“In a world propped up by cheap money, this banking crisis is only the beginning… One week into the 2023 chapter of the financial crisis, and it’s clear this is no 2008 redux. It may even end up being worse…
“Much of the wealth we imagined we’d created over the past decade, in stocks, bonds, property, crypto or you name it, was illusory. Central banks had flooded the economy with money, bidding up the prices of assets. But now that the effect of a weakening currency has begun to show up in the real economy, in the form of consumer price inflation, central banks are having to ask for the money back.”
https://www.theglobeandmail.com/business/commentary/article-banking-crisis-cheap-money/
“The head of the International Monetary Fund has warned that the global economy faces risks to its financial stability because of the turbulence in the banking sector.
“Kristalina Georgieva, the managing director of the Washington-based lender of last resort, said rising interest rates had put pressure on debts, leading to “stresses” in leading economies, including among lenders.”
“As banking sector confidence falters, central banks called on to do more.
“Some investors and analysts are calling for more coordinated interventions from central banks to restore financial stability, as they fear that tumult in the global banking sector will continue amid rising interest rates.”
“Banking stress puts U.S. and Europe on watch for credit crunch…
“”What’s unclear for us is how much of these banking stresses are leading to a widespread credit crunch. That credit crunch … would then slow down the economy. This is something we are monitoring very, very closely,” Minneapolis Fed President Neel Kashkari said Sunday on CBS show “Face the Nation.””
“The Flight to Safety Is About the Next Recession, Not Banks…
““It ain’t pretty out there,” said Charlie McElligot, cross-asset strategist at Nomura Securities International. “The bank ‘profitability crisis’ has become a ‘solvency crisis,’ and will act as a catalyst for a substantial tightening impulse in financial conditions.””
“Bank collapses are just the start of the world’s financial woes – indebted businesses will be next.
“Decades of easy money have led to high levels of corporate debt worldwide and in Asia especially; Now with the sharp rise in interest rates, businesses – particularly small and medium-sized firms… risk defaulting on their loans.”
“Property world’s debt deadlines could set off the next landmines…
“Prices have probably fallen by 20 per cent from their peak across various property sub-sectors. You don’t have to face that nasty reality until a refinancing forces it upon you. Then you realise there’s a chasm between the new debt stack and the old one that has to be repaid. Not only has your equity been wiped out, you need to pump more in.”
“‘A devastating impact’: SVB’s collapse leaves start-ups with a funding hole [US, especially]… Bank was pioneer and linchpin of venture debt market, a key alternative source of funding…
“Across the US, SVB was responsible for roughly a tenth of all venture debt issued in the year so far. But on its home turf in California, the bank was behind more than 60 per cent of all deals this year, according to data from Preqin.”
https://www.ft.com/content/9f8c506f-f01a-448e-ab4b-6c7fcd060422
“Toxic Treasuries a ‘blind spot’ in U.S. financial system, expert says.
“Banks have vast holdings of U.S. government bonds offsetting their deposits. While these securities have almost zero risk of default, they are susceptible to rising interest rates… Toxic Treasuries, spread across the thousands of banks that make up the nebulous U.S. financial system, could conceivably give rise to a cascade of turmoil that officials are unable to contain.”
“Bond Traders Go All-In on US Recession Bets That Defy Fed View.
“Bond investors are piling into wagers that a US recession is around the corner amid a growing dissonance between how markets and the Federal Reserve see the outlook for the economy… there’s a groundswell of sentiment that something has broken in the wake of the first US bank failures since the 2008 financial crisis.”
“UK recession still on the cards after after aggressive Bank of England rate hikes.
“Higher interest rates and households responding to the cost of living crunch gripping their finances by trimming spending is tipped to push GDP 0.3 per cent lower this year, according to consultancy KPMG. Families are being hit by the worst inflation surge in four decades and the Bank of England jacking up borrowing costs to tame it.”
“UK household debt swells past £2 trillion for first time ever.
“Family debt has swelled past £2 trillion for the first time ever in a sign Brits are whipping out their credit cards to fund spending amid the cost of living crunch, new research out today reveals. Household debt is now nearly the same size as the entire UK economy…”
https://www.cityam.com/uk-household-debt-swells-past-2-trillion-for-first-time-ever/
“Shadow banking could trigger next financial crisis, ECB warns…
“In the aftermath of the rescue of Credit Suisse last week, Luis de Guindos said that he believed the European banking sector was “sound and resilient”, but the nonbank sector “could be a source of problems for the whole financial system”.”
“Credit Suisse wouldn’t have lasted another day, minister says…
““CS would not have survived Monday,” Keller-Sutter said in an interview with Zurich newspaper NZZ. “Without a solution, payment transactions with CS in Switzerland would have been significantly disrupted, possibly even collapsed.” …The impact of a disorderly bankruptcy may have been as much as double Swiss economic output, the minister said…”
“Millions of Germans face transport disruption in cost of living ‘mega-strike’.
“Workers at airports, ports, railways, buses and metro lines throughout much of Europe’s biggest economy are expected to heed a call from the Verdi and EVG unions and take part in the 24-hour walkout on Monday.”
“France Pushed to the Brink as Pension Protests Spread…
“Giant mounds of stinking garbage bags overflow from bins across Paris, violent demonstrators in Bordeaux set fire to the City Hall and teargas-laced battles break out in major cities. More strikes are planned for tomorrow.”
“Green campaigners clashed with French police on Saturday when protesting against the construction of water reservoirs for farmers in western France.
“More than 25,000 protesters gathered in the rural town of Sainte-Soline… The reservoirs are designed to help farmers faced with more frequent droughts brought on by climate change. They allow water to be pumped from the underground water table in the winter and stored for use in the dry summer months.”
https://www.politico.eu/article/protesters-clash-with-police-over-water-reservoirs-in-france/
“Italy’s shift away from Russian gas clashes with its climate targets…
“Rome’s new funding policy carves out a wide range of exemptions for the continued support of fossil fuel projects beyond the stated deadlines on energy security grounds, including projects deemed “strategic for Italian energy and economic security”.”
https://www.ft.com/content/762e9d17-d5ab-41ca-9394-d668b30fb072
“Train drivers announce more strikes for April [Portugal].
“The union cites “disregard” for the workers and the difficulties they are going through in these times of galloping inflation. The National Union of Train Drivers of Portuguese Railways (SMAQ) announced another strike during the “whole month of April”, due to the “autistic attitude and disregard” of train operator CP.”
https://www.portugalresident.com/train-drivers-announce-more-strikes-for-april/
“Japanese banks take post-SVB hit over bond fears.
“The failure of Silicon Valley Bank and the ensuing turmoil at Credit Suisse have put Japan’s ailing regional banking sector and its financial institutions under the tightest market scrutiny since the 2008 global financial crisis.”
https://www.ft.com/content/1d9d93ef-4551-42fd-a89d-4afbb67e162d
“China’s industrial profits slump deepens on soft demand, high costs…
“”Currently, international commodity prices remain at high levels and overseas demand is still on a downtrend,” Zhou wrote. “Industrial and manufacturing departments still need to offer policy support, alleviating fiscal, cost and financing pressures and stabilizing firm confidence.””
“China’s debt-heavy local governments look for new ways to raise cash.
“Debt-heavy local governments in China need new ways to raise money under a central regime that’s made clear its priority is to reduce financial risks. Local governments’ direct debt exceeded 120% of revenue in 2022…”
“Fitch: Argentina debt exchange will trigger default.
“Fitch Ratings on Friday cut Argentina’s foreign currency rating to “C” from “CCC-” citing an “imminent” default after the country ordered public sector bodies to sell or exchange their holdings of some sovereign dollar bonds.”
https://buenosairesherald.com/economics/fitch-argentina-debt-exchange-will-trigger-default
“Security tight as Kenya braces for fresh protests despite ban.
” Kenyans were bracing Monday for a new round of anti-government demonstrations over the high cost of living, after the opposition vowed the action would go ahead despite a police ban. Security was tight, with riot police stationed at strategic points in Nairobi and patrolling the streets…”
https://www.france24.com/en/live-news/20230327-kenya-braces-for-fresh-protests-despite-police-ban
“‘I often find a corpse’: How Tunisia has become the deadly route of choice for migrants trying to make it to Europe…
“A statement by Tunisian President Kais Saeed condemning illegal black migrants has spurred an unprecedented crackdown in recent weeks. Thousands have since faced eviction, unemployment and arrest.”
“Israel’s president calls for halt to judicial overhaul after mass protests.
“Israel’s president has urged the government to halt its bitterly contested judicial overhaul, a day after prime minister Benjamin Netanyahu sacked his defence minister for opposing the move, sparking mass street protests.”
“Lebanon split into two time zones in row over daylight saving… Government’s last-minute decision to delay clocks going forward caused confusion and deepened religious division…
“With some institutions implementing the change while others refused, many Lebanese have found themselves in the position of juggling work and school schedules in different time zones – in the same small country.”
“Syria: 19 killed in retaliatory US strikes on Iran-linked groups.
“The death toll from retaliatory US strikes on Iran-linked groups in Syria after a deadly drone attack has risen to 19, a war monitor said, as Washington insisted that it was not seeking conflict with Tehran.”
https://www.theguardian.com/world/2023/mar/25/syria-retaliatory-us-strikes-iran-linked-groups
“Crippling dollar shortage underscores vulnerability of Iraq’s oil-based economy…
“Iraq’s vulnerable economy is almost entirely dependent on shifts in global oil prices. Record oil revenues have swelled the coffers of OPEC’s second-largest producer to more than $100bn, although Baghdad can only access the money through the US Federal Reserve that has held Iraq’s foreign exchange reserves since the 2003 invasion that toppled Saddam Hussein.”
https://www.ft.com/content/e42fe1ff-80f3-4d5b-b182-7812761c87ad
“Pakistan economic crisis: Ramzan flour bag distribution leads to stampede.
“Burgeoning inflation and a deepening cost-of-living crisis have left millions of people across Pakistan struggling to put food on their tables. In a bid to lift some burden off low-income families during Ramzan, provincial governments announced plans to distribute flour bags.”
https://www.opindia.com/2023/03/pakistan-economic-crisis-ramzan-flour-bag-distribution/
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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Hello Panopticon
The stock markets have rebounded and the French savings bank books have never been so well stocked. I am sure all will be well 🙂
Less well is the rising violence as you point out in your posts on France. It overshadows the legitimacy of the actions and strikes. ‘Everyone’ wants it to stop especially after the extended explosion of violence at the water basins.
And then soon comes the question of what is the ‘doctrine of violence’ among police and forces of order.
When and to what extent is ‘violence’ by the government that has the monopoly for it proportionate and where is the limit. In the US, this discussion has also been going on for years.
I once watched some videos from Paris and the basins of what that is actually like. The ‘autonomists and anarcho protesters’ use their elaborate ‘hit and run’ tactics.
The only ones who get caught are ‘ novice’ protesters and unsuspecting trade unionists. These are really (urban) guerrilla practices on the side of the protesters and the spiral of violence that then follows is mainly driven by the action of the BRAV M brigades.
Brigades de répression des actions violentes motorisées (BRAV-M), are mobile brigades made up of motorbike pairs, which intervene during demonstrations, set up in early 2019 by the Paris police prefect as part of the Yellow Jacket movement. They ride black Yamaha XTZ 1200 “super hot tub” and in the field like basins they operate on squads. The driver of the motorbike can be recognised by the “classic” white helmet of national police motorcyclists and the team member of the intervention company wears a black helmet.
And what did not cause problems with the anarchist ‘yellow shirts’ is now the case with the legitimate trade union demonstrators, who are now ‘bothered’ by the ‘ anarchos’
The BRAV-M has now been the subject of several judicial investigations for acts of violence against demonstrators and the subject of public and political debate about its legitimacy and their brutal and ‘ anonymous’ methods of intervention. The BRAV-M mainly intervenes in the context of demonstrations that threaten to degenerate, or with the aim of breaking up unannounced demonstrations. They then act very quickly to end the disturbances and make arrests. Because they are formed in very light units and travel by motorbike, they can adapt to the strategy of certain violent groups by being as mobile and reactive as possible
Controversies over the brigade increased during the social movement against France’s pension reform, but began much earlier. The daily Libération noted that on 5 December 2019, during the demonstration against pension reform, “in less than an hour, a brigade for the repression of violent action beat several people to the ground for no apparent reason and threw disencerclement grenades in an irregular manner.” The officers involved wore no visible identification number The department commissioner at the head of the brigade, who participated in beating up protesters is a member of the Syndicat national des commissaires de la police nationale and the brother of a Corsican mafia boss.
Meanwhile, there are so many complaints police prefect Laurent Nuñez is handing over several cases to the IGPN (service that investigates police violence internally) to investigate the facts reported by the media. Meanwhile, voices are rising especially from left-wing deputies of La France insoumise calling for the “provisional dismantling of the Brav-M23”, a brigade that has allegedly gone beyond all limits.
Let’s see how things turn out tomorrow on the tenth day of naitonal strikes 🙂
https://www.huffingtonpost.fr/france/article/les-policiers-de-la-brav-m-enregistres-a-paris-identifies-mais-pas-suspendus_215793.html
Thank you, Zip. That is very interesting re the special police units and the hardcore of anarchist protestors with whom they do battle. The media coverage that I’ve seen of the protests (apart from the recent, completely insane ones at the water basins) has tended to highlight the violent excesses of the police more than the protestors, for example:
“Europe’s leading human rights watchdog has accused the French police of using “excessive force” during protests against a fiercely contested pension law.”
https://www.theguardian.com/world/2023/mar/25/french-police-accused-of-using-excessive-force-during-pension-protests
I got an immediate answer to my question from Home Minister Gerald Darmanin.
He always does that when I ask a question 🙂
13,000 policemen and gendarmes will be mobilised tomorrow as part of the mobilisation against the pension reform. The minister described the operation as “unprecedented”. “There will be 90 units of mobile troops tomorrow, a level of mobilisation that has never been achieved before”.
Why more security forces on March 28? The Interior Ministry services foresee very high risks of public order disturbances tomorrow,” Gérald Darmanin stated, citing “more than a thousand radical elements”, some from abroad, who could carry out violent actions in several cities such as Paris, Nantes, Rennes, Lyon or Bordeaux.
“I have reminded the prefects and those in charge of the forces of order in each department of the proportionality of the use of force. I ask the police and gendarmes not to respond to any provocation,” Gérald Darmanin added, while several human rights NGOs have criticised police violence during the latest mobilisations.
Asked about police brutality, Gérald Darmanin reiterated his “full support” but “demanding” of the police and gendarmes, without using the term police brutality. .In cases of extreme violence, it is normal to sanction them after investigation. At present, 17 IGPN investigations into the pension protests are ongoing,” Darmanin said.
As for the Brav-M policemen who, according to a video, threatened seven detainees in Paris and beat one of them, “the policemen concerned will not be involved in maintaining order during the Paris demonstration tomorrow,” added Paris police prefect Laurent Nuñez.
Interesting the expected violence of the forces of order and the ‘European anarchos’…. because they exist take it from me 🙂 Ah ah those union struggles…. Or eh would the government in France have an interest in riots getting out of hand ?
We shall see.
Nice to have friends in high places, Zip!😆 Fingers crossed tomorrow is not too savage.
Wow, The situation over in Europe seem very unsteady compared here in the US.
Very worrisome the inflation numbers for basic necessary items to live.
Here in the US seems that housing affordability is a real crisis along with car transport, very little mass transit, only in certain cities like Boston or NYC.
Based on what I’m reading, can not see the US Dollar remaking the world reserve currency after this crisis works it way out.
Making it a weapon was a move that propelled this move as with the banking failures and budget deficits without a solution.
Putin has warned there will be a severe energy shortfall in a few years due to the sanctions and lack of investment in that sector.
That along with lack of food will mean severe hardship for everyone!
“Very worrisome the inflation numbers for basic necessary items to live.”
Vince, the sense of one’s purchasing power briskly eroding is certainly unsettling for those of us lucky enough to have enjoyed decades of improbable, relative stability. Even more so for those of us who understand that we are now on a slippery slope and never getting it back.
Some think it is closer than we’ve been told
https://consciousnessofsheep.co.uk/2023/03/24/time-trap/
Thanks, Rain. I do like Tim Watkins stuff.