“What dangers are lurking in the shadows of the global financial system?
“…The non-banks, or “shadow banks” as they are sometimes called, don’t face the capital or liquidity requirements of regulated banks nor are their activities as transparent. The IMF has said there is little regulatory or supervisory oversight of these non-banks and that they have “virtually no loss-absorbing capital”.
“The non-bank sector includes pension or superannuation funds, insurers, hedge funds, private equity funds, private credit funds and many other entities, often pursuing leveraged strategies…
“…banks can be exposed to non-banks indirectly, through a commonality of asset holdings.
“If property fund managers face a flood of redemptions and have to sell assets to raise cash, for instance, it would have depressing flow on effects to the value of the security banks hold against their property loans as well as for the solvency of their customers…
“Commercial real estate might, as it has in the past, be the most obvious source of problems and contagion between the non-bank and regulated banking sector but no-one really knows what’s lurking within the shadows of the system.”
“Why the world should fear a commercial property crash. Working from home spells trouble for the office sector…
“The spread of commercial property yields [in the US] over 10-year Treasuries (American gilts) is only 0.5pc. To return the spread to normal, average commercial property prices need to fall from peak to trough by about 22pc. So far, average prices have only dropped by about 7pc, leaving a large fall still to come.”
https://www.telegraph.co.uk/business/2023/05/14/global-commercial-property-crash-risk/
“G7 finance ministers warn of “uncertainty” on global economy.
“G7 finance ministers have warned of “heightened uncertainty” surrounding the global economy and the need to address regulatory gaps in the banking system in the wake of recent financial sector turmoil… The finance ministers also noted the need to fill “data, supervisory and regulatory gaps” in the banking system…”
https://www.ft.com/content/e12cc95b-5b86-474e-901b-b9686ca5c8c8
“The Pain of Silicon Valley Bank’s Collapse Is Being Felt by These Depositors…
““Funds held at foreign branches are not subject to deposit insurance protections,” the spokesperson said, adding that the bank’s creditors can file claims on what they are owed… “In fairness, it has always been true that foreign deposits are not covered by U.S. insurance,” said Christopher Curtis, a retired U.S. financial-regulatory attorney who worked at the FDIC in the early 1990s.”
“Investors predict ‘imminent’ US high-yield bond sell off…
“The US Federal Reserve’s quarterly Senior Loan Officer Opinion Survey this week showed that 46 per cent of US banks plan to raise their lending standards due to worries about loan losses and deposit flight.”
https://www.ft.com/content/40228b9c-a579-4b83-8f50-1f28d859e1db
“Bankruptcies Are Up 216% and We Aren’t Even Halfway Through 2023 [US]…
“The most recent S&P data show 2023 corporate bankruptcies rising at an alarming clip. Data show 236 bankruptcies were recorded through the end of April 2023 (109 had been recorded over the same time period last year). UBS also found in a recent study that bankruptcies worth $10 million or more had a rolling average of about 8 per week.”
https://www.thestreet.com/investing/bankruptcies-are-up-216-and-we-arent-even-halfway-through-2023
“Recession? Corporate America’s Earnings Say It’s Already Arrived.
“As the US economy teeters on the brink of recession, Wall Street is already enduring what could turn out to be the most prolonged corporate profits downturn in seven years. With the first-quarter earnings season drawing to a close, the profits of S&P 500 companies are estimated to have dropped 3.7% on average, compared to a year ago.”
““Worst freight market since the Great Financial Crisis.” [US]
“This statement is common across social media. Now we have some evidence to support it… The current trucking spot rate is below the 2019 seasonal equivalent. While this alone is bad, the worst news is that operating costs for trucking companies (not including fuel) are up more than $.30/mile in that same period.”
https://twitter.com/FreightAlley/status/1657408415604383746
“US oil and gas rig count falls to lowest since June 2022 – Baker Hughes.
“The U.S. oil and natural gas rig count fell this week to its lowest in nearly a year, as gas rigs slumped by the most in a week since February 2016, energy services firm Baker Hughes Co said in its closely followed report on Friday.”
“Shoppers and fast food fans face a shortage of home produced chicken amid claims supermarkets are refusing to pay farmers enough to cover soaring costs. [UK]
“The empty shelves and rationing of eggs and vegetables that was seen in recent months is likely to be repeated for many fresh British chicken products, according to experts at the British Poultry Council (BPC).”
“Neo-Nazis clash with police and counter-protesters at anti-immigration rally in Melbourne [Australia].
“A group led by the self-proclaimed neo-Nazi Thomas Sewell was expected to meet at state parliament at midday on Saturday for an anti-immigration protest, which an anti-fascist group planned to disrupt by rallying 30 minutes earlier, according to multiple posts on social media.”
“Dublin migrant camp set on fire after violent protests.
“Anti-immigration protests turned violent in Dublin over the weekend as tents belonging to homeless refugees were set on fire. Leo Varadkar, the Taoiseach, said he condemned the violence “unreservedly” and described it as “malign opportunism”.”
“French mayor forced out of office by far-right protests over immigration.
“Bitter divisions in French society over immigration are erupting once again after a small-town mayor in western France resigned in the face of far-right protests, an arson attack and death threats linked to his approval of building an immigrant asylum center close to a primary school.”
“Disastrous Clamp Down on Migrants Rights in Italy.
“After impeding the ability of search and rescue organizations to save lives in the Mediterranean Sea, Italian authorities have now passed a law restricting the rights of people who manage to reach its shores. Named after a terrible shipwreck in which more than 80 people died in March, the government’s Cutro decree became law last week.”
https://www.hrw.org/news/2023/05/12/disastrous-clamp-down-migrants-rights-italy
“Erdogan heading for a runoff in Turkey’s knife-edge elections.
“Turkey’s fiercely contested presidential election appears likely to go to a second round after President Recep Tayyip Erdogan failed to secure 50% of votes cast to decisively extend his 20-year rule. The high stakes election will ultimately decide the fate of a key NATO ally and regional power broker at a time when Russia’s invasion of Ukraine has plunged much of the world into uncertainty.”
https://edition.cnn.com/2023/05/14/europe/turkey-election-polls-results-erdogan-intl/index.html
“G7 and EU to ban restart of Russian gas pipelines.
“The G7 and EU will ban Russian gas imports on routes where Moscow has cut supplies, according to officials involved in the negotiations, the first time pipeline gas trade has been blocked by western powers since the invasion of Ukraine.”
https://www.ft.com/content/3568257b-9ab9-43b0-be96-04828b375fa2
“Safety Fears Surround the New Trade in Russian Oil.
“Moscow is increasingly reliant on a large number of tankers that in previous years may have been demolished because of their age… The G-7’s measures cut off Russia’s main export market — Europe. But just as importantly, they restricted access to insurance and an array of other services for crude purchased by anyone at more than $60 a barrel.”
“Head of Russia’s crime agency suggests nationalising key parts of economy…
““We are essentially talking about economic security in a war,” Alexander Bastrykin, head of the Investigative Committee, told a conference that was streamed online. “Let’s go along the path of nationalising the main sectors of our economy.””
“Iraq And Iran Ignore U.S. Sanctions In Talks To Expand Energy Ties.
“As a result of harsh US sanctions, billions in Iraqi funds owed to Tehran have been frozen. Due to the sanctions on Iran, Iraq is only allowed to receive Iranian energy imports and pay for them via waivers that extend up to 120 days.”
“Iran Blames Foreigners for Strikes at World’s Biggest Gas Field…
“Iranian energy workers have organized several strikes since October seeking higher pay and better conditions, coinciding with wider public anti-government protests. Iran has blamed the US and Israel for stoking the street protests…”
“Tehran has refused to comment on the embarrassing revelation that China’s private ports are complying with a ban on Iranian shipping.
“Ali Nazi, Deputy Director of Ports and Maritime Organization told ILNA news agency on Saturday that such “information is confidential.” China has handed over most main ports to the private sector and foreign companies. These operators do not allow Iranian ships to dock, for fear of being subject to US sanctions.”
https://www.iranintl.com/en/202305136471
“Shipping groups press Chinese counterparts for sanctions-proof contracts… Measures against Russia and worsening tensions over Taiwan have spooked the sector.
“Shipping groups are increasingly seeking break clauses in contracts with Chinese businesses that would make it easier for them to walk away from deals if western governments impose sanctions on Beijing.”
https://www.ft.com/content/7b266b81-3d6c-41cb-aa98-0b200857f2be
“China holds rates, adds more liquidity as recovery struggles.
“China’s central bank rolled over maturing medium-term policy loans while keeping the interest rate unchanged on Monday, as expected, but markets expect monetary easing may be inevitable in the coming months to support the economic recovery.”
“As global recession looms, China unlikely to rescue economy again: Report.
“As rest of world teeters on the brink of recession, last thing Western policymakers want is for China, biggest driver of global economic growth since 2008 financial crisis, to have a lopsided recovery. But that is what is unfolding…”
“Brazil Debt Is the Source of High Rates, Central Bank Chief Says…
“Campos Neto said it’s not the central bank’s fault when the government issues a bond and pays yields of 6% above inflation, like Brazil did recently. “There is a risk that justifies the real interest rate is 6%,” he added.”
“Argentina plans emergency economic measures to avoid big devaluation.
“Argentina will announce on Monday a new round of emergency government measures, including raising interest rates 600 basis points to 97 per cent, to try to stave off the country’s worst economic crisis in two decades.”
https://www.ft.com/content/fca2505d-e489-4c79-87da-4b1185278c38
“Bean Shortage Drives Up Cost of Even the Cheapest Cup of Coffee.
“The global cost-of-living crunch has pushed coffee drinkers to get their fix from cheaper brews. But a shortage of robusta beans is making it increasingly difficult to find a budget-friendly cup… Brazil, the second-largest grower of the variety, has seen its crops hurt by drought, and there are also concerns that Indonesia’s output could suffer following heavy rains.”
“‘Sustainable’ pension funds accused of greenwashing over billions held in oil and gas firms…
“Carbon Tracker Initiative said that asset managers have invested $376bn (£295bn) in oil and gas companies, despite publicly pledging to back efforts to limit global temperature rises to 1.5C.”
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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Apologies once again for yesterday Panopticon, but only to you personally. It’s a shame you have , in part , a following that sees trade with china a the holy grail of humankinds progress. I find it sickening to be honest .
For those I shall not name , follow Germans and XiJing Pins and such :
China’s Disregard for Human Rights
Repression in Xinjiang.Fear of Arbitrary Arrest.Religious Freedom Abuses.Stifling Freedom of Expression.Forced Labor.Assault on Hong Kong’s Autonomy.Severe Restrictions in Tibet.
The list is endless. Unlawful occupying of Philippine islands , attacks on their fishermen, concentration camps for minorities and dissidents, forced takeover of african mines and railroads , there’s books and libraries filled with Chinas shenanigans this century, but apparently the commenters here dont care
Another thing , I would like to clarify for the Gutmensch euro liberals here :
I wish all immigrants no harm whatsoever .. but..
Any aggression against immigrants in europe , especially in the poor south and east of our continent is on the hands of the EU and left liberals
There is no more space , no more resources and no more goodwill left , in italy , Croatia, Greece, and elsewhere. Frontex is a failure
Europa cannot assimilate 3 billion extra people so stop the charlatanism and the fake saviour complexes.
There is too much disconnect with reality among the European lefties , it has cost us our future. I blame right wingers just as much for not seeing what a catastrophe climate change already is .
Thank you have a nice one everybody.
“I find it sickening to be honest.”
Try not to lose too sleep over China winning some imaginary geopolitical popularity contest in my very niche comments section, Harmon. I’m certainly not going to leap in and defend their record on human rights or aggression, although I will point out that the other major power blocs can hardly be absolved of blame on those scores.
China has been the world’s primary engine of growth this century, powered by cheap coal, cheap labour and easy debt; and it is now sputtering. It turned net energy importer (ie using more energy than it produced indigenously) around 2002 but that gap has been widening badly of late. It also, broadly speaking, seems to be reaching the point where new debt is not very productive, even as its increasingly unstable mountain of existing debt constitutes a worsening drag on growth.
From an economic standpoint, that sucks for all of us, as there is no viable substitute.
Wise words overall, I sometimes dont get how you can stay unpartisan in these matters but it’s also a matter of personality.
I’m about to embark to South America for a lengthy trip so it would be better for my peace of mind to skip geopolitics altogether until September. It’s been five years since I really skipped my usual websites, so can never really stop thinking about our ecological predicament.
Near term , argentina worries me , very selfish , could affect my trip in a bad way. Keep doing the lords work (whether that’s chatGpt or Jaweh:p)
The reason why most of are apolitical is because it doesn’t matter at this point. Things are so bad with the environment and other issues it doesn’t matter what clown is in office. The 6th mass extinction continues on regardless of political atmosphere and the green new scam or what type of political system or economic one at this time.
Heather, I think that’s exactly it. I’m not clear that there is an ideological answer to this mess.
Also, I dare say I’ve been wrong so many damn times I’ve learnt not to take my own opinions too seriously. 🤣
Enjoy your trip to South America, Harmon!
You know what Heather , I realized that about ten years ago and I still let my internal anger get the better of me occasionally. It’s being a human, and added to that a feisty personality.
But you and Justin are very right about all that . I see a Guns Germs and Steell comment here as well, it’s one of my bibles.
Humankind isnt pretty when everyone is getting poor .
Thanks , flying to Buenos Aires in about ten days , take care
Funny that a French research firm found that the Chinese are among the happiest people on the planet.
https://www.ipsos.com/en/global-happiness-study-2020
The US came in 11th.
But yes, everything is Chinas fault. For example, why did they put their country so close to so many US military bases?
https://twitter.com/caitoz/status/1626028981131841537?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1626028981131841537%7Ctwgr%5Ee3b8f192198334280597151648203ee5fc6041f9%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fcaitlinjohnstone.com%2F2023%2F05%2F01%2Fthe-single-dumbest-thing-the-empire-asks-us-to-believe%2F
Ok BaiChi XiJingPinada. Who pays you for this level of propaganda man. Unreal.
Well. Whatever makes you happy with our messed up future I suppose .
“Propaganda”? I would love to hear more details about which story you think is false, and why.
Honestly, most of the propaganda I see comes from CNN, Fox, MSNBC, etc.
Build the Wall! There are nearly a billion people that will not be able to survive in South and Central America in the near future. The US, like the EU in Harmons example, will not be able to absorb very many of them.
It is a major ethical question that has been explored in fiction and philosophical works for a long time now. I particularly enjoyed the “Twilight Zone” episode where the main characters had the only bomb shelter on the block.
https://www.imdb.com/title/tt0734676/
Regarding “… I sometimes dont get how you can stay unpartisan in these matters but it’s also a matter of personality.”
It is much much too late for any of the shenanigans various countries do to matter in the final analysis. There are simply too many existential threats out there … one of them will get us. I am fascinated by one question: “Which threat will get us and when?” Aside from my close friends and family, it is the only question/issue that matters.
Quite a few posts on rising tensions with far-right groups, in countries faced with increasing numbers of immigrants/refugees.
Ever since I read “Guns, Germs and Steel”, I’ve seen geography as being a primary driver of human politics throughout history. A global form of the modern “postcode lottery”.
It’s easy to be compassionate and charitable, when most people feel they have enough to spare, in economic boom-boom party times. But when times get tough, individuals, govts etc all get hard-hearted. As my grandmother said, ‘when poverty walks in the door, love flies out the window’.
Nonetheless, the rise of the far-right latching onto scapegoats tends to become popular, as human history has shown so many countless times.
“…when times get tough, individuals, govts etc all get hard-hearted. As my grandmother said, ‘when poverty walks in the door, love flies out the window’.”
This is it exactly, Rain. I recall Nicole Foss used to call it the “shrinking trust horizon”.
Diamond delivered on of the true great books with that one , one of my five favorite books of all time
I’m even more sceptical about humans than him though, but travelling shows both the beauty and the beast.
If you like that Diamond guy , also try Kim Sterelny, or Tech-no Fix by Hausmann, or The Selfish Ape.
The combined insights of Hardin , Ehrlich and Lovelock, and most importantly Alexander von Humboldt and Malthus before them will never be surpassed anymore .