“Cash-short banks have borrowed about $300bn from the Federal Reserve in the past week, the central bank announced on Thursday.
“Nearly half the money – $143bn – went to holding companies for two major banks that failed over the past week, Silicon Valley Bank and Signature Bank, triggering widespread alarm in financial markets. The Fed did not identify the banks that received the other half of the funding or say how many of them did so.”
“US banks launch $30bn rescue of First Republic to stem spiraling crisis.
“Bank of America, Goldman Sachs, JP Morgan and others will deposit $30bn in First Republic, which has seen customers yank their money following the collapse of Silicon Valley Bank (SVB) and fears that First Republic could be next.”
https://www.theguardian.com/business/2023/mar/16/first-republic-bank-rescued-latest
“SVB’s collapse exposes the huge carry trade problem… This is the consequence of the Fed having left monetary policy too loose for too long…
“ “There are many carry trades [in the system], and they can’t all be bailed out,” JPMorgan analysts warned this week. Commercial real estate, say, “was a good investment at zero interest rates” — but not when rates rise.”
https://www.ft.com/content/978304ab-4e02-4504-8efa-c7f3df1dfd0e
“SVB collapse may be start of ‘slow-rolling crisis’, warns BlackRock boss.
“The collapse of Silicon Valley Bank could just be the start of “a “slow rolling crisis” in the US financial system with “more seizures and shutdowns coming”, the chief executive of the world’s largest asset manager has warned.”
“U.S. shareholders of Credit Suisse Group AG sued the Swiss bank on Thursday, claiming that the bank defrauded them by concealing problems with its finances.
“The proposed class action accuses Credit Suisse of deceiving investors by failing to disclose that it was suffering from “significant” customer outflows, and that it had material weaknesses in its internal controls over financial reporting.”
“Wild Swings Rock US Bond Market After Bank Meltdowns, Crisis at Credit Suisse.
“Pockets of the world’s deepest bond market are starting to buckle under soaring trading volumes and wild swings as bank meltdowns compel traders to slash rate hike bets. Trading was briefly halted in a key corner of the US interest-rate market Wednesday as futures contracts soared through circuit breakers.”
“US mortgage market suffers fallout from bank failures.
“The market volatility triggered by the failure of three banks in the past week has spooked traders in economically vital US mortgage-backed securities, leaving other lenders, usually important buyers, on the sidelines.”
https://www.ft.com/content/78ea4d8b-9d30-41bf-aec3-8bfeab3969f2
“Santander Halts $942 Million Subprime Auto ABS Sale Amid Turmoil.
“Santander Consumer USA on Wednesday delayed the sale of $942 million of bonds backed by subprime auto loans as the deepening Credit Suisse Group AG crisis added to turmoil in debt markets, according to people with knowledge of the matter… Risk premiums on unsecured company bonds have jumped in recent days…”
“Philadelphia Fed’s manufacturing gauge remains deep in contraction territory in March…
“Big picture: The health of the manufacturing is deteriorating in March. Earlier this week, the similar Empire State survey released by the New York Fed showed manufacturing activity sank 18.8 points to negative 24.6 in March.”
“Coal power stations unlikely to provide emergency energy top-up next winter [UK]…
“Companies running the UK’s three remaining coal-fired power stations have told Sky News that they will not be able to commit to new emergency power contracts next winter, despite a government request to do so.”
“Hundreds of thousands of workers are on strike today in what is believed to be the biggest walkout since the current wave of industrial action began [UK].
“Teachers, university lecturers, civil servants, junior doctors, London Underground drivers and BBC journalists are among those taking to picket lines around the country to coincide with budget day.”
“Farmers’ protest party win shock Dutch vote victory.
“A farmers’ party has stunned Dutch politics, and is set to be the biggest party in the upper house of parliament after provincial elections. The Farmer-citizen movement (BBB) was only set up in 2019 in the wake of widespread farmers’ protests.”
https://www.bbc.co.uk/news/world-europe-64967513
“Riot police clash with protesters in Paris amid anger at Macron forcing through unpopular pension reforms.
“Water cannon and tear gas was used to disperse protesters in the central Place de La Concorde on Thursday evening. Thousands took to the streets in response to President Macron’s use of an emergency presidential decree to push through a rise in the pension age from 62 to 64.”
https://www.standard.co.uk/news/world/france-pension-reforms-emmanuel-macron-vote-b1067876.html
“Clashes break out in Greece as thousands protest against train tragedy.
“Greek police fired tear gas and protesters hurled firebombs on Thursday as more than 40,000 people took to the streets to slam the government and voice outrage at last month’s train disaster that killed 57 people. The protests were accompanied by a 24-hour strike — the biggest yet…”
“European Central Bank sticks to its guns on interest rates despite market turmoil.
“Bank balance sheets have suffered because of the effect of interest rate increases, which have contributed to recent crises at Silicon Valley Bank and Credit Suisse. But the central bank – responsible for monetary policy in the 20 nations which use the euro as their currency – stuck to its original plan…”
“China cuts US Treasury holdings to lowest level since global financial crisis.
“China continued to cut its holdings of US Treasuries at the beginning of the year amid rising long-term interest rates, which slashed its returns on its overseas investments after the US Federal Reserve accelerated its lending cost increases last year.”
“China’s Bond Market Mayhem Pressures Regulator to Address Issue.
“China’s banking regulator is under pressure to minimize the impact of the sudden suspension of commonly used bond price feeds, which shocked investors and sent volumes plunging in the world’s second-largest debt market.”
https://finance.yahoo.com/news/china-bond-market-mayhem-pressures-022252711.html
“Singapore key exports fall 15.6% in February in 5th straight month of contraction.
“External demand is unlikely to pick up any time soon as bank turmoil in the United States and Europe could lead to a more cautious approach to lending. Tightening financial conditions will also weigh further on the global economy, which is already facing the spectre of recession.”
“Peru Unrest Triggers First Economic Contraction in Almost Two Years…
“Peru faced its worst political unrest in decades earlier this year, when road blockades isolated large parts of the country’s copper-rich south. The central bank has paused interest rate hikes for two months in a row, warning that rising uncertainty may hurt investment and consumption.”
“Unrest in Peru shows why copper should be a critical mineral…
“The essential nature of copper to the economy makes its availability an issue of national security. As a result of the ongoing unrest in Peru, 30 percent of the country’s copper supply is essentially inaccessible, approximately 3 percent of the world’s total.”
“In Bolivia’s heartland, protests rattle lithium development push.
“Protesters in Bolivia’s lithium-rich region of Potosi are blockading a key processing plant, demanding legislation that guarantees better benefits for local communities and larger royalties from extraction of the electric battery metal.”
“Cocaine production is at its highest level on record, with demand rebounding post-pandemic and new trafficking hubs emerging…
“Coca bush cultivation remains concentrated in three countries: Colombia, at 61% of the total, Peru with 26%, and Bolivia with 13%. Cocaine seizures are highest in the South and Central America and Caribbean region, at 72% of total seizures globally.”
https://www.cnbc.com/2023/03/16/cocaine-production-is-at-its-highest-level-on-record-un-says-.html
“What Would Happen if South Africa’s Electricity Grid Collapsed?
“…it “would be catastrophic,” with a risk of looting, vandalism and public unrest, according to Eskom. It cites the experience of Venezuela, whose economy was crippled by an extended blackout in 2019, as the closest example of what South Africa could expect.”
“Eskom Latest: Power Cuts Hit Banking Transactions, May Fuel CPI.
“An index measuring banking transactions in South Africa fell for the first time since November last month, signaling the country’s deteriorating economic activity… Eskom, the world’s biggest sulfur-dioxide emitter, obtained a pollution exemption at one of its two biggest coal-fired power plants to allow it to restore generation capacity to the grid quicker.”
https://news.yahoo.com/eskom-latest-pollution-waiver-lawmakers-102855641.html
“SVB run: Seven major Nigerian banks at risk…
“Bello, who is the chief executive officer/principal partner at Afrique Capital and Equity Funds Limited in New York, told The ICIR that “about seven major Nigeria’s banks already known in the global banking terrain or financial circles are running seriously below their distress parity lines.””
https://www.icirnigeria.org/svb-run-seven-major-nigerian-banks-at-risk-expert/
“Zambia says it is pushing to agree debt restructuring despite delays…
“Musokotwane said delays in the debt restructuring process were putting pressure on the local currency as foreign investors were scared to invest in Zambian bonds for fear of their investment being subject to restructuring.”
“Unrest in Senegal as police clash with opposition supporters [record heat can’t be helping tempers].
“Police and demonstrators clashed in Senegal’s capital Dakar on Thursday before a court case involving opposition leader Ousmane Sonko, who is widely supported by many of the West African country’s youth. Law enforcement officers fired tear gas at hundreds of Sonko supporters…”
“Imran Khan greets supporters outside home after Pakistan police arrest operation ends in chaos.
“Former Pakistani Prime Minister Imran Khan greeted supporters outside his Lahore residence Wednesday, after police were ordered to suspend an operation to arrest him amid a violent standoff around the compound. Khan was pictured in one video wearing a gas mask…”
https://edition.cnn.com/2023/03/14/asia/pakistan-imran-khan-clashes-police-intl/index.html
“Sri Lanka unions stage strike to protest against IMF bailout plan.
“Thousands of workers at hospitals, schools and railways across Sri Lanka have gone on strike to protest against high costs of living, including increased taxes imposed as a precondition for an International Monetary Fund (IMF) bailout, amid the country’s worst financial crisis in decades.”
“Fears were today raised over the boom in labs designed to handle the world’s most dangerous pathogens in the wake of Covid.
“More than 100 facilities tasked with storing and experimenting on viruses like Ebola and bird flu now exist globally. But leading scientists are alarmed about the lack of oversight of the labs, saying lax biosafety rules are particularly an issue in Asia.”
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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Hello, Been tuning in to Nate Hagen of late and he just posted a short video concerning the current banking crisis titled, Bigger Boat….
https://m.youtube.com/watch?v=eOYU1VlwTNs&t=18s
Pointed out what drives public policy in society today…(not environmental crisis but money) and suggests what likely will happen today and tomorrow and steps to do in advance.
I always thought the 2008 crisis was never solved but papered over, like this one we are in now.
Thanks, Vince. I must find time to watch that.
Credit Suisse shares sliding again today. Has the Swiss central bank’s intervention been enough to stem outflows? It’s really quite something to see one of these “global systemically important banks” wobbling. Even if we muddle through, a lot of damage has already been done in terms of risk appetite, credit availability and the central banks’ ability to combat inflation.
Hello Panopticon
It was a memorable week for me. You have that sometimes with a ‘ dual nationality’. Then you sit in the front row twice for the price of one.
We always talk ‘ deftly’ about grand theories and systemic crises.
But then again, you don’t really care about those when you have to go to work and run errands every day. Those people define political everyday reality and demand to be listened to. If the governments don’t do that, there will be a ‘swing’ and the legitimacy of our governments and societies will be in question.
In the Netherlands it was touch and go and I was on the edge of my seat. A party that actually ‘ did not exist’ suddenly became the largest in all departments and the Senate. The ‘peasant citizen movement’… ordinary average citizens who suddenly felt that ‘ enough was enough’ and that they should be listened to for once….And there they sit with their good decency. A political movement based on a few ‘ one-liners’ about ‘ nature, climate farmers and nitrogen’ Know it all???? No framework, no administrative experience whatsoever and they are now suddenly decisive on all these complex social issues…. of paediatrics, crime, drug control, climate, housing, energy, economy and taxes well you name it.
The people in power in a complex society! i can’t wait 🙂
And then France…. there really all signals are on red after the stupidity of Macron, a vain politician, who wants to bend the whole circus to his will over actually something relatively trivial…. his pension reform modelled on the now obsolete paradigm of the perpetual growth of global neoliberalism… His nickname is Juppiter, a failed sun as we astronomers know 🙂
The newspapers wrote this about his escapades into ‘the incongruous’.
The Press unanimously denounces Macron’s performance.
…..The French press unanimously condemned the use of Article 49.3 to push through pension reform and pointed the finger at Emmanuel Macron for the political and social crisis looming. “What a weakness”. “The government does not have an absolute majority to approve the flagship reform of the quinquennium,and there is now a huge political crisis looming “. “Zero political gain, huge social cost. “If the pension reform had to be saved, there was only one way: it had to be voted on. Of course, they then ran the risk of being defeated, but in politics it is sometimes better to take his leave than to foment the social inferno by force and without glory.” “One question dominates after this historic day: is Emmanuel Macron’s five-year mandate over 11 months after it began?” Yves Thréard in Le Figaro headlines “The taste of failure. The anger of unions and the population that increased yesterday, after the aborted session at the Palais-Bourbon, leads in the worst case, to a prolonged blockade of the country. The same concern is expressed by Libération, which states in an editorial that “the unsuccessful pension reform is pushing France, its democracy and its workers into instability”. “The president could save the day by announcing that the law will be repealed after this undemocratic passage. But it is nothing for him to listen to the French”. “This new invocation of 49.3 completes the separation between our institutions and the people……
https://www.lemonde.fr/politique/article/2023/03/17/reforme-des-retraites-la-presse-fustige-l-aveu-de-faiblesse-d-emmanuel-macron_6165843_823448.html?fbclid=IwAR1uf9vW4BxRDy1CfL1wSsEqR48pbdAqKsGMC0dL3XGGFVz2l8VnOC_-wiQ
Yes, you’ve really had a double-whammy there, Zip. The situations in both France and The Netherlands look like examples of bureaucratic overreach by arrogant and out of touch elites coming back to bite them in the posterior. You wonder if this is the beginning of the end for your preening “Jupiter”!