“Nothing Worries CEOs Right Now as Much as Geopolitics…
“Gone is the relative stability of what historians term the Pax Americana, the 75 years of US economic, military and cultural dominance that followed World War II. In its place is a multipolar and inherently fragile competition for power and influence over trade, technology and territory.
“This new age represents, in the words of German Chancellor Olaf Scholz, a Zeitenwendeâan âepochal tectonic shift,â in which fascism, authoritarianism and imperialism are newly ascendant and globalization is receding.”
“M&A activity dips amid geopolitical concerns, only 5 mega deals this year…
“Rising interest rates, geopolitical tensions, and recession fears have led to a downturn in Mergers and Acquisitions activities in the first quarter of 2023, said a Boston Consulting Group report… âOver the past year, M&A dealmakers have confronted their most prolonged challenges since the 2008â2009 financial crisis,â said the 20th edition of BCGâs Global M&A Report.”
“Airlines Hedging Oil To Protect Against Geopolitical Turmoil.
“Earnings calls within the airline industry have backed up what those traders and brokers are seeing, with confirmation of extra hedgingâparticularly in increased call options, which would help protect large fuel consumers such as airlines from rising prices.”
“Oil traders pay premiums to secure 2024 Mideast crude supplies.
“Oil traders will pay premiums for the annual supply of most grades of Middle East crude in 2024, trade sources said, on concerns over supply from the region after the Israel-Gaza conflict heightened geopolitical tensions.”
“Risk of a Wider Middle East War Threatens a âFragileâ World Economy…
“âThis is the first time that weâve had two energy shocks at the same time,â said Indermit Gill, chief economist at the World Bank, referring to the impact of the wars in Ukraine and the Middle East on oil and gas prices.”
https://www.nytimes.com/2023/11/01/business/economy/israel-gaza-war-global-economy.html
“After almost two years of aggressive monetary tightening, the world’s biggest central banks are taking time out before weighing up their next move.
“The Bank of England on Thursday left interest rates at 15-year high, a day after the U.S. Federal Reserve also kept rates unchanged.”
“Bond yields signal the end of the new normal… We are entering an era of higher and more volatile inflation, leading to broad changes in the investing landscape…
“In retrospect, the new normal looks like a unique period of historically depressed interest rates after the financial crisis [to be fair, plenty of us could see this at the time!].”
https://www.ft.com/content/255623ed-ef7e-4874-820c-02763d2c055e
“Rich countries are stumbling into a debt trap…
“The fear stalking financial markets is that the government of the worldâs largest economy [the US] â and the issuer of its only true reserve currency â is at risk of falling into a debt trap, as a vicious circle of higher borrowing costs and larger deficits sends the stock of debt on an uncontrolled upward spiral.”
https://www.reuters.com/breakingviews/rich-countries-are-stumbling-into-debt-trap-2023-11-03/
“US Treasury details plans to step up size of bond sales to manage growing debt load and higher rates.
“The Treasury Department announced plans Wednesday to accelerate the size of its auctions as it looks to handle its heavy debt load and with financing costs rising… On Monday, the department said it would need to borrow $776 billion in the current quarter and $816 billion in the first quarter of calendar 2024.”
“Manufacturing activity in the U.S. unexpectedly contracted at a faster rate in the month of October, according to a report released by the Institute for Supply Management on Wednesday.
“The ISM said its manufacturing PMI fell to 46.7 in October from 49.0 in September, with a reading below 50 indicating a contraction.”
“The US government is demanding data from US insurers as it probes whether more frequent and extreme hurricanes and wildfires are making insurance unaffordable for American homeowners.
“Insurers will be asked to provide information about their home insurance policies, premiums, claims and losses at a zip-code level for six years between 2017 and 2022.”
https://www.ft.com/content/6682aaed-ea7a-489a-9acc-8eca73b64451
“Climate change scenarios in public service pensions valuations [official UK government release; picture is of storm damage from Ciaran on Jersey]…
“For each public service pension scheme three scenarios, covering a range of climate outcomes at 2100, have been considered. These are the orderly transition, disorderly transition and failed transition scenarios. We formulated a broad narrative around each scenario…”
https://www.gov.uk/government/news/climate-change-scenarios-in-public-service-pensions-valuations
“When idiot savants do climate economics…
“Stiglitz and co-authors Nicholas Stern and Charlotte Taylor, of the Grantham Research Institute… at the London School of Economics and Political Science, declared that Nordhausian integrated assessment models are âinadequate to capture deep uncertainty and extreme risk.â …They fail to incorporate âpotential loss of lives and livelihoods on immense scale and fundamental transformation and destruction of our natural environment.â”
https://theecologist.org/2023/nov/01/when-idiot-savants-do-climate-economics
“Households face paying ÂŁ100 more a year for their energy as the Israel-Hamas conflict contributes to rising wholesale gas prices [UK].
“The conflict in Gaza has caused production at key Israeli gas fields to cease, reducing output to Egypt where it is processed into liquefied natural gas (LNG) and impacting supply.”
https://www.telegraph.co.uk/money/bills/energy/israel-hamas-war-expected-increase-energy-bills/
“UK factory production has seen the longest period of decline since the global financial crisis as the sector weighs heavy on the economy, an influential survey has found…
“The closely watched S&P Global/CIPS UK manufacturing PMI survey rose from 44.3 in September to 44.8 last month.”
“Euro zone factory downturn deepened in October…
“HCOB’s final euro zone manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 43.1 in October from September’s 43.4, just above a 43.0 preliminary estimate. A reading below 50 indicates a contraction in activity.”
https://www.reuters.com/markets/europe/euro-zone-factory-downturn-deepened-october-pmi-2023-11-02/
“Europe canât bank on its brimming gas stores to keep prices in check this winter.
“…while gas shortages are unlikely in Europe this winter, the price of the fuel remains a worry. Prices on commodity markets in the region have shot up 28% in the past month. And even before that surge, they were still almost double their historical average for the time of year.”
https://edition.cnn.com/2023/11/02/energy/europe-gas-prices-supply/index.html
“Germanyâs economic model is sputtering. So are its banks.
“The European Banking Authority estimates that in the first three months of 2023 their weighted-average return on equity, a measure of profitability, was 6.5%, compared with 10.4% across the eu. In 2020 banks in eight countries in the eu offered worse returns than German lenders.”
“Rise in German unemployment points to cracks in eurozone labour market.
“…economists and policymakers believe the labour market is weakening as the stagnating economy and higher borrowing costs drive more companies to cut jobs. The German unemployment rate climbed from 5.7 per cent in September to 5.8 per cent last month.”
https://www.ft.com/content/c7db72b3-c89a-4806-a681-c957b1928dee
“Germany: Illegal migration rise prompts border crackdown.
“Armed police officers wave cars off the motorway going from Poland to Germany. They’re searching for people-smugglers and their desperate cargo. This is the German government’s latest bid to show it is getting a grip on rising levels of irregular migration.”
https://www.bbc.co.uk/news/world-europe-67238144
“Lethal exchanges of gunfire between smugglers and fatal car crashes have made the migrant route through the Western Balkans into the EU even more treacherous in recent months. And yet the number of arrivals keeps rising…
“Police blame growing violence on a turf war between Moroccan, Afghan and Syrian gangs who control access to the border fence on Hungary’s southern border with Serbia.”
https://www.bbc.co.uk/news/world-europe-67245358
“Chinaâs economic miracle turns to fiscal crisis.
“Local government debt is way higher than explicit official stats show, a burden that must ultimately be shouldered by Chinese households… At a critical juncture of structural economic transformation, the sustainability of Chinaâs local government credit is a pressing concern for long-term economic growth and social stability.”
https://asiatimes.com/2023/11/chinas-economic-miracle-turns-to-fiscal-crisis/
“As strikes, clashes roil Bangladesh, opposition party vows to boycott polls in âdo-or-die momentâ.
“Bangladeshâs opposition party will boycott Januaryâs national polls, unless a caretaker government replaces PM Sheikh Hasina. Critics of Hasina say her rule, since 2009, has brought in corruption, hyper-nationalism, erosion of freedoms and violence against her political rivals.”
“Analysis: India’s smaller rice crop paves way for prolonged export curbs.
“For the first time in eight years, India’s rice output is expected to drop this year, raising the prospect that Prime Minister Narendra Modi’s government will extend curbs on exports of the grain to keep a lid on food prices ahead of elections.”
“An unprecedented power crisis has cast a shadow over the lives of Kashmiri residents, leaving them in the dark for hours, and at times, even days.
“As the winter season approaches, the region of Jammu and Kashmir is currently grappling with a severe power shortage… areas without meters will regularly experience an 8-hour curtailment in power supply.”
https://maktoobmedia.com/india/kashmir-grapples-with-severe-power-crisis/
“Kazakh Fuel Export Ban Triggers Crisis In Tajikistan…
“Fuel shortages happen periodically in Tajikistan but became acute toward the end of last month after the Kazakh Energy Ministry announced on October 20 a three-year ban on exports of liquefied petroleum gas (LPG), propane, and butane.”
https://oilprice.com/Energy/Energy-General/Kazakh-Fuel-Export-Ban-Triggers-Crisis-In-Tajikistan.html
“Pakistan-Afghanistan border overwhelmed as Afghans face expulsion.
“Pakistan’s northwestern border crossing was flooded with thousands of people looking to cross into Afghanistan on Thursday, a day after the government’s deadline expired for undocumented foreigners to leave or face expulsion.”
“Israel’s ship industry urges government to help with jump in war insurance.
“Ships sailing for Israel face a 10-fold jump in war risk premiums as the conflict in Gaza intensifies, prompting industry calls for the government to help ensure vital imports keep coming. Israel has vowed to annihilate Islamist group Hamas after its fighters stormed through Israeli towns…”
“Egypt raises petrol prices by up to 14.3%, keeps diesel unchanged.
“The state media, citing the official gazette, said the price of 80-octane petrol was raised by 1.25 Egyptian pounds, 92-octane petrol by 1.25 pounds and 95-octane petrol by 1 pound to 10 Egyptian pounds ($0.3241), 11.50 and 12.50 per litre, respectively.”
“Tunisia: Protests and clashes likely to continue nationwide through at least late November.
“Protests and associated clashes are likely across Tunisia through at least late November due to the political situation, high unemployment, rising inflation, and opposition parties’ continued calls for demonstrations against the government.”
“Fitch downgrades Ethiopia on rising default risk.
“”The material decline in external liquidity and significant external financing gaps have increased the likelihood of a default event,” the ratings agency said in a statement. Africa’s second most populous country has struggled with debt… following a punishing two-year civil war that ended last year.”
https://www.reuters.com/world/africa/fitch-downgrades-ethiopia-rising-default-risk-2023-11-02/
“UN says ‘horrible suffering’ in Sudan only growing as more people are displaced.
“…fierce fighting in Darfur once again pushes thousands of Sudanese to flee their homes. “Six months and six million people forced to move, that’s an average of one million per month, it’s horrible suffering,” said Mamadou Dian Balde, the top regional official for the UN’s refugee agency.”
“Why people are eating water-lilies in flooded, war-torn South Sudan.
“Years into a climate disaster, these people are eating the unthinkable… Climate disasters are often perceived as finite events â with an emergency and a recovery, a beginning and an end. But as these disasters grow in magnitude and frequency, striking poor countries dependent on a stretched humanitarian system, some are no longer just passing crises, but permanent states of being.”
https://www.washingtonpost.com/climate-environment/2023/11/02/south-sudan-climate-floods-war/
“IMF raises alarm over âcontagionâ from private capital in life insurance.
“More than 40 per cent of the assets of private equity-linked US insurance companies are allocated to illiquid strategies including structured credit, mortgage loans and mortgage-backed securities… Private equity-linked life insurers were âmore vulnerableâ than their peers if there was an increase in corporate defaults and credit downgrades due to rising interest rates.”
https://www.ft.com/content/43f98447-f798-425c-929e-7588f74e4cc0
“Trust us with AI, say the big tech titans. Thatâs what the banks said before the 2008 crisis.
“In the years leading up to the crisis, banks had developed products that were both lucrative and â as it turned out â highly toxic. The drive for profits trumped prudence. Only in retrospect were the dangers recognised of allowing the banks to mark their own homework.”
https://www.theguardian.com/commentisfree/2023/nov/01/ai-big-tech-banks-rishi-sunak-safety-summit
“We’ll never have to work!
“Elon Musk tells Rishi Sunak how rise of ‘magic genie’ AI will eventually mean no one will need a job – in extraordinary interview with the Prime Minister after Bletchley Park summit.”
You can read the previous âEconomicâ thread here. I’ll be back tomorrow with a âClimateâ 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.
Well! My opinion of Sunak has changed! I won’t need a job? OK bring on AI! Woot! Hallelujah! This is amazing! Wow! Tech rules! All praise Musk!
đ …Although they couldn’t be further from each other on the political spectrum, Elon’s comments actually reminded me of Aaron Bastani and his book, “Fully Automated Luxury Communism: A Manifesto.” A few *tiny* misunderstandings in that:
“Supporters believe fully automated luxury communism is an opportunity to realise a post-work society, where machines do the heavy lifting and employment as we know it is a thing of the past.”
https://www.theguardian.com/sustainable-business/2015/mar/18/fully-automated-luxury-communism-robots-employment
Everything is built on debt and lies. A future which doesn’t exist. Global warming the pipeline paper just lit up the internet.
I’ve not watched the whole video yet, 56 minutes in length.
https://www.youtube.com/watch?v=ULu-LFt5EOk
Still waiting for anyone to say “You are going to get what you deserve,overpopulators.”
Silly me,I just said it.
Now who is going to say:”We are living in NTHE.” Still silly me!
Yes, TR, as you have said probably 50 times: overpopulation. We get it. But what has ENABLED overpopulation? Fossil fuels used to make fertilizers, as well as transport food all over the planet.
Hello Pan
Extremely interesting longread on the economic madness models of Nordhaus, Richard Tol and others. Indeed, they follow improbable closed paradigms that can be methodologically directly overturned. They do argue that weather and climate systems are chaotic and unpredictable, but then get completely wrapped up by the ‘appeasement lobby’ and then make the weirdest statements that indeed find their way into the ‘ideological isn’t too bad’ discourse that is of course eagerly kicking off at the moment. ‘Dont look up’ is the adage.
Very interesting in itself that all that just happens…. but then again, this happens every day in the ‘kli9maat economy energy’ field whether it’s about warming, renewable energy or depletion.
I follow Tol closely because he is regularly quoted in the Netherlands by ‘climate sceptics’ to prove that the 2.5 degrees warming is not going to go that far…
The man is very dangerous. He visited Pakistan this spring to look around there and confided his findings to the Frankfurther Algemeine and made the following ridiculous ‘discovery’
……’Jacobabad in Pakistan is one of the hottest cities in the world. Journalists travelled there during a recent heatwave, apparently expecting to see bodies piled up. Instead, they discovered that people don’t just use their physiology to stay cool. They also change their behaviour, doing as little as possible and moving to cooler areas. Indeed, locals have experienced heatwaves before, creating places to stay cool. People also live in Death Valley.’…….
Was signed Richard Tol…. well go argue with that đ
https://www.climategate.nl/2023/08/nederlandse-klimaatonderzoeker-het-einde-is-nog-niet-nabij/
A couple of quotes from Tol:
“If we could accept that the outlook for climate change is not so bleak, reductions in greenhouse gas emissions could occur at a more acceptable pace â reducing the risk of popular backlash against climate policy, the professor said.”
“âThe impact of climate change is relatively small. The average impact on welfare is equivalent to losing a few per cent of income. That is, the impact of a century worth of climate change is comparable to the impact of one or two years of economic growth.â”
Apparently, a man who uses his considerable intellect to obfuscate rather than to edify, which begs the question – why is he a Professor of Economics at Sussex Uni and Professor of the Economics of Climate Change at Vrije Universiteit, Amsterdam?! Depressing to think of him shaping young minds…
well worth a listen Hansens interview re their paper yesterday
https://www.youtube.com/watch?v=NXDWpBlPCY8
Many thanks for that, Dale. Hansen et al’s latest paper is an important one. I haven’t read it; only about it – but I gather he is advocating geogineering:
“Hansen believes scientists and activists âshould raise concerns about the safety and ethics of NOT doing solar radiation management,â he said by email. Climate change, caused by human greenhouse gas emissions, is in itself a form of planetary geoengineering, he added.”
https://www.eenews.net/articles/james-hansen-is-back-with-another-dire-climate-warning/
Thanks Dale, much appreciated for that link. I had been following the paper since the early consultation drafts, and now its gone through all the review processes and published, its always valuable to have an improved picture of what to expect in the coming years. However, I remain unconvinced about “solutions”, including geoengineering, pressuring policy-makers, govts etc, so skipped most of that section of the discussion. Geoengineering, even if proven as workable, is too expensive.
As for geopolitics, in the Middle East in particular, all the panicky speculation about escalation and oil-shocks etc .. its not 1973 anymore. I cant see Arabic nations moving economically, let alone militarily, because of M.A.D. the only thing everyone is agreed on, is the “Spice must flow”. (Apologies for the Dune reference ). Although some of the dozens of non-state militias, may take some potshots at Israel in moral support of their Palestinian cousins, they are mostly an irritation not a threat.
And 2+ million Arabic palestinian peoples will eventually be “strategically sacrificed” for the sake of ‘World Peace’ and to help ensure that the “Spice Must Flow” I just wish Israel would hurry up and make it a quick humane eradication, instead of being so deliberately cruel about it.
TR – your overpopulation rants are such nonsense. Overpopulation was never about birth rates, its always been about imbalance in death rates which *nobody* will mention. Babies dont eat much, but keeping elderly baby-boomer folks alive chews far more resources.
Besides TR, you should be cheering at current geopolitics, lots of human death, desperation, destruction, disease, forced exiles, deportations, quite the culling. And will only get worse in coming years as both climate and economies also get worse year-on-year.
I’m sure that the Clever Ape will develop band-aids for our economic & environmental problems because it’s too stupid to stop the disease.