“Western economies rediscover meaning of scarcity…
“The world faces an enormous demographic challenge as China’s working-age population, along with those in the developed nations, starts to shrink. A lack of investment in traditional energy suggests that oil and gas prices will probably remain elevated in the coming years.
“The transition to alternative energy and electric vehicles is likewise constrained by inadequate investment and limited supplies of essential raw materials, such as lithium, nickel and cobalt.
“The last time Europe faced such severe constraints was after World War Two. “Austerity Britain” maintained rationing and capital controls. Interest rates rose from their artificially low wartime levels. To reduce the burden of their war debts… In Europe, large swathes of industry came under state control. In Japan, industrial quotas restricted firms’ access to steel, chemicals and energy.
“In the wake of Russia’s invasion of Ukraine, energy rationing has returned to Europe. European countries are nationalising energy suppliers including France’s electricity giant EDF. Financial repression has returned.
“Britain under a new Conservative administration faces austerity that could be more severe than that imposed after the global financial crisis. Rishi Sunak, the new prime minister, warns of “difficult decisions” ahead. Taxes are set to rise as governments bring spending under control. We are all about to discover the true meaning of economy.”
https://www.reuters.com/breakingviews/western-economies-rediscover-meaning-scarcity-2022-10-27/
“Grain Giant Warns Globalization Is Over…
““I think globalization is done for a period of time,” Bunge CEO Greg Heckman said in a call yesterday. “When we had a supply problem or a demand surge globally, every origin port and every destination was available to solve that problem in the past. That’s no longer true.”” [Actually, it is done permanently. The unknitting of the global economy is now irreversible.]
https://gcaptain.com/grain-giant-warns-globalization-is-over/
“Top central bankers fear breaking economy if they raise rates too fast.
“The world’s top central bankers are beginning to fear that an already weak global economy will stall if they keep pressing on the brakes, unnerved by plunging commodity prices, turmoil in emerging markets and potential flashpoints at home.”
“Central Banks Just Can’t Win. Damned if they hike, damned if they don’t [I’m liking Jerome Powell’s “Dude, I can’t even…” expression here].
“That’s how central bankers might feel as political heat on them intensifies. After being attacked for letting inflation take hold, they are now scolded for jeopardizing growth and jobs with their aggressive interest-rate hikes to get prices back under control.”
“A dead cat bounce 250 years in the making…
“1788 was an interesting year. France itched for revolution, King George III was adrift, and New York marked becoming the eleventh US state by hosting America’s first recorded riot, which was over grave-robbing in Manhattan for medical cadavers.
“It was also the last time 10-year US Treasuries did as badly as they’re doing now. Chart via Bank of America:”
https://www.ft.com/content/f244efd0-fc43-4b57-bc87-7ee343da70d6
“Growing Pile of Distressed Debt Signals Coming US Default Wave…
“Companies that binged on low-cost borrowing in recent years are facing the prospect of refinancing at exorbitant yields — if they can find any investors — as the Federal Reserve raises rates to battle persistent inflation, threatening to push the economy into recession.”
“Pharmacies across the US are reporting shortages of the widely used antibiotic amoxicillin…
“Three key amoxicillin manufacturers — Hikma Pharmaceuticals, headquartered in the United Kingdom; Sandoz, based in Switzerland; and Teva Pharmaceutical Industries Ltd., headquartered in Israel — are reporting shortages of the antibiotic…”
“U.S. diesel supplies are becoming critically low with shortages and price spikes likely to occur in the next six months unless and until the economy and fuel consumption slow.
“Stocks of diesel and other distillate fuel oils were just 106 million barrels on Oct. 21, the lowest for the time of year since the U.S. Energy Information Administration (EIA) started collecting weekly data in 1982.”
“New England’s largest utility is imploring President Joe Biden to start preparing emergency measures to prevent a potential wintertime natural gas shortage.
“The Federal Energy Regulatory Commission has “acknowledged for many months that New England will not have sufficient natural gas to meet power supply needs for the region in the event of a severe cold spell this winter,” Joseph Nolan, chief executive officer of Springfield, Massachusetts-based Eversource Energy, wrote in a letter to Biden.”
“UK Bond Market Sheds £1.3 Trillion In Value Amid Record Sell-Off.
““The unprecedented meltdown in bonds is not just causing issues for pension funds with exposure to Liability Driven Investment Strategies. The fall is also wrecking the returns for any investor with a large exposure to UK bonds,” explained Colin Leggett, Investment Director at Collidr.”
“Bank of England clashes with Sunak over plan to overrule regulators.
“The Bank of England and City watchdog have launched a coordinated attack on Rishi Sunak’s plan for a call-in power which would allow the Government to overrule their decisions, in a sign of growing tensions between regulators and Downing Street.”
https://www.telegraph.co.uk/business/2022/10/27/bank-england-clashes-sunak-plan-overrule-regulators/
“British Gas is drawing up plans to pay customers to cut their electricity use by 30pc at teatime to avoid blackouts this winter.
“Britain’s largest household supplier confirmed it is keen to take part in National Grid’s new scheme to shore up electricity supplies amid concerns about energy shortages during the colder months.”
“Darkest Days of Winter Have Finland Bracing for Blackouts. Authorities have warned Nordic country may see rolling outages…
““If the planned outages don’t take place, said Arto Pahkin, a network operations manager at Fingrid Oyj, which oversees the country’s electricity grid, there would a national large-scale disruption and “people could die.” …Finland is at the sharp end of Europe’s energy crisis.”
“Gas crisis forces Germany to flatten wind farm for coal mine.
“The eight wind turbines will be dismantled with a dozen nearby villages and hamlets to clear space for a pit that will ultimately cover an area about the size of Swindon 25 miles to the northwest of Cologne. The Garzweiler II mine is expected to yield about 190 million tonnes of lignite, a relatively dirty fuel also known as brown coal…”
“Czechs Protest Over Cost-of-Living Crisis with Ukraine in Focus.
“More than 10,000 people filled the Czech capital’s central Wenceslas Square on Friday, with demonstrators calling for the government to resign as consumers face sharply rising prices. The latest such rally to be held in Prague is intensifying pressure on Prime Minister Petr Fiala to address public concerns over soaring energy costs.”
“Greek consumers should cut use of energy-hungry appliances during peak hours to help save at least 5% of energy over the winter, its energy minister said on Thursday.
“The comments come after EU countries agreed to a mandatory target to cut electricity consumption from December to March so as to tame surging energy prices…”
“Italian inflation breaks the 11% threshold, driven by energy.
“The energy component was the driver of the surprisingly strong leap in headline inflation. Possible government interventions could increase volatility in inflation numbers over the rest of the year.”
https://think.ing.com/articles/italian-inflation-breaks-the-11-threshold-driven-by-energy/
“Parts of Europe Are Starting to Run Out of Diesel.
“The loss of Russian diesel supply, combined with disruption in fuel production in France, have left parts of Europe short, according to the head of Spanish oil refiner Repsol SA. “We are running out of middle distillates in some European countries,” Chief Executive Officer Josu Jon Imaz said…”
“Energy crisis risks upending Europe’s essential medicine supply chains.
“Surging energy costs in Europe risk accelerating an exodus of companies critical in the manufacture of essential medicines, further endangering drug supply chains hit by shortages at the height of COVID-19, generic drugmaker Teva (TEVA.TA) warned on Thursday.”
“Sliding yen: What is happening to the Japanese currency?
“This year alone it has lost more than a fifth of its value against the US dollar… The yen’s slide has been driven by the difference between interest rates in Japan and the US. However, some experts believe the weak yen reflects the state of the country’s finances. The economy has hardly grown in the last three decades. It is also the world’s most indebted nation.”
https://www.bbc.co.uk/news/business-63335371
“South Korea’s Legoland default points to wider bond market stress…
“The missed debt payment by the Gangwon Jungdo Development has raised questions about loans related to hundreds of thousands of other projects in Asia’s fourth-largest economy and even drawn alarming parallels with China’s property debt crisis… It also shocked some investors as the case showed even state-backed developers at risk of defaults…”
“Crisis Trauma Haunts Korea as It Confronts a Credit Meltdown.
“… in Korea there’s added urgency for policymakers to respond quickly because memories remain fresh of a series of financial crises that hit the country in recent decades, which caused heavy economic damage and sparked political turmoil.”
“China Covid: Videos emerge of rare protests in Tibet.
“Footage has emerged showing what appear to be rare large-scale protests against strict Covid-19 measures in the Tibetan regional capital, Lhasa. Multiple videos on social media show hundreds demonstrating and clashing with police. They are said to be mostly ethnic Han Chinese migrant workers. The city has been under lockdown for nearly three months…”
https://www.bbc.co.uk/news/world-asia-china-63410339
“Thousands march in Sri Lanka against government crackdown on cost-of-living protests.
“The rally in Colombo condemned the government’s attempts to intimidate protesters through military surveillance, arbitrary arrests and direct attacks by authorities. Sri Lankans have been protesting for months over the economic crisis that has led to severe shortages in many essential imported items such as medicines, fuel and cooking gas.”
“Food is on the ballot for millions of poor Brazilians ahead of presidential run-off vote.
“”It’s not every day that you’re able to buy bread. Some days you have it, some you don’t,” Aninha, 36, explains. “I don’t always have formula. Some days I can’t buy meat so we have to eat beans or rice.” She opens her fridge, revealing some bottled water and little else.”
“Fuel shortage hits Cuba again amid economic crisis…
“Cuba is facing its second fuel shortage in seven months, authorities have said, as long lines snaked around many Havana filling stations. Thursday’s queues came a day after state-run Cuba-Petroleum Union (Cupet) announced “a deficit in the availability of fuel” and delivery “difficulties.””
https://www.trtworld.com/americas/fuel-shortage-hits-cuba-again-amid-economic-crisis-62033
“More protests in Palo Seco [Trinidad]…
“Palo Seco residents held a second day of fiery demonstrations yesterday, blocking the SS Erin Main Road with burning debris and tyres, in protest of rising unemployment, crime, and the cost of living in the area. Yesterday morning, traffic was brought to a halt in and out of the constituency, with fires being lit by protesters who said they were desperate for assistance.”
“Cholera overwhelms Haiti as cases, deaths spike amid crisis…
“Across Haiti, many patients are dying because say they’re unable to reach a hospital in time, health officials say. A spike in gang violence has made it unsafe for people to leave their communities and a lack of fuel has shut down public transportation, gas stations and other key businesses including water supply companies.”
https://www.independent.co.uk/news/ap-haiti-cholera-portauprince-families-b2213271.html
“Cholera thrives in a warming world.
“Cholera outbreaks are widespread and more deadly these days — popping up in places that haven’t seen them in years. According to the World Health Organization, 29 countries have already reported cholera this year. Syria, Malawi, and Haiti are currently wrestling with especially large outbreaks… Climate change is largely to blame for the uptick, experts said, as waters warm and violent weather is more frequent.”
https://www.devex.com/news/cholera-thrives-in-a-warming-world-104161
“Climate crisis study finds heatwaves have cost global economy $16tn…
““We have been underestimating the true economic costs we’ve suffered because of global warming so far, and we are likely underestimating the costs going out into the future,” said Justin Mankin, an assistant professor of geography at Dartmouth College and senior author of the study published in the journal Science Advances.”
https://www.theguardian.com/environment/2022/oct/28/climate-crisis-heatwaves-cost-global-economy
You can read the previous “Economic” thread here. I’ll be back on Monday with a “Climate” thread.
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