“Higher interest rates risk another global financial crisis, says OECD.
“The Paris-based Organisation for Economic Co-operation and Development said ever-higher borrowing costs could put the global financial system under severe stress and send share and bond prices tumbling, as it expressed concern in its half-yearly update that the full impact of tougher policy was yet to felt.”
“World Bank offers dim outlook for the global economy in face of higher interest rates.
“The global economy is likely slowing sharply this year, hobbled by high interest rates, the repercussions of Russia’s invasion of Ukraine and the lingering effects of the coronavirus pandemic. That’s the latest outlook of the World Bank…”
https://abcnews.go.com/US/wireStory/world-bank-offers-dim-outlook-global-economy-face-99867179
“The Tough Choices Facing the World’s Central Banks.
“…new turbulence was added by the biggest banking crisis since 2008. While the bank failures were largely limited to the US, other central banks faced difficult choices on whether to continue, pause or reverse interest rate hikes.”
“Oil prices steady as fears over supply tightness counter demand woes.
“Oil prices steadied on Wednesday after the previous session’s losses, as demand concerns owing to slow global economic growth were offset by fears of tighter global supply following Saudi Arabia’s pledge to deepen output cuts.”
“Commodities Slide as Investors Bet on Economic Slowdown.
“Industrial malaise, particularly in China, is draining demand for energy and metals… The S&P GSCI commodities index has fallen about 11% so far this year through Friday, as prices for energy, metals, grains and other raw materials have retreated.”
https://www.wsj.com/articles/commodities-slide-as-investors-bet-on-economic-slowdown-233a6d3
“US Treasury’s $1tn borrowing drive set to put banks under strain…
““Everyone knows the flood is coming,” said Gennadiy Goldberg, a strategist at TD Securities. “Yields will move higher because of this flood. Treasury bills will cheapen further. And that will put pressure on banks.””
https://www.ft.com/content/9bc73cea-e736-42f1-8a8f-6fc85945b641
“US Banks Face Capital Jump With More Lenders Roped In to Comply.
“Large US banks may have to boost their capital by an average 20% and a broader swath of lenders would face strict requirements for setting aside money under a draft plan from US regulators to bolster the financial system.”
“US hotel developers run out of cash as construction lending dries up.
“Tighter lending standards from regional banks are making it harder for U.S. hotel developers to secure funding, slowing construction of new hotels… the financial stress on regional banks — the largest lenders to hotels and other commercial real estate markets — has forced developers to postpone projects…”
“Owner of San Francisco’s Largest Hotel, the Hilton Union Square, Is Walking Away, Surrendering It to Lender.
“Virginia-based REIT Park Hotels & Resorts has opted to cease payments on a $725 million loan, as the SF Business Times reports today, essentially surrendering over 2,900 hotel rooms and hospitality facilities to its lender. This includes the 1,921-room Hilton San Francisco Union Square, which is San Francisco’s largest hotel…”
“Investment slump amid higher interest rates risks finally sparking UK recession.
“A mix of factors are buffeting the UK economy right now. Spending power is being crushed by high inflation eroding family finances. House prices are coming off their heady heights as sellers drop prices to source buyers amid higher mortgage rates.”
“High inflation and recession risk – the Bank of England’s dilemma.
“The Bank of England is trying to curb an inflation rate that is running higher in Britain than in the United States and the euro zone, without pushing the economy into a recession after having already increased borrowing costs 12 times since late 2021.”
“Homeowners ‘risk death’ by tampering with gas meters to cut bills [UK].
“Cash-strapped households are asking engineers to tamper with energy meters to shield themselves from soaring bills. More than two in five gas and electricity engineers have been asked to interfere with a meter, according to research carried out by insurer Direct Line in March.”
“Revised figures set to show eurozone economy is shrinking.
“The eurozone economy is heading for symbolically important reversal on Thursday, when economists expect official growth figures to be downgraded to show output slightly contracted for the past two quarters.”
https://www.ft.com/content/390ae6ae-4713-421d-b550-b677277b563b
“European Central Bank chief signals more rate hikes ahead with inflation still ‘strong’…
“Lagarde’s remarks reinforced her earlier statements indicating the ECB was not done raising rates even after inflation fell by almost a full percentage point in May, to 6.1%. The ECB has been hiking rates at the fastest pace in its history…”
“Kakhovka hydroelectric dam burst [Ukraine]: What are the risks to human life?
“Water from the Kahkovka dam is used to cool reactors and spent fuel at Europe’s largest nuclear site, ZNPP… there are two possible issues: access to fresh, cool water may run out, making vital cooling more difficult, and disruption from flooding could affect power supplies needed to keep the offline plant safe.”
“China’s exports plunge by 7.5% in May, far more than expected.
“Exports fell 7.5% year-on-year to $283.5 billion, customs data showed Wednesday, far worse than the 0.4% decline predicted by a Reuters poll. The decline was so sharp that export volumes came in below their levels at the start of the year…”
“Beijing tells banks to cut rates for Chinese savers in bid to boost flagging economy.
“The authorities have issued guidance for China’s largest banks to pay savers less interest for at least the second time in less than a year, according to Bloomberg. State-owned lenders including the Bank of China were told to consider cutting rates in an effort to encourage people to spend rather than save.”
“Many tourists have canceled their travel plans to UNESCO-recognized Ha Long Bay [Vietnam] due to massive power cuts, leaving hotels desperate for business.
“Nguyen Thanh Dan from HCMC booked a five-star hotel room in Ha Long City for two weeks starting Sunday, but on the first night of her stay the power went out immediately.”
“Mumbaiites blow a fuse over power cuts.
“Mumbaiites are facing power cuts due to a rise in demand for electricity, leading to disruptions in power supply in parts of the city affecting thousands of consumers. The power distribution companies are unable to meet the rise in load, especially during evening hours when contributions from solar power drops.”
“Israel Admits to Prioritizing Religious Communities During Planned Power Outages.
“The widespread power outages over the weekend led the Israel Electric Company to disconnect mostly secular communities from the grid in favor of mostly religious ones, according to the company’s CEO.”
“Police Open Fire Killing Student During Protests Over Power Blackouts [Kenya].
“A form three student was on Sunday, June 4, shot dead during protests over prolonged blackouts in Wajir Town. A report by the police indicated that the victim was shot dead near the power offices where the protest was taking place.”
“Madagascar: Further rolling power cuts and sporadic interruptions likely through June.
“Jirama, Madagascar’s national electricity utility… has reportedly explained that a drop in water reserves, in solar energy production, and limited reserves of fuel, have meant it has not been able to match the increased demand for electricity during the winter months.”
“South Africa dodges first quarter recession, but outlook grim.
“…economists and analysts warned that the country faced major growth-crippling challenges for the remainder of the year. Africa’s most industrialised economy is in its worst power crisis on record with up to 10 hours a day of rolling electricity cuts, largely due to breakdowns in state utility Eskom’s ailing fleet of coal power stations.”
https://www.reuters.com/world/africa/south-africa-dodges-recession-economy-grows-04-q1-2023-06-06/
“Fallout from Senegal unrest hits economy.
“Two days of violence last week have cost “billions of CFA francs” — tens of millions of dollars — and political risk is threatening this year’s growth targets, said consultant economist Mansour Sambe. The West African state has long surfed on its reputation for stability in a region plagued by coups.”
https://www.france24.com/en/live-news/20230606-fallout-from-senegal-unrest-hits-economy
“Desperate shortages in Khartoum as Sudan battles intensify.
“Sudan’s rival military forces have engaged in battles throughout the capital as intensifying attacks and growing lawlessness add to the misery of civilians already struggling with limited water, food and medicine.”
https://www.aljazeera.com/news/2023/6/6/desperate-shortages-in-khartoum-as-sudan-battles-intensify
“Billions ‘use polluting fuel to cook’ and millions ‘have no electricity’.
“Up to 2.3 billion people around the world are still using polluting fuels to cook and 675 million do not have electricity, a report released by five international organisations said. At current rates, 660 million people are projected to be without electricity and 1.9 billion will not have clean cooking opportunities by 2030…”
You can read the previous “Economic” thread here. I’ll be back tomorrow with an “Economic” 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.
https://www.kitsapsun.com/story/opinion/columnists/2023/06/02/washington-state-ferries-problems-frustrating-riders/70279911007/?utm_source=pbks-dailybriefing-automated&utm_content=1261ks-e-daily%20briefing&utm_campaign=daily_briefing&utm_medium=email&utm_term=Trending%20Stories
Meanwhile our ferry system is falling apart in the great state of Washington
“Two vessels are held out at a time for maintenance, leaving only 19, the bare minimum to run our “marine highway,” a system which transported 5,239,212 riders between January and March 2023.”
Heather, we have similar problems over here. It’s really hurting some islands and having knock-on effects on tourism, one of our primary sources of income.
“Nearly a third of the population of a remote Scottish island turned out to protest being cut off from the mainland for more than a month amid the SNP’s £300million ferry fiasco.” [apologies for the DM’s political spin]
https://www.dailymail.co.uk/news/article-12160937/Scottish-islanders-South-Uist-hold-massive-protest-amid-SNP-ferry-fiasco.html
Hello Panopticon
Thanks for the overview. SA and Eskom is now such a typical example of why a normally functioning energy network can never! get off the ground in this kind of economy no matter what you do…. I have been following Eskom’s sparring for years and years. It unfortunately applies in even stronger terms to almost all African energy networks.
‘Nobody’ can simply pay for it. How a surely simple economy can cope especially for the ‘small entrepreneurs’ in Africa more generally is completely unclear. Very tragic by the way.
In France, the pension protests have deflated like a balloon; It’s done over and done with and it’s about time too. The economic damage was not too bad, by the way.
The summer economy is running like crazy and there are hardly any train tickets left to buy for the whole summer. The media are full of articles on how to avoid the crowds and toll roads are offering up to 40 per cent discounts on summer traffic. Their wind margins have therefore exploded in recent months.
Oh yes about the ‘ weather’ Northern and central France is very dry but here in the central south we have a kind of weather pattern that runs as follows. A few hours of sunshine in the morning and then thunderstorms really every day. More than 250 litres have now fallen in the past month. Nature is breathtakingly green and will remain so for the next 10 days. Never experienced this before in the 20 years since I have been maintaining my own meteorological station here 🙂
Really fantastic the springs are running well and der Gazeille and the Loire are well above average.
……Mobilisation against pension reform at low point.
In most cities, the number of demonstrators had never been so low. In Paris, only 31,000 demonstrators turned up, according to the Préfecture de Police. Figures far from the Paris record of 23 March (800,000 for the CGT, 119,000 for the police). This decline was also visible nationally, with “more than 900,000” protesters across France according to the CGT and only 281,000 according to the interior ministry. Even in the strongholds of the protest movement, the figures were the lowest in almost five months.
Laurent Berger stated “The contest is coming to an end, whether we like it or not”. The CFDT number one called on unions to “throw their weight behind the coming balance of power” on other issues such as wages and working conditions. “We want real negotiations,” argued Sophie Binet, leader of the CGT. She stressed that “pensions will always be a struggle” and she considered it “likely that there will be other demonstrations given the anger in the country”.
https://www.huffingtonpost.fr/france/video/pour-la-greve-du-6-juin-une-mobilisation-au-plus-bas-contre-la-reforme-des-retraites_218830.html
Zip, thank you for all the local intel. Glad your bit of the countryside is verdant at last!
“The summer economy is running like crazy and there are hardly any train tickets left to buy for the whole summer.”
We are seeing a weirdly mixed situation in the major economies right now with employment and services robust; manufacturing, freight and trade weak, and lots of signs of the most financially vulnerable citizens starting to struggle. These higher energy and debt-service costs will tell across the board eventually though.
Australia is beginning to catch up with the north, along with a rise in Doom-is-Nigh economic/energy policy opinions in the anti-gov press:
“Australian dollar in marriage from hell with yuan”
“Melbourne and Sydney ‘ground zero’ of Australia’s rental crisis”
Australia’s population is also expected to grow by 2.18 million people during the next five years, or by an average of 435,200 people every year, or roughly 1,200 people per day.
That’s on the back of record projected immigration of 1.5 million people over five years.
“AI Priced on markets” – Greed stocks rising in AI, a new AI bubble?
“Aussie per capita GDP turns negative as households smashed”
“It’s the houses, stupid”
After 25 years of it, the moment the central banks take their foot off the brake, the bubbles resurface and inflation comes with them.
In the US it is tech stocks. In Australia it is houses.
Expect hikes to resume in both countries until both bubbles pop again enough to deflate inflation.
“Australian dollar launches as RBA hikes from here to eternity”
https://www.macrobusiness.com.au/2023/06/australias-jobs-market-cant-absorb-albos-record-immigration/
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As for my weather, in SE Oz, winter is definitely here, and wet too, but no extremes. Several days of heavy frost or heavy foggy mornings, followed by 3 days of light but steady rain.
My young girl dog is in the middle of her 1st season – “puberty” — so can’t go out much either!
Already had a young gorgeous looking and well-behaved boy Shepherd sitting at the front gate.
Reminded me of several years when my daughter was 15, and a well-dressed young man came to the door to ask my permission to allow her to go on a date (with his parents in attendance).
I was so impressed by his manners, of course I said yes.
My daughter came home from school, and screamed blue murder at me – she didn’t want to go out with *him* and had been telling him for weeks, that I wouldn’t let her date until she was 17 🙂