Many thanks to my special sponsor for September 2024 – ANON
“Global Bond Yields Fall to Two-Year Low as Slowdown Fears Grow.
“Global bond yields slid to a two-year low this week due to concern over slowing growth in major economies and increasing expectations for interest-rate cuts. Sentiment over the world’s growth outlook deteriorated further this week as oil slumped and deflation fears intensified in China.”
“Oil prices set to drop as global economic slowdown looms ‘weakest since 2011’…
“Trader sentiment in the oil market has hit its lowest point in 12 years due to concerns about demand. The “new long position” among oil traders—indicating the proportion of those expecting prices to rise—has dropped to its lowest level since 2011, according to the ICE Exchange.”
“U.S. bankruptcy filings spiked in August after slowdown in July.
“U.S. bankruptcy filings spiked in August after a slowdown in July, propelling the total for the first eight months of the year to the highest level since 2020 and second-highest since 2010, S&P Global Market Intelligence said Monday.”
“US consumer borrowing increased in July by the most since November 2022, reflecting jumps in non-revolving debt and credit-card balances…
“The increase in borrowing helped fuel the biggest jump in retail sales during the month since early 2023… However, carrying bigger credit-card balances and loans with high interest rates poses a risk to spending should consumers become more guarded.”
“Thriving luxury car manufacturers and struggling discount stores summarizes the current economic backdrop.
“The wealth divide is growing and the rich have never been richer than they are now. How is this “strong” economy?” [Art Berman]
https://x.com/aeberman12/status/1833474395714588969
“China’s $6.5 Trillion Stock Rout Worsens Economic Peril for Xi…
“The risk for Xi Jinping’s government is that the market slump further erodes confidence among consumers and businesses, spurring a deflationary feedback loop for the economy. That’s one reason why state-backed funds have spent billions of dollars trying to prop up stock prices, to little avail.”
“China is on track for the first annual outflow from stock funds in 2024.
“Global funds have been regularly withdrawing money from the Chinese stock market. The issue is that after that Chinese stock exchanges stopped releasing the fund flow data.”
https://x.com/GlobalMktObserv/status/1833482697806692382
“China’s banks have a nasty case of indigestion…
“Through warehousing, selling and writing off loans, China’s banks are muddling through. But not without cost… The bigger concern for Beijing’s economic planners is how to prop up economic expansion… If the economy slows, bad debts are likely to rise even further, and a nasty case of financial dyspepsia will turn into something worse.”
https://www.reuters.com/breakingviews/chinas-banks-have-nasty-case-indigestion-2024-09-10/
“Fuel shortages and bare pharmacies: we need to talk about what a possible war with China could look like.” [An Australian perspective]
“I believe the government has a detailed understanding of how war could impact domestic supplies of critical goods and international freight transporting supplies to Australia. What is missing, however, is a frank engagement with industry and the public about the hardships that may arise during a crisis…”
“UK, US and Australia sign supply chain resilience pact…
“On Tuesday 9 September 2024, the United Kingdom, United States and Australia signed a Memorandum of Understanding (MoU) establishing a new trilateral collaboration that will strengthen strategic cooperation and address risks to critical supply chains.”
https://www.gov.uk/government/news/uk-us-and-australia-sign-supply-chain-resilience-pact
“UK economy unexpectedly flatlines for second month in row.
“The anticipated post-election bounceback in the UK economy failed to materialise as activity flatlined in July for a second month, , according to the latest official data… Before the release of the ONS figures, economists had thought the slowdown witnessed in June was temporary and caused by political uncertainty.”
“Britain’s local governments are at ‘serious’ risk of ‘widespread collapse’…
“Local governments across England, Scotland and Wales face a £4.3 billion ($5.6 billion) hole in their finances in the coming year, according to a new report. That could force cuts to jobs and vital services, such as rubbish collection.”
https://edition.cnn.com/2024/09/09/business/uk-local-government-financial-collapse/index.html
“The pressing risk of the national debt becoming unsustainable will force Britain into the unenviable choice of paying higher taxes or the state doing less, a House of Lords committee has warned.
“A report by peers said tough decisions and a new set of rules for the public finances were needed…”
“The ECB has no room to cut rates…
“That course of action [its lengthy experiment with negative rates] means that today the ECB has less room than other central banks to loosen its policy. Never forget: the monetary stance depends on interest rate levels, not changes. The latter are at most indications of possible future levels.”
https://www.ft.com/content/74c43985-309e-4889-b5f8-5fce56fbdd8d
“‘The end of Schengen’: Germany’s new border controls put EU unity at risk…
“Germany’s decision to tighten controls at every one of its land borders seems driven chiefly by politics, is difficult to justify in law, deals a heavy blow to Europe’s prized free movement and could severely test EU unity.”
“Europe’s ‘Reason for Being’ at Risk as Competitiveness Wanes, Report Warns.
“The European Union, facing a shrinking share of the global economy, needs to increase its spending by nearly $900 billion a year, according to a long-awaited report from Mario Draghi… The challenge for the European Union is “existential,” Mario Draghi, a former president of the European Central Bank, said.”
https://www.nytimes.com/2024/09/09/business/europe-economy-competitiveness.html
“Europe Braces for Last of Ukraine’s Russian Gas Deliveries…
“While talks are intensifying ahead of the heating season, an agreement between Moscow and Kyiv to move Russian gas to Europe is unlikely to be renewed before it expires in December. That would halt flows, which continued through more than two years of the full-scale invasion, hitting the market at a critical period.”
“France, Germany and the United Kingdom will sanction Iran for providing missiles to Russia for its war on Ukraine, the three countries announced Tuesday…
““This is a further escalation of Iran’s military support to Russia’s war of aggression against Ukraine and will see Iranian missiles reaching European soil, increasing the suffering of the Ukrainian people,” Paris, Berlin and London said in a joint statement.”
“US accuses China of directly supporting Russia’s ‘war machine’…
“The US has accused China of providing Russia with direct support for its “war machine” for the first time, as part of an intensified campaign to urge Europe to join Washington in ratcheting up pressure on Beijing.”
https://www.ft.com/content/017e210b-8551-403f-8e8d-e7fa9dc72905
“President Joe Biden has hinted at Washington lifting restrictions on Ukraine using US long-range missiles against Russia.
“If granted, it would fulfil repeated requests by Ukraine to loosen the limits on US-supplied weapons, which officials have said has left them fighting against Russia’s full-scale invasion with their hands tied.”
https://www.bbc.co.uk/news/articles/crrlg2xj5qno
“Bolivia’s Economy on the Brink…
“The country is at risk of a currency crisis as the government keeps a fixed exchange rate with no international reserves to support it… [it is now] a nation with minimal reserves, distorted relative prices—with shortages of fuel, milk, bread, butter, and other essential goods—and a bloated public sector.”
https://www.as-coa.org/articles/bolivias-economy-brink
“The board of ailing state-owned company Petroleos del Peru submitted its resignation on Tuesday…
“The resignation comes as the board, chaired by Oliver Stark, had repeatedly asked the government to decide on the future of the cash-strapped company: either bail it out or let it go bankrupt.”
“Ecuador relies on a floating power plant to stabilize its electricity grid…
“Overdependence on hydroelectricity has been highlighted by a prolonged drought that has reduced dam water reserves to a bare minimum. Faced with this situation, the authorities are testing a 100-megawatt floating power plant…”
“Bogotá Adds Risk of Power Cuts to Its Months-Long Water Shortage…
“Bogotá officials began rationing five months ago hoping that the Chingaza water system would reach at least 70% of its total capacity by October, when it’s set to peak. Dry weather, however, has lasted longer than expected and the main reservoir is still below 50%.”
“‘We’re flooded with trash’: pollution crisis as 500,000 migrants a year attempt perilous Darién Gap crossing…
“Darién’s Indigenous groups say their ecosystem and way of life are under threat… When it rains, the once pristine stony banks of the Turquesa River in Nueva Vigía are now lined with discarded drinks cans, T-shirts and plastic food containers.”
“If Nigeria cannot end fuel shortages, disaster beckons…
“Cheap petrol is financed by a subsidy so vast that it squeezes all other public spending. The subsidy is not paid directly. Instead, the state-owned Nigerian National Petroleum Corporation swaps crude oil pumped in Nigeria for petrol refined abroad, then sells that petrol to the public at a big loss.”
“How Sudan’s devastating civil war became a global battleground…
“With 150,000 dead and millions displaced, Russia, Iran and the UAE are jockeying for influence… This is arguably the world’s most devastating war, and there is no sign of a decisive winner, still less a tangible peace deal.”
https://www.ft.com/content/da1c7bd2-3ad9-4a06-8295-e746e4cd3f58
“Sailing through Houthi Red Sea hotspot now is ‘insane’, says shipowner…
“Conbulk Shipmanagement has joined the container shipowners that have stopped sending ships to the Red Sea, according to its chief executive Dimitris Dalakouras. “We have stopped trading there. This will have very bad consequences in general if everybody stop…””
“Israel launches multiple airstrikes on southern Lebanon, killing Hezbollah special forces commander…
“The IDF said Al-Shaer had “advanced numerous terrorist activities against the state of Israel” and his “elimination” would impair the Iran-backed militant group’s ability to launch attacks against Israel from southern Lebanon.”
“UN human rights chief warns of global risk of ‘dystopian future’.
“In a speech at a United Nations Human Rights Council session, High Commissioner for Human Rights Volker Turk advocated a change in path away from a ‘new normal,’ warning against war escalation, repression, disinformation and ‘strongman’ politicians.”
I rely on donations and tips from my readers to to keep the site running. Every little bit helps. Can you chip in even a dollar? Buy me a coffee or become a Patreon supporter. I personally acknowledge every donation individually. A huge thank you to those who do subscribe or donate.
You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.
Hi Pan. I think you posted last week I believe in let me summarise; an energy war between AI on the one hand and Cryptocurrency on the other. That was about the expected explosive demand for energy….
Can you give me that link again, if it’s not too much trouble.
It might be this but you need a subscription to read.
“The environmental cost of AI.. Data centres are becoming some of the biggest consumers of power and water…
“The International Energy Agency says data centres, cryptocurrencies and AI accounted for almost 2 per cent of global power demand in 2022 — and this could double by 2026 to nearly match the electricity consumption of Japan. Ireland, a favoured location for server farms, is now limiting new data centre connections to the power grid; others are exploring whether to do the same.”
https://www.ft.com/content/323299dc-d9d5-482e-9442-f4516f6753f0
Hmmm. When I search on google (The environmental cost of AI) and scroll down to the Financial Times article, I can read the article. If I use the link in the comment above, it requires a subscription. Link at google = link above. Strange.
I have already found it and discussed it some more with my reseachers. It is an extremely complex economic and energy battle taking place there in all kinds of countries ranging from Argentina, Kazakhstan, Texas Iceland, Norway and the Netherlands. Outcome very uncertain but definitely worth following given the volatility of crypto and the rise of AI. They have many similarities and the main one is the battle over data centres, energy costs and cooling capabilities…. a very weird world eith just virtual products….
Zip, glad you found it and, Edward, thank you for digging it out.
I must confess I had been struggling to recall the article. I skim-read so many of the damn things. 😂
You also forgot water supplies to with some of these energy sources. It is also being reported in texas with one bitcoin site of people having health issues due to the amount of noise from the site.
“My main concern is that the substantial cost to develop and run AI technology means that AI applications must solve extremely complex and important problems for enterprises to earn an appropriate return on investment (ROI). We estimate that the AI infrastructure buildout will cost over $1tn in the next several years alone, which includes spending on data centers, utilities, and applications. So, the crucial question is: What $1tn problem will AI solve? Replacing low-wage jobs with tremendously costly technology is basically the polar opposite of the prior technology transitions I’ve witnessed. . . .
The bigger question seems to be whether power supply can keep up. GS US and European utilities analysts Carly Davenport and Alberto Gandolfi, respectively, expect the proliferation of AI technology, and the data centers necessary to feed it, to drive an increase in power demand the likes of which hasn’t been seen in a generation, which GS commodities strategist Hongcen Wei finds early evidence of in Virginia, a hotbed for US data center growth. “?
https://indi.ca/content/files/2024/07/Goldman-Sachs-AI-Report.pdf
Hi Pano and fellow watchers as we witness the great unravelling..
Looks as if we are walking on eggshells in every manner.
The Australian article regarding the dependence of China goods in essential goods reminds me of the demise of the Bronze Age trade scheme. History apparently will repeat itself in many ways….nothing new here, but on a larger stage..take a bow Folks, the greatest show on Earth…never to be seen again…
Vince, right – except the global economy is so complex, brittle and networked now, and our dependence on it so absolute, that we will fall much further, much faster. I thought it was a very interesting article; David Korowicz territory:
“Once road freight is impacted by a lack of fuel, supermarkets would start experiencing shortages of basic goods. Air travel would collapse. Non-essential retail businesses and most personal vehicle travel would likely cease, as fuel would be need to be rationed for freight, emergency services and the military.”
“Remember when the narrative was that it was Russia totally reliant on Western-supplied parts in its weaponry? Here an American general literally admits the entire U.S. military structure would collapse in a day if China issued an embargo against them:
‘If we were in a war with China and it stopped providing parts, we wouldn’t be able to build the planes and weapons we needed,’ he said.
A startling report released earlier this year revealed Chinese firms have a stranglehold across 12 critical technologies that are vital to US national security, including nuclear modernization, hypersonic and space technologies.
The study, which was carried out by defense software firm Govini, delivered a damning indictment on the American armaments industry.
‘U.S. domestic production capacity is a shriveled shadow of its former self,’ the report said.
‘Crucial categories of industry for U.S. national defense are no longer built in any of the 50 states.’
Remember when it was Russia using Western chips in all of its missiles?
Perhaps most worryingly, Govini found that more than 40 per cent of the semiconductors that sustain Department of Defense (DoD) weapons systems are now sourced from China.”?
https://www.dailymail.co.uk/news/article-13551371/China-military-supplies-war.html
Everyday turns into a bigger shit show. The system is looking more and more fragile by the day. I pity those who want to be charge of this ship as it dies. As the mask of empire falls apart and its ability to control the narrative and corruption and other scams.
https://www.nbcnews.com/tech/security/crypto-scams-stole-56-billion-americans-last-year-mostly-older-people-rcna170410
Bitcoin scams for seniors who knew.
Ugh. These are such cynical, predatory times. Purchase scams and romance frauds big on this side of the channel, apparently, with crypto scams a growing threat:
“Some 156,000 purchase scam cases were recorded [in 2023], with a total loss of £85.9 million, marking the highest loss and case total recorded by the organisation, which represents the banking and finance industry…
“Increases in cryptocurrency prices could be exploited by criminals to trick potential victims with the promise to big returns, UK Finance warned.”
https://www.independent.co.uk/money/tricked-consumers-lose-record-amount-to-purchase-scams-in-2023-uk-finance-b2549111.html
Higher taxes and fewer services. Oh, yeah, and that whole energy thing.
Who could have seen that coming?
More fun with humans:
Someone on reddit pointed to a fun article about the “calm down” crowd. You know, the folks so mummified by normalcy bias that they won’t talk about the clusterfuck, um, I mean the “polycrisis” even if you fattened their liver with it. Unless, of course, they are reeking with patronizing prattle about the latest and greatest “green” thing. Whatever.
So far, so good. Then the payoff: When things really start going to shit they will simply shrug and whimper something about “No one could have seen this coming!”
Must. Not. Retch…
“Higher taxes and fewer services.”
The UK is basically a post-growth economy and has run out of financial tricks to pretend otherwise. The electorate aren’t going to be thrilled with the “higher taxes and fewer services” scenario, to say the least. There is much outrage here after the new government pressed on with its unpopular decision to cut winter fuel payments to millions of pensioners yesterday.
Presumably, we will see a trend towards more authoritarianism, as the terrible truth dawns on the populace that there are no “sunlit uplands” ahead, to borrow Boris Johnson’s irritating phrase:
“Britain now stifles peaceful dissent like a repressive regime… a country that holds itself up as a beacon of the rule of law, bound by international commitments to freedom of expression and the right to assembly, is taking draconian steps to curb protest activities.”
https://www.theguardian.com/commentisfree/article/2024/sep/10/britain-protest-laws-tories-climate-labour
“0:00 Russia last year 400 people were
0:02 arrested for things that they said on
0:04 social media 400 people in Russia
0:07 obviously this country’s very different
0:08 how many people do you think were
0:09 arrested in Britain for things they said
0:11 on social media last
0:14 year go on take a guess I have no idea
0:17 3,300 really arrested for what they said
0:20 on social media . . . “?
https://www.youtube.com/watch?v=xZ8t6bOQ5H8
“In a speech at a United Nations Human Rights Council session, High Commissioner for Human Rights Volker Turk advocated a change in path away from a ‘new normal,’ warning against war escalation, repression, disinformation and ‘strongman’ politicians.””
Well, that speech will help.
😂
It must be a nice way to make a living, standing atop the moral high ground, lecturing the species on where we are erring and what needs to be done better.
“standing atop the moral high ground”
It really lonesome up here. 😉
https://www.krqe.com/news/investigations/this-is-not-right-albuquerque-police-investigating-hoa-presidents-paychecks/
Growing scandals with hoas as corrupt management companies and presidents who run them as the states have lax laws on them. Its a mess.
What’s dumber than buying bottled water? Being a member of a HOA? One of the biggest purchases one can make is a roof over one’s head & most know very little about what they are buying. This coming from one that has been in construction & home building for 40 years.
To paraphrase Taylor Swift: Don’t remain ignorant, do your damn research!
Sorry Taylor, I refuse to be politically correct. 😉
Okay its hard to get away from now. Most new homes are under hoas in expanded areas. So yes i would love not to be under one but the county doesn’t want to be responsible for costs and puts it under hoas. The hoa laws are not good either for economic responsibility and fraud issues weather its a management company or one person running it. Home buyers are left with few options. So please spare me the lecture about doing my research.
You did not not mention you were in a HOA. Don’t be offended when a comment may apply & is not meant to offend. As far as I know you could be a renter.
I had no use for Ronald Reagan but he said one thing everyone should take to heart; “Trust but verify.”
HOA problems will melt away at the hands of Mother Nature’s revenge on this species.