“No place to hide for global investors facing mounting political risks. Businesses scramble to make sense of shape-shifting environment by moving supply chains and funds.
“Day after day of government-shaking protests in Israel and France. The most acrimonious U.S.-China relationship since the reign of Mao Zedong. And the prospect of a U.S. government debt default this year that could rock financial markets.
“Investors and companies are facing the most complex global landscape in decades, as political conditions once regarded as enduring give way to profound and unpredictable change…
“Risks are growing around the world even as the cost of bearing them is rising… Josep Borrell, the European Union’s foreign policy chief, warned European ambassadors in an October speech that an era of “radical uncertainty” had been unleashed by the conflict in Ukraine…
““The speed and scope of change is exceptional,” Borrell said. “… Events that one could imagine that they will never happen, they are happening one after the other.””
https://www.washingtonpost.com/business/2023/04/03/global-economy-risks/
“Russia warns Finland’s Nato membership risks escalating conflict… Moscow threatens counter-measures and describes Helsinki’s move as an ‘encroachment on Russia’s security’…
“The accession roughly doubles the length of Nato’s direct border with Russia at a time of heightened tension between the two sides, after more than 13 months of full-scale war in Ukraine…”
https://www.ft.com/content/fe22b154-0135-4661-90bd-e1f75985115c
“Distressed debt cycle is already here – Strategic Value Partners.
“A distressed debt cycle, in which the number of companies with too high a debt load or refinancing problems rises, is here and likely to stay in place for some time… “In some ways, we’ve been on a little bit of a sugar high with what the central banks did in regard to monetary policy,” Khosla added, referring to the easy-cash era.”
https://uk.finance.yahoo.com/news/distressed-debt-cycle-already-strategic-131614171.html
“Traders Build Up Hedges as Oil Shock Adds to Inflationary Fires… The fashion for retro has hit financial markets: stagflation playbooks from the 1970s are back.
“That’s because the latest shock move by oil producers to restrict supplies is likely to fuel inflation, just as central banks were expected to pivot to rate cuts to prop up growth and give up their fight against rampant price pressures.”
“Oil Cartel Cut Raises Threat of Stagflation…
“Rising oil prices squeeze consumers and companies. It drives up costs across the board… It may not be a disaster depending on how global growth unfolds from here. But on balance this makes bad outcomes more likely.”
https://www.bloomberg.com/news/newsletters/2023-04-03/oil-cartel-cut-raises-threat-of-stagflation
“The financial turmoil that led to the downfall of Silicon Valley Bank in the US and Credit Suisse in Europe is not yet over and its effects will be felt for years, the boss of America’s biggest bank has warned…
“Jamie Dimon criticised the US Federal Reserve for failing to incorporate higher borrowing costs into its annual stress tests.”
“The non-bank sector now accounts for half of the assets of the entire world financial system and should be more closely regulated to protect its stability, staff economists from the International Monetary Fund said on Tuesday.
“The release of the research comes a week before the IMF and World Bank convene a semi-annual gathering of central bankers and finance ministers in Washington…”
“Bloomberg’s senior commodities specialist Mike McGlone has warned that the upcoming financial crisis could be the “worst in our lifetime,” rivaling the Great Depression that started in 1929…
““it’s almost guaranteed the recession will be starting at some point soon,” he said, and the “enduring deflation” was perhaps a bigger risk than inflation right now as this financial crisis is showing signs of mirroring the crash of 1929 in scale.”
https://finbold.com/commodity-expert-warns-2023-financial-crisis-could-be-worst-in-our-lifetime/
“Morgan Stanley analysts are forecasting something ‘worse than in the Great Financial Crisis’ for [US] commercial real estate.
““More than 50% of the $2.9 trillion in commercial mortgages will need to be renegotiated in the next 24 months when new lending rates are likely to be up by 350 to 450 basis points,” Shalett writes. Alarmingly, Shalett notes that regional banks accounted for 70% to 80% of all new loan originations in the past cycle…”
“US Factory Gauge Falls to Lowest Since 2020, Employment Measure Drops…
“Excluding the pandemic, last month’s factory reading was the worst since 2009… The latest data, released Monday, suggest rising interest rates, growing recession fears and tighter lending conditions may be starting to weigh on business investment.”
“The [US] freight market downturn is a year old. When will the market turn around?
“…The freight recession has come… As we enter the second quarter of 2023, it appears that the freight market may be worse than the freight recession of 2019, as tender rejections are on the verge of dropping below 3% (now 3.05%). The low in 2019 was 3.86%.”
“Even a Recession Might Not Tame Inflation [US]…
“There are a lot of moving parts here, and as the last three years have demonstrated, things don’t always work as you expect. There is a possibility we could get a recession and still have high inflation — essentially a return of the 1970s stagflation.”
https://www.bloomberg.com/opinion/articles/2023-04-03/even-a-recession-might-not-tame-inflation
“Bank of Canada Rate Hikes Hitting Immigrants and Millennials Hard.
“Millennials and immigrants are bearing the brunt of the Bank of Canada’s aggressive interest-rate hikes. But baby boomers who own their homes outright aren’t likely to be feeling the pinch. A generational wealth gap is at the root of the contrasting experiences of these cohorts.”
“Irish people struggling with energy crisis costs more than others in EU.
“Significantly more Irish people have experienced difficulties paying energy bills in recent months than the EU average according to a new piece of research published by the European Commission… People in just four other countries found affordability more difficult, with people in Greece struggling the most…”
“‘Worse than the pandemic’: Pub bodies warn of closures as energy bills relief scheme ends [UK]…
““We’re seeing an acceleration of business failure which is now worse than the pandemic,” Emma McClarkin, chief executive of the British Beer and Pub Association (BBPA) told City A.M.”
“Power showers could be banned from sale under Government plans to save water [UK].
“It comes as ministers want to cut individual demand from 144 litres a day to 122 litres a day by 2038 to protect supplies. The plans include the development of new standards for showers and taps which restrict how much water they can use.”
https://www.telegraph.co.uk/environment/2023/04/04/power-showers-ban-water/
“Nuclear recognised ‘in principle’ in EU’s renewable energy law, says French minister…
““In concrete terms, this recognition involves the affirmation that the development of renewable energies is aimed solely at eliminating fossil fuels and must not lead to the replacement of nuclear reactors,” the minister explained.”
“Spanish Companies Claim Damages From Algeria Sanctions…
“Algeria had blocked all trade with Spain after the Spanish government supported Morocco’s Autonomy Plan as the most serious and credible basis to end the Western Sahara dispute. The blockade has reportedly cost Spain more than 900 million euros, seriously affecting regions such as Valencia which had the most substantial exports to Algeria.”
“Water ban in drought-stricken Tunisia adds to growing crisis…
“Tunisia is already reeling from a weak economy, high unemployment and rising living costs, and there are fears the water cuts could further stoke social unrest. In February, demonstrators took to the streets after President Kais Saied accused undocumented migrants of a plot to dilute Tunisia’s Arab identity.”
“Tunisia’s ‘hostile environment’ pushes migrants across Mediterranean…
“The violence, in which migrants and some black Tunisians have been attacked in the streets and thrown out of their jobs and homes, has helped fuel an already escalating surge of migration across the Mediterranean that is alarming EU members — especially Italy, on whose shores many first arrive in Europe.”
https://www.ft.com/content/c5304e43-785a-4fee-b9fa-115f8491c92f
“Turkey cracks down on migrants in major operation as pre-election rhetoric heats up…
“Against the backdrop of the mass arrests, Turkish Defense Minister Hulusi Akar denied rumors that scores of irregular migrants — in particular from Afghanistan — had entered Turkey in recent days, as the interior ministry’s focus has moved to rebuilding the southeast of the country, which suffered major destruction in a series of earthquakes…”
“Global carriers warned yesterday that concerns over blocked airline funds in Africa and elsewhere could lead to interruptions in air services if there is no progress in talks to unfreeze money owed.
“About $1.6 billion of funds are being withheld in various Africa countries due to currency shortages or other problems, the International Air Transport Association said in a briefing…”
https://www.gdnonline.com/Details/1228482/Airlines-seek-to-unblock-$16-billion-Africa-funds
“South Africa fights to keep phone networks up as lights go out.
“As the national power grid crumbles, leaving Africa’s most advanced economy in the dark for up to 10 hours a day, mobile operators… are scrambling to ensure their networks stay up and running. They’re spending millions to install solar panels, batteries and are even trialling wind turbines…”
“Egyptian President Abdel Fattah Al-Sisi Sisi visits Saudi Arabia in search of support to face economic crisis…
“The visit comes in light of a severe economic crisis in Egypt, especially the lack of US dollars available to pay for necessary imports and settle debt instalments… It is estimated that Egypt has received some $92 billion in support from the Gulf since the 25 January 2011 revolution which toppled President Hosni Mubarak.”
“Pakistan rupee falls all-time low against US dollar amid economic crisis.
“The Pakistani rupee sank to ₹287.29 against the US dollar, a record low on Tuesday as the cash-starved country struggles to unlock critical International Monetary Fund (IMF) funding while dwindling foreign exchange reserves become another source of concern for investors…”
“Autopsies show 30 people died from gunfire in Peru protests…
“Human rights groups — including the United Nations — have called on the Peruvian government to investigate claims of excessive force used by police and soldiers during recent protests that have left 49 civilians dead, and the autopsies provide some evidence of the alleged use of lethal ammunition.”
“Cuba will likely face more — and costlier — lawsuits over billions of dollars’ worth of unpaid commercial debts from the 1980s after a decision Tuesday by a UK High Court judge…
“The loans were granted to Cuba by European commercial banks in the 1980s, when Fidel Castro ruled the Caribbean nation, and were denominated in German Deutschmarks, a currency that no longer exists.”
https://www.cnbc.com/2023/04/04/cuba-castro-debt-uk-ruling.html
“Global chickpea shortage expected as dry spell impacts crop production for world’s largest supplier…
“Low yields for India’s 2023 kabuli chickpea crop have made for below-average production, the Global Pulse Confederation reported. Combined with low production in Mexico, global supplies are under increased pressure, meaning a shortage is expected over the next six months.”
https://www.foxweather.com/extreme-weather/chickpea-shortage-continues-2023
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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Hello, this grabbed my attention and thought I would share ….
Carbon dioxide removal is not a current climate solution — we need to change the narrative
Drastically reduce emissions first, or carbon dioxide removal will be next to useless.
David T. Ho
I have spent my career studying the natural carbon cycle and, in recent years, developing methods for checking that CDR works.
Take the proposed US DAC hubs, for example. Each facility is eventually expected to extract one million tonnes of CO2 each year.
…In 2022, the world emitted 40.5 billion tonnes of CO2 (P. Friedlingstein et al. Earth Syst. Sci. Data 14, 4811–4900; 2022). At that rate, for every year of operation at its full potential, each hub would take the atmosphere back in time by almost 13 minutes, but in the time it took to remove those 13 minutes of CO2, the world would have spewed another full year of CO2 into the atmosphere.
Meanwhile, if everyone on Earth planted a tree — 8 billion trees — it would take us back in time by about 43 hours every year, once the trees had matured.
time-machine analogy reveals just how futile CDR currently is.
We have to shift the narrative as a matter of urgency. Money is going to flood into climate solutions over the next few years, and we need to direct it well. We must stop talking about deploying CDR as a solution today, when emissions remain high — as if it somehow replaces radical, immediate emission cuts.
Humanity has never removed an atmospheric pollutant at a global, continental or, even, regional scale — we have only ever shut down the source and let nature do the clearing up. This is the case for chlorofluorocarbons and stratospheric ozone destruction, for sulfur dioxide and acid rain, and for sulfur and nitrogen oxides and photochemical smog. We must be prepared for CDR to be a failure, leaving us to rely on the environment to stabilize atmospheric CO2 over thousands of years. This is another argument for rapid decarbonization.
My Guess is there is much money to be made in such schemes to remove carbon like the DC hubs and the money will flow in that direction….Rex Tillerson, ex CEO Exxon and Sec of State, had a published interview alluding to such schemes a number of years back…what steps we will need to take to ADAPT to Climate Change and public policy will determine the steps, he used sea walls as an example if I remember. In other words, socialize the costs and privatize the profits for shareholders and executives of Exxon and other corporations.
https://www.nature.com/articles/d41586-023-00953-x
Good read and judging from your article list, it’s far too late in the ball game to mitigate the outcome that are starting to being felt.
Just interesting to observe modern leaders false belief that technology and human cleverness will get us out of another mess of our own creation.
There is a weird Sisyphean futility to emitting carbon and then attempting to recapture and store it even as you emit more. I guess that’s what happens when you reach the limits of marginal returns on complexity – “solutions” become ever more patently absurd and life starts to feel like satire.
I’m sure you’re correct and CDR is just another green gravy train, which the fossil fuel firms in particular will ride with enthusiasm to bolster their green credentials and head off further divestment. The sort of quantities of CO2 we are talking about don’t even move the needle. The new Northern Lights joint-project by TotalEnergies, Equinor and Shell is going to store a risible 1.5 million per year from 2024:
https://totalenergies.com/projects/carbon-neutrality/northern-lights-first-major-carbon-capture-and-storage-project-norway
Based on what I read from Rees, Jensen ,Diamond Ehrlich , Hardin an the likes I never went full McPherson but in some possible scenarios the McPhersonites aren’t that far off just a decade or two.
If we all got really lucky , and implement two or three decent geo engineering options I see 500 million folks walk into the 22nd century. But it’s a big if. I’d say any kind of mega scale cloud seeding , ocean iron dumps or stuff like that will backfire , planting trees is utopia . Some if those swiss air scrubbers have potential , they have been deployed in Iceland now.
Saving all current infrastructure is way too late anyway what I fear are the scientists that have been selling planet wide geo engineering since 1980, newer options seem more small scale and could quickly adapt . Giving back marshlands, swamps and boreal forests and not touch m would help
Nice stuff on Chinas geo engineering yesterday
Excerpts from an analyst I follow (behind paywall) from today:
“It is still hard for most of us, even the hard core, to believe how quickly the system can unravel. We saw it in Silicon Valley Bank where one single press release leads to $47B in withdrawals overnight and the bank is dead in a matter of hours. That’s how fragile the system is.
“SilverSqueeze was a miniature version of this that showed you how fast word can spread and cause the public to move against the dollar. SLV almost broke down that weekend.
“The moves in deposits right now are unprecedented. Nearly $400 billion in deposits have been sucked out of the banking system in one month.
“I was able to kajigger this chart on FRED showing the monthly movements. There is a major earthquake going on in the monetary system right now and you cannot have a stable banking system with these kinds of withdrawals.
“$389B in a month. That’s 2% of the entire money supply. And it isn’t stopping. Keep in mind that deposits don’t simply “disappear” unless debt is being defaulted on (or paid off and extinguished). Debt is part of the money supply, and when there are defaults, the debt that was once counted as money, is no longer counted as money, it being worthless and in default. So what’s happening is a domino of debt defaults from high interest rates. Otherwise, there wouldn’t be net losses in deposits. They’d simply be moving around from bank to bank but not disappearing.
I don’t know how much longer the spit holding the system together will continue doing its job.”
Cassandra, many thanks for that. Whilst the financial economy looks increasingly precarious, the “real” one is sputtering ominously. John Kemp at Reuters reports:
“U.S. Economy is losing momentum rapidly, with both manufacturing and non-manufacturing sectors losing speed in what increasingly looks like a heavy landing.”
https://twitter.com/JKempEnergy/status/1643660572284551173
One of the most interesting concepts/theories rich in psychology is ‘Maslov’s ‘hammer’.
It boils down to this: if you have just one tool, ideologically or religiously defined or otherwise , you end up treating everything like a nail.
It’s basically about simplistically reducing a problem one dimensionally to an equally simplistic one-dimensional ‘toolbox’.
CO2 is such a simplistic one dimensional reduced back problem that reduces any instrumental solution to climate/energy to a simple hammer problem.
Chase the CO2 nail into the problem shelf! and you won’t see a thing!!! What you are actually building is totally irrelevant….only hammering counts.
You do that by starting to define CO2 emissions as a problem very mendaciously! very very complexly to now once ‘ direct’ emissions at the source as in the case of nuclear power plants and then once again to define it in a long-term time cycle where the growth time of a tree/forests (biomass) for which there is at least a century to define as CO2 neutral.
A tree/forest and a nuclear power plant are thus reduced to something very absurdly simplistic but brought under the same heading .
That is precisely what happened last week in those insane EU negotiations on a new energy/emissions scenario…. They have gone totally mad over there and are hammering some solution with their CO2 hammer
France insisted that nuclear power should be defined as ‘ climate neutral and the Scandinavian countries demanded that ‘ biomass’ as large-scale generation for power plants should also be treated as such….
Hammer CO2 out of the world…if necessary we burn down all our forests? Will be fine in a hundred years! No one has ever come up with a sensible solution for radioactive waste under the motto ‘we’ll see that later’ ….?
Well, in a hundred years, the fossil era will be behind us no matter what optimistic energy scenario you conjure up. There will be no more large-scale felling of trees, and how we will manage the cooling and control of our ‘radiation wells’ without fossil backup is completely unclear.
One hope is there though…. humanity will invent a new ‘hammer of Maslov’ we are good at that! …
Glad I won’t be there 🙂
Zip, it is hard not to feel a little jaded watching our species strutting the final steps towards an abyss of its own creation, still brimming over with ill-founded confidence. Too much cleverness; too little wisdom!
Eventually the collapse of the system will gain enough momentum to out weigh any gains or perceived gains or growth as things begin to spiral out of control when this happens is anyone guess but given the news we might not be far away.
https://www.zerohedge.com/markets/china-weighs-rare-earth-magnet-export-ban-retaliation-biden-chip-crackdown
But the 4th industrial green revolution aint happen sorry.
The global economy will continue fracturing and splintering until it ultimately seizes up under the duress of energy/resource constraints.
It is both a tragedy, at least from an economic standpoint, and an irony that the more nations need to work cohesively as localised expressions of the whole to offset physically diminishing returns, the more those same diminishing returns will encourage them to act out of self-interest. #dividedwefall
China certainly holds the whip hand as far as rare earths go:
“…the US has only one operational rare earth mine, owned by a company called MP Materials and located in the Mojave Desert. It mines around 14 per cent of the global supply of rare earths, according to minerals expert Nayantara Hensel, the chief economist at Seaborne Defense…
“The Biden administration is clearly concerned about supply. It flagged the importance of securing more critical minerals in the 2021 supply chain report issued by the White House. And the Inflation Reduction Act offers a $3,750 tax credit for consumers that buy electric vehicles made with minerals extracted or processed in the US.”
https://www.ft.com/content/94802287-2b26-47cf-a94f-cc542fca0a01
One minor problem with Wyoming, Arizona and nevada they all are facing the collapsing water supply of the Colorado river system.
Here is another state and another huge problem Florida and its rising insurance costs due to hurricanes. https://news.wgcu.org/2023-03-20/got-hurricane-insurance-from-citizens-heres-a-new-reason-your-bill-may-rise-in-florida
Insanity