“The financial crisis lurking in the shadows: Why regulators must now turn their attention to shadow banking…
“Despite the mostly peripheral nature of shadow banks, experts are concerned that the traditional financial sector will still face risks of contagion if large shadow banks were to collapse… analysts identified credit hedge funds and broker dealers as amongst the most risky shadow banks due to their higher level of leverage.”
“Uh oh! The crypto collapse has reached the real financial system.
“Silvergate, one of the most important banks in crypto, is in big trouble. Maybe existential trouble… Silvergate was a pass-through point for crypto… So Silvergate’s troubles are a problem for the entire crypto industry.”
https://www.theverge.com/2023/3/4/23623964/crypto-silvergate-bank-run-stablecoins-dollars
“French shipping giant CMA CGM warns demand is deteriorating.
“A downturn that began in the second half of last year “remained at play in 2023, as market conditions in the transport and logistics industry continue to deteriorate,” the world’s third-largest container line said in a statement Friday… The bleak outlook from the French transporter is in line with European rivals A.P. Moller-Maersk A/S and Hapag-Lloyd AG…”
“U.S. Bank: Truck freight volumes continue to decline.
“The volume of freight moved by truck in the peak shipping season of 2022 dropped by the largest year-over-year level since the heart of the pandemic, according to the latest U.S. Bank Freight Payment Index. Fourth-quarter truck freight shipments contracted 7.1% year-over-year…”
https://www.fleetequipmentmag.com/truck-freight-volumes-decline/
“‘There has to be a mistake’ – shock as electricity bills arrive [Ireland].
“When Úna Ni Chonaire Fulham opened her most recent bill from Electric Ireland she said she felt “shock” firstly, then thought “there has to be a mistake”. Una was charged €2,285 for a total of 71 days’ usage from 1 December last year to 9 February this year.”
https://www.rte.ie/news/ireland/2023/0305/1360378-electricity-bills/
“In Britain, ‘warm hubs’ emerge to beat soaring energy costs.
“On a blustery late-winter day in Shakespeare’s birthplace, the foyer of the Other Place theater is a cozy refuge. Visitors are having meetings over coffee, checking emails, writing poetry, learning to sew. It looks and feels like an arty café in the pictureque streets of Stratford-upon-Avon, but it’s a “warm hub”…”
“Mental health crisis takes its toll on UK workforce…
“Mental ill health appears to be playing a significant — and in some age groups, growing — role in this picture. IPPR, a think tank, said in December that a mental health issue was the most common condition among working-age people who were not in work due to poor health.”
https://www.thetimes.co.uk/article/mental-health-crisis-takes-its-toll-on-uk-workforce-2x0xz5zrc
“Farmers from Belgium’s northern region of Flanders drove thousands of tractors into Brussels on Friday in a protest against a new regional government plan to limit nitrogen emissions…
“Agricultural organisations said in a joint statement that the nitrogen agreement as it now stands “will cause a socio-economic carnage”.”
“France braces for strikes that could bring the country ‘to a standstill’ for days on end.
“Strikes against bitterly contested plans to reform pensions in France continue on Tuesday, and this time unions have upped the ante. Unlike previous walkouts, this week’s industrial action has no pre-arranged end date.”
“Demonstrators, police clash as Greece train crash protests resume.
“Clashes have erupted between police and a group of demonstrators outside the Greek parliament in Athens on the fringes of a protest by thousands of students and railway workers over Greece’s deadliest train crash in living memory.”
“ECB must do more to tackle inflation ‘monster’, says Christine Lagarde.
“Christine Lagarde has warned that underlying price pressures will remain “sticky in the short term” and signalled that further interest rate rises from the European Central Bank are very likely as “inflation is a monster that we need to knock on the head”. The ECB was not seeking to “break the economy” with rate increases, Lagarde told Spain’s El Correo…”
https://www.ft.com/content/83d44991-4988-4e4f-8143-81d34b2b4173
“The New European Energy Normal Remains Rather Painful.
“Gas prices are down from their peak, but still elevated. European companies face a long-term loss of competitiveness… For the region’s energy-intensive industries, such as chemical companies and glass manufacturers, prices remain catastrophically elevated.”
“Traditional, heavy warfare has returned to Europe with Ukraine conflict…
“…the idea was widespread that future conflicts would be economic, or fought in cyberspace; by mercenaries or simply deniably in the way Russia’s first incursions into Ukraine in 2014 were led by separatist rebels infiltrated by Moscow’s forces. War, in short, would be less bloody – and much cheaper.”
“China increases military spending in face of ‘escalating’ threats…
“Outgoing Premier Li Keqiang told delegates to the National People’s Congress (NPC) that “external attempts to suppress and contain China are escalating”. “The armed forces should intensify military training and preparedness across the board,” he said…”
“Why has China announced its lowest growth target in decades?
“China’s economy faces serious long-term challenges… Many economists believe that China’s high-growth era — characterised by decades of double-digit expansion each year — is now in the past.”
“Food supplies to Australia’s biggest supermarkets can no longer be guaranteed after the shock collapse of one of the county’s biggest trucking firms.
“News broke late last month that Scott’s Refrigerated Logistics – one of Australia’s biggest trucking firms, which services major supermarkets, including Coles, IGA and Aldi – had been plunged into receivership.”
“Peru government condemns attack on police station as 27 injured in clashes.
“The Peruvian defense and interior ministries on Saturday strongly condemned an attack by anti-government protesters on a police station in the Juli district – situated in the southern Puno region – in which the facility was set on fire, adding that 27 people had been wounded in clashes in the city.”
“Suriname’s Unrest Is a Warning. The world’s existing mechanisms to help developing countries through debt crises are coming up short…
“High costs of living exacerbated by government efforts to address a sovereign debt crisis are driving the unrest in Suriname. The country has defaulted on its foreign debt three times since the start of the COVID-19 pandemic…”
https://foreignpolicy.com/2023/03/03/suriname-riots-inflation-debt-imf-china-india-pandemic/
“Kenya slowly sinking in debt, inflation, weakening shilling…
“Kenya’s government technocrats are scrounging for options to stem a loading economic crisis that has forced many households to keep tightening their belts, with close to six million people suffering acute food shortage. A poll published this week painted an economy racing towards a cliff.”
“Kenya hit by nationwide power outage.
“Kenya was hit by a nationwide power blackout on Saturday evening caused by a “system disturbance”, electricity distributor Kenya Power (KPLC.NR) said. “We are working to restore normalcy within the shortest time possible,” Kenya Power said in a statement.”
https://www.reuters.com/world/africa/kenya-hit-by-nationwide-power-outage-2023-03-04/
“Tunisia: Thousands march against food prices and president’s crackdown on critics.
“Thousands of people have marched through Tunisia’s capital, protesting against an expanding crackdown on opposition voices and a proposed lifting of subsidies for food and other goods. Saturday’s march, organised by Tunisia’s central trade union, was the latest challenge to President Kais Saied…”
“Egypt non-oil activity contracts for 27th month as prices surge.
“Egypt’s non-oil private sector activity shrank for the 27th month in a row in February as surging inflation and obstacles to importing from abroad extended business travails, a survey showed on Sunday.”
“Pakistani drug firms head for closure amid economic crisis.
“Pakistan’s pharmaceutical industry has warned that dozens of local companies will be forced to close due to unaffordable production costs caused by the rupee’s devaluation, import hiccups and spiralling inflation.”
https://www.dw.com/en/pakistani-drug-firms-head-for-closure-amid-economic-crisis/a-64861867
“World’s Riskiest Markets Stumble Into Crisis With Dollars Scarce.
“Hospitals delaying surgery in Sri Lanka. International flights suspended in Nigeria. Car factories shuttered in Pakistan… In some of the world’s most vulnerable developing nations, the situations on the ground are dire. Shortages of dollars are crimping access to everything from raw materials to medicine.”
https://finance.yahoo.com/news/world-riskiest-markets-stumble-crisis-130000294.html
“UN development chief sounds alarm over debt distress.
“A top UN official has warned that “urgent” measures are needed to help 52 countries facing debt repayment problems that put some at risk of default. Achim Steiner, head of the United Nations Development Programme, told AFP that 25 of the 52 were spending more than a fifth of government revenues servicing external debt.”
https://www.france24.com/en/live-news/20230305-un-development-chief-sounds-alarm-over-debt-distress
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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Good Day Everyone…
Daily Digest
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540 planes and 120 billion dollars: the largest aircraft order in history
Story by Zeleb.es • Friday
Christian Scherer, Airbus Chief Commercial Officer and director of Airbus International, assures that the A320 and A350 models “will be an effective and versatile resource to continue democratizing and decarbonizing the country’s air transport.”
What is known, through a statement released by Air India, is that all the aircraft purchased by the company will have the latest technological advances and offer cutting edge efficiency and sustainability.
Without official figures, specialized media such as Bloomberg estimate the agreement has a cost of more than 120 billion dollars.
February 2023 is already engraved in gold letters in the aeronautical sector, after the agreement that Air India reached with Airbus and Boeing, in which it will buy 250 and 290 aircraft, respectively
Peak Oil?..not for these people ….what are we thinking?
Lebanon adopts ‘dollarization’ as currency, economy crumble
By KAREEM CHEHAYEB
today
People are fed up with the fluctuation of the dollar rate, and having to spend lots of time changing it, so practically, on a societal level, it’s better to use dollars,” Mansour said. “This is the end of the Lebanese pound as we know it.”
Strange how the people of the world act and react…
Oh well, enjoy another beautiful day…because we know not what tomorrow brings..
Not convinced “sustainability” and Airbus belong in the same sentence. 😆
I recall that Zimbabwe went the dollarization route after their hyperinflation nightmare but then re-introduced a sovereign currency in 2019. Now they have a mix, although recent weakening of the Zimbabwean dollar vs the greenback means that they are tilting back towards dollarization:
https://www.bloomberg.com/news/articles/2022-02-07/zimbabwe-s-central-bank-rules-out-return-to-dollarization
Venezuela also has a bit of a hybrid situation with US dollars and Bolivars.
Hello Panopticon
Thanks for your stark overview. There is little positive to take from it. I always use your selection to refresh my memory on one post. 🙂 This time it was Tunisia.
That was the country where the so-called ‘Arab Spring’ once began.
A short-lived kind of ‘ movement of hope’ borne of massive youth unemployment. However, the economic problems existed before that and certainly in Tunisia which experienced its most prosperous years after an experiment with socialist policies in the 1960s gone wrong. This was followed by a market-oriented liberal strategy aimed at strengthening exports, foreign investment and tourism. Major exports include textiles, clothing, foodstuffs, petroleum products, chemicals and phosphates. About 80 per cent of exports go to the European Union.
The liberal strategy, combined with investment in education and infrastructure, ensured 4-5% annual GDP growth and improved living standards for decades. Former president Zine El Abidine Ben Ali (1987-2011) maintained these policies, but eventually cronyism and corruption hampered economic performance and unemployment rose. The resulting discontent contributed to the regime’s overthrow in January 2011. After this, Tunisia’s economy entered a downward spiral. Investment and tourism revenues fell sharply. Moreover, the country turned from an energy exporter into an energy importer with sharply declining revenues from gas and oil fields that were being depleted.
Of particular interest is the production of phosphate! Once the world’s No 5, Tunisia was one of their main exports to bring in ‘foreign currency’. However, Tunisia has large deposits of iron, zinc, clay and phosphate. In 2010, before the January 2011 revolution, the country produced 8 million tonnes per year, making it the world’s fifth largest exporter of phosphate products.
One of the commodities subject to the Maltusian trap. Peak production of this indispensable fertiliser feedstock is expected sometime around 2030. The Arab Spring completely collapsed phosphate mining so that there is now only a tenth of the original production. Not in the least because the same unemployed younger generation has been blocking several phosphate mines for years now!
The riots that are going on now are of course about inflation, mixed with xenophobic elements. Energy prices have risen sharply and the country should actually step up its mining activities…. but yes… the chances of it becoming stranded assets like so many ‘ proven reserves’ are increasing.
Mining is a complex industry 🙂
https://africanmanager.com/le-phosphate-en-route-pour-retrouver-bonne-mine/
Zip, I was surprised to learn recently that Morocco has the world’s largest reserves of phosphate, and they have benefited from the conflict in Ukraine:
“The fallout from Russia’s invasion of Ukraine has been catastrophic for European nitrogen fertiliser companies. The soaring prices of the natural gas that is their feedstock forced them to cut output by more than two-thirds at times last year. The war also disrupted the supply of fertiliser from Russia, the biggest exporter in the world.
“But for Morocco’s OCP Group, the world’s largest phosphate fertiliser company, 2022 brought record earnings thanks to higher prices and profit margins.”
https://www.ft.com/content/850d8c0a-a853-4b0e-aba3-d63d18ab0c93
Tunisia is not by any means a major oil producer but it has significantly passed peak, which may be factoring in to its problems:
https://tradingeconomics.com/tunisia/crude-oil-production
A really great overview article on phosphate with many references to Morocco. It is in Dutch but with AI no problem at all. 🙂
https://geografie.nl/artikel/fosfaatschaarste-bedreigt-wereldvoedselvoorziening
According to our Oz news – South Africa is on the brink of collapse, and chaotic “civil war” conditions, as the Australian embassy has been instructed to stockpile food and water, and to go on “standby” for possible evacuation just-in-case things get worse.
The reports of sabotage, (not just corruption/mismanagement by Eskom execs and oligarchs, which has been reported for a long while), but the criminal/physical sabotage too, are even more alarming – eg. putting rocks in the coal? Tearing down pylons and towers?
Also looks like the govt is powerless to do anything about it.
https://www.news.com.au/finance/economy/world-economy/stockpile-food-and-water-south-africa-faces-civil-war-conditions-if-power-grid-collapses/news-story/231d976d93e9a34ef8dfaf0ac3db6582
Yes, I had a vague sense of South Africa as struggling badly with corruption but it was still shocking to me that actual criminal cartels were operating inside Eskom. The poisoning of the outgoing CEO was an eye-opener, too!
“André de Ruyter knew something was not right when he started to feel dizzy and nauseous after drinking a coffee. At the time he was chief executive of Eskom, South Africa’s collapsing electricity utility, and to his surprise, he found himself forgetting simple words, even the term “power station”.
“Only later, after he had been rushed to hospital, did he discover the coffee had been laced with a poisonous cocktail of cyanide and sodium arsenite.
According to his toxicologist, “this was indeed an attempted murder, not just a warning”, says de Ruyter, who rejects speculation that whoever spiked his coffee was only out to scare him.”
https://www.ft.com/content/5fe8291d-9895-4272-9e0a-eefa279116f4