“Wall Street ends down as PacWest fuels fears of deeper bank crisis.
“”Regional banks and tightening credit conditions are weighing on the market as investors try to recalibrate on where we are in terms of credit cycles and bank lending standards, and when a potential recession may hit,” said Zhe Shen, managing director of diversifying strategies at TIFF Investment Management.”
“Brace yourselves, the banking crisis is just getting started…
“The problem is that once investors lose confidence, it is desperately difficult to regain, and regulators quickly become helpless bystanders. Similarly, for all the regulation that was ushered in following the financial crash of 2008, when customers take fright, bank runs are practically impossible to stop.”
https://www.telegraph.co.uk/business/2023/05/05/banking-crisis-pacwest-jpmorgan-jamie-dimon/
“US banking crisis: Close to 190 banks could collapse, according to study…
““The recent declines in bank asset values very significantly increased the fragility of the U.S. banking system to uninsured depositor runs,” economists wrote in a recent paper published on the Social Science Research Network.”
https://finance.yahoo.com/news/close-190-banks-could-face-163717073.html
“Nearly half of Americans are worried about the safety of their bank deposits following turmoil in the industry that’s led two institutions to collapse and left others teetering on the bring.
“A poll shows 48 percent of people are either moderately or very worried about the cash they keep in banks – a higher proportion than during the financial crisis of 2008.”
“Britons have withdrawn record amounts of cash from accounts as fears over the US banking crisis spread around the globe.
“As shares in America’s regional lenders tumbled yesterday on another brutal day for the sector, Bank of England (BoE) figures showed £4.8billion was pulled out of UK banks and building societies in March.”
“US banking crisis pushes gold close to all-time high…
“The latest leg of a banking crisis, in which regional US bank PacWest said it was exploring potential sales to secure its future, pushed trading in gold futures on the Comex exchange to match its all-time high of $2,072 on Thursday.”
https://www.ft.com/content/b28378f9-adbe-429c-ae16-f6919f96369c
“Fed raises US interest rate to 16-year high despite banking crisis.
“The US Federal Reserve raised interest rates to the highest level since 2007 on Wednesday even as chairman Jerome Powell warned the recent turmoil in the banking sector would hit jobs and growth.”
“A Recession Is Coming [US]—And Here’s How We Know…
“Persistently high inflation, slowing spending, declining investment, interest rate increases—this is a textbook scenario for a recession, and one that is being closely watched by business leaders and global economists alike.”
https://www.forbes.com/sites/phillipbraun/2023/05/03/a-recession-is-coming-and-heres-how-we-know/
“Russia and China would use debt default to portray U.S. as chaotic, intel chief warns [to be fair, the US would look pretty chaotic, objectively, and wouldn’t need much portraying as such!].
“The director of America’s top spy agency warned lawmakers Thursday that Russia and China will take advantage of the U.S. potentially defaulting on its debt, which the Treasury Department says could happen as early as June 1.”
https://www.cnbc.com/2023/05/04/russia-china-would-use-debt-ceiling-default-against-us-haines.html
“Sovereign Debt Costs to Double by 2025 as Rates Rise, Says Janus… Governments seen stymied by markets, echoing UK under Truss…
“It’s a far cry from years of ultra-low rates and central bank bond buying programs, which allowed governments the world over to borrow record amounts at little cost. Interest rates have risen globally… Some central banks are now actively offloading bonds, pilling further pressure on the market.”
“Slow-burning route to financial disorder…
“…central banks have weakened their own balance sheets, as well as their reputation and independence. As they struggle to deal with inflation, the decline in central banks’ credibility can be reversed only if they are able to restore stable prices.”
https://www.omfif.org/2023/05/slow-burning-route-to-financial-disorder/
“Maersk warns of ‘radically changed’ world as profits tumble…
“AP Møller-Maersk warned of a “radically changed business environment” as profits plunged at the world’s second-largest container shipping line due to a sharp drop in demand and freight rates… Maersk said it expected economic growth to be “muted” and the container market — a proxy for global trade — to most likely contract.”
https://www.ft.com/content/c9808a10-a9d9-45ee-ac80-3da93172f290
“ECB raises rates in inflation fight.
“The European Central Bank raised interest rates by 25 basis points to 3.25% as expected on Thursday and said it would stop reinvesting cash from maturing debt in its 3.2 trillion euro Asset Purchase Programme from July… further action is still likely given mounting wage and price pressures.”
“France and Japan have signed a nuclear cooperation agreement in Paris, the French ministry said on Wednesday…
“French Energy Minister Agnes Pannier-Runacher met Yasutoshi Nishimura, Japan’s minister of trade… and they discussed accelerating technical cooperation on the nuclear fuel cycle, and working to build a supply chain involving only countries sharing “common values” — a veiled reference to Russia’s outsized role in the sector.”
https://www.reuters.com/world/france-japan-sign-nuclear-partnership-deal-2023-05-03/
“Iran seizes second oil tanker in a week amid US confrontation…
“A video released by the 5th Fleet appeared to show about a dozen fast-attack IRGC vessels approaching a tanker that was identified as the Panama-flagged Niovi. The US said the tanker was forced to reverse course into Iranian territorial waters during the “unlawful seizure”.”
“Truckers Join Iran’s Expanding Labor Strikes…
“The Union of Truck-Owners and Truck Drivers issued a statement on Thursday, saying their complaints and short-term strikes have not resulted in any change in their situation therefore they plan a long and nationwide action. Referring to rising prices and rampant inflation, they demanded fares on par with the increasing prices for fuel and spare parts.”
https://www.iranintl.com/en/202305048719
“India army patrols streets to defuse clashes in remote state [Manipur].
“The governor of a remote Indian state issued orders allowing district magistrates to shoot protesters, as soldiers patrolled the streets and enforced a curfew after thousands of people clashed, causing deaths and damage to homes and vehicles, officials said Thursday.”
“Traders faces difficulties as prices rocket in conflict-hit Sudan…
“Sudanese trader Ahmed Hashem says the conflict is creating inflation, alongside cash and fuel shortages in northern city of Wad al-Habashi. Wad Al Habashi so far has been spared from the spreading clashes thanks to the army’s tight security measures.”
“South Africa Braais Are About to Get More Expensive.
“Crunching data from the Pietermaritzburg Economic Justice and Dignity group, the index tracks the prices of some of the key ingredients in a traditional barbecue consumed in South Africa’s townships… The gauge shows prices rose 20.3% on average in April from a year earlier.”
“Chile’s March economic activity indicator contracts 2,1%, with the largest falls in mining and manufacturing.
“Chile’s monthly economic activity indicator, Imacec, contracted in March 2,1% compared to the same month in 2022, according to the latest report from the country’s Central Bank. The indicator is located in the pessimist area of analysts’ expectations…”
“Intense droughts show fragility of Peru’s energy sector…
“…dry spells are no longer isolated incidents… In addition to their impact on crops, these droughts have also set alarm bells ringing over their impact on power generation in Peru, with just under half of the national electricity supply dependent on hydroelectric plants.”
“Exclusive: Venezuela’s oil tankers at risk of sinking, fires, spills, report finds.
“More than half of the 22 oil tankers in Venezuela’s fleet are so run down that they should be immediately repaired or taken out of service, according to an internal report from state-run oil company PDVSA that was shared exclusively with Reuters.”
“Two killed during riots in Suriname…
“Police said that the insurgents belong to the Kaliña Amerindian tribe… For years, the indigenous people have complained that concessions and mining rights are granted in their traditional living space by the government to individuals and companies without the residents being consulted.”
https://caribbean.loopnews.com/content/two-killed-during-riots-suriname
“Fungal attacks threaten global food supply, say experts.
“Fast-rising fungal attacks on the world’s most important crops threaten the planet’s future food supply, scientists have said, warning that failing to tackle fungal pathogens could lead to a “global health catastrophe”. Fungi are already by far the biggest destroyer of crops.”
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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If you dare, I want anyone to think about these two economics articles. The first by Dr. Tim Morgan explains that the world economy has stopped growing because the supply of easily accesible oil has been used up.
https://surplusenergyeconomics.wordpress.com/2023/04/28/254-a-tale-of-two-economies/
The second, by the economics team of Hudson and Desai is the 4th in a series explaining the why, and and in this latest article the consequences of de-dollarization.
https://geopoliticaleconomy.com/2023/04/29/de-dollarization-neoliberalism-radhika-desai-michael-hudson/
I am always fascinated that Morgan has not and likely never will consider the concept of de-dollarization, and that Hudson and Desai as conventional economists will never consider peak affordable oil. Both very competent economists IMO are missing a big part of the geopolitical/economics changes that are afoot.
What the heck, lets add Gail T. to the mix.
https://ourfiniteworld.com/
Hudson + Desai and Gail Tverberg both see US hegemony crumbling; the former scent a socialist utopia sprouting from its ruins; the latter sees the potential for nuclear Armageddon. Quite a divergence of views. 😆 Naturally, I tend more towards the latter.
Neither factors in climate change properly IMO. That is going to stop nipping at our heels and start gouging chunks from our flesh soon.
I cannot say that I am so smart, and knowledgeable about – well – everything that I am simply bored with economics in general. In fact, being a fairly dense country bumpkin, I like to see several different viewpoints so that I can get a deeper understanding.
“Neither factors in climate change …”
Tverberg and Hudson are straight up global warming deniers, while Morgan pays lip service to the concept of AGW and completely ignores it in his analysis. I don’t worry about that since I can add in the effects of AGW on my own.
I find a number of things interesting while trying to understand these articles:
Hudson and Desai make a very good case (and cannot hide their delight) that de-dollarization is happening quickly now that China and Russia are working hard on finding alternatives and bringing the rest of the global south into a semi-united front. Since it is pretty obvious (see Morgan) that growth is over world wide, the effect on the US of loosing the petrodollar and the dollar as the reserve currency must be amplified. Its just a matter of waiting a few months to see how the specifics manifest themselves.
Stated another way, Morgan projects a 43% gap between the financial economy and the real economy of goods and services which implies to me that the stock and bond market will drop by that amount in the next few months. Problem is, Morgan does not see (should I say “acknowledge”?) that the dollar as reserve currency is doomed. Do we move from anticipating a 43% drop in the value of the financial side of the economy to a much larger drop?
Hudson and Desai do not see the ERoI that will continue to slow the Chinese and Russian economies. The Russians have good conventional oil and coal production currently, but soon – Morgan projects within 2 years – depletion will push their ERoI up. Will they be able to de-dollarize and keep their economies afloat at the same time in the face of the physical limits?
“… potential for nuclear Armageddon …”
Yeah, with the quality of the “leadership” that I see in the west, AGW seems like a minor issue (and I think by now you know my feelings about AGW 🙂 ).
Hello Panopticon
Since the ‘ higher’ economic powers that ‘ swim around like goldfish’ in the creaking paradigms of their self-created goldfish bowl are financially economically inimitable or, on the contrary, highly predictable, let’s say a word about ‘ braai’.
At least that’s about something.
It really is highly significant BBQ in southern Africa and there is always ‘ something’ to celebrate. The highlights of the mundane are understated highlights that may be more important in the perspective of the quality of everyday life. Just as the coronation of Charles and all that excitement and old fairy tales about Scottish stones are actually much more enjoyable than the boring ‘sermons’ of Dr Tim Morgan and Sister Tverberg anyway…. that’s the same preaching from the pulpit every time with a mob that also already doesn’t listen and just gets on with their comments of eh …. where were we again with our conspiracy theories?
Funny and paradoxical though is that it is precisely the ‘ vegetables’ that make the braai feast expensive. You could quite easily tie a whole ‘ theory’ to that about meat’, veggies, climate and more specifically Africa 🙂
I briefly consulted the sites about ‘ braai’ well a world opens up for you.
The funniest post was the 1 April joke about the deplorable energy situation around Eskom and the call to make braai available to the ailing company this year.
https://www.citizen.co.za/news/electricity-minister-south-africans-donate-braai-coals-eskom/
Zip, the whole braai phenomenon was entirely new to me! I thought the Aussies had the monopoly on Southern Hemisphere barbecues.
Ha! Maybe its a southern-hemisphere thing?
However, I have heard ‘braai’ used here in Oz too, but its meaning is usually limited to large organised parties, using wood/charcoal in firepits, often with a roasting spit. Like a high-school graduation braai, when scores of teens gather around a huge firepit (and beer kegs).
>Zip* [<—insert preferred epithet).
unfortunately, a fracking gas project – in the Beetaloo basin – has finally been given the go-ahead. We are drowning in conventional gas fields, don't need to frack any of 'em – let alone frack 'em in sensitive environmental spaces like the Beetaloo.
https://www.afr.com/companies/energy/environment-stoush-erupts-on-nt-approval-of-fracking-in-beetaloo-20230503-p5d5af
But I guess its location, so close to the Darwin port, makes it financially lucrative. But fracking? *sheesh*
but as our Treasurer said, most of the Budget surplus, will go onto the rising debt-interest burden left behind by the previous 15+ years of profligate government borrowing and obscene cash-splashing following the GFC. But at least our national credit rating is still flying high. No defaults here, we paying our debts on time —
for the time being at least! 🙂
Watching our Budget rolling out – announced in full next Tuesday – but 'leaking' bits'n'pieces ahead of time. Like everywhere else, people are mostly focussed on 'cost-of-living' relief measures. And welfare. And housing.
Another big chunk of the surplus will go on military defence infrastructure promises, and also our Pacific island neighbours in contracts for police services, health services, other security, communications and energy/water tech infrastructure projects, as well as the current trickle of population relocations due to sea level rise on worst affected islands. (Mostly to mountainous islands off PNG coast). For a year now, Australia has been courting the Pacific island nations, primarily to outbid, outperform and replace the Chinese incursions.
But Australians are mumbling & grumbling – spending on Defence, and Foreign AID to poor neighbours, is all well and fine, but what about our own increasing poverty, homelessness, and fraying health system? (eg increasing co-payments for GP visits)
It appears both sides of pond have a political clown show taking place. Everyday there is more corruption and scams appearing in the news. It’s everywhere. Considering the empire going down in flames i need to hold on to my beer. I just read that half of British want the monarchy gone.
Heather, it is the coronation today. It all feels like a bit of an anachronistic sideshow to me really.
@Zip –
“…the boring ‘sermons’ of Dr Tim Morgan and Sister Tverberg anyway…. that’s the same preaching from the pulpit every time with a mob that also already doesn’t listen and just gets on with their comments of eh …. where were we again with our conspiracy theories?..”
Indeed! Bahahaha.
Recently I must have accidentally clicked on something, and ended up with 70+ email notifications of the commentariat on OFW, instead of just being notified of new posts. Took me awhile to figure out how to undo it, before I became infected with conspiracy rabbit-hole disease 🙂
With colder nights, I have switched to watching more YT podcasts and vids on the bedroom TV set, instead of reading articles, blogs/forums etc. Easier on the eyes and more comfy in the bed 🙂
I had to laugh with the rabbit-hole (below) of the Iran-USA Tit-for-Tat siezures of oil tankers.
It made me laugh, because this dude is so gung-ho on the US Navy being the ‘protector’ of the High Seas and needs to ‘intervene’. Its why the US Navy was built after all 🙂
But it *seems* that the USA is doing its own not-so-fair share of ‘piracy’, while claiming something about only siezing “illegal” shipping getting around the sanctions on Iran.
https://www.youtube.com/watch?v=5XMNXPgl3cQ
Will piracy of oil tankers increase?
What about mega-freighters of foodstuffs?
Will commercial shipping need to arm themselves? Or be escorted in convoy by naval destroyers etc.