“The Global Economic Growth Deficit.
“World Bank President David Malpass recently worried on these pages about the slowing global economy and the lack of pro-growth policies. His warning is already coming true, as China is slumping while Germany slips into recession.
“The post-Covid boom many expected in China appears to be fizzling. Data this week suggests a manufacturing slump is becoming deeper [manufacturing also contracting in UK, US and Eurozone], while services are losing buoyancy. Urban youth unemployment is at a record high, and the real-estate market limps along.”
“The global economy has likely been spared a US debt default. It still faces a mountain of risks.
“While an immediate crisis has likely been avoided, the litany of problems that had been temporarily overshadowed by the specter of a US default — among them, high inflation, rising interest rates and sluggish growth — haven’t gone away.”
https://edition.cnn.com/2023/06/01/economy/global-economy-outlook-recession/index.html
“More gloom for container lines as long-term freight rates ‘collapse’.
“Long-term container freight rates have logged their biggest ever monthly drop. The contracted cost of shipping containers dived 27.5% in May in the largest ever monthly fall recorded on the by Xeneta’s Shipping Index. The drop followed a massive monthly fall of 40% in the value of long-term rates to the US market.”
“Major central banks renew rate hike push in May…
“All six of the central banks overseeing one of the 10 most heavily traded currencies and that met in May hiked rates. Central banks in Australia, New Zealand and Norway joined the European Central Bank, the Bank of England and the Federal Reserve in lifting benchmark rates last month by 25 basis points each, for a cumulative 150 bps.”
https://www.reuters.com/markets/rates-bonds/major-central-banks-renew-rate-hike-push-may-2023-06-01/
“The world is sliding into a new age of nuclear risk — in which miscalculation or accident could lead to catastrophe.
“The latest retreat came in Minsk, Belarus, on May 25, when Russian Defense Minister Sergei Shoigu and Belarusian Defense Minister Viktor Khrenin signed a formal agreement paving the way for Russia to deploy tactical nuclear weapons in Belarus.”
https://www.washingtonpost.com/opinions/2023/05/31/nuclear-weapons-arms-race-russia-china-belarus/
“US cuts data sharing with Russia under New START nuclear deal.
“The United States will stop providing Russia with some notifications required under the New START nuclear arms control treaty, including updates on missile and launcher locations, in what Washington describes as a retaliatory “countermeasure” due to Moscow’s “violations” of the accord.”
“Biden has an “appetite” to cross Putin’s red lines…
“As US officials explain, the key reason for ignoring Putin’s threats is the fact that the Russian president does not keep his promises to punish the West for providing weapons to Ukraine. His bluff assured American and European leaders that they could continue to do so without any serious consequences.”
https://news.yahoo.com/biden-appetite-cross-putins-red-183211125.html
“U.S. banks sink on concerns about office real estate loans.
“Investors worried about potential losses among banks from office real estate loans after comments from executives, including Wells Fargo & Co’s (WFC.N) Chief Executive Officer Charlie Scharf and Blackstone President Jonathan Gray at a Sanford C Bernstein investor conference.”
“The US banking crisis is far from over, with more banks slated to collapse in coming months as the global economic outlook worsens.
“Over in the US, the debt ceiling crisis has occupied the minds of global and local economists in recent weeks but the banking crisis is also still a huge risk, experts have warned.”
“Default wave imminent, will peak in 2024 – Deutsche Bank…
“A wave of debt defaults by companies in the United States and Europe is imminent, due in part to the fastest monetary tightening cycle in 15 years… The estimate for a U.S. loan peak default rate of 11.3% would be a near all-time high, compared to a peak of 12% during the 2007-2008 global financial crisis…”
https://www.reuters.com/markets/default-wave-imminent-will-peak-2024-deutsche-bank-2023-05-31/
“How a fossil fuel pipeline helped grease the debt ceiling deal…
““We got Mountain Valley Pipeline done,” McCarthy told Rep. Carol Miller (R-W.Va.), according to people familiar with the conversation. The speaker was referring to a controversial gas pipeline that the debt limit deal sought to fast-track.”
https://www.washingtonpost.com/climate-environment/2023/05/31/debt-deal-mountain-valley-pipeline/
“Stagflation emerges as OPEC’s big economic risk after US debt reprieve…
“The economic phenomena of low growth and entrenched inflation that wreaked havoc in the 1970s may be back with a vengeance. For OPEC and its allies led by Russia, global stagflation is very bad for business. It invariably means tepid demand for crude oil in the major industrialized nations most affected, or even worse demand destruction.”
“OPEC reporters from three large news organizations have not been invited to the oil producing alliance’s meetings this weekend…
“…reporters who normally cover OPEC from Reuters, Bloomberg and the Wall Street Journal did not receive invitations as of Wednesday night, according to people familiar with the matter who did not want to be named due to the sensitivity of the issue.”
“Sweden is heading for a severe power crunch from the middle of this decade as new capacity won’t be sufficient to satisfy soaring consumption.
“After a mild European winter helped avert a crisis last year, the biggest Nordic nation is facing a large deficit from 2025-2026 that can’t be met by increasing imports…”
“UK mortgage lending hits record low in sign of housing market stress.
“The UK’s housing market is showing growing signs of stress, with mortgage lending collapsing to the lowest monthly level on record, and property valuations falling at the fastest annual rate in almost 14 years.”
https://www.theguardian.com/money/2023/jun/01/uk-house-prices-fall-nationwide-high-interest-rates
“Manufacturing downturn deepens amid weak demand for UK goods…
“”Lacklustre” overseas demand for products made in the UK and a shift in spending away from goods to services in the country were among the reasons, according to the S&P Global/CIPS UK manufacturing purchasing managers index (PMI).”
https://news.sky.com/story/manufacturing-downturn-deepens-amid-weak-demand-for-uk-goods-12894227
“UK inflation: Food prices causing problems for farmers…
“…since the Covid-19 pandemic and Russia’s invasion of Ukraine, food production costs have jumped. For fertiliser we were paying £290-odd and it shot up to £900 for that same bag,” said Tessa, whose family has run Cresswell Barn Farm for more than 40 years.”
https://www.bbc.co.uk/news/uk-wales-65776561
“Food-loving French tighten belts as supermarket prices soar.
“France prides itself on taking its food seriously, but many consumers are now tightening their belts or skimping on quality, hit by a record inflation rate that threatens to serve up another political headache for the government. Adjusted for inflation, household spending on food fell year on year by a record 10% in April…”
“Thousands of Bulgarians gathered in front of the presidency on May 30 to protest against what many see as a coordinated effort to block the creation of a pro-Western coalition government.
““This is not Moscow,” chanted protesters, accusing President Rumen Radev of becoming openly pro-Russian and working in the interest of Moscow, not of Sofia.”
“Violent Clashes Trigger Fears of New War in Europe…
“Tension has flared up in the region ever since Kosovo seceded from Serbia, another ex-Yugoslav state, in the late 1990s… The latest flare-up has raised fears in Western capitals that the possibility of conflict could create an opening for Russia to reignite one of Europe’s unresolved flashpoints.”
https://www.wsj.com/articles/violent-clashes-trigger-fears-of-new-war-in-europe-23d63058
“ECB Warns BOJ Policy Change Could Test Global Bond Markets.
“A rare European Central Bank warning about the bond market risk of a Bank of Japan policy change comes at a time when Japanese outflows from the region are already at record levels… With inflation pressures in Japan persisting, a majority of investors believe the BOJ will eventually have little choice but to join peers in hiking borrowing costs…”
“Japan passes law to use nuclear reactors past 60 years.
“Japan’s parliament has passed legislation allowing the country’s nuclear power operators to continue using reactors beyond their maximum lifespan of 60 years, by excluding the time spent having increased safety scrutiny in the wake of the 2011 Fukushima nuclear disaster.”
https://www.argusmedia.com/en/news/2454628-japan-passes-law-to-use-nuclear-reactors-past-60-years
“China’s 11.6m graduates face a jobs market with no jobs.
“With a master’s degree in applied linguistics from one of Australia’s top universities, Ingrid Xie did not expect to end up working in a grocery store. But that was where she ended up after graduating from the University of Queensland in July last year.”
https://www.theguardian.com/world/2023/jun/01/china-graduates-jobs-market-youth-unemployment
“Half of China Cities Face Debt Service Difficulty, Rhodium Says.
“Financial stress faced by China’s local governments is limiting fiscal support for the economy’s recovery, with half of cities facing difficulty in managing the interest payments on their debt last year.”
“As default looms, Argentina’s fiscal discipline slides.
“The country’s economy was already weak before a serious drought hit. Now it is broke, and the question in Buenos Aires isn’t whether finance minister Sergio Massa can muddle through to the presidential election at the end of October, it is whether he can make it to the primaries in August before a full-blown financial crisis.”
“‘The situation is becoming unbearable’: criminals dump bodies in Cape Town suburb beset by power outages.
“Residents of Macassar, a small suburb 40km outside Cape Town plagued by repeated power outages on top of load-shedding, are not only gatvol with Eskom but fear criminals are taking advantage of the darkness to dump bodies there.”
“Ghana: More deaths feared as power cut hits hospitals over non-payment.
“An attempt by an electricity firm in Ghana to recover debt from customers including state-run hospitals by cutting power has resulted in the death of two newborns.”
“Nigeria: Anger over high fuel prices, shortages.
“Pump prices have doubled, even tripled in some areas following an announcement by President Bola Tinubu that a subsidy which kept prices down was coming to an end… “The reality is that from today the government can no longer afford to pay for fuel subsidies,” the CEO of the Nigerian National Petroleum Corporation Mele Kyari told reporters on Tuesday.”
https://www.africanews.com/2023/06/01/nigeria-anger-over-high-fuel-prices-shortages/
“Nine killed in Senegal clashes after opposition leader sentenced.
“After Thursday’s verdict, clashes broke out between police and protesters, buses were set alight in the capital Dakar, and disturbances were reported elsewhere including the city of Ziguinchor, where Sonko has been mayor since 2022.”
“The United States has imposed the first sanctions related to the conflict in Sudan, warning that it will “hold accountable” all those undermining peace in the northeast African country.
“Thursday’s sanctions targeted two firms associated with the Sudanese Armed Forces (SAF) and two others linked to the paramilitary Rapid Support Forces (RSF).”
https://www.aljazeera.com/news/2023/6/1/us-imposes-first-sanctions-over-sudan-conflict
“Tunisia’s financial crisis leaves the sick struggling to find medicine.
“Sick Tunisians face a frantic struggle to find some medicines because the cash-strapped state has reduced imports, leaving doctors unable to control debilitating health problems and patients turning to informal markets for their medication. Hundreds of medicines have been missing for months…”
“Turkey’s Erdogan faces struggle to meet Syrian refugee promise.
“President Tayyip Erdogan played up his plans to repatriate a million Syrian refugees as he rode a wave of nationalism to his third decade in power, but he could struggle to make good on the promise as conflict lingers on in neighbouring Syria.”
“In crisis-hit Pakistan, rogue loan apps add to financial pain.
“…while the apps offer quick, collateral-free credit to the largely unbanked, the boom has led to a surge in complaints about illegal lenders that routinely abuse customers’ data and use aggressive recovery tactics including threats and blackmail.”
https://www.eco-business.com/news/in-crisis-hit-pakistan-rogue-loan-apps-add-to-financial-pain/
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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“Central banks in Australia, New Zealand and Norway joined the European Central Bank, the Bank of England and the Federal Reserve in lifting benchmark rates last month by 25 basis points each, for a cumulative 150 bps.”
Wait … What? I didn’t know that worked like that.
“His bluff assured American and European leaders that they could continue to do so without any serious consequences.”
A lot of people in Russia are making the same complaint. Unfortunately, the Putin administration keeps making measured and “mirrored” responses to the various provocations from the west. That is why Putins popularity was down to the as low as 80% in the latest poling that I’ve seen.
I spotted this article, suggesting that Putin is willing to use tactical nuclear weapons in Ukraine but I didn’t post it because I felt it was too speculative and I wasn’t wholly swayed by the arguments. The author does have a few interesting observations though:
“There is strong evidence that Putin has resolved to use a tactical nuclear weapon in his war in Ukraine. In recent speeches and interviews, he has argued that Russia faces an existential threat — a situation, under Russian policy, that warrants the use of nuclear weapons. He has also reshuffled his military leadership, so that the three generals responsible for the employment of tactical nuclear weapons now command his “special military operation” in Ukraine.”
https://unherd.com/2023/06/why-putin-will-use-nuclear-weapons/
From the referenced article:
“… which killed eight people, and for which Kyiv has denied all responsibility — were the first against Russian civilians since the war began.”
Wrong! What about the raid into Russia last month? The almost daily shelling of the Belgorod region?
True but stupid, “… and the reported deployment of tanks from the Fifties has added fuel to the rumour that Russian munitions are running out.”
Yes, the RF has moved obsolete tanks to the front, and has used them as additional artillery because they have tons (literally) of ammo for those old tanks that isn’t usable in the new ones, or in their other artillery pieces.
What I was looking for in the article was an actual quote from Putin that supports the obviously spurious claim that, “And yet, there is strong evidence that Putin has resolved to use a tactical nuclear weapon in his war in Ukraine. In recent speeches and interviews, …”. All of Putins speeches are made available on-line in english within a couple days of the speech (whether he is sober, or in one case where is was obviously high as a kite. LOL). Kevin Ryan made no effort to quote Putin, but instead linked to a equally biased screed from Harvards Belfer Center.
Sorry Panopticon, the article referenced is BS.
The RF will not use nukes of any type until they begin to loose the war (e.g. When NATO is shelling Sevastopol). NATO is much more likely to do something stupid, including trying to create a false flag incident, since they are definitely loosing at this point.
I misspoke above when I said “Unfortunately …”. I cant say whether the RF approach is good or bad, it is just frustrating to see at least 600 Ukrainian deaths, and continued escalations daily. It seems that the RF could make a final coup-de-gras type strike and end the suffering, or that NATO could stop fanning the flames.
Something that most here have not seen was the latest mirrored response from the RF. Ukraine sent a drone swarm toward Moscow (that part is in all the MSM), what isn’t reported is that the RF hit the intelligence office of the Ukrainian administration with some sort of bunker buster missile. The result was an explosion that registered ~3 on the Richter scale, apparently there was some explosive storage on site, and killed up to 200 NATO personnel. The intelligence service complex was completely destroyed.
While I cant say that I like this guy personally, he does a good job presenting the “facts” here:
https://simplicius76.substack.com/p/putin-strikes-back-destroys-gur-bunker?utm_source=profile&utm_medium=reader2
Lou, I looked into the last claim you posted about mass NATO casualties on Ukrainian soil as a result of a bunker-busting Russian missile and found them very unconvincing.
I cant argue that issue, except that:
Obviously, there are NATO people in Kiev. Obviously, that building was destroyed. Obviously, it was the headquarters for the intelligence service. For me, it is no leap to assume that there were NATO people, maybe lots of NATO people, in the building or sheltering in the bunkers with all that ordinance that exploded with a force of about 3 on the Richter scale.
We will likely never know for sure.
Ehh, I really hate discussing this stuff tbh, Lou, because we wind up stuck in a morass of unknowables and all of the bloodshed and suffering tends to become a vehicle for commenters to express their personal geopolitical grievances.
I guess I’ve just had my fill of the blame game and the point-scoring.
Sorry, no hurt intended. The way things are today, it is very very difficult to get to the truth about anything … as you say.
Lou, that’s OK. It’s really my failing. For a person who bears witness to so much bad news I am surprisingly sensitive to discord; the war in Ukraine is a flashpoint for that. It’s too big a story for me not to report on from time to time but…
There are a couple of missing comments. Oh, the horror! What if someone misses out on my brilliant pontifications?!?!?!?
I cannot find anything new on the student loan bubble and such just thats its 1.6 trillion dollars that will never be paid back and can nevet be discharged either. Debt slaves for life
Heather, I’m not across that at all. Has the debt ceiling deal changed the equation on student debt?
No but thats been out there forever and just another bubble that eventually will go. I think i read somewhere they have started repayments again here soon. I cant remember if the Supreme Court had to weigh in on that again or not. I do not know how anyone will be able to pay anything soon with all of the financial problems every where.