“More rotting assets are lurking in the shadows of the financial system…
“The pandemic foreshadowed cracks in the credit system that the Federal Reserve papered over with its massive injections of liquidity in 2021. The need to tamper resurgent inflation has now stripped central bankers of that tool. And the hangover of years of policy-driven, frothy credit provision are now showing, as default rates in the U.S. and Europe escalate.
“The hangover from this subprime corporate lending will amplify any future downturn as companies struggling to service their debt laypeople off and reduce their capital investments amid a global economic slowdown. It will also test the financial system, daring central bankers to veer away from higher rates.”
“We need to deal with regulatory blind spots in the financial system…
“In its ‘2023 Global Investment Outlook’, BlackRock paints a gloomy picture. The world’s most powerful asset management firm forecasts a painful recession and an unstable environment for investments. Contrary to what many investors assume, they would not be able to count on the support of the central banks in an emergency. What this seemingly frank assessment neglects to mention, however, is the considerable systemic risk posed by ‘shadow banks’ such as BlackRock itself.”
“No, Banks Aren’t Stronger Than They Need to Be; Capital standards have proven their worth. They should be restored, not weakened…
“So how much capital do banks really need? It’s hard to say precisely, but it’s abundantly clear that the biggest ones don’t have enough.”
“‘Greed is Good’ …The [UK] Government is Quietly Rolling Out Dozens of Changes that could ‘Unleash the Next Financial Crash’…
“Jesse Griffiths, chief executive of the Finance Innovation Lab, told Byline Times the package was the “biggest change to the rules since the 1980s”. As many as 100 reforms are on the cards. “Taken together they represent a push to roll back protections since the crash. The Financial Services bill makes regulators cheerleaders of the sector. It is… really worrying.””
“Global Property Market Faces $175 Billion Debt Spiral.
“The slump in the world’s biggest asset class has spread from the housing market to commercial real estate, threatening to unleash waves of credit turmoil across the economy. Almost $175 billion of real estate credit is already distressed…”
“The global construction slowdown could be upon us: Construction in 7 out of 10 countries worldwide is expected to decline this year…
“The forecast predicted falling construction activity this year in 82 of the 112 countries where data was collected. The declines are primarily due to higher mortgage rates worldwide, weaker economies, and reduced buying activity, as well as tighter budgets for homebuilders.”
https://uk.finance.yahoo.com/news/global-construction-slowdown-could-upon-213640835.html
“Weak US Retail Sales, Factory Data Heighten Recession Concerns.
“US retail sales fell by the most in a year and business equipment production slumped, raising concerns that the economy is losing momentum under the weight of tighter Federal Reserve policy… Taken together, the data show a consumer that’s losing steam and business investment falling…”
“FBI warns of neo-Nazi plots as attacks on Northwest power grid spike…
“Attacks like the one in Morton are on the rise in the Northwest – there have been 15 since June, more than in the previous six years combined. The recent attacks make this region a hotspot for such activity, according to a joint investigation by Oregon Public Broadcasting and KUOW. In most cases…”
“Another electrical substation damaged by gunfire in North Carolina.
“An electrical substation in North Carolina has been damaged by gunfire, marking the third incident where a substation was damaged since November. An EnergyUnited substation was damaged around 3 a.m. Tuesday…”
https://uk.sports.yahoo.com/news/another-electrical-substation-damaged-gunfire-223038614.html
“Bank of England Says Banks Most Wary Since Financial Crisis About Lending to Households.
“UK banks are more hesitant about lending to households than at any point since the financial crisis more than a decade ago, the Bank of England said in figures that underscore the growing risks for the economy.”
“UK Retail Sales Had Worst Year on Record in Spending Squeeze.
“UK retail sales fell unexpectedly last month, capping the worst year on record after a cost-of-living squeeze forced consumers to pay more for fewer goods. The volume of goods purchased in shops and online fell 5.8% from a year ago…”
“Striking French workers lead 1 million people in protest over plans to raise retirement age.
“Strikes disrupted train services, flights, schools and businesses in France on Thursday as more than one million people protested against the government’s plans to raise the retirement age for most workers.”
https://edition.cnn.com/2023/01/19/business/france-strikes-retirement-age-protest/index.html
“Lagarde promises to ‘stay the course’ on high interest rates.
“Christine Lagarde warned financial markets on Thursday that the European Central Bank was determined to “stay the course” and signalled further big interest rate rises lay ahead to get inflation down.”
https://www.ft.com/content/cf43669d-95b7-4b69-8ed2-c4b683eb7e94
“Cost of living: Japan inflation jumps to new 41-year high.
“Core consumer prices for last month rose by 4% from a year earlier, double the Bank of Japan’s (BOJ) target level.
“It puts further pressure on the central bank to put up its interest rates to help ease the rising cost of living.”
https://www.bbc.co.uk/news/business-64341733
“Dysfunction plagues Japan bond market as BOJ sticks to its guns…
“There are doubts over the BOJ’s ability to sustain bond purchases. The bank has bought 34 trillion yen ($265 billion) in bonds since December to defend its policy band. It is now believed to hold almost all of the three issues targeted by its unlimited bond-buying operations, which has thrown a wrench into trades by institutional investors.”
“Drop in China-bound Japanese exports adds to fears of global downturn.
“Japan’s export growth slowed sharply in December as China-bound shipments fell for the first time in seven months, stoking fears of further slowdown in the global economy and external demand for Japanese shipments.”
https://www.reuters.com/markets/asia/japans-trade-deficit-persists-recession-risks-loom-2023-01-19/
“Foreign Investors Pulled $91 Billion From China’s Bond Market Last Year.
“Foreigners cut their holdings of yuan-denominated bonds by the net equivalent of $91 billion in 2022. It was the only net annual outflow since China’s central bank began publishing foreign ownership figures in 2013…”
“Too-big-to-fail Chinese banks have $550B capital gap to fill – S&P Global…
“While the Chinese government remains highly supportive of domestic banks, that does not mean the entire system would be bailed out in the event of a crisis, Ratings said, adding that the government’s vast resources could be outmatched by contagion effects of a massive systemic crisis.”
“Peru Unrest Threatens to Choke Off Almost 2% of Global Copper Supply.
“Protests in Peru are threatening to choke off access to almost $4 billion worth of copper just as China’s emergence from Covid lockdowns promises to boost demand… Unrest has rattled Peru since the ouster and arrest of former President Pedro Castillo, upending commodity supply chains from metals to organic coffee.”
“‘Takeover of Lima’: thousands march on Peru’s capital as unrest spreads.
“Thousands of protesters in Peru, many from the country’s heavily indigenous south, descended on Lima, the capital, on Thursday, angered by a mounting death toll since unrest erupted last month and calling for sweeping change.”
“A Bolivian judge ruled Thursday that Santa Cruz Governor Luis Camacho, a leader long in opposition to the left-leaning federal government, must remain detained while he awaits trial.
“Camacho was arrested in December… Since then, weeks of protests and blockades in Camacho’s Santa Cruz region, an agricultural hub, have impacted trade with the rest of the country, putting pressure on political capital La Paz.”
“An Energy Crisis Is Seeping Into South Africa’s Food Supply.
“The most severe power cuts ever experienced in South Africa are threatening food and water supplies and disrupting the lives of millions of people, including chicken farmers.”
“South African businesses turn to diesel and solar panels as Eskom crisis deepens…
““When you’re running a business, you have to consider not just your stock, but the diesel you have to purchase. It’s very difficult for these businesses to survive,” said Thabi Leoka, an independent economist. Even phone calls or internet access were ordeals as mobile tower batteries ran out, she said.”
https://www.ft.com/content/77f1e4fa-5c1d-4c4c-8ade-c1168250a60b
“South Africa: Fresh Protests Erupt in Phoenix As Power Outages Continue.
“Fresh protests erupted in Phoenix, north of Durban, on Wednesday afternoon, with people taking to the streets and burning tyres. This comes after protests earlier this week were sparked by a 40-hour long power outage over the weekend. On Tuesday, ward 50 was again without power.”
https://allafrica.com/stories/202301190517.html
“Frequent blackouts cripple South African labs…
“In Johannesburg, paleoclimatologist Stephan Woodborne needs these faltering power supplies to run the African continent’s sole accelerator mass spectrometry facility, which uses radiocarbon dating to determine the age of historical artefacts, as well as biological, hydrological and geological samples.”
“Malawi’s cholera outbreak exacerbated by inadequate funding for water and sanitation.
“Malawi’s worsening cholera crisis is the result of long-term neglect of the country’s water supplies and water testing urgently needed, specialists say. Malawi has been dealing with a cholera outbreak since March 2022 with 26,263 confirmed cases in 27 districts and 852 deaths as of this week…”
“Cholera has been classified as a “deteriorating” situation which will further strain healthcare systems worldwide, the UK’s health authority announced today.
““The incident is deteriorating with increased implications for public health,” the UKHSA said, indicating that the threat to the UK has also been raised.”
https://www.telegraph.co.uk/global-health/science-and-disease/cholera/
“Unrest and unsettled leaders bode ill for the Middle East in 2023…
“Last week there were warnings of civil war in Israel over Netanyahu weakening the Supreme Court… the worsening economic conditions and failing institutions in Iraq, Jordan, Lebanon, Egypt and Syria are beyond crisis point.”
https://www.ft.com/content/71447fef-7d65-4a00-86bd-046505c657fb
“Egypt’s economic situation is so dire that the government is asking people to eat chicken feet…
“Many Egyptians are furious that the government would ask citizens to resort to foods that are symbols of extreme poverty in the country… “(We have entered) the age of chicken feet, the collapse of the Egyptian pound… and drowning in debt,” tweeted Mohamed Al-Hashimi, a media personality, to his 400,000 followers.”
https://www.kten.com/story/48176124/why-egypt-is-asking-its-people-to-eat-chicken-feet
“Lebanese pound slumps to new low as president vote fails again.
“Lebanon’s currency hit an all-time low against the dollar on the black market Thursday as politicians for an 11th time failed to elect a new president in the crisis-torn country… Since an unprecedented financial crisis hit Lebanon in late 2019, the currency has lost more than 95 percent of its value…”
https://uk.finance.yahoo.com/news/lebanese-pound-slumps-low-president-142447133.html
“Lebanon to take out $116m in loans for ailing electric grid.
“The cash-strapped country for over two years has struggled with rampant power cuts that have crippled much of public life, worsening a broader economic crisis that has pulled over three-quarters of the country’s population into poverty. Today, households only receive about an hour of state electricity per day…”
https://abcnews.go.com/International/wireStory/lebanon-116m-loans-ailing-electric-grid-96503428
“Lebanon’s middle class vanishes as economy collapses.
“Following years of political and economic crises, Lebanon’s population structure has changed, and not for the better… Lebanon’s capital Beirut has turned into a city of contrasts. Expensive cars park before popular restaurants and bars, while people of all ages rummage through bins for something edible.”
https://www.dw.com/en/lebanons-middle-class-vanishes-as-economy-collapses/a-64442064
“Balochistan unrest unnerves Pakistan, Army chief Munir blames ‘external enemies’…
“Not just terrorism, the Balochistan province of Pakistan is even facing an acute shortage of essential food items. Earlier this month, in the wake of the worsening economic situation in Pakistan, the Balochistan administration had sent an urgent missive to the Shehbaz Sharif-led government informing about the complete lack of wheat in the province.”
“Bangladesh: Protests denouncing government’s plan to increase gas price rates possible across country into late January.
“Various opposition political groups, such as the Bangladesh Jamaat-e-Islami (JI) and Bangladesh Nationalist Party (BNP), and other activists opposed to the government’s plan to increase gas prices may stage protests across the country into late January.”
“The number of children grappling with various forms of undernutrition in Sri Lanka increased for the first time in at least six years in 2022, a government report and data from the health ministry indicate.
“The island nation of 22 million people is struggling with soaring prices, including of food, largely caused by its worst economic crisis since it gained independence in 1948.”
“The worst thing about Davos? The Masters of the Universe think they are do-gooders…
“Davos and similar conclaves can only be understood as performances. They are the stage upon which the Masters of the Universe act out the dramatic narrative of their own lives. They are exercises in mutual self-affirmation: we’re here, and we are important.”
https://www.theguardian.com/commentisfree/2023/jan/19/davos-masters-of-the-universe
“Davos elites need to wake up to ‘megathreats’ the world is facing…
“Where once interest rates were too low – or even negative – they have now been rising fast, driving up borrowing costs and creating the risk of cascading debt crises. The age of hyper-globalisation, free trade, offshoring, and just-in-time supply chains has yielded to a new era of deglobalisation, protectionism, reshoring (or “friend-shoring”), secure trade and “just-in-case” supply-chain redundancies.”
https://www.theguardian.com/business/2023/jan/19/davos-megathreats-imf-economic-financial-challenges
“The Era of Markets ended in 2019. What comes next?
“…What comes next? The honest answer is nobody knows. What is clear is that we are moving towards a more multipolar world, instead of the American-dominated order. The bad news is that this is going hand-in-hand with rising protectionism, conflict and outright war.”
https://www.ft.com/content/ec1ff146-ab34-49a7-b908-f3deaa68e80e
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 content, please help me continue this work by becoming a patron of my work via Patreon. And if you are already a subscriber or have donated – thank you! It is an enormous help as the cost-of-living crisis ratchets up here in the UK.
Interesting update full of bizarre contradictions and strategies. The article on the london financials and their greed is truly baffling, but logical from the point of view of making London the speculative hub on earth.
The articles on South Africa, a country I know well, paint a dramatic picture of the collapse of what is still Africa’s largest economy. I follow your ‘ choice’ articles with great appreciation. Have a pleasant weekend
Zip, thank you on both counts!
I’m often keenly aware, putting together these socio-economic threads, of how hopelessly confused our poor species is. I guess that stems from governments and organisations trying to deal with the problems immediately in front of them rather than stepping back and thinking in truly systemic terms. Unfortunately, if you do the latter, you are likely to come to the realisation that there isn’t much you can do. As Paul Chefurka says in his splendid article, “Climbing the Ladder of Awareness”:
“The very concept of a “Solution” is seen through, and cast aside as a waste of effort.”
http://www.paulchefurka.ca/LadderOfAwareness.html
Interesting. the ladder of awareness Today, following a story/report I wrote, I had an extended discussion with my readers about the ‘retirement’ manifestations in France.
I have to tell you that, given all the complexities in all areas that Cherfurka describes and which have certainly become even more complex for us Europeans since 2012, I find myself having more and more ‘fun’ (although that’s a weird word) describing and researching all these insoluble complexities in all its extreme contradictions on a pure daily basis. Therefore, I am not afraid of depression 🙂
I find it somewhere reassuring that 90% of humanity believes and acts in the twilight world of ‘everyday solvability’ and continuity of their BAU model. Frankly, I also ‘quietly’ leave them in that delusion and see no reason to take that away from them.
@zip
“I find it somewhere reassuring that 90% of humanity believes and acts in the twilight world of ‘everyday solvability’ and continuity of their BAU model. Frankly, I also ‘quietly’ leave them in that delusion and see no reason to take that away from them.”
I hear you, I am much the same 🙂
I am unable to comment on such topics with my friends, family etc.
It would only upset them, because nobody likes having their happy bubbles pricked.
It would be like telling your little kids there is no Tooth Fairy!
Perhaps BAU and conservatism are the cement of society.
I live in a very small farming village in Auvergne; Opposite me a farmer with 28 cows, a pig and some sheep.
John Berger, perhaps you have ever heard of him wrote the book ‘Pig Earth’.
A somewhat romanticised picture of the French countryside, analysing the stubborn, and eternal conservatism of the farmers who for centuries, under all the changes in climate and power structures, kept on farming, ploughing and harvesting their crops and planting their apple trees.
The same sort conservatism as Bruce Chatwin describes in On the Blackhill, on a farm called ‘The Vision’ for a reason.
“Those who need to cross a river like to look for a ford and shallow spot….” That’s BAU and everyday conservatism
“Forests precede civilizations and deserts follow them.”
– François-René de Chateaubriand
Apt, Curt! I looked up this François-René de Chateaubriand chap, as he is new to me, and found him very quotable. I like this one: “Every institution goes through three stages – utility, privilege, and abuse.” Made me think of Eskom, for some reason. 😆