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Climate crisis will collapse our financial system, IMF official warns… Climate change could “absolutely” ignite a financial crisis, according to a top official from the International Monetary Fund.

“”The climate crisis is slow in the making, but it’s potentially disastrous,” Tobias Adrian, director of the IMF’s monetary and capital markets department, told CNN recently, adding, “There are many countries where you see the climate catastrophe is catastrophic for the financial system.””

https://www.independent.co.uk/climate-change/news/climate-change-wall-street-imf-b1859419.html


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Federal Reserve Chairman Jerome Powell acknowledged serious risks the climate crisis poses to the world economy and called for a coordinated response that is led in the United States by elected officials.

“”There is no doubt that climate change poses profound challenges for the global economy and certainly the financial system,” Powell said Friday while speaking virtually at the Green Swan Conference.”

https://edition.cnn.com/2021/06/04/economy/powell-climate-change-central-banks/index.html


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The Federal Reserve’s plan to begin unwinding its unprecedented backstop of corporate debt is rekindling an idea that many have warned about: that investors are now convinced that the central bank will bail them out again if needed

The Fed is a bit like a helicopter parent when it comes to the bond markets,” said Nicholas Elfner, co-head of research at Breckinridge Capital Advisors. “Their involvement in the bond market is assumed at this point.””

[It’s no surprise – of course the system will become tolerant to and reliant on each new infusion of monetary methadone.]

https://www.bloomberg.com/news/articles/2021-06-03/as-fed-exits-credit-investors-see-helicopter-parent-close-by


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A year after peak job losses, the US recovery has been slow to arrive.

“Government data shows unemployment rates for many groups remain high, even as post-pandemic hiring picks up… Employers say they are struggling to hire workers, and yet the US is still 7.6m jobs short of where it was before Covid-19 struck.”

https://www.theguardian.com/business/2021/jun/05/us-economy-recovery-job-losses-pandemic-covid


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Biden Infrastructure Plan Endangered by Dire U.S. Shortages.

“The biggest threat to President Joe Biden’s vision of energizing the U.S. economy with the largest infrastructure program in decades may not be its challenging path through Congress, but a dire shortage of everything from workers to cement mills.

https://www.bloomberg.com/news/articles/2021-06-04/biden-s-infrastructure-plan-endangered-by-dire-u-s-shortages


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China is pushing China Huarong Asset Management Co to sell non-core assets, two people involved in the revamp told Reuters, while considering offering an implicit guarantee of the liabilities of the debt-laden bad-debt manager

“The plan, one source said, envisions the authorities informally backing $20 billion of dollar debt coming due this year for the sprawling company, one of the nation’s four giant state-owned asset managers.”

https://www.reuters.com/article/businessNews/idUSKCN2DG0Y4?il=0


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Creditors seeking $187 billion from China’s bankrupt HNA Group – executive quoted.

“China’s HNA Group Co (HNAIRC.UL) said some 67,400 creditors are seeking a total of 1.2 trillion yuan ($187 billion), according to a person who attended the conglomerate’s online meeting for creditors on Friday.”

https://www.reuters.com/business/creditors-seeking-187-bln-chinas-bankrupt-hna-group-executive-quoted-2021-06-04/


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Grinding higher: Emerging market central banks raise rates in May

““EM central banks are reluctantly turning more hawkish, due to price pressures amid higher demand and supply constraints,” said Christian Keller at Barclays.”

https://wtvbam.com/2021/06/04/grinding-higher-emerging-market-central-banks-raise-rates-in-may/


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Kerala [India] had landed in a financial crisis much before the outbreak of Covid. In the last 15 months, the crisis deepened as the pandemic gripped the state.

“The financial crisis now faced by the state is the worst since its formation.”

https://www.newindianexpress.com/states/kerala/2021/jun/05/kerala-budget-turns-blind-eye-to-deep-financial-crisis-2311924.html


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CFG Advisory says Nigeria is now faced with stagflation, a situation that is more protracted than a recession. They also note that monetary policy has reached its limits…”

[Video]

https://www.cnbcafrica.com/2021/cfg-advisory-nigeria-now-faced-with-stagflation-which-is-more-protracted-than-a-recession/


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Devils’ dance, praying to end crisis in Venezuela

Catholic devotees in the Venezuelan town of Naiguata on Thursday participated in the “Dancing Devils” tradition, despite COVID-19 restrictions and an economic crisis. Many coastal towns in the Guajira region, north of capital Caracas, also took part in the ancient tradition…”

https://www.euronews.com/2021/06/04/devils-dance-praying-to-end-crisis-in-venezuela


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Civil unrest and road blockades in Colombia have forced Toronto-listed Frontera Energy to shut in heavy oil production from its operations at Block CPE-6 in the eastern Llanos basin

“Colombia has been suffering from waves of protests and civil unrest since April.”

https://www.upstreamonline.com/production/colombian-unrest-forces-frontera-to-shut-in-oil-production-at-llanos-block/2-1-1020301


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While everyone is talking about inflation and whether it will stick around, Ed Yardeni, president of Yardeni Research, says last week’s oil-sector news may have set the stage for the next recession

““I’ve often observed that recessions are usually caused when the tightening of monetary policy triggers a financial crisis, which turns into a widespread credit crunch and results in a recession,” Yardeni wrote in a note to clients Wednesday. Perhaps less appreciated: a spike in oil prices often causes, or at least exacerbates, recessions.”

https://www.barrons.com/articles/the-dark-side-of-big-oils-recent-losses-to-green-activists-recession-51622729445


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No fruit, no milk: Israelis still suffering economic fallout of pandemic.

“Recent report shows that coronavirus outbreak and subsequent financial crisis have led to massive household cutbacks, more than half of entire population making tough choices about food, buying fewer dairy products, fruit and vegetables.”

https://www.ynetnews.com/magazine/article/Syk6wHf5u


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As economic crisis wears on, Lebanese can’t even afford manoucheh

“As increasing numbers of Lebanese families struggle to make ends meet amid the economic collapse, simple foodstuffs such as the traditional manoucheh are becoming a luxury that few can afford.”

https://www.aljazeera.com/news/2021/6/4/as-economic-crisis-wears-on-lebanese-cant-even-afford-manoucheh


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What’s driving the surge in food prices and what are the knock-on effects?

“Weather is obviously a huge issue in food production… [and] the pressure on supply chains has affected production and distribution of food.”

https://moneyweek.com/economy/inflation/603338/whats-driving-the-surge-in-food-prices-and-what-are-the-knock-on-effects


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What are the limits to government borrowing?

“…As crisis has hit and interest rates have fallen, politicians have felt more able to run up debts than in the past. But the issue of whether and when limits to borrowing might apply still remains. Recent research casts light on these constraints.”

https://www.economist.com/finance-and-economics/2021/06/05/what-are-the-limits-to-government-borrowing


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Rising government debt and the banking doom loop… the fact remains that governments have been addicted to easy money and debt-funded growth for many years now

With interest rates across the world at or near historic lows, the cost of these debts to governments has thus far been manageable. However, going forth, in a less sedate interest rate environment, managing this massive debt overhang is likely to throw up numerous challenges, with the potential for a banking doom loop a key challenge.”

https://www.theedgemarkets.com/article/my-say-rising-government-debt-and-banking-doom-loop


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Pity the central bankers: No easy way to stop rising inflation or bubble-bursting… One has to pity Federal Reserve Chairman Jerome Powell and European Central Bank (ECB) President Christine Lagarde…

“…both find themselves damned if they begin to taper their aggressive bond-buying programs and raise interest rates. However, they also find themselves damned if they do not begin monetary policy tightening.”

https://thehill.com/opinion/finance/556635-pity-the-central-bankers-no-easy-way-to-stop-rising-inflation-or-bubble


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

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