“What if soaring rates don’t kill inflation? Central banks may be about to blow up the economy.
“The problem is that those primal global forces that helped undercut consumer prices during the past few decades are not only no longer in place, they’re moving in the opposite direction.
“The peaceful era of economic co-operation is no more. Globalisation has been replaced by a retreat to regional confrontation and a rise of nationalism. Protectionism is on the rise.. That will come at a cost — elevating prices that will pump up inflation.
And while China may remain a major exporter to the West, its rapid transformation is reaching an end point. Its exports no longer will undercut the West and replace industries.
“Even if diplomatic relations were stronger, longer-term it will not be a major force in lowering costs across the developed world.
“Then there are the yet to be tallied costs of global warming and the urgency required to shift to a low emissions world… Let’s hope central bankers wake up to the fact other forces are at work…”
https://www.abc.net.au/news/2023-07-11/central-banks-may-be-about-to-blow-up-the-economy/102585206
“Central banks fear inflation and geopolitical risks.
“An increasing number of central banks and sovereign wealth funds are repatriating gold reserves as a precautionary measure against potential sanctions, citing the example of the West’s sanctions on Russia… money managers are “fundamentally” rethinking their strategies in the belief that higher inflation and geopolitical tensions are here to stay.”
“Cost-of-living crisis fuels political turmoil: WTW…
“Evan Freely, Global Head of Financial Solutions, WTW, said, “The international community continues to grapple with the cost-of-living crises and its wide consequences. “This report indicates that rising prices, particularly in food and energy, often result in a political cost including more frequent examples of disruptive civil unrest.”
https://www.reinsurancene.ws/cost-of-living-crisis-fuels-political-turmoil-wtw/
“The global energy crisis isn’t over…
““There was clear consensus that we’re still in the energy crisis,” Mel Ydreos, LNG2023’s executive director, said at a press conference this morning attended by Ian McKay, Canadian ambassador to Japan, and David MacNaughton, former Canadian ambassador to the U.S.”
https://biv.com/article/2023/07/global-energy-crisis-isnt-over
“The use of collateral has deepened and broadened financial markets, notably by expanding hedging possibilities. But as this column argues, it comes with side effects that raise financial stability risks of their own…
“…by shifting the loss absorption function to markets, it heightens liquidity risk, which can trigger or amplify system-wide disruptions.”
https://cepr.org/voxeu/columns/collateral-damage
“How The Fed’s Interest Rate Hikes Are Eating Into The Government’s Budget…
“As interest costs rise, the cost of servicing the debt is starting to compete with some of the larger functions of the U.S. government. Interest payments already cost about the same in 2023 so far as spending on veterans’ services, employment and training and transportation combined.”
“The American banking landscape is on the cusp of a seismic shift. Expect more pain to come…
“…even as the dust settles from a string of government seizures of failed midsized banks, the forces that sparked the regional banking crisis in March are still at play.”
https://www.cnbc.com/2023/07/10/american-banks-face-more-pain-huge-shift.html
“Fatal blow for Scotland’s Norwegian green energy dream…
“It was supposed to be the dream of cheap, green Norwegian energy for Scotland. The long-running NorthConnect interconnector had been in development since 2013 by a consortium of Scandinavian energy companies… The justification for cancelling NorthConnect revolved around concerns about energy security and the impact on energy prices.”
“Proposed new UK oil and gas fields would provide at most three weeks of energy a year.
“New oil and gas fields in the North Sea would produce only enough gas to satisfy the UK’s needs for a few weeks a year, with a minimal impact on energy security, analysis has found.”
“UK hydrogen heating trial ditched over residents’ concerns… Cancellation is blow to government’s goal of cutting carbon emissions…
“UK ministers have scrapped plans to use the town of Whitby near Liverpool as a testing ground for hydrogen in domestic heating following objections from residents, in a sign of the difficulties involved in decarbonising homes.”
https://www.ft.com/content/f33c6c03-16c4-4b81-b5f7-1814c10aaba4
“Almost half of NHS hospitals in England have been forced to close wards and vital services due to flooding, power cuts and structural problems, an investigation reveals.
“Entire A&E departments, maternity wards and paediatric units have been temporarily shut in the last three years due to maintenance problems.”
“London could face water rationing “imminently” because of over-abstraction, over-use and wastage through leaking pipes, a leading environmentalist has warned.
“James Wallace, chief executive of River Action, said the chalk streams that provided the capital with drinking water were at risk of drying up and that the situation needed to be treated as an emergency.”
“‘Record high’: Payment defaults stoke fears of mass insolvencies as household spending falls and more rate hikes loom [Australia].
“CreditorWatch’s monthly Business Risk Index showed defaults on payments between businesses reached a record high of 1,586 in June, increasing the risk of insolvencies across the economy as household spending slows and further interest rate rises loom.”
“China’s Hidden-Debt Problem Laid Bare in Zunyi City’s Half-Finished Roads, Empty Flats.
“A city in one of China’s poorest provinces is awash in half-built roads and apartment blocks, symbolic of the mounting debt crisis facing municipalities around the country after years of stimulus-fueled growth.”
“Goldman Is Calling Out China at the Worst Time…
“Goldman argued that lenders’ exposure to a prolonged property downturn and local government debt will lead to non-performing loan losses and shrinking profit margins, and thus threaten their ability to pay dividends. The country’s biggest banks, whose shares have held up well this year, sank after the July 4 publication.”
“Peru’s Police Are on Edge as New Anti-Government Protests Loom.
“Peruvian police are mobilizing thousands of officers nationwide in an effort to identify protesters traveling to the country’s capital, as a new wave of anti-government protests looks likely to restart next week. Peru was gripped earlier this year by its worst social unrest in decades…”
“‘It’s pillage’: thirsty Uruguayans decry Google’s plan to exploit water supply.
“A plan to build a Google data centre that will use millions of litres of water a day has sparked anger in Uruguay, which is suffering its worst drought in 74 years. Water shortages are so severe in the country that a state of emergency has been declared in Montevideo…”
https://www.theguardian.com/world/2023/jul/11/uruguay-drought-water-google-data-center
“Power and water cuts hit Joburg hard in cold spell.
“Johannesburg residents have had to put up with power and water outages as freezing weather buffets SA’s richest and largest metro. Bulk supplier Rand Water is embarking on a 58-hour water cut to carry out maintenance work to improve delivery to its customers.”
“Uganda oil pipeline has ‘devastated’ livelihoods, says HRW.
“A planned oil pipeline to help Uganda export its crude to international markets has “devastated” the lives of thousands of people who have experienced delayed or inadequate compensation for their land, Human Rights Watch (HRW) said on Monday.”
https://www.aljazeera.com/news/2023/7/10/uganda-oil-pipeline-has-devastated-livelihoods-hrw
“Kenyans brace for 3 looming nationwide protests on Wednesday across different sectors.
“As Kenyans prepare for Wednesday, July 12, a sense of caution is being urged throughout the nation. The day is expected to witness three protests across different sectors, with the potential for major disruptions and a greater impact compared to previous demonstrations.”
“Egypt has hit a financial deadlock. Sisi’s only hope now is a miracle.
“At a finance summit in Paris last month, Egyptian President Abdel Fattah el-Sisi called on lenders to show more “understanding” of his country’s deteriorating debt crisis. The previous week, Sisi appeared to have ruled out a future devaluation of the pound, which has lost half of its value since February 2022.”
https://www.middleeasteye.net/opinion/egypt-economy-financial-deadlock-hit-has
“Iran’s electricity usage has broken a record to hit 72,500 megawatts – increasing strain on power grids that were already struggling to meet demand.
“The constant rise in temperatures and decrease in rainfall across Iran in the last decade have made electricity supply a challenge during peak consumption periods.”
https://www.iranintl.com/en/202307110167
“Capitalism Alone Won’t Save the Planet [no small amount of confusion embodied in this statement].
“With every record-smashing day, week, month and year of global warming that goes by, finding solutions to climate change becomes more urgent… humanity doesn’t have the luxury of waiting. Capitalism will need guidance and assistance from government.”
[Fascinating to see this DC-based think tank stumbling across the work of Joseph Tainter and ultimately concluding it doesn’t properly apply to us – such hubris.]
“Joseph Tainter’s notion of “declining marginal returns to investments in complexity” is so abstract as to defy rigorous quantification, but in qualitative terms my impression is that it well captures the broad outlines of our current predicament. Our social order feels bloated and stagnant, its institutions extended beyond their prime use cases and flagging accordingly…
“But now let’s turn Tainter’s model around. Instead of using it to look for signs of incipient collapse, let’s use it to investigate possible strategies for civilizational renewal… With our immense wealth and technological sophistication… we need not face such dreadful prospects.”
https://www.niskanencenter.org/the-possible-relevance-of-joseph-tainter/
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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Hello Pan
Interesting to read the ‘essay’ based on Tanter.
Hybris ? Rather typical analysis of the ‘new middle class moralists’. There are problems but yes…..A matter of changing attitudes, a little less, a little restoration of the old values. And then we will have a ‘simpler’ society. All will be well.
Something about adding complexities.
There is an interesting study on ‘digital’ skills that should actually increase and perhaps simplify access for all. Many services zijun only digitassal access. In practice, this seems to lead to more problems than solutions. In the EU, only 59% of citizens are able to understand more complex sites. That’s a huge number of ‘digibits’ who, incidentally, are perfectly capable of using snapchat tiktok but eh for the rest it’s a big struggle which means that analogue and even physical assistance systems actually have to remain in place.
There is no prospect of that sitautie ever changing, rather worsening because no matter how you look at it, ‘reading comprehension’ is going backwards and, moreover, the margins of error in the digital systems themselves with unworkable algorithms lead to huge problems. Above all, digital systems lead to added complexity that runs counter to the ‘simplification’ we were promised.
For instance, two years ago, the Dutch government even fell for a ‘digital benefits file’ and now the entire French tax system is bogged down by a change in tax laws for homeowners, leading to disastrous chaos in services. I’ll spare you the details. 🙂
Lovely all this total nonsense.
https://www.security.nl/posting/710924/Vier+miljoen+Nederlanders+kunnen+geen+digitaal+zaken+doen+met+de+overheid
Its interesting how now its the data centers are the water hogs and I remember back in 2008 it was nestle and PepsiCo using it in drought ridden california for bottled water and other things. I do expect that the drought will return again but it looks like it will be even harsher than before with el nino kicking in lets wait for the flash drought headlines to appear.
Heather, Bitcoin too!
“…based on current trends, and documented water requirements to generate electricity, a back-of-an-envelope calculation suggests bitcoin mining drives both a prodigious and fast-escalating demand for water.”
https://www.thesourcemagazine.org/how-bitcoins-footprint-is-impacting-water-use/
https://www.americanrivers.org/2022/11/five-key-lessons-as-worlds-biggest-dam-removal-project-will-soon-begin-on-the-klamath-river/
Too bad its too late and every river in the United States is dammed so its a start but too late
Just got off a conference call with AGW, climate change & weather weirding & all three said they didn’t care about the love of money. Out of curiosity they had to ask how’s that unregulated,free market capitalism working out with TARP, recent bailouts,money printing,fictional reserve lending,Central banks owned by banks,massive debt where there isn’t currency to pay off a small part of the debt & insurance companies pulling out of areas that have been cutting into their bottom line. I’m waiting to see how wild climate changes are going to affect the global economy. We can always rely on hope,thoughts & prayers.
Now I’m a Debbie Downer.