The international business community expects a challenging 2023 marked by geopolitical tensions, high inflation and the energy crisis, according to the Eurochambres global economic survey published Wednesday.“
“The Eurochambres’ report, based on the responses of trade and commerce organisations representing around 70% of world GDP, shows prolonged geopolitical tensions and instability as the top challenges for the global economy this year.”
A Summer of Sovereign-Debt Crises Could Be Coming. Is the Fed Ready?“
“…The truth of the matter is that for different reasons we could have debt crises as early as this summer in the world’s three largest sovereign bond markets: the United States, Japan, and Italy. Should any of these crises occur, they could shake up currently illiquid world financial markets. They could do so in much the same way as the recent U.K. gilt-market meltdown in the wake of former Prime Minister Liz Truss’s ill-advised budget shook up U.K. financial markets.”
The leveraged loan ‘downgrade wave’ is starting as era of cheap debt fades.“
“A credit downgrade wave has begun to hit the highflying $1.4 trillion U.S. leveraged loan market as the Federal Reserve’s rapid pace of interest rate hikes threatens companies hooked on cheap debt… warning signs of potential stress have emerged as companies with shakier finances navigate a slowing U.S. economy and a higher interest rate world.”
The U.S. Economy Is Screwed Whether Inflation Slows Or Not…“
“Pick your poison:
1.) Hyperinflation returns leading to recession/depression.
2.) Inflation moderates, financial markets likely see gains, but consumers remain squeezed.
3.) Inflation turns to deflation, recession becomes near-certainty.”
A key barometer for the health of the economy continues to flash a recession warning sign, indicating a downturn is in store for the US in the near future. A growing number of business leaders agree the US economy is getting worse.“
“America is not in an official recession — not yet, anyway — but the Conference Board’s Leading Economic Index declined for the 10th consecutive month…”
Doomsday prepper has enough food to survive five years in case of disaster…“
“For Gubba who lives just outside Seattle in Washington, USA, worrying about the end of the world is more than a once-a-year thing. She keeps the pantry on her 30-acre farm packed with cans, rice and pasta at all times, deploying oxygen absorbers and freeze-drying techniques to keep it all edible for as long as possible.”
UK Asks Consumers to Cut Energy Use as London Freezes.“
“The UK grid is asking some households to cut energy use on Monday — a request which is likely to be extended Tuesday — as a plunge in wind power and freezing temperatures across the country test its ability to keep the lights on.”
UK borrowing pushed to new record amid energy crisis and debt bill.“
“British government borrowing shot up to a December record on the back of a climbing debt interest bill and the cost of energy subsidies for households and businesses. Official figures show public sector borrowing hit £27.4 billion last month, the highest for December since equivalent records began…”
There are growing fears that 2023 could see a wave of company collapses as the cost of living crisis continues [UK].“
“The number of firms on the brink of going bust jumped by more than a third at the end of last year, said insolvency firm Begbies Traynor. It expects this number to rise due to higher costs, firms repaying Covid loans and consumers cutting back.”
France to move ahead on pension reform despite protests.“
“France’s government says it will continue with plans to hike the retirement age by two years to 64, among other reforms. It says this is necessary to restore economic balance — but unions strongly disagree.”
Italy Braces for Disruption as Gas Stations Begin Strike.“
“Italy is bracing for two days of disruptions after gas station operators across the country started a strike late Tuesday to protest against a new policy introduced by Prime Minister Giorgia Meloni’s government… Italy’s strike comes on the heels of widespread labor protests in the UK and following strikes in France against President Emmanuel Macron’s pension reform.”
The Dutch government plans to close the Groningen gas field this year despite Europe’s precarious supply position. Groningen is the largest gas field in Europe…“
““We won’t open up more because of the safety issues,” Hans Vijbrief told the FT. “It is politically totally unviable. But apart from that, I’m not going to do it because it means that you increase the chances of earthquakes, which I don’t want to be responsible for.””
Germany is still years from substituting Russian pipeline gas imports with liquefied natural gas capacities, according to estimates by the country’s Economy Ministry…“
“But it will take until 2026 for Germany to install 56 billion cubic meters of domestic LNG import capacity, about the same it imported by pipe from Russia in 2021…”
Is Europe Sleepwalking Into Another War? The continent’s last major conflict in the Balkans never stopped smoldering, and a fragile peace is at a precipice…“
“…in a tinderbox of division and mutual distrust, a small spark can easily become a raging fire. A diplomat in Belgrade, who requested anonymity because he was not authorized to speak publicly, said it was shocking to watch Europe flirt with a second conflict in recent months.”
The Doomsday Clock reveals how close we are to total annihilation.“
“On Tuesday, the clock was set at 90 seconds until midnight — the closest to the hour it has ever been, according to the Bulletin of the Atomic Scientists, which created the clock in 1947. Midnight represents the moment at which we will have made Earth uninhabitable for humanity.”
Australian inflation hits 33-year high on energy costs and tourism rebound…“
“Official data on Wednesday showed that inflation rose 7.8 per cent year on year in the October to December quarter, the highest rate since 1990. The reading will dash hopes of a pause in rising interest rates, which have climbed 3 per cent since May, putting pressure on household finances.”
Bank of Japan Owns More Than 100% of Some Debt as Bonds Go Round and Round.“
“Japan’s broken bond market continued to throw up anomalies with central bank ownership of some government debt exceeding the amount outstanding, according to its latest data… How the central bank can own more than 100% of a bond is down to double counting…”
Kepco debt crisis exposes South Korean vulnerabilities…“
“Unless prices are raised much further Kepco’s debts are likely to mount. By crowding out other borrowers, the scale of Kepco’s bond issuance has already contributed to an autumn liquidity crunch that triggered government and central bank interventions in October last year. But if prices are raised substantially, this could not only feed inflation but also weaken the country’s prized export competitiveness.”
Chinese migrant workers face crackdown for ‘malicious’ protests over unpaid wages…“
“More than a dozen cities across China have in recent weeks threatened to punish workers who take “extremist” measures, such as protests blocking traffic or outside government offices, to get the money they are owed.”
Natural Gas Shortages Hit China as Temperatures Plunge.“
“Local governments starved for cash after enormous spending on costly “zero Covid” measures cannot afford to keep up adequate supplies of gas… The lack of natural gas, which is used widely across China to heat homes and businesses, has angered tens of millions of people and spilled over into caustic complaints on social media.”
As Uzbekistan freezes, is it exporting valuable gas to China – or not?“
“As Uzbekistan freezes amid rampant power shortages in its coldest winter for half a century, there is a million dollar question on the lips of its shivering citizens. Is the government exporting gas that could be powering heating plants and pumping warmth into people’s homes?”
Pakistan’s economic crisis forcing its army to retreat from Balochistan…“
“To confirm the report of the Pakistan army’s withdrawal from Kahan, an oil-rich region in Kohistan Marri, the Hamgaam News contacted the Baloch Liberation Army (BLA) sources which confirmed that the army has abandoned several of its check posts from Kahan and adjoining areas including some of its main cantonments.”
Pakistan imports luxury cars worth $1.2 billion amid economic crisis.“
“According to the reports by The News International newspaper, cash-strapped Pakistan has spent $1.2 billion on the imports of transportation items like luxury cars and electric vehicles during the last six months.”
Iraq sacks central bank governor as dinar slides in value.“
“Iraq has dismissed the governor of the Central Bank of Iraq and replaced him with the monetary authority’s former chief as the government tries to stem a big decline in the country’s currency.”
‘Eggs Are Luxury Items, Avoid Buying Rice in Bulk’: Egypt Heads towards a Financial Crisis.“
“Egypt is facing a financial crisis mostly because it has allowed the military to run a parallel government… Sisi commissioned the building of a new capital, 45kms from Cairo, and in that new city he has given contracts to companies associated with Egyptian military to build Africa’s tallest skyscraper and a mega-mosque. He also purchased a jumbo jet for himself worth $500m…”
South Africa Government Sued by Opposition Over Power Crisis.“
“South Africa’s biggest labor union and three opposition parties sued the nation’s president, the energy and public enterprises ministries and power utility Eskom Holdings SOC Ltd. over their approach to ending a 15-year energy crisis.”
South Africa Inquires About Rapid Deployment of Power Ships.“
“South Africa made fresh inquiries about securing electricity supply from Turkey’s Karpowership as it battles its worst ever power outages, according to people familiar with the situation. The approach follows a stalled attempt to procure 1,220 megawatts of emergency power from the company, a process that’s been mired in legal battles…”
Venezuelan public workers resume protests to demand pay hike.“
“Thousands of public employees took to the streets again in a number of Venezuelan cities on Monday to commemorate the 65th anniversary of the country’s democracy and to demand that the government give them a pay hike that “allows (us) to live with dignity.””
Violent Demonstrations Roil Peru’s Southern Copper and Tourism Heartland.“
“The focus of Peru’s violent unrest shifted back to the impoverished rural south after mass demonstrations in Lima last week failed to unseat the fragile government of President Dina Boluarte… The copper-rich south of Peru is the heartland of the country’s mining industry, as well as its tourism sector.”
As deadly protests continue, Peru’s government faces crisis…“
“… the burning question on the minds of millions of Peruvians is: How does their nation overcome this deadly political impasse? “”I don’t see another path forward that doesn’t mean more repression, possible loss of life or extreme instability, impasse and paralysis.””
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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Thanks for the varied overview.
The Gas File of the Netherlands I know well. It remains to be seen whether the gas tap will really close. Some political parties now advocate keeping the gas field open, which has really had its best days, by the way. I believe there is still a maximum of 12 years left in the ground It is an interesting energy dilemma where gas prices for Dutch consumers have to be weighed against the ground movements and small earthquakes that affect the ‘local population’, causing fear and damage to their homes. By the way, a similar discussion is taking place in several European countries where shale gas drilling is concerned. Is current in England I believe because the moratorium would be lifted. In France, large geothermal projects have been stopped for these reasons. But ‘ we’ just keep drilling and injecting no doubt about it. 🙂
Zip, it feels like every day we are being confronted with more evidence of how fundamentally incompatible our modern way of life is with a healthy biosphere. Our denial of that basic fact is inducing all sorts of magical thinking and hypocrisy. We want energy security (at affordable prices; wasn’t the gilet jaunes movement sparked by a potential rise in fuel tax?) but we don’t want to accept the ugly realities of energy-production, and we certainly don’t want them in our backyards.
And I am not setting myself apart – I was horrified when oil exploration began at the Horse Hill site back when I lived in Sussex. 😆 I mean, who wants poisoned groundwater and earthquakes, right? To say nothing of all the industry and traffic invading one’s rural idyll.
Our historically short-lived Prime Minister, Lynne Truss lifted the ban on fracking. Rishi Sunak has re-imposed it – a perfect illustration of how confused we are about the whole issue.
Panopticon….Oh yes Lynn Truss I had already forgotten about her. The Uk is so funny. A lot of English people live here in my department. You really are a class society and you notice that they classify each other directly into all sorts of subcategories The Brexit time was a big carnival and rollercoaster for them. France is very popular if at least the pound will cooperate.
Fracking, gas in the Netherlands and geothermal is all about injecting ‘our’ soil…. But who does that soil actually belong to? and to how deep? and what can you do with it all…. nuclear waste storage, mining, CO2 storage. With the rise of the ‘ renewables’ and the era of electric coils and windmill blades and precious metals, all of that is giant news again.
In the link an overview article unfortunately in French… I see many passages recurring in various articles from sites you promote and I myself regularly quote excerpts in my own articles on energy when it is convenient to do so
I should probably add that I don’t see fracking in the UK as any kind of solution to our energy crisis. We don’t have the infrastructure and population density is too high. This isn’t the Permian Basin where a multitude of short-lived wells can be drilled and “orphaned”. Earthquakes won’t go unnoticed or unprotested here either.
Australian inflation rated a mention, on our news today as well. I will check my micro-retirement fund balance tomorrow. They expected 7.6 and it hit 7.8, but it’s still significantly lower than most other OECD countries so I didn’t understand why it was so “concerning”. We knew our CB would increase rates again in Feb.
Followed by the news that the billionaire “Power Pair” with their solar generator startup SunCable collapsing. Ambitious project, but the co-founders have split opinions (and their funds) on its potential to provide export returns on their investment.
Original idea was to lay an undersea power cable to Singapore and export the power that way, but one of the duo wants to cancel that as too problematic after the Bass Strait cable broke down last year (it took weeks to locate the fault) and focus on exporting green hydrogen instead.
As for fracking, Oz supposedly has plenty of reserves, but the initial pilot projects all failed. Not profitable. In remote areas, difficult to get machinery in or out. Or near existing farmland, and landowners wouldn’t give access. Ditto with being too close to national parks. Fire risks etc. One was protested very strongly after it released a pocket of methane gas bubbling into a river (the protesters kept setting it alight by throwing lit matches into it LOL ) No more private investment in that idea. Maybe we passed the “peak” before it really started? 🙂
But investment has been secured for a huge off-shore wind farm off the southern coast. And a pilot scheme for community batteries has started.
Seems while Aussies have taken up household rooftop solar arrays in a big way, we aren’t installing household batteries to go with them.
And feed-in of the excess solar power back to the grid, causes load problems on the grid…*sigh*..so the govts are now trialling community sized big batteries.
I wonder if my district will be one of them?
There are the same problems in the Netherlands regarding the glut of solar panels that ‘everyone’ went to put on their roofs subsidised by the state. Consequence overload etc. Now the ‘ home battery’ is being promoted. Seems they do the same in Germany. The disadvantages are obvious… payback time is doubled or more… huge pollution later when they replace them and high recycling costs they will undoubtedly introduce.
Here in my insulated valley in France where I have lived for 18 years, they do things differently. I myself am a member of an energy cooperative and have installed 9450 Wp with a yield of about 1.4Mwh. In consultation with the grid operator Enedis, a maximum of what can be installed in the valley and villages was agreed ‘ years ago to avoid overloading and the associated grid aggravation. France, because of its nuclear power, has a heavily established grid where literally everyone was sited in the 70s to do ‘ everything’ electrically 🙂 Personally based on my work within the energy cooperative that invests in local! biomass and pellet processing, I am relatively positive about small-scale deployment of renawables in remote, semi autarkic areas. In de link ‘ mijn’ 🙂 energiecooperatie… ik ben maar een eenvoudig lid hoor.
“Original idea was to lay an undersea power cable to Singapore and export the power that way.” The mind boggles. Our electricity is supplied by undersea cable and it often breaks, meaning that we fall back on our diesel generator. Some poor chap was killed whilst repairing it last year, I gather.
That is interesting re fracking in Oz. Off the top of my head, I would have guessed that it might actually be commercially viable in Australia (if indeed in real terms it is commercially viable anywhere). Argentina’s Vaca Muerte has long been touted as the southern hemisphere’s big fracking success story. It seems to be finally taking off with these elevated prices but I read recently that infrastructure is wanting:
I can only guess re fracking in Oz, but no plans to develop or projects in the pipeline. Not much interest by Oz govt or investors.
Oz is all but drowning in natural gas reserves, 80+% of which is exported. Recently our government passed “emergency” legislation to cap local gas prices, as with the war in Ukraine the gas companies decided to export more, left us a shortfall on domestic gas supplies, and charged us the international prices.
Our north-west shelf oil field is still producing about 20% of our oil needs, but passed its ‘peak’ ages ago. Its shipped mostly to a PNG refinery or Malaysia. We lost 2 of the last onshore 4 refineries during CoVID, and the remaining two are being subsidised by govt to keep operating until 2027, but methinx another one will probably close and be converted to an import terminal sooner. Our own refineries said they can’t compete commercially with SE Asia.
Nearly all our oil and refined oil products come from or via SE Asia or Middle East. So we have relatively short oil supply chains, and export our natural gas in trade … along with being one of the biggest Cobalt miners in the world – second only to the DRC, but we don’t use child slave labour to mine it 🙂
So we keep mining/exporting iron ore, coal
cobalt, nickel, lithium, copper, gold, silver, aluminium, disilicate, huge sand mining projects, amongst a dozen or more other metals and minerals. All of which are going very well on our ASX.
So I can understand why there isn’t much interest in developing shale oil. Yet. We aren’t desperate for it while we still get good prices for what we already mine and drill for.
We have no nuclear power generation at all. We only ever built one very small reactor, but it was designed only to produce short half-life isotopes for medical/hospital use, and for University research projects.
As for solar arrays, yes we do have a lot of wind and solar around the country, my own city (around 500k population) is 100% wind/solar with Snowy Hydro 1.0 as backup, and has been for years. but we have no industry to support on that grid.
I was later uptake than most of my neighbours, I put my rooftop solar in early 2020 after the ‘Black Summer’ fires, as I could afford to with the govt subsidies, and wanted to reduce my power bills (because I do like my ducted air-conditioning! LOL). The installers even talked me out of getting a household battery 🙂 This new ‘community’ big battery project will supposedly only cost us $20 month to use in ‘off-peak’ times. We’ll see if it works out in fixing the grid load problems, and still supply cheap enough elecktrickery for household use.
From reneweconomy.com, I read that Oz is going mostly for wind over solar but the problem is mainly in distribution. All of our little isolated grids are not connected. Even the old coal & gas power stations are mostly State-govt owned and not connected across borders. As my brother said, the wind may stop blowing in one spot, but wind will be blowing somewhere else. So Oz is building more long-distance high voltage transmission lines to connect up the grids. That’s also the problem with Snowy Hydro 1.0 and 2.0 . Produces a great deal, but not well connected over long distances.
So in short, I agree that wind/solar hydro works well enough for residential household uses in small sparse populations like ours, and maybe even for electrified public transport in the cities, but it won’t ever support industry/manufacturing, heavy transport or agriculture etc.
Rain, thank you for the thorough overview. Glad to hear you’re not sending ankle biters down the cobalt mines!
From an energy and resource standpoint, and given that you don’t have lots of radioactive spent fuel ponds, Australia sounds better placed than most to ride out the worsening economic and social upheaval. Unfortunately, you seem to to be very much in climate change’s crosshairs down there.
For those interested in what is expected and why, Nate Hagen spells it out in stark details here..
Oil ain’t what it use to be and the chickens are coming home to roost and wanting what is due…that Debt load will be crushing….
This is an amazing podcast discussion!
Thanks for the link, Vince. Looks like my cup of tea! Nate Hagens I know well and admire, sizing up our systemic predicament from every conceivable angle, as he does.