Daily updates on climate change and the global economy.

Daily updates on climate change and the global economy.
Stay current with what’s happening around the world with a quick scan of top news.

Daily updates on climate change and the global economy.
Stay current with what’s happening around the world with a quick scan of top news.

Daily updates on climate change and the global economy.
Stay current with what’s happening around the world with a quick scan of top news.

Daily updates on climate change and the global economy.
Stay current with what’s happening around the world with a quick scan of top news.

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Banking Crisis Raises Concerns About Hidden Leverage in the System.

“More than a dozen regulators, bankers, asset managers and former central bank officials interviewed by Bloomberg News say shadow debt and its links to lenders are becoming a major cause for concern as rising interest rates send tremors through financial markets…

“The concern is that private equity firms and others were allowed to load up on cheap loans as banking regulations tightened after the global financial crisis — without enough oversight into how the debt could be interconnected…

“Fund managers are also concerned. A systemic credit event poses the biggest threat to global markets, and the most likely source of one is US shadow banking, according to a survey of investors published last week by Bank of America Corp.”

https://www.bloomberg.com/news/articles/2023-03-27/banking-crisis-raises-concerns-about-hidden-leverage-in-the-system


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Biden says banking crisis ‘not over yet’.

“U.S. President Joe Biden said on Tuesday he has done what is possible to address the banking crisis with available authorities but that it is “not over yet.” Asked if the administration would not take any more executive action to address the matter, Biden said “Oh no, It’s not over yet. We’re watching very closely.””

https://www.reuters.com/markets/us/biden-says-banking-crisis-not-over-yet-2023-03-28/


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Don’t hold your breath – banking crises last years.

“… if history is anything to go by. Bank crises tend not to be resolved in weeks or months – they smolder for years. As banking is built on confidence, a sudden loss of trust can take a long time to rekindle – no matter how swift and bold authorities’ fire-fighting measures are.”

https://www.reuters.com/markets/europe/dont-hold-your-breath-banking-crises-last-years-2023-03-27/


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What Happens in the Banking Sector Won’t Stay There…

Unfortunately, there are no easy and immediate policy measures to offset this new headwind to economic growth, especially given the nature of the potential credit contractions and partisan realities in Washington.

https://www.bloomberg.com/opinion/articles/2023-03-28/silicon-valley-bank-fallout-contagion-extends-to-the-economy


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US banking concerns shift from crisis to growth woes…

“We expect stress in the banking system to weigh on credit growth, which will in turn reduce real GDP growth,” Goldman Sachs analysts led by chief economist Jan Hatzius wrote in a note, referring to gross domestic product.”

https://www.reuters.com/business/finance/us-banking-concerns-shift-crisis-growth-woes-2023-03-27/


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World Bank warns global economy at risk of lost decade of growth.

“The global economy is in danger of suffering a lost decade of growth, which would be even more severe if the current financial turmoil sparked a global recession, according to new research from the World Bank.”

https://www.ft.com/content/d845249b-9191-4655-8843-dc403c1487f2


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Central banks are running full speed ahead to prevent the sense of a global crisis…

Even if an actual crisis is averted, a credit crunch is clearly looming. It was looming back when the central banks announced giant hikes to come, but somehow we all missed the point that the banks might not be equipped to handle it. This was, apparently, misplaced confidence.”

https://www.fxstreet.com/analysis/central-banks-are-running-full-speed-ahead-to-prevent-the-sense-of-a-global-crisis-202303271251


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Investors slash expectations of global interest rate rises after banking turmoil…

“…market indicators [are] suggesting that the period of rapid increases has come to an abrupt end. The pricing of derivatives products, such as interest rate swaps, indicates investors believe many of world’s major central banks will not raise rates further and, in some cases, will begin to impose cuts before the end of the year.”

https://www.ft.com/content/ac91a6a5-5705-4d9f-bae8-c2b431942889


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The number of auto loan accounts considered severely delinquent has reached an all-time high in 2023, marking problematic symptoms in the embattled automotive industry [US].

“In a Q1 2023 Industry Insights and Sales Forecast Call held by Cox Auto, it was reported that the severe account delinquency rate has surpassed a record high set in 2009.”

https://thedeepdive.ca/auto-loan-delinquencies-rejections-push-at-record-high/


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‘Catastrophe’ for Poor New Yorkers as Pandemic Food Aid Ends…

“In New York City, more than 1.5 million people, or nearly one in five residents, could receive smaller food stamp benefits, according to nonprofit leaders — reflecting a loss of at least $160 million total in Supplemental Nutrition Assistance Program benefits each month.”

https://www.nytimes.com/2023/03/27/nyregion/food-stamps-snap-nyc.html


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Shale oil drillers left exposed after pulling back price hedges.

“US oil producers cut back on price hedges this year in a bet that energy markets would rally again, a move that has left them suddenly vulnerable after turmoil in the banking sector knocked down the price of crude.”

https://www.ft.com/content/c3baf69f-41fc-42ea-b13a-5ef6f546e143


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The United States is now the biggest supplier of crude oil to the European Union.

“In December, 18% of the bloc’s crude imports came from America, EU data office Eurostat said Tuesday. That is a big turnaround. Russia was until recently the bloc’s top supplier of crude, accounting for as much as 31% of total imports until the end of January 2022, according to Eurostat.”

https://edition.cnn.com/2023/03/28/energy/eu-us-oil-imports-overtake-russia/index.html


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Royal Mail bosses threaten to declare insolvency as pay talks near collapse.

“Long-running talks between Royal Mail and the Communication Workers Union are on the brink of collapse, with the company’s board thought to have threatened to put the loss-making postal service – the regulated UK entity that delivers to every address in the country – into a form of administration if a deal cannot be agreed.”

https://www.theguardian.com/business/2023/mar/27/royal-mail-bosses-threaten-to-declare-insolvency-as-pay-talks-near-collapse


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More food shortages could add to Britain’s price pressure.

“Britons already reeling from the biggest rise in food prices since 1977 may have to get used to shortages of fresh vegetables as soaring costs and unpredictable weather hit domestic production. British shoppers have faced a shortage of tomatoes, cucumbers and peppers in recent weeks…”

https://www.reuters.com/world/uk/more-food-shortages-could-add-britains-price-pressure-2023-03-28/


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Financial turmoil will not affect Bank of England’s push to curb inflation, says Bailey.

“Following the latest rise in interest rates to 4.25 per cent last week, Bailey said the BoE had not already decided that interest rates needed to increase further but noted that inflation of 10.4 per cent in February was “much too high”.”

https://www.ft.com/content/ad7d767f-83bb-4e67-a4eb-f06e5110d6a4


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French Strikes Leave Millions of Barrels of Oil Stuck on Tankers.

“A fleet of tankers carrying millions of barrels of oil is backed up off the coast of France as strikes over pension reform rumble on. Vessels holding at least 14 millions of barrels of crude oil are currently floating off the country’s shores…”

https://www.bloomberg.com/news/articles/2023-03-28/french-strikes-leave-millions-of-barrels-of-oil-stuck-on-tankers


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French Financial Prosecutor Searches 5 Banks on Tax Fraud Claim…

“Societe Generale SA said its French headquarters are being searched in relation to the investigation, according to the bank. Le Monde newspaper also named HSBC Holdings Plc, BNP Paribas SA, Societe Generale SA and Natixis as being part of the investigation.”

https://edition.cnn.com/2023/03/28/business/paris-banks-search/index.html


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Money pulled from eurozone banks at record rate in February.

“Depositors have withdrawn €214bn from eurozone banks over the past five months, with outflows hitting a record level in February, according to data(opens a new window) published by the European Central Bank on Monday.”

https://www.ft.com/content/5b8386cc-7abb-40ef-8306-249b2cead789


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Bank of Spain sees turmoil rising funding costs, requiring liquidity sourcing review.

“Uncertainty triggered by the global banking sector turmoil may generate a persistent increase in funding costs for Spanish lenders and require a thorough assessment of sources of funding and liquidity, senior Bank of Spain officials said.”

https://www.reuters.com/business/finance/bank-spain-sees-turmoil-rising-funding-costs-requiring-liquidity-sourcing-review-2023-03-28/


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Portugal spends €600 million to reduce basic food prices.

“Scrapping VAT on essential food products while also helping producers in the process will cost Portugal around €600 million, Prime Minister António Costa said after his government signed a deal with retailers and farmers in Lisbon on Monday.”

https://www.euractiv.com/section/politics/news/portugal-spends-e600-million-to-reduce-basic-food-prices/


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Power Shortages Disrupt Aluminum Production In South China.

“China’s aluminum production faces a “touch and go” situation once again. In this case, the problem is mainly due to a power supply crisis in the southwest area of the country. The Yunnan province, the aluminum manufacturing hub of southern China, is reducing production of the metal due to a severe water shortage.”

https://oilprice.com/Metals/Commodities/Power-Shortages-Disrupt-Aluminum-Production-In-South-China.html


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Hong Kong’s first protest in 3 years shows how the city has changed

“Wearing numbered lanyards, a small group of 80 demonstrators took part in Hong Kong’s first authorized protest in three years on Sunday – a carefully choreographed event that campaigners say offers a chilling insight into the future of protest in the city.”

https://edition.cnn.com/2023/03/28/asia/hong-kong-first-protest-in-years-intl-hnk/index.html


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[Taiwan’s] Economy remains in contraction mode for 4th straight month.

“Taiwan’s business climate monitor flashed a “blue” light in February for a fourth straight month, signaling that the local economy remained in contraction mode amid slumping exports, the National Development Council (NDC) reported Monday.”

https://focustaiwan.tw/business/202303270020


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South Korea’s construction deals fell by a record margin last quarter as the property market cooled with rising interest rates weakening demand and inflation fueling costs…

“The lack of construction activity adds to factors weighing on the outlook for the economy. Gross domestic product contracted last quarter as construction investment and exports slumped while inflation increased expenses for both companies and consumers.”

https://www.bloomberg.com/news/articles/2023-03-27/south-korean-construction-deals-fall-by-record-amid-slowdown


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How a historic general strike brought Israel to a standstill.

“Israel’s political crisis escalated into uncharted territory as the country’s largest trade union announced a “historic” strike shutting down transportation, universities, restaurants and retailers in protest against Prime Minister Benjamin Netanyahu’s planned judicial overhaul.”

https://edition.cnn.com/videos/world/2023/03/27/israel-protests-netanyahu-vpx.cnn


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Lebanon’s Meltdown Has Become a Dystopian Nightmare…

“What I saw was just a fraction of what the residents of Lebanon are enduring. But it nevertheless illustrates what Lebanon’s economic collapse means for the daily lives of ordinary people here, as they navigate a landscape that combines the volitivity of a crashing stock market with the horrors of a dystopian movie.”

https://www.worldpoliticsreview.com/lebanon-economic-crisis-politics-imf-corruption/


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‘We’d have died of hunger’: the charity kitchens feeding millions in Pakistan…

“This week, the All Pakistan Textile Mills Association warned that the country’s textile industry is facing “imminent collapse” due to production cuts. About 7 million people have already lost their jobs in the sector since the Covid pandemic. Another 7 million jobs are at risk in the steel industry, where factories are closing as costs rise.”

https://www.theguardian.com/global-development/2023/mar/29/lost-jobs-hunger-food-charity-kitchens-feeding-millions-pakistan


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Why does Russia want tactical nuclear weapons in Belarus?

“…In remarks broadcast Saturday, Putin said the immediate trigger for the deployment of Russia’s tactical nuclear weapons to Belarus was the UK government’s decision to provide Ukraine with armour-piercing shells containing depleted uranium.”

https://www.aljazeera.com/news/2023/3/28/why-does-russia-want-tactical-nuclear-weapons-in-belarus


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The US has told Russia it would not provide Moscow with nuclear data that is meant to be exchanged twice a year under the New Start treaty after Russia suspended its participation in the agreement.

“A White House National Security Council spokesperson said on Tuesday that Washington considered Russia to be in violation of its obligations under the treaty, triggering the decision.”

https://www.ft.com/content/e85c16ab-58b1-4b5f-aadc-1804ba0530b0


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Necessity always seems to be the mother of invention when finding a last minute solution to these debt ceiling impasses but nothing would surprise me in 2023, so for interest:

What happens to global trade if the US defaults on its debt?

“The impact of the US government defaulting on its debt obligations is likely to be massive and far-reaching, and even the best-case scenarios are not good.”

https://www.thomsonreuters.com/en-us/posts/international-trade-and-supply-chain/global-trade-impacts-default/


You can read the previous “Economc” thread here. I’ll be back tomorrow with a “Climate” thread.

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