idUSKBN29H0LX


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A new coronavirus variant has been detected in four travellers from Brazil’s Amazonas state, Japan’s Health Ministry said on Sunday, the latest new mutation of the virus discovered.

A ministry official said studies were underway into the efficacy of vaccines against the new variant, which differs from highly infectious variants first found in Britain and South Africa…”

https://www.reuters.com/article/us-health-coronavirus-japan-variant/japan-finds-new-coronavirus-variant-in-travellers-from-brazil-idUSKBN29F08R


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South Korea lost the most jobs in two decades and the unemployment rate hit a 10-year high as the country’s worst coronavirus outbreak yet forced businesses to slash hiring.

“The nation shed 628,000 jobs in December compared with the prior year, a tenth straight monthly drop…”

https://www.straitstimes.com/singapore/south-koreas-jobless-rate-hits-10-year-high-as-covid-19-cases-surge


Investors have a new default worry in China’s credit market: Investor confidence in China Fortune Land Development Co. Ltd. is tumbling as concerns grow about its debt repayment abilities just as Beijing steps up efforts to cut risk in the real estate sector.”

https://www.bloomberg.com/news/articles/2021-01-12/investors-have-a-new-default-worry-in-china-s-credit-market


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China’s food security is again on Beijing’s agenda, with the nation’s bitter history of hunger and famine in mind.

After a quarter century, the issue of ensuring China’s grain supply has returned to prominence. China’s reliance on imports to ultimately feed its increasingly affluent citizens is much higher than the headline figures suggest.”

https://www.scmp.com/economy/china-economy/article/3117279/chinas-food-security-again-beijings-agenda-nations-bitter


“Banking stability indicator has improved on all five parameters but as investors chase returns in the low interest-rate scenario, the disconnect between the real economy and the financial markets is getting worse, India’s central bank said in its Financial Stability Report Monday.

https://economictimes.indiatimes.com/news/economy/finance/disconnect-between-real-economy-and-financial-markets-only-getting-worse/articleshow/80220910.cms


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The crisis facing the Indian Ocean island of Mauritius dramatically worsened last week.

For the first time in its history, armed militarized police were deployed against peaceful protestors in the capital city.”

https://www.forbes.com/sites/nishandegnarain/2021/01/11/mauritius-in-crisis-as-militarized-police-deployed-against-peaceful-protestors/


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The number of protests with more than 10,000 participants whose goal is to remove a politician has grown over the past few decades… the number (outside the US) was as follows:

“1990-1999: 78 protests

2000-2009: 55 protests

2010-2020: 282 protests.”

https://www.nationalgeographic.com/history/2021/01/this-expert-has-tracked-30-years-of-global-protests-heres-what-hes-learned/


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“…the unfortunate truth is that by many metrics, the US and much of the rest of the world have already been in a mild depression for the past 12 years, ever since the 2008 global financial crisis.

“It’s just not as obvious as the 1930s depression, because higher levels of technology and anti-deflationary monetary policy disguised it in a nominal sense.”

https://seekingalpha.com/article/4398273-hindsight-depression


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After several years of being bombarded by peak oil demand or oil glut scenarios, the market is without any doubt heading towards a major supply crisis. The COVID-era has not only removed short-term demand and increased interest in a global energy transition, it has also brought down global upstream investments.

“Analysts have already indicated a possible peak oil investment scenario, but that has been countered by many claiming that renewables will make up for losses. The reality, however, is very worrying.”

https://oilprice.com/Energy/Oil-Prices/The-Oil-Industry-Is-In-Dire-Need-Of-Investment.html


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The global economy starts 2021 with record amounts of debt that will slow the recovery and could destabilise some countries, the Institute of International Finance (IIF) warned

The surge in global debt levels has been unprecedented since the onset of the pandemic, increasing by over $17 trillion to $275 trillion last year.”

https://www.intellinews.com/comment-record-high-debt-levels-will-slow-post-coronavirus-recovery-threaten-some-countries-financial-stability-says-iif-200017/


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

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