“Debt in advanced economies is piling on to global challenges, says World Bank president.
“Developed economies across the world are facing a debt problem, and that’s piling onto other headaches in the global economy as central banks continue to grapple with persistent inflation, according to World Bank President David Malpass.
“Speaking to CNBC’s Martin Soong at the G-7 finance ministers and central bank governors’ meeting in Japan, Malpass emphasized that record-high global debt levels need to be addressed for stability.”
https://www.cnbc.com/2023/05/12/malpass-g7-global-debt.html
“QE and the central bank hangover that just won’t end…
“What if the sophisticated sounding operations central banks wheeled out in the wake of the global financial crisis and the pandemic to keep the system ticking over were really just a cover for something far more basic: “Money printer goes brrr.””
https://www.politico.eu/article/quantitative-easing-central-bank-hangover-end-inequality/
“The deflating credit bubble could hurt more than just the banks.
“… as investors — and American politicians — uneasily watch those banks, there is another sector that also deserves our attention: life insurance… a decade of extremely low rates has created distortions across the financial world and it could take a long time for these to unwind. That attrition problem goes far beyond the banks.”
https://www.ft.com/content/1aa41d97-f8a7-46d5-be71-6ec0a0cc208f
“An Update On The Banking Crisis…
“The regional banking crisis has continued after the failure of Silicon Valley Bank. Rapid increases in short-term interest rates have pushed the cost of funds for some banks above the interest rate that they can conservatively earn on a loan portfolio.”
https://seekingalpha.com/article/4602707-an-update-on-the-banking-crisis
“PacWest plunges 29pc as US banking crisis rages on.
“Shares in PacWest plunged by more than a quarter on Thursday after warning that customers were continuing to pull deposits from the embattled US regional lender. The California-based bank said that deposits fell by nearly a tenth last week after it confirmed it was exploring a potential sale…”
““It’s really the perfect storm”: Empty office buildings across U.S. could lead to financial meltdown…
“”I see a tsunami of loans coming due,” said Christopher Rising, co-founder and CEO of Rising Realty Partners, a Los-Angeles based commercial real estate company. Rising Realty Partners spent $35 million to remodel a historic Los Angeles building into an impressive office space that remains nearly empty…”
“Luxury home prices have fallen globally for the first time since the 2008 global financial crisis, according to a report Wednesday from Knight Frank.
“Prices dropped by 0.4% in the 12 months to the end of March across the 46 leading luxury markets the real estate firm tracks. Though slight, the slump is a drastic about-face from a peak of 10.1% growth seen in the fourth quarter of 2021 and the first negative reading logged since 2009.”
“Swedish real estate sector rattled as refinancing worries surface… “The closer we look at Sweden the worse things seem to appear,” said James McMorrow, Europe commercial property economist at Capital Economics.
“For a decade global commercial real estate companies took advantage of rising property values and low interest rates to load up on debt. But many will need to refinance their borrowings just as interest rates touch their highest levels since before the 2008 financial crisis.”
https://www.ft.com/content/97b03a7e-a70f-48a2-b048-332b53edccf3
“[UK] Interest rates rise to 4.5%, the highest level since global financial crisis 15 years ago.
“The Bank of England has announced another rise in interest rates to to 4.5% – the 12th increase in a row. Rates are now at their highest level for 15 years, since the global financial crisis in 2008, after seven out of nine members of the Bank’s monetary policy committee (MPC) voted for the increase.”
https://www.lbc.co.uk/news/interest-rates-rise-4-and-a-half-percent/
“Audit finds holes in ECB’s management of bank credit risk.
“European Central Bank supervisors are often too lenient with banks in how they manage credit risk, especially in the case of the worst performers, the European Court of Auditors (ECA) said on Friday in a report that highlighted a number of shortcomings.”
“Struggling with debt, local governments across China call for help from Beijing.
“Authorities in the southwestern province of Guizhou have hired a state-owned debt management company, as analysts warned of a potential financial crisis sparked by “domino-like” bankruptcies among local authorities.”
https://www.rfa.org/english/news/china/local-government-debt-05102023150247.html
“Slump in China bank loans, prices raise more worries about recovery, adds pressure on central bank.
“New Chinese bank loans tumbled far more sharply than expected in April, adding to worries that the economy’s post-pandemic recovery is losing steam and putting pressure on the central bank to ease policy.”
“China’s slow consumer inflation, deepening factory gate deflation to test policy…
“The weak consumer price rise reinforces the signals from this week’s trade data suggesting domestic demand remains lacklustre, while the deflationary impulse in producer prices underlines the strains on factories – a double-whammy for the world’s second-biggest economy as it tries to shake off the COVID-induced damage.”
“Argentina Is Going Broke to Stall a Full-On Currency Collapse.
“Argentina’s fight to prevent its problematic currency from a total meltdown is leaving the central bank, by some estimates, broke… Without easy-to-spend cash on hand, questions are swirling about how much longer the government can continue to defend the peso from an all-out collapse.”
“Blackouts Fuel Pandemic-Like Rout in South African Markets.
“The rand weakened to its worst level in three years and yields on local-currency bonds rose as concerns over South Africa’s continuing energy shortage and deteriorating economic outlook intensify among investors.”
https://finance.yahoo.com/news/blackouts-fuel-pandemic-rout-south-105249730.html
“At least seven people killed by police gunfire in Guinea protests.
“An anti-government movement is planning new protests in Guinea after its leaders said at least seven people were killed and 32 wounded during demonstrations in the capital, Conakry, and other cities.”
“One dead, 30 injured in new wave of unrest in Senegal.
“Violence during protests in the Ngor neighbourhood of the Senegalese capital, Dakar, has killed one teenager and wounded 30 people as young protesters took to the streets against an increasingly “repressive state”.”
“Communal violence and civilian deaths in Sudan fuel fears of widening conflict.
“The deaths of dozens of civilians in fighting in the far south of Sudan and an outbreak of communal violence in the restive Darfur region have fuelled fears that communities across the frontier regions of Africa’s third biggest country are being drawn into the bloody contest between two rival generals.”
“Tunisians’ View of Economic Crisis – the Struggle Continues [terrible drought, too].
“Almost three-fourths (72%) of Tunisians say the country is heading in “the wrong direction.” Tunisians view management of the economy (94%) as the most pressing issue for the government to address, followed by unemployment (45%), poverty (21%), and health (21%).”
https://allafrica.com/stories/202305100259.html
“North Africa backslides toward swirling debt troubles.
“Tunisia and Egypt are edging closer to major debt crises that could suck in a volatile North Africa region and pose tough choices to wealthy Gulf Arab neighbours, investors and analysts warn. The countries are already being challenged by shortages of essential goods and financial market dysfunction…”
“Clashes erupt outside banks in Lebanon.
“Beirut protesters on Tuesday gathered in front of Lebanon’s biggest banks to demand their deposits back after it was blocked by local lenders. The flow of money has been under tightly controlled measures since the economic meltdown in the small Mediterranean country started 3 years ago.”
“A crushing economic crisis in Lebanon has impelled members of the security forces to take on side hustles to get by, raising concerns about security in the eastern Mediterranean country.
“Soldiers in Lebanon have seen their salaries diminish to around an eighth of their value in dollar terms since the country’s economy began tanking in late 2019.”
“Pakistan’s Supreme Court has ordered the release of the former prime minister Imran Khan, after declaring his arrest earlier this week “invalid”…
“His arrest led to widespread civil unrest. Ten people have died and 200 police officers have been injured in the violence, and the government has called in the army to three of its four provinces to help restore order.”
https://www.thetimes.co.uk/article/imran-khan-pakistan-news-latest-arrest-kk9ftl6wd
“Wall Street Takes Up Hedges Against Debt Ceiling Doomsday…
“Back in 2011, a similar standoff triggered an unprecedented credit downgrade of the US government and a 16% drop in the S&P 500 over the span of 10 days, while the VIX climbed to 48.”
“US debt crisis could crash the world’s economy, warns Treasury Secretary…
“Ms Yellen said: “All of these analyses show that we would fall into – if this lasted for any meaningful period of time – a very substantial downturn.” Traders believe there is only a very small chance of the debt ceiling not being lifted in time to avoid disaster, but the ongoing impasse between the government and the opposition is starting to raise concerns.”
https://www.telegraph.co.uk/business/2023/05/11/us-debt-crisis-janet-yellen-world-economy-crash/
“Alarming drop in mining derails drive for Net Zero.
“The International Energy Agency says that to reach net-zero emissions by 2050, we need to be producing six times the current global output of mineral inputs just to build the turbines, transmission lines, batteries and other items essential for low-carbon energy infrastructure. Instead, we are mining less than we did in 2019.”
https://ca.finance.yahoo.com/news/opinion-alarming-drop-mining-derails-165525488.html
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
If you found value in this content, please help me continue this work by becoming a patron of my work via Patreon. And if you are already a subscriber or have donated – thank you! It is an enormous help as the cost-of-living crisis ratchets up here in the UK.
“Alarming drop in mining derails drive for Net Zero.”
LOL
Yes, quite a jarring headline that – shows up the fallacy of conflating Net Zero with a healthier biosphere.
Hello Panopticon
These are interesting times 🙂 and even Macron has problems understanding the ‘ exponential factor’.
He presented yesterday his new industrial plan to boost France into ‘ green industry’ Billions are being released for that. It seems so simple as your interesting article on mining shows.
Just factor in 6 and you’re done. Just invest some money and lo and behold Europe’s ‘low-carbon’ future is firmly in place….
Of course, it doesn’t have to get much crazier in the ‘ green energy’ casino… just bet and set aside the laws of probability and the exponential factor….
Macron lamented the deindustrialisation that has been taking place in France for 40 years now… he stuck an ‘ ideological’ explanation to it. Perhaps he would have done better to look as an explanation at the depletion in France of all raw materials from uranium to iron ore and the closure of all mines anyway.
Europe is bluffing in the global casino and holding all its cards tightly to its chest let’s see if anyone falls for it… 🙂 Introduce a bit of CO2 tax as a climate bonus card;
You just have to dare…. It won’t be up to Macron and Timmermans…. but hope for a heatwave in Europe that resists ‘ideologically’ the senses a bit.
Just together the Chinese is the new motto!
https://www.lefigaro.fr/societes/emmanuel-macron-annonce-un-nouvel-investissement-d-1-5-milliard-d-euros-a-dunkerque-20230512
From your article, Zip:
“The Chinese XTC and the French Orano will invest 1.5 billion euros and create 1700 jobs in a site related to lithium batteries in Dunkirk (North), announced Friday Emmanuel Macron.”
Here in the UK we had similar plans but they have hit some snags. A company called Britishvolt was supposed to be building a lithium battery factory in Northumberland and generating 3,000 jobs in the process – but they went bust and the new owners are delaying the construction:
“A council has given the new owners of Britishvolt more time to build a planned battery factory. Northumberland County Council has extended a buy-back clause on the land at the former Blyth Power Station.
“The council’s contract allowed it to buy back the land from Britishvolt if work was not completed in a set time. Recharge Industries, which bought Britishvolt after it went in to administration, said it remained committed to the gigafactory.
“In January, Britishvolt collapsed into administration, throwing the project into jeopardy.”
https://www.bbc.co.uk/news/uk-england-tyne-64979915
“Europe is bluffing in the global casino.”
Yes. All the players in the energy-constrained, debt-saturated global financial Ponzi scheme are now bluffing to some extent but Europe has a worse hand than most.
Ok interesting.
France is pursuing a special rather controversial course with China. This regularly leads to ‘ tensions’ with its allies. Macron was just in China where he repeatedly propagates the independent course of the EU possibly led by France. France has a complex relationship with the US, UK and Nato and a traditionally ambivalent attitude towards Russia…
Moreover, because of its nuclear power, France is ‘ normally’ a major energy exporter.
On top of that, France has been called the ‘sleeping giant’ when it comes to ‘transition commodities’.
I don’t see it that way myself but well who am I 🙂
There is a lot of focus on mining lithium in France with projected large investments in lithium mines not so far from where I live. Involves significant stocks over an extended period.
Add to that France has built up interest with China in the auto and nuclear industries and the idea of a ‘ second energy line’ in both countries has many
‘ supporters’ in both countries.
Frankly, I think Macron is betting heavily on cooperation with China, but we will see. Foreign minister dines with Macron tonight and I am not invited…. so I have to rely on ‘ hearsay’
https://www.usinenouvelle.com/article/en-attendant-d-extraire-son-propre-lithium-imerys-continue-son-recentrage-vers-les-mineraux-de-specialite.N2102121
Our leaders are delusional. I think it’s a mental illness, generally associated with psychosis of some sort of another.
“A delusion is a false fixed belief that is not amenable to change in light of conflicting evidence.
[1] As a pathology, it is distinct from a belief based on false or incomplete information, confabulation, dogma, illusion, hallucination, or some other misleading effects of perception, as individuals with those beliefs are able to change or readjust their beliefs upon reviewing the evidence.”
We should require all leaders to get medical treatment!
Treatments
SEEKING MEDICAL CARE
Seek emergency help if you
Are thinking about harming yourself or others
Make an appointment to see a doctor if you are
Having difficulty with work or relationships
Are holding steadfast to a belief that others insist isn’t correct
Or more likely it’s delusion along with this item here:
“The philosopher or economists who had the theory that if something is broken then it’s too big is Friedrich Hayek. He was an Austrian economist and philosopher who is considered one of the most important thinkers of the 20th century. Hayek was a strong advocate of free markets and limited government intervention. He believed that the best way to solve problems is through the decentralized decision-making of individuals and businesses, rather than through centralized planning by governments.
Hayek’s theory of spontaneous order is based on the idea that complex systems, such as markets, are more likely to be efficient and effective if they are allowed to develop organically, without government interference. He argued that government intervention in markets often leads to unintended consequences, such as market failures and economic crises.
Hayek’s theory of spontaneous order has been influential in many fields, including economics, political science, and philosophy. It is a powerful argument for the importance of individual freedom and limited government.
Here is a quote from Hayek that illustrates his theory of spontaneous order:
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
Hayek’s theory of spontaneous order is a powerful reminder that we should be careful about trying to control complex systems. When we try to control things that we don’t fully understand, we often end up making things worse.”
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
As someone who sees even personal, let alone collective, agency and free will as ultimately illusory, I like that quote and that final paragraph very much.
However, Hayek seems to be arguing that the risk of unintended consequences justifies letting what we may as well call capitalism run rampant, to which I would respond with the old Arab proverb: “Trust in Allah, but tie up your camel first!”
Hello Curt B;
I enjoyed and agreed with your 8:10 post, but I think for different reasons which is the interesting thing about the term. One persons delusion is another persons inspired insight.
Curt B says, “… Friedrich Hayek. He was an Austrian economist and philosopher who is considered one of the most important thinkers of the 20th century. Hayek was a strong advocate of free markets and limited government intervention. He believed that the best way to solve problems is through the decentralized decision-making of individuals and businesses, rather than through centralized planning by governments.”
I agree, Hayek was a great thinker …
“Hayek’s theory of spontaneous order is a powerful reminder that we should be careful about trying to control complex systems. When we try to control things that we don’t fully understand, we often end up making things worse.”
Again, we agree. The place where we disagree is down into the weeds a bit.
“… centralized planning by governments …” was shown to not work by the USSR. The waste, and inefficiency of that economic system is legendary, and a useful lesson that should not be forgotten. In fact, as a result of that lesson, I can only think of one country (North Korea) that may still be practicing central planning. Certainly Russia, and China do not engage in central planning.
In the west, especially in the US, the government has taken Hayeks ideas to heart and has done a fair job at enacting them in the economy. The result has not been good. Without careful controls on companies while they are relatively small, they end up too big to control. The examples are too numerous for me to provide a complete list but generally they can be blamed on the companies actually taking over the regulatory agencies
The world wide (western world) banking crisis
The FDA gets most of its funding from the companies that it is supposed to regulate. The result is vaccines that don’t need to be tested, hip joints that leak Cobalt, etc.
The USDA food pyramid is upside down (and has been since it was created) so that ADM can sell grain products. The result? A fat, unhealthy population.
The phenomenon looks like corruption, but it is just the ultimate result of letting big companies get so big that they take over. It looks like an oligarchy because that is what the US has become.
I hope that you check back, and look forward to reading more of your views.
This site is truly superb. As a tell for the Greenwash movement, note that not anywhere, at any time is there made mention the billions or tones of ADDITIONal CO2 that would be added to the atmosphere to get to their zero emissions goal (an impossibility when working without a net). Each ton of aluminum manufactured, eg, releases 1.2 tons of CO2. It matters not whether that metal is used to make an ICE machine or an EV. We keep “paying it forward”, with absolutely no clue, because we actually could care less, on the faith that the savings tomorrow will make up for the profligacy of the present. But just when has ThaT ever happened?
Robert, bless you for those kind words.
Yes, as you say, the transition itself – if such a root and branch overhaul of our entire system (as opposed to a tinkering with our electricity provision and vehicle-engine types) were even possible – would be highly CO2 intensive.