So, this will be my last thread until 14th February. Thank you to all my readers for keeping me company on this fascinating journey into uncharted waters, as the global economy starts to lose its battle against entropy, and a special thank you to anyone who has donated or is a subscriber.
An American hedge fund advised by the economic guru known as “The Black Swan” has warned a debt timebomb risks pushing the global economy into a downturn rivalling the Great Depression.“
“Mark Spitznagel, chief investment officer of Miami-based Universa Investments, said levels of borrowing were so high following a decade of low interest rates that they now risked triggering a “contagious inferno” that could envelop the financial system.
““It is objectively the greatest tinderbox-timebomb in financial history – greater than the late 1920s, and likely with similar market consequences,” the 51-year-old told his clients in a letter reported by Bloomberg.”
Here’s where the next financial crisis starts…“
“A change in financial market conditions could lead to short-term cash stress and trigger forced selling… That could create a “self-reinforcing mechanism”… while almost everyone agrees the shadow banking sector might be an accident waiting to happen, there isn’t a clear or agreed plan for how to stop it.”
Housing Slump Deepens From US to China in Risk to Global Growth.“
“Reports this week have shown the US housing slump stretched into a fifth month, China’s home sales slide continued and price declines persisted in both Australia and New Zealand. Sliding home values threaten to undermine consumer confidence and weigh on household spending…”
How bad will the global housing market crash be?“
“…Since the last global property bubble in 2006-07 and the financial crisis that resulted from it, central banks have held interest rates close to zero. While few have paid attention, this has led to a reflation of many of the same property bubbles that caused the disaster to begin with… risk metrics show the potential for a mass default event rising and rising.”
An under-the-radar economic indicator is flashing a warning not seen since the 2008 financial crisis…“
“According to data from the Fibre Box Association, US cardboard box shipments declined 8.4% in the fourth-quarter, representing the largest quarterly decline since the second quarter of 2009, amid the Great Financial Crisis. Cardboard boxes are an overlooked barometer of the health of the economy…”
UK falls to lowest-ever position in global corruption index after Boris Johnson’s scandal-hit premiership.“
“A survey of perceived corruption in public office places Britain behind Uruguay and Hong Kong amid a warning that scandals and concerns about the use of taxpayers’ money mean ‘slipping standards’ in the UK are being noticed globally.”
UK Business Groups Warn of ‘Cliff Edge’ as Energy Help Ends.“
“Many British businesses face dire risks when the government tightens its energy support package in April, industry groups told a parliamentary committee Tuesday. Hospitality companies could see an average of 85% increase in their power and gas bills from April…”
German industry to pay 40% more for energy than pre-crisis – study says.“
“German industry is set to pay about 40% more for energy in 2023 than in 2021, before the energy crisis triggered by Russia’s invasion of Ukraine, a study by Allianz Trade said on Monday, citing contract expiries and delayed wholesale pricing effects. “The large energy-price shock still lies ahead for European corporates,” said Allianz Trade…”
Lucky Europe has swerved blackouts – but don’t rejoice just yet…“
“We will probably have to live with elevated energy prices for the foreseeable future… governments cannot afford to keep subsidising energy bills on the scale they did last year. In the EU, some governments have spent the equivalent of over 7% of GDP shielding businesses and households from rising energy costs. This is unsustainable.”
Thousands of care sector workers protest in Brussels.“
“Over 10,000 people have protested throughout central Brussels to demand better working conditions and more pay in the care sector which has been especially hard-hit during the Covid-19 pandemic. Trade union activists and workers are demanding that more people be hired…”
Huge crowds of protesters clashed with riot police in cities across France today in a second day of nationwide protests over Emmanuel Macron’s plan to make people work longer before retirement.“
“Hundreds of thousands of striking workers descended onto the streets of French cities – from Paris to Marseille – to denounce a reform that raises the retirement age by two years to 64 in a major test of Macron’s presidency.”
Spanish inflation at highest in 35 years after state subsidies end.“
“Core inflation climbed to 7.5% in Spain, making it the highest figure since December 1986, the national statistics institute INE revealed Monday after VAT was reduced on some foodstuffs and some state subsidies on fuel were removed.”
Bank of Japan outright bond purchases in January were the highest ever on record.“
“Defending Yield Curve Control. Expensive business …and despite all the breathless headline chatter of policy change to come from the Bank of Japan (mea culpa) the BOJ is showing no signs of relenting.”
Japan Factory Output Inches Down Amid Global Slowdown…“
“Among concerns is the global economic slowdown, especially in the US and Europe, caused by continued aggressive policy tightening. International financial organizations have increasingly warned of the risk of a deceleration… a slowdown in China is also a concern.”
South Korea posts the worst trade deficit in its history.“
“South Korea recorded a trade deficit of $47.5 billion for 2022, official data from the customs agency showed. It marked the worst trade deficit since the agency started compiling data in 1956 and far more than the $20.6 billion trade deficit in 1996.”
China’s debt-based interest payments top a trillion yuan for first time, raising concerns about financial risks.“
“Interest payments on local government debt in China exceeded a trillion yuan for the first time last year as Beijing called for enhanced efforts to steady the economy, and analysts say public debt in the world’s second-largest economy could continue to surge to an all-time high in 2023.”
Chinese cities are struggling to pay their bills as ‘hidden debts’ soar.“
“Three years of strict pandemic controls in China and a real estate crash have drained local government coffers, leaving authorities across the country struggling with mountains of debt. The problem has gotten so extreme that some cities are now unable to provide basic services, and the risk of default is rising.”
Peru Residents Form Long Lines For Gas In Face Of Fuel Shortages.“
“Hundreds of people line up along the streets of Poroy village, in the outskirts of Peru’s Cusco city, to buy canisters of gas amid shortages following anti-government road blockades.”
South Africa’s Energy Crisis Could Spark A Political And Economic Disaster…“
“The country faces a “perfect storm of inflation, electricity cuts and corruption accusations that will continue to deteriorate South Africa’s profile and to pose risk for investments in the country,” as Aleix Montana, Africa analyst at risk consultancy Verisk Maplecroft, told CNBC.”
Protesters block Benin City roads [Nigeria] over fuel price hike, Obaseki promises solution in 24 hours.“
“Protesters, made up of Civil Society Organisations and other residents of Edo State, including youths, yesterday, staged a peaceful protest over hike in pump price of fuel. They barricaded strategic locations within the metropolis and marched through Sapele Road to Ring Road, causing gridlock.”
Another uprising is in the making in Tunisia…“
“Saied’s government is now gearing up to implement ravaging new austerity measures the financial institution presented as a prerequisite to sealing the deal. These policies will likely include the complete elimination of food and fuel subsidies, the slashing of public health, education, and social protection spending, and the privatisation of key public companies.”
Cost of living crisis cuts a cruel swathe through Arab political economies…“
“The depreciation of Arab currencies against the dollar is a particular concern for the most vulnerable nations because households that had built up savings prior to the economic downturn have seen the value of their financial reserves plummet and safety nets cut from beneath them.”
Something Has to Give in Postwar Syria… Thirteen years of constant crisis is heading toward inevitable breakdown…“
“…2023 looks almost guaranteed to be a year of potentially game-changing instability, and although developments unique to Turkey, Russia, and Iran are likely to contribute toward significant changes, the most consequential dynamic relates to the economy and specifically the situation inside regime areas.”
Local demonstrations have returned to the towns and villages of the northern and eastern countryside of Aleppo, protesting the high prices of electricity supply and its frequent interruptions.“
“A wave of anger among the people was met with the local councils’ rejection of the electricity companies’ policy…”
Israel and Palestinians risk deeper conflict in a distracted world…“
“With prospects for political progress bleaker than they have been for years and with world powers now distracted by the Ukraine war, violence has steadily been rising. The latest outbreak followed months of confrontations that left 190 Palestinians dead, according to United Nations figures…”
Turkey’s push into Iraq risks deeper conflict…“
“Turkey’s advances across the increasingly depopulated border of Iraqi Kurdistan attract little global attention compared to its incursions into Syria or the battle against Islamic State, but the escalation risks further destabilising a region where foreign powers have intervened with impunity, analysts say.”
Death toll from suicide bombing at mosque in Pakistan climbs to 100.“
“At least 225 people were injured in Monday’s attack, which took place as more than 300 worshippers were gathered inside the mosque. Most of those killed or injured were police officers… The mosque is located inside a compound that also includes the city’s police headquarters.”
Pakistan braces for fuel shortages amid liquidity crisis.“
“Pakistan could face a crunch in fuel supplies in February as banks have stopped financing and facilitating payments for imports due to depleting foreign exchange reserves, traders and industry sources said. The South Asian nation is facing a balance of payments crisis…”
Sri Lanka Is Calm Again. That Doesn’t Mean Things Are Any Better…“
“… the island nation’s economy remains on a ventilator, with the government yet to secure a way out of crushing debt. Sri Lankans have become resigned to a sad reality: pared-down meals, shrunken incomes and reduced expectations. Many young people are desperately trying to find a way out of the country.”
You can read the previous “Economic” thread here. I’ll be back on the 14th Feb.
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I wish you a pleasant time on the mainland. Where there is a mainland there is also a ‘hinterland’, one of the most beautiful words you use in England too.
Hinterland a metaphor for anything and everything and it is good to be there is my experience there somewhere far away in Europe.
Hopefully for us as loyal readers, after a day or ten you’ll start ‘ missing your research’ on ‘as the world turns’ and in a fortnight’ time you’ll be able to make a go ahead in your own ‘hinterland’ after solid and ‘rusty’ beginnings.
…..Hinterland….A further sense in which the term is commonly applied, especially by British politicians, is in talking about an individual’s depth and breadth of knowledge of matters outside politics, specifically of academic, artistic, cultural, literary and scientific pursuits…..
Zip, thank you! I am pretty compulsive about my staying on top of the news, so, even though I’m excited to have a break, I will no doubt Jones a little. 😆
I really hate the thought of missing a story of systemic importance… like not being at my station for the equivalent of the Bear Sterns hedge funds blowing up in 2007.
Brazil wants to abandon a 34,000-ton warship in international waters, and it could become one of the biggest pieces of garbage in the ocean
Brazilian Navy Warships anchored in Guanabara Bay Luiz Souza/NurPhoto via Getty Images
Brazil plans to abandon its biggest warship, the “São Paulo,” out at sea.
The ship was en-route to a Turkish scrapyard to be taken apart, but was denied entry.
It’s believed to contain asbestos, and the Brazilian army now plans to abandon it in international waters.
e São Paulo, a 60-year-old aircraft carrier, has been floating abandoned in the South Atlantic Ocean for five months.
Weighing 34,000 tons and reaching a height of 870 feet, it’s the largest Brazilian warship in existence. Brazil sold the ship to a Turkish scrapyard to be dismantled, per Time, and it started sailing to Turkey in August, but it was not allowed to dock in the country. Turkish authorities said the ship had asbestos, a toxic material commonly found in ships made in the 20th century.
The ship then turned around and returned to Brazil, but in September, it was prevented from docking on the coast of Pernambuco state, per Time. It was left to circle aimlessly along the Brazilian coast for five months.
See, that sums it up nicely…not responsible for the mess we leave on the planet..
That is a depressing vignette, Vince. Reminded me of the decrepit oil tanker slowly rotting off the coast of Yemen whilst everyone argues what to do about it:
“The FSO Safer is a decrepit floating storage and off-loading facility in an advanced state of decay containing 1.14 million barrels of oil which threatens to cause unprecedented humanitarian, environmental and economic damage.”