“Any possible escalation of the Israel-Hamas war poses a major risk to the global economy, driving up energy prices and disrupting key trade routes, economists have warned.
“Diplomatic efforts from a slew of international powers have intensified in the hope of containing the fallout from the Oct. 7 attack on Israeli civilians by Palestinian militant group Hamas. Israel’s subsequent bombardment of Gaza in a bid to eliminate Hamas has increased the risk of a spillover to the wider Middle East region.”
“Wildfires erupt in south Lebanon as Israel-Hezbollah border clashes escalate.
“The United Nations peacekeeping force UNIFIL said on Thursday it was working with Lebanese authorities to extinguish wildfires that have spread for several kilometres in south Lebanon after being started by gunfire along the Lebanese-Israeli border.”
“US strikes Iran-linked sites in Syria amid fears Israel-Hamas war could escalate…
“In a statement, defence secretary Lloyd Austin said the “self-defence strikes” early on Friday were a response to a slew of drone and missile attacks by Iranian-backed militia groups against US bases and personnel in Syria and Iraq that began last week.”
“‘Ghastly expensive mess’: bond vigilantes return as deficits rise… Governments face surge in cost of borrowing fuelled by high interest rates and conflict in Middle East…
“In particular, bond market investors are concerned about the $1.7tn deficit being run by the Biden administration in the US. The fact that the US bond market is by far the biggest globally means that concern about US fiscal policy has knock-on effects elsewhere.”
“Turmoil in government bond markets has forced US companies to delay borrowing plans, making this the slowest October for debt issuance in more than a decade.
“US firms have raised just under $70bn from sales of bonds and leveraged loans so far this month, the quietest month so far this year and the weakest pace of borrowing in any October since 2011…”
“A rising wave of property defaults threatens hundreds of US banks…
“America’s commercial property collapse is becoming a danger to the financial system. Office blocks purchased with debt remain half empty, 18 months after the end of the pandemic. Thousands of buildings will have to be torn down. Hundreds of regional banks are sitting on crippling losses that they yet to acknowledge.”
“One quarter of Brits rely on credit to cover essential costs.
“Higher loan rejections and limited traditional affordability checks are impacting Brits’ ability to access credit to help make ends meet. A significant number of Brits today need to find a way to bridge the gap between income and expenditure each month.”
“Britain is facing a second 2008… The Conservatives should be preparing for catastrophe…
“It is very likely that — for the second time this century — the Great British housing bubble has burst. And, just as in 2008, it is taking the rest of the economy with it. A deep recession is now very probable.”
“Britain is quietly inching towards a fate worse than bankruptcy… We only have to look to the 1970s to see where unsustainable spending and debt lead us…
“The UK entered this century with debt at less than 30pc of GDP. In the 20 years that followed, the financial crisis, lockdown and Ukraine war have seen it rise above 100pc. Interest payments are at their highest levels since the 1980s. The tax burden, too, is at a post-war high, limiting the ability of the government to raise further revenue.”
“ECB keeps interest rates steady amid eurozone recession fears.
“In a decision widely expected in financial markets, the ECB left its key policy rates unchanged for the first time in more than a year, halting a round of 10 previous increases in the cost of borrowing after concluding it had done enough for now to tackle the rising cost of living.”
“Staff at the European Central Bank say workloads are hurting their mental health, as the central bank deals with the fallout from the global economic crisis and Credit Suisse’s collapse.
“In an April internal survey seen by Financial News, 39% of staff said their workload was not manageable and 35% said work was harming their mental health.”
“Credit Crunch Spells Bad News for Europe.
“…banks are getting worried about the solvency of their customers and want to reduce their exposure to higher-risk lending as quickly as possible. But it is actually worse than that: when banks tighten the terms of credit, they have in all likelihood already seen a rise in loan defaults.”
“The German government is in talks to provide a multibillion-euro bailout to the engineering company Siemens Energy to shore up its balance sheet amid increasing problems at its wind turbine division.
“Shares in the company, one of the world’s biggest makers of wind turbines, plunged by almost 40% to all-time lows on the German stock exchange, wiping €3bn from its market value…”
“Bulgarian dispute with Lukoil could turn into regional oil crisis.
“The rapid withdrawal of the derogation for the import of Russian crude oil for Russian company Lukoil’s Bulgarian refinery has the potential to lead to a crisis in the fuel market in the Balkan region, Bulgarian Prime Minister Nikolai Denkov warned in an exclusive interview for Euractiv Bulgaria.”
“Endangered whales and dolphins live year-round in an area of the Mediterranean earmarked for oil and gas exploration, new research shows….
“”The Mediterranean is one of the busiest seas on the planet, and whales and dolphins are already threatened by ship strikes, overfishing, bycatch (accidental catching), pollution with chemicals and plastics, and climate change,” said Dr. Kirsten Thompson.”
“Fukushima nuclear plant workers sent to hospital after being splashed with tainted water…
“The incident, which took place on Wednesday, highlights the dangers Japan still faces in decommissioning the plant. The reactor was knocked out by an immense tsunami in 2011 in the world’s worst atomic disaster since Chornobyl in 1986.”
“Yen Weakens Close to Three-Decade Low Against US Dollar, Raising Intervention Risk.
“The yen slumped back past 150 per dollar again, raising the risk of government intervention in the currency market and piling pressure on the Bank of Japan to adjust monetary policy.”
“China Woes Hit Global Banks as StanChart Shares Slump on Results…
“Standard Chartered Plc is setting aside more cash to cover China-related losses… The hit taken by Nomura and Standard Chartered highlight the impact of the unfolding property crisis in China, where developers grappling with a years-long slump and a cash crunch are defaulting on bond payments.”
“China Selloff Threatens $27 Billion of ‘Snowball’ Derivatives…
“A relentless rout in Chinese stocks has turned the spotlight on the risk of those derivatives, which promise bond-like coupons as long as underlying assets trade within a certain range. Snowballs, similar to autocallables in other countries, gained popularity in 2021 among China’s institutional and wealthy investors…”
“China’s budget deficit ratio to be raised to about 3.8 per cent of gross domestic product by approving 1 trillion yuan (US$137 billion) issuance of sovereign bonds…
“China’s fiscal revision, including a 1 trillion yuan (US$137 billion) sovereign debt plan, was aimed at ensuring economic stability in the coming months amid a faltering property market and rising local government debt pressure…”
“Peru ties up $300 million IDB contingency loan as economy shrinks…
“The loan enables Peru to obtain financing “in the event of a natural or technological disaster, emergency situation or economic or financial crisis in the country,” the South American nation said. The financing can come in the form of credit lines, bonds or debt operations, according to the notice.”
“Ecuador to impose power cuts as El Nino hits hydroelectric plants.
“Ecuador will introduce power cuts for several hours a day until mid-December, the government said on Thursday… The country’s most extreme drought in the last five decades, which the government attributes to the El Nino phenomenon, has affected the eastern and southern regions where 90% of hydro-electric plants operate.”
“Drivers in Argentina are dealing with long lines at the pump and completely closed gas stations as the government’s dollar shortage strands ships at sea that are waiting to import fuel.
“Scenes reminiscent of Venezuela in recent years have surfaced across Argentina recently with cars around the block attempting to fuel up at stations.”
“Ghana power crisis: Limited gas supply triggers nationwide power outage.
“Ghana is currently going through its worst economic crisis in a generation. A June study said the country’s current energy provision was “critically unhealthy and tottering towards a power crisis”… In July, independent power producers in the country threatened to shut down operations over arrears owed to them by state-run Electricity Company of Ghana.”
“South Africa credit crunch: Over 22,000 vehicles repossessed in first half of year…
“Vehicle repossessions are becoming a common occurrence as maintaining a cost of living, compounded by rising interest rates and high unemployment rates, becomes an almost impossible task for citizens.”
“‘Becoming Lampedusa’: Migrant arrivals surge on remote Spanish island.
“A group of tired migrants struggled to pull themselves up onto the harbour of La Restinga, a fishing village on the tiny island of El Hierro in Spain’s Canary islands. Some collapsed from exhaustion and were aided by Red Cross staff. One was led away on a wheelchair as tourists ate at restaurant terraces just metres (yards) away.”
“Pakistan on Thursday gave a last warning to all immigrants in the country illegally, including hundreds of thousands of Afghan nationals, to leave voluntarily before a Nov. 1 deadline, the country’s caretaker interior minister said on Thursday.
“Sarfraz Bugti told a news conference in Islamabad that Pakistan was determined to go ahead with a plan to remove all undocumented immigrants after Nov. 1.”
“Nearly 600,000 internally displaced people are sheltering in 150 facilities of the United Nations Palestinian refugee agency (UNRWA) in Gaza, while at least 40 UNRWA installations have been impacted, the UN agency posted on Wednesday on the social media platform X.
“”Our shelters are four times over their capacities – many people are sleeping in the streets as current facilities are overwhelmed,” the agency added.”
“Record 114 million people displaced globally, says UN…
““The number of people displaced by war, persecution, violence and human rights violations globally is likely to have exceeded 114 million at the end of September,” UNHCR, the UN refugee agency, said on Wednesday, marking an increase of 5.6 million from the end of last year.”
“Goldman Wants Trading Derivatives to Be Easy as Buying on Amazon.
“Goldman Sachs Group Inc. is expanding its use of a technology that leverages artificial intelligence in the hopes that it will make it easier for clients to plan complex derivatives trades… the firm in recent weeks began allowing clients to use its visual structuring product for credit derivatives.”
“Wall Street Embraces AI Despite Risks of Catastrophe.
“Across Wall Street, the artificial intelligence arms race is heating up. Vanguard is already using AI to generate retirement portfolios. Morgan Stanley has launched a ChatGPT-fueled assistant for financial advisers, saying generative AI would “revolutionize client interactions.” JPMorgan Chase filed a patent for a product called “IndexGPT” to help traders decide where to invest.”
“Risk of terrorist bioweapons and societal unrest caused by AI, UK government warns ahead of safety summit…
“In a research paper circulated with summit attendees, the Government Office for Science explores a series of potentially catastrophic scenarios that could be brought about by enhanced capabilities of artificial intelligence if left unregulated over the coming decade.”
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
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