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The world has never been more indebted after a year of battling Covid-19. And there’s even more borrowing ahead.

“Governments, companies and households raised $24 trillion last year to offset the pandemic’s economic toll, bringing the global debt total to an all-time high of $281 trillion by the end of 2020, or more than 355% of global GDP, according to the Institute of International Finance. They may have little choice but to keep borrowing in 2021, said Washington-based director of sustainability research Emre Tiftik and economist Khadija Mahmood.”

https://www.bloomberg.com/news/articles/2021-02-17/global-debt-hits-all-time-high-as-pandemic-boosts-spending-need


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Another 861,000 Americans signed up for jobless claims in the week to 13 February.

“That’s a week-on-week increase of 16,000 in US jobless claims, according to the Department of Labor data.”

https://www.cityam.com/us-jobless-claims-rise-unexpectedly-to-861000/


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Canadian restaurants and bars suffered their worst year for sales on record in 2020.

“Sales at eating and drinking establishments in Canada dropped 28% from the year before, Statistics Canada reported Thursday in Ottawa. That’s the largest drop in records dating back more than two decades…”

https://www.aljazeera.com/economy/2021/2/18/dining-woes-restaurants-in-canada-suffer-worst-year-on-record


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The U.K. economy risks a jobless recovery from the coronavirus, with surging gross domestic product and lingering unemployment, a policy maker at the Bank of England said.

“Michael Saunders, a member of the central bank’s Monetary Policy Committee, said the pandemic has gone on longer than anticipated and is hurting the finances of businesses and households.”

https://www.bloomberg.com/news/articles/2021-02-18/u-k-risks-jobless-recovery-from-covid-crisis-boe-official-says


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German shipping investment that once helped shape the world’s maritime operations is in retreat, as years of steep losses lead many of the country’s biggest banks to abandon ship financing altogether.

“The number of German-owned oceangoing vessels has declined by nearly half over the past decade.”

https://www.wsj.com/articles/german-shipping-fleet-dwindles-as-financing-dries-up-11613581454


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Barricades burn in Spanish streets amid protests over jailed rapper:

“Police fired tear gas, rubber bullets, and sound bombs at two protests in Madrid and Barcelona on Wednesday, each attended by thousands, the day after a rapper was arrested on charges of glorifying terrorism and insulting royalty in his songs.”

https://www.reuters.com/article/us-spain-rights-rapper-protests-idUSKBN2AH2P1


Eurozone tries to patch up its broken debt rules: The bloc is under intense pressure to adopt a more flexible set of fiscal guidelines as Covid borrowing sends debt soaring.”

https://www.telegraph.co.uk/business/2021/02/18/eurozone-tries-patch-broken-debt-rules/


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Europe’s Pandemic Debt Is Dizzying. Who Will Pay?

“For households trying to balance their budget each month, the fact that European countries are incurring trillion-euro debts is dizzying. In France alone, the national debt has topped 2.7 trillion euros ($3.2 trillion) and will soon exceed 120 percent of the economy.”

https://www.nytimes.com/2021/02/17/business/europe-pandemic-debt.html?


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Inflationary pressures and currency weakness could force central banks in some key African economies to tighten monetary policy, even as the slow rollout of coronavirus vaccines and new mutations of the disease pose risks to economic growth.

“Mozambique and Zambia became the first two countries in the world to raise their benchmark interest rates this year, and Zimbabwe did the same on Thursday. Three of sub-Saharan Africa’s biggest economies — Nigeria, South Africa and Angola — could follow suit.”

https://www.bloomberg.com/news/articles/2021-02-17/african-nations-are-already-hiking-rates-with-more-to-come


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The Covid-19 pandemic has posed difficulties for a host of sub-Saharan African countries that have borrowed substantially from China in recent years to fund major infrastructure projects.

“Verisk Maplecroft Research Associate Aleix Montana expressed concern about high debt levels in oil exporting countries such as Angola and the Republic of Congo. Zambia became the first country on the continent to formally default on its debt in November 2020…”

https://www.cnbc.com/2021/02/17/africas-reliance-on-chinese-loans-has-experts-concerned-about-more-debt-defaults.html


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Chinese stocks briefly climbed to an all-time high on optimism for the country’s economic recovery from Covid-19 as traders returned from the lunar new year holiday.

“The CSI 300 index of large Shanghai- and Shenzhen-listed stocks jumped as much as 2 per cent to an intraday record of almost 5,931 points in early trading on Thursday…”

https://www.ft.com/content/a2370bc1-ca17-4bc3-9fcc-6afc961669f6


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We were ‘dangerously close’ to collapse of ‘entire system,’ says Interactive Brokers founder ahead of GameStop hearing

“Clearinghouses play a crucial role in markets from equities to derivatives. They stand between the parties to a trade to guarantee payment if either reneges. That crucial piece of financial-market plumbing was at the center of the matter, Peterffy said.”

https://www.marketwatch.com/story/we-were-dangerously-close-to-collapse-of-entire-system-says-interactive-brokers-founder-ahead-of-gamestop-hearing-11613600319


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“President Biden came into office with plans to help the economy recover from the coronavirus pandemic and spur a domestic manufacturing revival for goods such as automobiles and semiconductors.

“But one month into his presidency, a global chip shortage has shuttered auto factories in the United States, slowed shipments of consumer electronics and called into question the security of American supply chains.”

https://www.nytimes.com/2021/02/18/business/economy/chip-shortage-semiconductors-manufacturing-biden.html


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What began as a power issue for a handful of U.S. states [due to the bitterly cold and snowy weather] is rippling into a shock for the world’s oil market.

“More than 4 million barrels a day of output — almost 40% of the nation’s crude production — is now offline, according to traders and executives.”

https://www.bloomberg.com/news/articles/2021-02-17/big-freeze-in-texas-is-becoming-a-global-oil-market-crisis


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Peak oil demand is coming – but first brace for an almighty supply crunch: Investment of $600bn a year in non-Opec oil exploration and drilling is needed to keep the global show on the road. Spending collapsed after 2014 and has never recovered. Last year it was $300bn. It has been running at just 35pc of levels reached in the boom.

“This catches up with you in the end.”

https://www.telegraph.co.uk/business/2021/02/17/peak-oil-demand-coming-first-brace-almighty-supply-crunch/


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“… many governments entered the pandemic with higher government – or sovereign – debt. And they had to print money all over again in the first big test since GFC

““Monetary policy has had to respond to an unprecedented shock and for many central banks the main tool to date has been further quantitative easing, in an unprecedented scale and pace of purchases.” In a nutshell, the latest pandemic-triggered sovereign debt has been piled on top of the money printed in the immediate wake of the GFC.”

https://www.worldfinance.com/special-reports/sea-of-debt


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In May 2013, bond investors threw a tantrum after hints the U.S. Federal Reserve might slow the money-printing presses. A similar selloff now, with another $70 trillion added to global debt, could prove to be far more vicious

““There is no doubt the risks are greater this time around than 2013 because of the high leverage in the system.””

https://www.reuters.com/article/us-global-bonds-tantrum-analysis-idUSKBN2AI1RA


You can read the previous ‘Economic’ thread here. I’ll be back over the weekend with a ‘Climate’ thread. If you found value in this work please consider subscribing to my Patreon.

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