“Are we sleepwalking into a prolonged global recession?
“The International Monetary Fund and the World Bank held their Spring Meetings in Washington last month amid growing fears of a prolonged worldwide recession and following a series of reports predicting that global economic growth will continue to slow…
“Since the 2008 global financial crisis, the Group of Seven countries’ loose monetary and fiscal policies have led to more than a decade of relative stability for the world’s advanced economies. But they have also led to near-negative nominal interest rates and higher debt levels, fueled speculative asset bubbles and encouraged investors to forsake long-term investments in favor of chasing short-term yields…
“The COVID-19 pandemic, together with the war in Ukraine, has further exacerbated the fragmentation of the global financial system…
“The current situation is reminiscent of the run-up to the global recession of the 1930s, which also led to increased military expenditures and set the stage for World War II.”
“We have all the ingredients for a ‘Minsky moment’ and investors should brace for months of a volatile stock market, according to Allianz…
“Stability, fragility, and then, suddenly, a crisis… with global debts touching a record $300 trillion and stocks rising in the face of stubborn inflation and banking instability, Allianz chief economist Ludovic Subran is worried Minsky’s prediction is about to come true.”
“FX markets experiencing 2008-like economic conditions minus Lehman crisis.
“The current foreign exchange (FX) market environment exhibits certain resemblances to the period preceding the Lehman Brothers collapse in September 2008.”
“US banks plan to tighten lending standards amid loan loss fears.
“US banks expect to tighten lending standards over the course of the year because of worries about rising losses in their loan portfolios and concerns that customers will continue to withdraw deposits, according to a survey from the Federal Reserve.”
https://www.ft.com/content/77d42ab5-694b-4bdb-9e5b-d8e106e2c02f
“US Small-Business Optimism Falls to Lowest Level in a Decade.
“US small-business sentiment fell in April to the lowest level in a decade, reflecting dimmer prospects for the economy and sales that are causing firms to dial back investment plans. The National Federation of Independent Business optimism index decreased by 1.1 points to 89…”
“Cash-strapped Britons buying food near expiry to save money.
“Nearly two-fifths (38pc) of households bought discounted products nearing their expiry dates in April, according to Barclays. Sales of so-called “yellow sticker” items, which have their prices cut as they near best before dates, have been on the rise as food and drink prices soar. Food inflation hit 19.2pc in March.”
“UK mortgage lender to offer first 100% loans since 2008 crisis.
“A leading lender plans to launch a 100% mortgage aimed at would-be first-time buyers who cannot save for a deposit, the first since the 2008 financial crisis. Standard home loans where the borrower does not have to put down a deposit used to be fairly commonplace but the last was axed in the wake of the financial crisis.”
https://www.theguardian.com/money/2023/may/08/uk-mortgage-lender-100-loans-skipton-building-society
“Credit pulse in the Eurozone: Monetary policy tightening is causing an historic drop in demand.
“Already noticeable in Q4 2022, the effects of monetary policy tightening on the distribution of bank credit in the eurozone intensified significantly in Q1 2023. The impulse of bank lending to the private sector has been negative since February 2023, for the first time since 2014, excluding 2021 (after-effects of Covid support measures and loans).”
“European gas prices could rise in the second half of this year and nearly treble from current levels in the winter, according to Goldman Sachs.
“Analysts at the US investment bank said that lower-than-expected prices in recent months following a mild winter could make European households more likely to increase their gas usage.”
https://www.thetimes.co.uk/article/gas-prices-in-europe-may-treble-warns-goldman-sachs-dmfc55wz0
“Key German Utility Warns Energy Crisis ‘Not Over Yet’…
“While energy prices have plunged from last summer’s highs, analysts have warned that a sudden rebound in demand and increased competition from Asia for supplies could reignite volatility in the market.”
“Germany’s regional leaders demand more financial support for refugees.
“German lawmakers are at loggerheads over how to manage the number of refugees coming into the country, with regional leaders calling on the government to provide more financial support. On Wednesday, the leaders of Germany’s 16 states will meet Olaf Scholz, the chancellor…”
“As key votes loom, Turkish parties vow to send migrants home…
“Syrians fleeing the civil war — now into its 12th year — were once welcomed in Turkey out of compassion, making the country home to the world’s largest refugee community. But as their numbers grew — and as the country began to grapple with a battered economy, including skyrocketing food and housing prices — so did calls for their return.”
“Erdogan again? Amid rubble of Turkey’s quake, voters demand to be heard.
“Reuters interviews with Kar and a dozen other voters in Antakya reflected anger over what some viewed as a slow initial government response to the disaster. Yet they showed little evidence that the issue has changed how people will vote in the presidential and parliamentary polls on Sunday.”
“Pakistan internet cut as violence erupts after arrest of ex-PM Imran Khan…
“Internet services have been suspended across Pakistan after violence erupted when the former prime minister, Imran Khan, was arrested at a court appearance in Islamabad and dragged into an armoured vehicle by scores of security forces in riot gear.”
https://www.theguardian.com/world/2023/may/09/pakistan-former-pm-imran-khan-arrested-in-islamabad
“Pakistan may default if IMF denies bailout, warns Moody’s.
“The possibility of a delay in a loan from the IMF has been increased by political unrest in Pakistan ahead of this year’s elections. The arrest of former premier Imran Khan by the Pakistan Army and the subsequent violence across Pakistan has not helped matters.”
“Retailers pulling down shutters as recession bites [Nepal].
“A credit crunch, real estate slowdown, tumbling stock market and rising unemployment have rattled the economy even as a new government was formed. ‘Sale’ posters became a common sight at apparel stores in Kathmandu as they tried to attract buyers amid a drop in consumer spending primarily because of inflationary pressures.”
https://kathmandupost.com/money/2023/05/10/retailers-pulling-down-shutters-as-recession-bites
“An Oil Tanker Ablaze in South China Sea Is Warning of Global Problem.
“…for nearby maritime authorities, the headache has just begun. There is little evidence of the owner, a Marshall Islands-registered company whose fleet contains no other ships, and no trace of insurance. Both are vital for a clean-up to begin.”
https://www.insurancejournal.com/news/international/2023/05/08/719945.htm
“China Halts 50 Million Tons of Coal Output After Deadly Accident.
“China halted operations at 32 coal production locations in Inner Mongolia after a deadly accident in February triggered nationwide safety checks. The affected operations were open pits with steep slopes on the edge of mining areas. That poses safety risks similar to the fatal accident, in which a landslide left 53 people dead or missing…”
“China Warns Severe Heat Means Another Summer of Power Risks.
“Asia’s brutally hot weather is expected to hit China this summer, threatening a new round of power shortages that last year disrupted global supply chains of everything from cars to solar panels. The electricity supply situation will be tight across the entire nation this summer, state-run China Energy News reported…”
“China’s shrinking imports, slower exports growth darken economic outlook.
“China’s imports contracted sharply in April, while exports rose at a slower pace, reinforcing signs of feeble domestic demand despite the lifting of COVID curbs and heaping pressure on an economy already struggling in the face of cooling global growth.”
“[South Africa’s] Electricity minister warns of stage-8 load shedding.
“Kgosientsho Ramokgopa said he can’t preclude the possibility of South Africa being plunged into even worse load shedding this winter.
“This could mean up to stage-8 rolling blackouts, with no electricity for up to 13 hours a day.”
https://techcentral.co.za/electricity-minister-warns-of-stage-8-load-shedding/225356/
“S&P says El Salvador’s debt exchange constituted default…
“El Salvador conducted a pension debt exchange on April 28, offering private pension funds a mix of new certificates to replace some earlier sovereign financial obligations, according to S&P. “In general, at such low ratings levels, we consider most exchanges as distressed and tantamount to a default,” S&P said.”
https://www.reuters.com/markets/sp-says-el-salvadors-debt-exchange-constituted-default-2023-05-10/
“‘There’s no water’: migrants stranded in Chilean desert as Peru closes border…
“This desolate stretch of the Atacama desert has been home for days – and in some cases weeks – to hundreds of migrants, mostly Venezuelans, fleeing harsher immigration protocols and growing xenophobia in Chile and hoping to cross its northern border into Peru.”
https://www.theguardian.com/global-development/2023/may/09/migrants-stranded-chile-peru-border
“Sand shortages push up cost of jam jars and fracking.
“The rising cost of a grain of sand is inflating the price of materials such as glass and cement even as energy bills flatten out, highlighting its importance for everything from jam jars to global infrastructure projects.”
https://www.ft.com/content/da751338-81a8-45c6-bf2e-acd97980145a
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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JapanTimes is interesting opinion.
So what do we know? The global material economy is shifting down-gear, the global financial system is fragmenting and geopolitics is following suit into higher protectionism, regionalisation and military spending.
Noam Chomsky recently had some interesting insights on geopolitics and the transition to a complicated “multipolar world”
https://youtu.be/tD_JdwimnjU
And as he has always done, links the decline from the 70s to classic “class struggle” playing out to the final Act. Starting with Reaganomics
https://youtu.be/AqT_5C0H23E
Thanks for those clips, Rain. I’m just watching the first one. Noam sounding a bit desiccated but still amazingly switched on for a 94-year-old. He doesn’t seem very optimistic…
I was curious to know his views on climate change. Not much optimism there either:
“It’s not just the defining issue of this century, but of human history. We are now, as he says, at a point where we’ll decide whether the human experiment on Earth will continue in any recognizable form. The report was stark and clear. We’re reaching a point where irreversible processes will be set into motion. It doesn’t mean that everybody’s going to die tomorrow, but we’ll pass tipping points where nothing more can be done, where it’s just decline to disaster.”
https://www.salon.com/2023/04/11/noam-chomsky-on-savage-capitalism-from-climate-change-to-failures-to_partner/