“World powers are paralysing the UN and pulverising the planet… Global warming will not wait for geopolitics to cool down…
“Ukraine will continue to harden and deepen the divide between the United States and Europe in the West and Russia and China in the East.
“With the four comprising some 60 percent of the world economy, and all the veto powers at the UNSC, expect their conflict and collision to sap the energies of the United Nations and paralyse the multilateralism that could help the world to tackle global disasters.”
#dividedwefall
https://www.aljazeera.com/opinions/2022/9/20/the-un-a-deadly-paralysis-of-multilateralism
“A Great Copper Squeeze Is Coming for the Global Economy…
“You wouldn’t know it from looking at the market today, but some of the largest miners and metals traders are warning that in just a couple of years’ time, a massive shortfall will emerge for the world’s most critical metal — one that could itself hold back global growth, stoke inflation by raising manufacturing costs and throw global climate goals off course.”
“A global manufacturing slowdown suggests worse is to come.
““Is a global recession imminent?” asks a new report by the World Bank. The answer—that one very well might be—will not be a surprise to manufacturers… Debt loads around the world remain alarmingly high, and many country’s economies lag below their pre-pandemic trendline. Their leaders will be watching the slowdown in global manufacturing with considerable trepidation.”
“IMF chief warns there will be ‘people on the street’ globally unless steps taken to ease inflation… [On the other hand, they’re hardly going to be thrilled with a swingeing recession either]
“”It is important to think that this compounded impact of multiple crises is already testing the patience and resilience of people. And if you don’t take action to support the most vulnerable, there would be consequences,” she told CNN’s Christiane Amanpour.”
https://edition.cnn.com/2022/09/21/economy/imf-georgieva-inflation-warning/index.html
“US Fed hikes interest rate to highest level since 2008.
“Intensifying its fight against chronically high inflation, the United States Federal Reserve has raised its key interest rate by a substantial three-quarters of a point for a third straight time, an aggressive pace that is heightening the risk of an eventual recession.”
“Big U.S. banks’ prime rate soars to highest since financial crisis… The move follows a similar hefty hike by the Federal Reserve…
“Hopes of a soft landing have waned in recent months as the Fed remains steadfast in its decision to keep raising rates until data shows a sustained pullback in consumer prices.”
“A global backlash is brewing against the Fed… Surge in US borrowing costs is having spillover effects for the rest of the world…
“Rate rises, while necessary to quell inflation, have become so aggressive the World Bank warned last week they risk sending the global economy into a devastating recession that would leave the world’s poorest countries at risk of collapse… Yet, it is difficult to see what the US central bank can do but raise rates.”
https://www.ft.com/content/8f7889bd-b129-421e-9013-ab1adbf6d5dc
“As recession looms, central banks have no good options.
“As the world’s biggest investment banks prepare to report third-quarter earnings in October, the signals are bad across the board… As the financial world gathers in Washington DC for the annual meetings of the IMF and the IIF, it faces one of the grimmest outlooks on record.”
“Global Recessions Are Relatively Rare. Simultaneous Rate Increases Could Trigger One… Today, the global economy is already experiencing a much steeper growth slowdown than was seen in the run-up to earlier global recessions…
“It’s an impossible situation for economic policy makers. All the signs point toward a sharp global economic downturn as the main engines of growth sputter: the United States, China, and the euro area. Ordinarily, the remedy would be to stimulate growth by slashing interest rates, cranking up public spending, and cutting taxes. This time, however, the opposite is taking place.”
https://www.barrons.com/articles/global-recession-fed-rate-increase-economy-51663770427
“UK’s mounting debts unsustainable if sweeping tax cuts go ahead, warns IFS.
“Fuelling concerns that the UK’s precarious financial position will spark a run on the pound, the chancellor, Kwasi Kwarteng, is expected to reverse an increase in national insurance payments and cut corporation tax at a cost to the Treasury of £30bn.”
“British pound, euro stuck in a ‘doom loop,’ TD strategist says.
“The pound and euro are trapped in a “doom loop” caused by soaring energy prices that feed into weaker economic growth and lower currency values, wrote strategists including James Rossiter in a note on Friday.”
https://financialpost.com/news/economy/british-pound-euro-doom-loop-td
“Germany’s biggest gas importer Uniper is nationalised after huge losses.
“The German government has said it will nationalise the country’s biggest gas importer, Uniper, as it battles massive losses amid Europe’s energy crunch. The Finnish company Fortum that had controlled Uniper said Russia’s squeeze on supplies since the invasion of Ukraine meant that the unit had lost €8.5bn (£7.4bn) to date.”
“German industry suffers worst shock since 1949 from Putin’s energy stranglehold.
“Prices of industrial products jumped by almost 46pc over the past year, according to the Federal Statistical Office, which is the biggest ever increase on records dating back to 1949 when Germany was divided and recovering from the Second World War.”
“Europe energy crisis may deepen with looming liquidity crunch…
“Europe’s problems in sourcing oil and gas this winter after a dispute with Russia may be exacerbated by a new crisis in the market where prices are already red-hot: a liquidity crunch that could send them spiralling higher still… The ECB declined to offer fresh comment.”
“European governments spend half a trillion euros on energy crisis…
“Governments in Europe have earmarked nearly 500 billion euros in the last year to cushion citizens and companies from soaring gas and power prices, according to research published by think-tank Bruegel on Wednesday.”
“‘The situation has deteriorated.’ Deutsche Bank forecasts deeper Europe recession amid a war-fueled energy crisis…
“Hopes for a “mild recession” in Europe this winter have been abandoned by Deutsche Bank strategists, who have dramatically slashed their 2023 growth forecasts… That downgrade comes after the indefinite closure of the Nord Stream 1 pipeline for Russian gas into Europe, that was announced in early September.”
“Thousands protest in Brussels over cost of living crisis.
“Rising food prices, startling energy bills, and frustration with politicians and employers brought 10,000 people to the streets of Brussels on Wednesday. Dressed in green, blue and red, the colours of the three main unions – the anger was palpable as they gathered in the city centre.”
“Italy’s banking system braces for winter energy crisis, election spillovers.
“Reporting from Milan, CNBC’s Joumanna Bercetche highlights the impacts the Italian banking system could experience from the energy crisis and a potential economic contraction this winter.”
“China’s rulers seem resigned to a slowing economy… Gone are the days when they led the world in recession-busting…
“Thanks to its deep property slump and the government’s “zero-covid” policy, which entails lockdowns in response to every outbreak of the virus, the economy is now forecast to grow by less than 3% in 2022, according to banks such as Nomura, Morgan Stanley and ubs. That is far below the official target of 5.5%.”
“Japan intervened in forex market to stem weak yen…
“The Japanese government has intervened in the foreign exchange market to sell dollars for yen to stem the Japanese currency’s recent sharp falls, top currency diplomat Masato Kanda said on Thursday. “We have taken decisive action (in the exchange market),” he told reporters…”
“South Korean won falls through key level after Fed hike.
“South Korea’s won tumbled past the psychologically important 1,400 level against dollar for the first time in 13-1/2 years on Thursday on the U.S. Fed’s aggressive tightening and defying official warnings against sharp currency moves.”
https://financialpost.com/pmn/business-pmn/s-korean-won-falls-through-key-level-after-fed-hike
“Thai acting PM asks finance ministry to monitor weak baht – official.
“There were concerns about weakness in the currency and also oil prices, Anucha Burapachaisri told a briefing. The baht was trading at its weakest level in more than 15 years against the dollar.”
https://www.nasdaq.com/articles/thai-acting-pm-asks-finance-ministry-to-monitor-weak-baht-official
“South Africa’s economy is reeling under the most severe electricity blackouts in the country’s history, as load-shedding threatens to trim growth further in the continent’s most industrialised economy.
“The escalation has meant most South Africans have been without power for at least six hours a day, hammering an economy which has been struggling to re-emerge from the effects of the Covid-19 pandemic.”
“Default ‘a real possibility’ for Ghana, Fitch senior director says.
“Sovereign debt default is “a real possibility” for Ghana, and any kind of domestic debt restructuring could severely threaten the local banking sector, a senior director from the ratings agency Fitch said on Wednesday.”
“Maldives: Closing in on an economic crisis… The Maldives is said to be in a brittle economic state, slowly inching closer to what Sri Lanka and Pakistan are experiencing…
“Tourism is the nation’s economic mainstay but future predictions of complete recovery to pre-COVID levels are not encouraging, as the current trends indicate. The IMF has said as much, linking anticipated short-falls this year…”
https://www.orfonline.org/expert-speak/maldives-closing-in-on-an-economic-crisis/
“Iran death toll rises as protests intensify.
“Iranian authorities said on Wednesday three people including a member of the security forces had been killed during unrest sweeping the country, as anger at the death of a woman in police custody fuelled protests for a fifth day.”
“Barricades and ditches limit access to fuel terminals in Haiti… protests intensified last week when the government confirmed the adjustment to increasing fuel price…
“For over a week, the capital and other cities have remained blocked, with their shops, public and private institutions closed and without access to transportation…. A number of lootings of humanitarian institutions, banks, schools, religious organizations and state offices like the Civil Protection have been reported.”
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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Excellent review Harry. Keep it up.
Doug, thank you! My grandfather was from Aberdeen btw, so I think of the place fondly…