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Volatility Index Sounds Alarm While Greed Engulfs Global Markets: Fears unleashed by the once-in-a-century pandemic are clinging onto volatility markets even as stocks boom to record highs and Wall Street speculators gorge on every risk.

“For all the euphoria in markets, the Cboe Volatility Index has stayed elevated in an historic divergence between this gauge of investor fear and rallying equities.

https://www.bloomberg.com/news/articles/2021-01-26/all-the-reasons-vix-is-sounding-alarms-as-greed-engulfs-markets


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Evictions, unemployment and hunger: The American economy Joe Biden inherits

“The eviction crisis is just one of the economic disasters the Biden administration needs to tackle — it’s also staring down massive unemployment and a growing hunger problem. Even with the proposition of a historic $1.9 trillion relief package, President Joe Biden faces an uphill battle to get the economy back to where it was before the pandemic.”

https://edition.cnn.com/2021/01/26/economy/evictions-unemployment-hunger-biden/index.html


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Senior U.S. lawmakers are stressing out about mounting government debt as they resist President Joe Biden’s $1.9 trillion plan to boost the economy through more direct checks to Americans and aid to states and cities.

But investors in the federal debt, a wide range of market-focused economists and officials in the Biden administration have a firm response:

“Don’t worry about it right now.”

https://www.politico.com/news/2021/01/26/wall-street-national-debt-462453


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This year marks the 50th anniversary of the end of the gold standard in the U.S. In August 1971, President Richard Nixon formally unpegged the U.S. dollar from gold, meaning the greenback was no longer convertible into bullion.

Overnight, the dollar became a free-floating currency, measurable only by comparing it to other world currencies… Federal debt has only exploded since…”

https://www.forbes.com/sites/greatspeculations/2021/01/25/the-gold-standard-ended-50-years-ago-federal-debt-has-only-exploded-since/?sh=4547ad3c1e17


California: Criminal rings loot billions in jobless funds: California officials say hackers, identity thieves and overseas criminal rings stole an estimated $11.4 billion [with another $20 bilion looking suspicious] in unemployment benefits from California last year…”

https://www.independent.co.uk/news/california-criminal-rings-loot-billions-in-jobless-funds-rings-billions-funds-los-angeles-ap-b1792587.html


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“The [UK] employment data published this morning paints a grim picture for the nation’s job prospects and their finances.

“With higher redundancies and fewer vacancies, getting back to work for those who have lost jobs during the pandemic is likely to be a tougher uphill struggle.”

https://www.ii.co.uk/analysis-commentary/uks-jobless-battle-financial-survival-ii514884


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Gordon Brown has called for emergency measures to support businesses in the budget after new research from the London School of Economics warned almost 1m UK companies [one in seven] were at risk of failure in the next three months.

“The former prime minister said the report’s finding that one in seven businesses – employing 2.5 million people – might be forced to close by the spring should act as a “clarion call” to Rishi Sunak…”

https://www.theguardian.com/business/2021/jan/27/gordon-brown-calls-for-urgent-budget-help-as-1-in-7-uk-firms-face-collapse


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England’s much-hyped £2bn green homes grant is in chaos, renewable energy installers say, with some owed tens of thousands of pounds and struggling to stay in business.

“Members of the public have been left waiting nearly four months, in some cases, to take advantage of the scheme to fit low carbon heating systems. Some installers say customers are pulling out after losing faith in the green grants.”

https://www.theguardian.com/environment/2021/jan/26/government-plans-to-turn-england-homes-green-in-chaos-with-debt-and-job-losses


Europe’s economy is starting to follow the familiar script of lagging its international peers when recovering from a crisis… Political unease over the future leadership of Germany and a crisis in Italy are compounding the gloom.”

https://www.bloomberg.com/news/articles/2021-01-27/european-economy-lags-peers-as-vaccine-shambles-deepens-slump?utm_source=google&utm_medium=bd&cmpId=google


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Europe risks failing in its mission to boost its growth prospects via the €750bn coronavirus recovery fund, Germany’s former finance minister has warned

““There is a lack of real progress, a lack of efficiency in the execution of [economic reform programmes] in the member states,” Wolfgang Schäuble told the Financial Times. “These difficulties worry me.””

https://www.ft.com/content/ba177185-90c6-41cc-8989-5efe77689392


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The European Central Bank is stepping up its scrutiny of credit risk at banks across the continent to get a better sense of their preparation for a potential wave of loan defaults triggered by the pandemic.

Officials from the ECB and national watchdogs are pushing lenders including BNP Paribas SA, Societe Generale SA and Deutsche Bank AG for additional information on their corporate lending in 2020, people familiar with the matter said.”

https://www.bloomberg.com/news/articles/2021-01-26/ecb-steps-up-scrutiny-of-bank-risk-before-potential-default-wave


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The situation across the Netherlands remained tense on Tuesday night after three nights of violence in protest against the government’s implementation of tough coronavirus restrictions…

“Police took to the streets of towns and cities across the country to prevent violent rioting, while businesses closed early and shops boarded up.”

https://www.dw.com/en/netherlands-tensions-high-after-nights-of-covid-lockdown-riots/a-56355415


Italy’s prime minister Giuseppe Conte has tendered his resignation one week after he survived two confidence votes in parliament.”

https://www.euronews.com/2021/01/25/italy-s-under-fire-pm-giuseppe-conte-will-resign-on-tuesday-his-office-announces


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Bank of Japan Governor Haruhiko Kuroda said on Tuesday there were limits to what monetary policy can do, as years of massive money printing have failed to drive prices sustainably higher.

His comments were a rare acknowledgement of the difficulty the BOJ faces in meeting its 2% inflation goal, and underscore the struggle major central banks have in fending off shocks… with a dwindling tool-kit.”

https://www.reuters.com/article/japan-economy-boj-kuroda/update-1-bojs-kuroda-says-monetary-policy-has-some-limits-idUSL1N2K10N8


A return to deflation is a nightmare scenario for Japanese policymakers after years of arduous efforts to prevent prices from falling, but the coronavirus pandemic is raising fears that it may become a reality.”

https://www.japantimes.co.jp/news/2021/01/26/business/economy-business/slow-wage-growth-deflation-fears/


India is poised to sell a near-record amount of debt in the coming fiscal year, pressuring a sovereign bond market that’s increasingly worried about support from the central bank.”

https://www.bloomberg.com/news/articles/2021-01-27/bonds-in-india-head-for-losses-on-modi-s-near-record-debt-sales?srnd=economics-vp


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Calls to “shoot” farmers protesting against controversial agricultural reforms in India trended for hours on Twitter on Tuesday, as thousands of tweets encouraging police brutality against them flooded the platform.

“Violence erupted in India’s capital on Tuesday after thousands of farmers, who have been camped on the outskirts of New Delhi for nearly two months to protest against government agricultural reforms they say will hurt their livelihoods, entered the city and clashed with police.”

https://www.buzzfeednews.com/article/pranavdixit/india-protests-viral-tweets-police-brutality


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Supporters of the Russian opposition leader Alexei Navalny have called for more rallies this weekend to demand his release from pre-trial detention over parole violations he denies.

“One of Navalny’s leading allies, the lawyer and politician Lyubov Sobol, told reporters on Tuesday that his anti-corruption movement would continue to operate despite many people being detained…”

https://www.theguardian.com/world/2021/jan/27/navalny-supporters-calls-for-fresh-protests-across-russia


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Saudi Arabia started the sale of a two-part dollar bond as countries in the Gulf Arab region raise cash buffers to weather low oil prices and the coronavirus pandemic.

The world’s largest crude exporter plans to price benchmark-sized bonds on Tuesday, according to a person familiar with the matter, who asked not to be named. Benchmark typically means the equivalent of at least $500 million.”

https://www.bloomberg.com/news/articles/2021-01-26/saudi-arabia-starts-selling-dollar-debt-to-fund-deficit


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Bread and Fuel Protests Continue Throughout Sudan:

“Yesterday, protests and road closures continued for the third day in a row in Khartoum and a number of other cities in response to the high prices and general lack of bread and fuel. The bread crisis in Khartoum is reportedly caused by cuts in the allocation of flour to the state.”

https://allafrica.com/stories/202101270198.html


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Tunisian riot police on Tuesday turned water cannon on protesters outside the heavily barricaded parliament as they tried to quell the largest rally yet since demonstrations began this month over inequality and police abuses.

“Hundreds of protesters marched from the Ettadhamen district of the capital where young people have clashed nightly with police for more than a week, and were joined by hundreds more near the parliament.”

https://www.aljazeera.com/news/2021/1/26/police-fire-water-cannons-as-tunisians-march-on-parliament


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Nigerian president Muhammadu Buhari has replaced the four heads of the country’s armed forces after years of resisting widespread calls to do so, in a belated acknowledgment of the swiftly deteriorating security situation in Africa’s most populous country

“The bandit crisis has made major highways across Nigeria, including the one linking the capital Abuja to northern Kaduna state, all but unpassable.”

https://www.ft.com/content/ccaa99cc-c066-4369-aba1-46fd064a1ae9


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Authorities have declared a curfew in and around a city in southeastern Nigeria after clashes erupted between the army and a local militia, killing at least one person, officials and witnesses said Tuesday.

“The governor of Imo state, Hope Uzodinma, said a curfew had been imposed in the city of Orlu and nine surrounding districts on Monday after “militants… unleashed a shooting spree… killing an innocent citizen.””

https://www.brecorder.com/news/40056295/curfew-declared-in-nigerian-city-after-clashes


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Middle-class Venezuelans were once famous as the shopaholics of Latin America, the country was home to some of the first major malls in the region and many of the world’s big brands established outlets there.

But its recent economic crisis has forced a change of habit. These days, clothes and shoes are more often repaired than thrown away.”

https://newsus.cgtn.com/news/2021-01-27/Economic-crisis-changes-how-Venezuelans-repair-old-clothes-XnqCypCMk8/index.html


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Attacks and Insults Greet Venezuelans Fleeing a Ruined Homeland: Venezuela’s descent into hunger and chaos has strained the region for several years, driving out thousands every month into nearby countries.

“But now, with the number of Venezuelans in exile reaching 5.4 million, the pandemic’s devastation is increasing the level of hostility toward the newcomers.”

https://www.bloomberg.com/news/articles/2021-01-25/attacks-and-insults-greet-venezuelans-fleeing-a-ruined-homeland


A global oil & gas industry still reeling from plummeting demand and the proliferation of net-zero climate policies is bracing for a tumultuous year ahead, with further cost cuts, consolidation and constricted hydrocarbon exploration and development likely in 2021, according to a new survey of senior-level energy professionals.”

https://www.rechargenews.com/transition/oil-gas-bracing-for-year-of-turmoil-and-transformation-survey-reveals/2-1-951288


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Covid-19 is destroying the market for supertankers that deliver about a fifth of the world’s crude oil.

The result is likely to be booming trade on the beaches of Bangladesh, India and Pakistan, where obsolete ships go to get blow-torched and sold for scrap.”

https://www.business-standard.com/article/international/covid-19-unemployed-supertankers-are-about-to-get-junked-on-asia-s-beaches-121012600008_1.html


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The fate of more than 200,000 seafarers who play a crucial role in keeping global trade flowing is being labelled a “humanitarian crisis at sea”.

More than 300 firms and organisations are urging for them to be treated as “key workers”, so they can return home… governments have banned crew from coming ashore amid Covid-19 fears.”

https://www.bbc.co.uk/news/business-55802514


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Even Swiss Bankers Are in Bubble Territory: UBS had a stellar 2020 but the asset mania that’s made the rich even richer can’t last forever

“…the asset bubble that’s made the rich even richer is an aberration that pulls in private bankers, too. As is true across asset classes, from Bitcoin to rock-bottom bond yields, this situation cannot be sustained in perpetuity.”

https://www.bloomberg.com/opinion/articles/2021-01-26/even-swiss-banks-like-ubs-are-in-market-bubble-territory


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“Credit has replaced equity and savings as the main instrument to fund growth and spending but also, in this pandemic-induced economic shutdown, to bail out an already overextended system. Credit is eating the world

“Debt has always played a central part in economic development. But there is likely a level beyond which the ‘debtisation’ (or should it be ‘indebtisation’?) of the markets will harm the economy permanently by magnifying volatility and crystallizing financial instability.”

https://www.politics.co.uk/comment/2021/01/27/how-credit-is-eating-the-world/


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

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