A New Era of Hunger Has Hit the US:
“I started my Financial Times career covering famine in Africa in the 1980s. I did not expect to be writing about hunger in my own homeland 40 years later.
“But as America finishes its sixth month of coronavirus chaos, queues of hungry New Yorkers stretch a quarter of a mile outside a food bank in Queens and food giveaways provoke traffic jams that can last for hours.”
“Ms Babineaux-Fontenot provides some shocking numbers. “I hope I’m wrong, but if I’m not”, she says, an extra 17m people in the US could be “food insecure” in 2020 as a result of the pandemic.
“”That would make a total of 54m, according to Feeding America’s calculations, up from 37.2m before the crisis. And 18m, or one in four, of those hungry people will be children.”
“…the foundation underpinning the recent [US] recovery is shaky, according to several analysts, and many believe that both the economy and financial markets will need more government help – fiscal stimulus – to continue to make gains.”
“In 2020, unprecedented protests have swept through Louisville and the US. Why now?
“Pandemic has ‘heightened the unease that we’re all living with,’ expert says.”
“Local lockdowns have put the brakes on recoveries in Covid-hit areas [of the UK], the latest data is signalling, prompting warnings from economists that a second wave risks causing a double-dip downturn… as a second wave threatened to combine with mounting Brexit worries and rising unemployment.
“Fears of mass job losses ahead of the furlough scheme’s end have also been stoked by rocketing online searches on redundancies and workers seeking advice.”
“British sport was on the brink of financial implosion on Monday night after government forecasts of a devastating Covid-19 second wave raised fears that competitions and clubs would be folding within weeks.
“The Premier League, Rugby Football Union and England and Wales Cricket Board are among more than 100 national and grass-roots governing bodies to sign a letter pleading with the Prime Minister for a major new bail-out as the pandemic tightens its grip again.”
“A leading rating agency on Friday cut the outlook on Spain’s debt to negative from stable and warned that the pandemic-hit economy will struggle to return to growth.”
“ECB to review flagship bond-buying tool in fighting Covid crisis: …Until the new PEPP programme’s introduction, the ECB’s sovereign bond purchases were bound by self-imposed rules, designed to avoid it being accused of using monetary policy to directly finance governments, which is illegal under EU law…
“Any move to increase the flexibility of the ECB’s overall bond-buying programme is likely to prove controversial, particularly among its critics in Germany who are gearing up to launch another legal challenge at the country’s constitutional court.”
“Europe could be facing a new sovereign-bank “doom loop” if a coronavirus crisis surge in government bond buying by banks in those same countries persists, rating agency S&P Global has warned.
“The “doom loop” was at the heart of the euro zone debt crisis when banks had huge holdings of their own governments’ debt. As it tumbled in value the banks needed bailing out which made the governments’ debt problems even worse.”
“As India emerges to be the new global hotspot for COVID-19 with 54, 85,612 cases till 21 September, the economy struggles to sustain itself.
“Global institutions and economists are speculating a poor future for India’s economic growth as all trends point towards negative.”
“A Chinese county government recently admitted that it was unable to meet a quota to set up a 5 million-kilogram (about 5,511-ton) grain reserve, fueling concerns that China faces a food crisis.
“According to the website of the Huguan county government of Changzhi city, Shanxi Province, the city in 2014 assigned Huguan county to establish the grain reserve. Shanxi Province is a major wheat-producing region of China.”
“China is tackling unbridled borrowing in the real estate development sector anew with caps for debt ratios.
“But sources at developers say a rush to get around the rules by moving more debt off balance sheets is on.”
“Indonesia’s economy is set to contract for the first time since the Asian financial crisis more than two decades ago as the country struggles to get virus cases under control.
“Gross domestic product is forecast to decline 0.6% to 1.7% this year, Finance Minister Sri Mulyani Indrawati said Tuesday at a briefing in Jakarta.”
“JobSeeker, JobKeeper changes from September 25 may cause [Australia an] economic collapse:
“The countdown is on to the day the rug will be pulled from under us. This is when Aussies will feel the real economic pain of the pandemic.”
“New Zealand’s great sensitivity to zigs and zags in the global economy makes it the canary in the coal mine of Asian trade. And at the moment, globalization’s early warning system is on life support as COVID-19 kills demand everywhere…
“With the U.S. slumping amid nearly 7 million COVID-19 infections, Japan and Europe stumbling, and China recovering only modestly, New Zealand export prospects are darkening by the day… Nor does the central bank have much ammunition left.”
“Latin America could be heading for a systemic banking crisis if authorities do not confront threats to financial stability head on, a new report warns.
“Many governments across the region have taken action to support their economies, and central banks have eased policy. But intense strains on banks could lead to failures that supervisors are not fully equipped to tackle and governments have little fiscal room remaining.”
“Cuba’s Economy Was Hurting. The Pandemic Brought a Food Crisis:
“Cuba, a police state with a strong public health care system, was able to quickly control the coronavirus, even as the pandemic threw wealthier nations into crisis. But its economy, already hurting from crippling U.S. sanctions and mismanagement, was particularly vulnerable to the economic devastation that followed.”
“Lebanese seeking safety and jobs have joined the thousands risking their lives by setting sail in flimsy rafts and small boats with the aim of reaching peaceful and employment-rich shores…
“The exodus from Lebanon, caused by that country’s economic collapse, has accelerated since the August 4th explosion of nearly 300,000 tonnes of ammonium nitrate stored in Beirut’s port.”
“Sudan’s PM calls for international aid as transition teeters amid economic collapse:
“Western countries encouraged Sudan to overthrow a dictator, but now these ‘friends’ are needed to provide support.”
“The west will be haunted for decades to come by its failure to do more to help poor countries cope with the economic and social impact of the Covid-19 crisis, the United Nations humanitarian chief has warned.
“…Sir Mark Lowcock, the former top civil servant at the UK’s Department for International Development, said rich nations had acted decisively to deal with their own problems but failed to show the same vigour in response to the growing international crisis.”
“Saudi Arabia’s energy minister is keeping his options open while the recovery in oil prices splutters…
“…Prince Abdulaziz bin Salman is reluctant to commit to any new measures to bolster the oil market, telling reporters last week that “anyone who thinks they will get a word from me on what we will do next, is absolutely living in La La Land”.”
“At World Oil, we have finished compiling the 2020 mid-year forecast update for drilling and production.
“On the drilling side, we now can tell you, our readers, that if this forecast is realized, the U.S. total for the year will definitely be the lowest since before 1940.
“Indeed, it could go back considerably further than the 1930s…”
“Downward spiral continues in U.S. shale as 190 companies teeter on brink of bankruptcy:
It is less than two months since U.S. President Donald Trump travelled to Texas to declare that the U.S. energy industry, laid low by this year’s oil price crash, was back on its feet. “We’re OK now,” the president told the assembled crowd.
“But bankruptcy numbers released this week tell a different story.”
“HSBC allowed fraudsters to transfer millions of dollars around the world even after it had learned of their scam, leaked secret files show… The files show the investment scam started soon after the bank was fined $1.9bn (£1.4bn) in the US over money laundering. It had promised to clamp down on these sorts of practices.
“The scam was a Ponzi scheme – a notorious type of investment racket that pays existing stakeholders with money collected from new members.”
“Deutsche Bank Money Laundering Scandal Could Create Greatest Economic Crisis in History:
“The leak of the FinCEN Files over the weekend has rocked global markets and augurs a financial crisis of epic proportions as Deutsche Bank hovers over the precipice.”
“A financial crisis could surprise investors ‘sooner rather than later,’ warns Deutsche Bank.:
“…the Deutsche Bank strategists… see a looming financial crisis, tipped by a “growing overvaluation of assets and mounting debt levels,” and driven by the massive fiscal and monetary policy stimulus efforts.”
[FWIW this is what I also see!]
You can read the previous ‘Economic’ thread here and visit my Patreon page here. I’ll be back tomorrow with a ‘Climate’ round-up.
“In a recent report, the Bank for International Settlements, the bank of the world’s central banks, issued an ominous warning. It drew attention to the growing gap between buoyant world asset and credit market prices and the weak post COVID-19 world economy.
“It warned that such disconnects should not be expected to continue indefinitely and that when they do end, they generally unsettle [I’m thinking that a stronger word than “unsettle” may be warranted here] the world’s financial markets.”
“US Investors are gearing up for the year’s record-breaking pace of corporate bond issuance to continue in the coming week…
“The breakneck pace of fresh issuance illustrates how the Fed’s late March pledge to backstop credit markets and its policy of holding interest rates near zero have spurred borrowing by corporations this year.”
“Wall Street’s foray back into lending to homeowners with spotty credit isn’t looking great during the coronavirus pandemic.
“…delinquencies on residential mortgages bundled into private bond deals, or without government backing, have shot up to about 18% as of July from a low of about 4% in January, according to Goldman Sachs.”
“The problem with the U.S. economy is there are too many poor people…
“Until employment and wages increase, the U.S. economy will remain at best bogged down and at worst digging a deeper hole for all of us, our children and grandchildren.”
“Officers requested a “heat ray” weapon for possible use against protesters in a park next to the White House in June, a National Guard major has said.”
“Gardaí are increasingly concerned by the presence of far-right extremists at anti-mask rallies in Dublin and the possibility of serious violence breaking out at future events.”
“Police have made 32 arrests during a demonstration in central London against coronavirus restrictions and mass vaccinations.
“More than a thousand people are estimated to have joined the rally in Trafalgar Square, among them 5G conspiracy theorists, coronavirus sceptics and “anti-vaxxers”.”
“Speculation is mounting that the Bank of England could take interest rates into negative territory for the first time in history next year if the UK economy weakens further…
“…analysts zeroed in on a few lines within the MPC meeting minutes, showing negative interest rate policies were being prepared.”
“The UK’s largest nightclub operator, Deltic Group, has enough cash to last another two months. Its chief executive, Peter Marks, has doubts the company can survive much longer…
“While retailers, restaurants and other UK businesses were given permission to reopen weeks ago, nightclubs — with their sweaty dance floors and loud music — remain out of bounds.”
““The [health] system has already collapsed,” said Madrid-based paediatrician Natividad Gil García. “In the next two weeks, if we continue like this, it will definitely sink.”
“…Healthcare centres are on the frontline of containing the pandemic, an added burden to a basic pillar of care that in Madrid has seriously deteriorated since the economic crisis of 2008.”
“The Turkish lira weakened to a fresh all-time low against the dollar on Friday as investor attention focused on prospects for further central bank tightening steps ahead of its policy-setting meeting next Thursday.”
“If the Turkish economy collapses banks in Europe will fall…
“Spanish, French, British and German banks still have over a hundred billion dollars invested in Turkey… In particular, Spanish financial institutions should hope that the situation in Turkey will stabilize…”
“Hundreds of Israelis protested in Tel Aviv late Thursday against a second nationwide lockdown to combat Israel’s surging coronavirus outbreak.
““The economy is in free-fall, people are losing their jobs, they’re depressed,” said Yael, one of between 300 and 400 demonstrators at Habima Square.”
“Fitch Solutions has revised downward its forecast for fuel demand contraction in India to 11.5 per cent in 2020 in line with further deterioration in the country”s economic outlook…
“The domestic COVID-19 outbreak shows no signs of abating, with daily cases continuing to accelerate.”
“Across this nation of 1.3 billion people, companies say they are struggling to keep up with their loans…
India’s banks, too, are reeling from the pandemic… Banks already have bad loans of over $120 billion, much of it on the books of state-run lenders, which dominate India’s banking landscape, and the non-performing debt is set to surge in coming months.”
“Global box office slump a worrying sign for Indian film business.
“Marquee Hollywood productions Tenet and Mulan, which were being considered a litmus test for box office collections have churned lackluster numbers.”
“Soaring prices of agricultural products are stoking food-security jitters in China.
“According to the China’s National Bureau of Statistics, food prices went up by 13 percent in July, compared to the previous July; the price of pork rose about 85 percent.
“On a year-on-year basis, food prices have increased by 10 percent in 2020 — the price of corn is 20 percent higher and the price of soybeans, 30 percent.”
“The monsoonal showers did not stop them. Nor did the specter of 8,550 police officers, whose armed presence evoked violently crushed protest movements in Thailand’s past.
“Thousands of protesters gathered in Bangkok on Saturday, calling for change…”
“Police have arrested 16 anti-lockdown protesters and fined 21 others during “chaotic” scenes in Melbourne’s south-east in which demonstrators were chased by police on horseback.
“There was “a lot of running and not much protesting”, one photographer said.”
“Japan’s banks face fresh problem as pandemic casts pall…
“Japanese officials don’t mouth the words ‘Lehman Brothers’ often, and certainly not casually. One reason: few are more sensitive to the risk of a banking system shock that shakes the entire economy.”
“HSBC Holdings Plc slumped below its financial crisis closing low set more than a decade ago as pressures mount on several fronts, including political tension in Hong Kong, the fallout of the pandemic and renewed Brexit turmoil in the UK…
“Europe’s largest bank has been caught in a maelstrom of trouble over the past year amid unrest in its biggest market, Hong Kong. It also faces difficulties in navigating low interest rates and surging loan losses sparked by the global pandemic.”
“Global light vehicles sales are expected to fall by 20 per cent this year compared with 2019 following sales and production disruption due to the Covid-19 pandemic, S&P Global Ratings in a report published on Friday.
“”This new forecast follows a first-half 2020 sales slump of 25 per cent, an unprecedented shock for the global industry,” said S&P Global Ratings analyst Vittoria Ferraris.”
You can read the previous ‘Economic’ thread here and visit my Patreon page here. I’ll be back tomorrow with the climate news.
“The Federal Reserve boosted its monetary response to the pandemic, projecting no interest rate increases until at least the end of 2023 and indicating it would not tighten policy until inflation had been higher than 2 per cent “for some time”.
“The new guidance from the Federal Open Market Committee implements a shift towards a more dovish long-term stance that was endorsed by the Fed last month, and is likely to translate into rock-bottom interest rates for years to come.”
[The rate was 1.5 – 1.75% at the end of 2019, so hardly dizzying even then but, as with their newly tolerant position on inflation, this is an important announcement because it demonstrates that the Fed is prepared to throw out the rule-book to keep things ticking over].
“The World Trade Organization undercut the main justification for President Donald Trump’s trade war against China, saying that American tariffs on Chinese goods violate international rules.
“Still, the ruling failed to dissuade Washington of its ‘America First’ trade policy and will do little to alter the current trade environment.”
“Investment flows between China and the US fell to their lowest level in almost a decade in the first half of the year… Capital flows between the two countries amounted to $10.9bn in the first six months of 2020, lower than any period since 2011…
“US-China relations have fallen to their lowest point in decades following the coronavirus pandemic, which exacerbated frictions over trade and ushered in fears of a “cold war” chill between the world’s two largest economies.”
“Europe’s Economic Revival Is Imperiled, Raising the Specter of a Grinding Downturn:
“As the coronavirus regains force, economists fear that Europe’s tentative recovery is at risk from traditional political concerns [and a resurgence of Covid-19]…
““It’s hard to imagine a recovery that’s going to be strong and sustained given the current situation,” said Ángel Talavera, lead eurozone economist at Oxford Economics in London. “There’s not a lot of engines of growth.””
“One has to pity Christine Lagarde, the president of the European Central Bank (ECB). In its effort to revitalize the Eurozone economy and avoid deflation, the last thing that the ECB needs is a strong Euro.
“Yet the Euro has been strengthening, and there is little that the ECB can do to weaken the currency without creating another set of serious problems for itself.”
“Spain’s recovery from record recession will be slower than expected after a surge in coronavirus infections weighed on activity in the third quarter…”
In pictures, The eerie abandoned sites of modern Greece:
“The Covid pandemic signalled the death knell for countless Greek businesses, which were already struggling after ten years of economic crisis.”
“The head of macro strategies at Record Currency Management, which oversees $63bn in assets, is reportedly shorting government bonds of Spain, France and Italy—as well as the euro itself—on the expectation that Turkey’s market ructions will soon be felt on the balance sheets of European banks…
“The shares of Spain’s Banco Bilbao Vizcaya Argentaria (BBVA), which owns an almost 50% stake in Turkiye Garanti Bankasi, Turkey’s second-largest private bank, are down more than 50% in the year so far.”
“Moody’s Investors Service said it downgraded the ratings of 13 Turkish banks after recently revising Turkey’s sovereign bond rating to B2 from B1, with the negative outlook maintained.
“The outlooks on the long-term deposit and debt ratings of all the Turkish banks rated by Moody’s remain negative, in line with the negative outlook on the sovereign rating. The negative outlooks reflect the downside risks associated with a balance of payments crisis, which could lead to capital controls and restrictions on foreign currency outflows, the ratings agency said in a statement on Tuesday.”
“South African banks have made their rainy-day provisions. Now, they must wait and see whether the funds set aside will be enough to manage a potential torrent of bad debt…
“The country’s so-called “Big Four” experienced a profit slump deeper than that seen during the global financial crisis in the six months ended June…”
“Expect More Venezuelas in the Post-Peak Oil Era:
“The capitulation of independent oil producers to a future of weaker demand should be a wake-up call to governments. If BP and Shell find it harder to survive in a world after crude, life will be even tougher for Saudi Arabia and the UAE.”
“Cash-strapped Venezuela seeks deal with bondholders despite sanctions:
“Venezuela has missed more than $10 billion in payments to bondholders. Exports of oil – the country’s main source of foreign currency – are at their lowest levels since the 1940s.”
“Battered by worsening inflation, Sudan declared an economic state of emergency on 10 September, triggered by what it called a “systematic vandalism” of its currency.”
[Sudan derives most of its revenue from exporting oil.]
“Nigeria’s inflation rate, last placed at 12.82 percent in July, may soar to more than 14 percent by the end of December, the central bank has warned. This comes as Africa’s largest economy faces a rising government deficit and broader economic challenges amid the coronavirus outbreak.”
[As does Nigeria. Sudan, Nigeria and Venezuela have also been hammered by floods recently as our crises converge].
“Oil prices have plunged during the pandemic and the sector’s crisis could get worse as new investments are unlikely to flow in, experts said at an energy conference this week.
“Pandemic-related movement restrictions stopped people from commuting and traveling, drastically reducing oil usage.”
“The oil market has a diesel problem and it’s not letting up.
“While crude stockpiles in the U.S. are sitting at the lowest since April, supplies of distillates, which include diesel, heating oil and jet fuel, are continuing to swell and skyrocketed to the highest level for this time of year in U.S. government data going back to at least 1991.”
“Oil Tanker Industry Is In An Ocean Of Trouble…
“…much of the oil that traders and producers stored in the spring is still there, FreightWaves’ Miller noted. Off the coast of China, according to Kpler data, there are some 67 million barrels in storage alone. This means that the new demand for offshore storage will by necessity be limited, setting a ceiling on freight rates, too.”
“The coronavirus crisis cost the global tourism sector $460 billion in lost revenue during the first six months of 2020 as the number of people travelling plunged, the UN said Tuesday.
“Revenue lost between January and June amounted to “around five times the loss in international tourism receipts recorded in 2009 amid the global economic and financial crisis…””
“Private equity groups including TPG and Apax Partners are taking advantage of blockbuster demand for corporate debt by loading companies they own with fresh loans and using the cash to award themselves a bumper payday.
“So-called dividend recapitalisations have become a feature of the loan market in recent weeks, ringing alarm bells since they come on top of already high leverage and weak investor protections and against a backdrop of economic uncertainty.”
^^^This makes me so queasy I’m going to have to clumsily juxtapose it with this:
“A pandemic of suffering follows on the heels of Covid-19 in poor countries, and children suffer most.
““If you’re a day laborer and you’re told you can’t leave your shack one day, the next day you’ve got no income to buy food,” noted Mark Lowcock, the United Nations’ humanitarian chief. “I would bet my house that there’s going to be an increase in poverty head count, an increase in child mortality, an increase in maternal mortality.””
You can read the previous ‘Economic’ thread here and visit my Patreon page here. I’ll be back tomorrow with a ‘Climate’ round-up.
“As the world reels from the fiscal shockwaves of Covid-19, a new 26-country survey suggests that many people are perilously unprepared for a major economic jolt.
“According to the Organization for Economic Cooperation and Development’s 2020 International Survey of Adult Financial Literacy, 42% of the 125,787 adults polled reported worrying about meeting everyday expenses; 40% were concerned about their financial situation; and 37% reported they were just getting by.”
“As households struggle to make ends meet, more Americans have been forced to halt or raid their retirement savings in this coronavirus-induced recession.”
“A debt crisis looms as renters turn to credit cards to stay afloat.”
“Ever since the pandemic began closing down most American colleges, the rate of food insecurity among students has been rising — and it’s about to get much worse.”
“Gun sales… have continued to climb following widespread unrest in the country this summer. Many of these sales are from first-time gun owners, fearful of an uncertain future.”
“Economists warn of US ‘wasteland’ without stimulus deal – Hopes fade for $1tn or more in government aid for workers, businesses and local governments…
“The diminished chances of additional fiscal support have caused many economists to fret that the US rebound will lose steam in later 2020 or early 2021, creating a drag on the global economy as it tries to recover from the worst contraction since the second world war.”
“A Treasuries arbitrage strategy favored by hedge funds has fallen into near-hibernation, threatening liquidity in the world’s largest debt market…
“The fate of the trade has crucial implications for the $20 trillion Treasury market, with the Federal Reserve already buying billions of dollars of U.S. obligations to keep it functioning smoothly.”
“The debt treadmill that is the United States Treasury market is overheating. If you look closely, you can see the engine smoking now. Of course, the streets are littered with the bodies of traders that called the bond market top and lost.
“Nevertheless, here I’ll try to make the case from a mathematical standpoint that the US Treasury market could implode at any time now, and that only one final trigger is needed.”
“UK firms are not ready for the “triple threat” of fresh local lockdowns, the wind-down of government support and Brexit disruption, a leading business chief has warned.
“Ruby McGregor Smith, president of the British Chambers of Commerce (BCC) has written to prime minister Boris Johnson warning of a “difficult winter ahead” even without a resurgence of the coronavirus.
“The letter comes as new figures show employers have axed 695,000 staff since March…”
“British mortgage lenders are beginning to batten down the hatches for an oncoming spike in unemployment.
“HSBC Holdings Plc, Barclays Plc and Natwest Group Plc have tightened restrictions on home loans for risky borrowers as officials unwind pandemic-support efforts. Then there’s the renewed prospect of a no-deal Brexit, threatening to deepen what’s already the worst recession in centuries.”
“Britain is in the grip of a long-term and widescale decline in the networks and institutions that constitute its social fabric with people less likely belong to a local group, be debt free or trust civic institutions, according to a new study.”
“As I described in January, many economists were predicting the end of Germany’s recent “economic miracle” even before Covid-19…
“…it’s only when the tide goes out that you discover who’s been swimming naked. Germany can keeping pouring on money for a while longer, but it can’t prevent the ebb.”
“Europe’s Deep Economic Crisis Might Not Have a Solution… And that is a problem for the global economy. China, India and other emerging economies depend on Europe’s ability to import their goods for growth.”
“Turkey had its debt rating cut deeper into junk by Moody’s Investors Service, which warned of a possible balance-of-payments crisis in assigning the lowest grade it’s ever given to the country…
“”Turkey’s external vulnerabilities are increasingly likely to crystallize in a balance-of-payments crisis,” London-based Moody’s analysts Sarah Carlson and Yves Lemay said in a report Friday.”
“Small businesses fear collapse as Israel heads into second lockdown – “I still haven’t decided what I’m going to do, but many businesses on my street have already said they plan to open because if they don’t, they’ll go under,” said the owner of a store on Tel Aviv’s Ibn Gabirol Street.
““The government doesn’t understand that businesses will fail. Another month like this, it’ll all be over.””
“…Modi imposed a draconian lockdown in late March with no warning and no planning. The prime minister seemed to revel in the drama of a primetime announcement and its muscular message.
“But the national shutdown, which ended in June, destroyed millions of people’s livelihoods. Many of the most affected sit on the bottom rungs of Indian society…”
“China’s retraining campaign offers scant prospects for the unemployed.
“Critics said the programme had failed to meet the needs of the market because of a lack of investment in the initiative as well as the ineffective state-dominated professional certification system.”
“The Asian Development Bank (ADB) says the Covid-19 pandemic has pulled the region’s developing economies into recession.
“It is the first time in six decades that “developing Asia” – a designation that includes 45 countries – has seen a regional slump.”
“Bond investors in three of Asia’s biggest emerging markets are starting to push back against record increases in government borrowing, an ominous sign for policy makers…
“As governments globally sell sovereign bonds faster than central banks can buy them, the warning signs from Mumbai to Seoul underscore the challenge to markets everywhere from ever-increasing debt.”
“As tensions increase at the border between India and China, what is more, concerning is the economic collapse out of the rivalry relationship between the two nuclear-armed countries.
“This is because the economic relationship between the two neighbors is too profound to be overlooked.”
“Countries coping with the coronavirus crisis and a slump in commodities prices are dipping into sovereign wealth funds for more than $100 billion, and that figure could swell as budget pressures mount for some emerging markets.”
“Oil-rich Gulf nations are relying on a well-worn playbook of spending less and borrowing more to get through the coronavirus crisis but with the outlook for oil clouded by uncertainty the strategy is riskier than before.”
“The economic hit from the coronavirus pandemic will hurt global energy demand harder and for longer than previously feared, the Organization of the Petroleum Exporting Countries said Monday.
“In its monthly report, OPEC said it expects the pandemic to reduce demand by 9.5 million barrels a day, forecasting a fall in demand of 9.5% from last year.”
““SIDS (small island developing states) are sinking, and it’s not due to just the sea level rise and climate change. We are actually sinking in debt,” she said.
““COVID and the collapse of the tourism sector – basically, they just pushed us over the edge.”
“In a statement on debt, released in late June, AOSIS members said their economies – many of them reliant on tourism for up to 40% of GDP – were “in freefall”.”
“Credit investors are unconvinced about the ability of the world’s weakest lenders to weather a coronavirus economic slowdown, according to Bank for International Settlements.”
“COVID-19 containment measures weighed heavily on economic activity in the second quarter of 2020, with unprecedented falls in real gross domestic product (GDP) in most G20 countries.
“For the G20 area as a whole, GDP dropped by a record (minus) 6.9%, significantly larger than the (minus) 1.6% recorded in the first quarter of 2009 at the height of the financial crisis.”
“The next subprime crisis could be in food:
“Of all the many problems caused by Covid-19, three of the most visible have been food insecurity, the demise of small businesses and asset market volatility…
“The problem is like a gigantic iceberg under the surface of financial markets, one that we can’t yet see but are nonetheless headed for…”
“The number of incidents of violence against journalists covering protests across the world has risen sharply, with police and security forces the main culprits, the United Nations cultural agency has said…
“…the spike came as part of “a wider upward trend in the use of unlawful force by police and security forces over the last five years”.”
You can read the previous ‘Economic’ thread here and visit my Patreon page here. I’ll be back tomorrow with a climate round-up.
“The threat of a turbulent US presidential election is raising the pressure on companies to load up on cheap debt as bankers warn that disruption to financial markets could deny them access to funds on favourable terms…
““The November 3 election is “about as clear a risk factor as you have going into year-end,” said Jonny Fine, head of investment grade debt syndicate at Goldman Sachs.”
“Chicago historian Rich Lindberg went further, saying that COVID-19 might be a more severe crisis than World War II, when at least the country was united and the struggle was infused with meaning.
“Partisan division is at perhaps its the highest level since the Civil War, he said, with extremism on both sides, a lack of faith in public institutions and a looming sense of dread.”
“The amount of money investors are recovering from companies that default on their debt has fallen at a sharper rate this year than during previous credit cycles, potentially heralding a structural shift in debt markets, according to a new report from Barclays.
“CDS recoveries have sunk “alarmingly” to an all-time low of nine cents on the dollar in recent months…”
“The pandemic recession plunged dozens of large American companies into bankruptcy this summer. Countless more are on their way.”
“For millions of Americans this week, a temporary $300 bump in their unemployment checks will be their last.
“Funding for President Donald Trump’s $300 unemployment benefits is starting to run out, leaving nearly 30 million people on unemployment benefits with only a fraction of their past wages.”
“If the costs of living [in the US] these days seems to be rising faster than the official 1.3% inflation rate, there’s a reason.
“The annual inflation rate for Covid-connected purchases is 1.85%, or a half percentage point higher than the Consumer Price Index, according according to Harvard Business School professor Alberto Cavallo.”
“Britain’s economy recovered half of its COVID-19 crash by the end of July, helped by pubs and restaurants reopening from lockdown, but the bounce-back is expected to slow as job losses mount and Brexit tensions rise.”
“The French police fired tear gas and arrested more than 250 people in Paris as “yellow vest” protesters returned to the capital’s streets in force for the first time since the coronavirus lockdown…
“Some of the protesters wore black clothes and carried the flag of an anti-fascist movement, suggesting the presence of radical demonstrators dubbed “black blocs” often blamed for violence at street marches in France.”
“The tourists are leaving Italy. Now catastrophe looms… All Italian cities are expected to be significantly impacted, particularly those more dependent on international visitors like Venice, Florence and Rome…
“Fears of a second wave appear to have dashed earlier projections of a September and October tourism revival.”
“Greece’s president will head to a tiny island that is at the heart of the country’s bitter dispute with Turkey on Sunday as Recep Tayyip Erdogan, Turkey’s authoritarian leader, threatened to resolve the two nation’s differences “on the battlefield…
“While speaking in Istanbul, he issued another threat towards Greece, referring obliquely to the 1923 Treaty of Lausanne…”
“Riot police fought running battles with opposing groups of protesters near Beirut’s Presidential Palace on Saturday after rights activists clashed with rival demonstrators chanting their support for President Michel Aoun.
“Clashes erupted after activists marking the 40th day since the deadly Beirut port explosion on Aug. 4 were confronted by Free Patriotic Movement supporters who tried to break through a security blockade.”
“Anti-Shiite protesters march for second day in Karachi –
“Tens of thousands of anti-Shiite protesters including demonstrators linked to Sunni extremists rallied in Pakistan’s Karachi on Saturday, in the second day of protests that have sparked fears of sectarian violence.” [Photos]
“Virus pushes world’s biggest job program to brink in India – Rathod is vying for work under the world’s largest jobs programs: The only option for the millions of migrant workers who face mass job losses in a struggling economy and a raging pandemic.
““If there were 15 people for a job earlier, now there are 200. Work for eight days is getting done in one day,” Rathod, 45, said from Nawabganj in Uttar Pradesh.”
“Scores of people protested in Benghazi on Thursday over power cuts and living conditions, witnesses said, burning tyres and blocking some roads in an unusual public show of dissent in the eastern Libyan city.”
“Nigerian police Thursday dispersed and arrested protesters decrying the recent hike in petrol prices and electricity tariff in the suburban city of Ojuelegba, Lagos, local media reported.
“This comes as a series of demonstrations against the increase in petrol prices and electricity tariff has reportedly hit different parts of the oil-rich country…”
“Violent clashes have erupted in Colombia’s capital following the death of a man in police custody, with angry citizens setting fire to city buses, vandalising police stations and squaring off with officers in confrontations that killed at least nine people.”
“After reviving crude prices from an unprecedented collapse over the spring, OPEC+ is seeing the recovery stall and fuel demand falter as the deadly pandemic surges once again. Prices slipped below $40 a barrel last week for the first time since June.
“On Thursday, Saudi Arabia and Russia — the leading members of the alliance — will chair a monitoring meeting to assess whether the vast production cuts, which they started easing in August, are still staving off an oil glut. New signs of exporters reneging on the deal are not helping.”
“The United Nations Industrial Development Organisation (UNIDO) has projected a gloomy outlook for the global manufacturing industry, saying it was set for its biggest collapse in decades, by year-end.”
[2019 wasn’t so hot either with manufacturing in contraction for much of the year.]
“…with the world economy expected to contract nearly 5 percent this year, households are cutting back sharply on spending. Among those who went into the pandemic in extreme poverty, hundreds of millions of people are suffering an intensifying crisis over how to secure their basic dietary needs.”
You can read the previous ‘Economic’ thread here and visit my Patreon page here. I’ll be back tomorrow with a climate round-up.
“IMF Managing Director Kristalina Georgieva and chief economist Gita Gopinath said the ongoing economic recovery from the crisis was the result of the rapid implementation and unprecedented scale of government and central bank support, but more efforts would be needed.
““The recovery remains very fragile and uneven across regions and sectors. To ensure that the recovery continues, it is essential that support not be prematurely withdrawn,” the two economists wrote in the essay.” [À propos of nothing, looks rather messianic in that picture, doesn’t she?!]
“Amid the gloom of the coronavirus recession, even the good economic news tends to be bad. Take productivity. Its growth is soaring to rates not seen in half a century. Wage growth is accelerating, too. Normally, this would be a cause for celebration…
“Average wages aren’t growing because individual workers are getting raises. Instead, they are growing because so many low-wage workers have been laid off.”
“…small-business owners across DC were buoyed for months by an influx of funding from federal and local government programs and propelled by hope that gradual reopenings would breathe new life into their storefronts.
“But as summer stretched on, sales sputtered and pandemic-relief grants ran dry. Now, as Congress squabbles over how to help the millions of struggling businesses nationwide, owners of small firms across DC are left teetering on the edge of financial ruin.”
“This is… a more perilous phase for the US economy. In March and April, policymakers pulled out all the stops to staunch the economic bleeding. But there will be less policy support now if the economy again goes south.
“Although the Federal Reserve can always devise another asset-purchase programme, it has already lowered interest rates to zero and hoovered up many of the relevant assets.”
“Speaking to the Financial Times, the European Central Bank (ECB) said that the central bank will deepen the pressure on the big European banks, asking them to prepare for Brexit once again as the summer draws to an end.”
“The UK and EU are to hold emergency talks later as tensions rise over Boris Johnson’s move to override key parts of the Brexit withdrawal agreement. Cabinet Office Minister Michael Gove will meet EU official Maros Sefcovic in London to discuss how the development could affect the island of Ireland.
“The EU says it wants “clarifications” on the implementation of the agreement.” [No idea what Johnson’s government thinks it is going to accomplish with this gambit, which unfortunately makes us look very underhanded].
“Nearly 125,000 retail jobs have been lost in the UK in the first eight months of this year, according to a fresh estimate, as major chains including Debenhams, Marks & Spencer joined independents in shutting stores.
“As many as 13,867 shops have closed permanently, including thousands of small stores employing 32,598, the Centre for Retail Research (CRR) said.”
“The chief executive of UK-based low-cost carrier EasyJet has warned that the lack of government support targeted at the airline industry is threatening the sector’s long-term competitiveness…
““This is the last chance to save the UK airline industry and ensure it is as vibrant and competitive after Covid as it was before,” he states. “I hope the Government takes it.””
““Continuing the trend of the past few weeks, the number of (global) scheduled flights operated this week is 47% below the number operated for the same week last year,” aviation data firm OAG said in a statement.”
“Two months into China’s fastest stock rally in years, and the days of making easy money are ending…
““Turnover and liquidity conditions are not aligning in the best place for the market right now,” said Shen Zhengyang, an analyst at Northeast Securities Co. “We’re halfway through a correction.””
“As the Covid-19-induced economic slowdown deepens, Indian banks have been preparing for the worst. But what they are considering worst might still be conservative…
“…analysts believe bad loans could eventually be much higher than the buffer created by banks so far.”
“Perez is one of more than 100,000 nurses in Venezuela who are struggling to make ends meet on salaries that have been decimated by rampant inflation, while also facing a heightened risk of contracting the coronavirus in a country where medical staff lack protective equipment and even running water.”
“South Africa faces a precipitous economic and political collapse by 2030 unless it changes its economic model…
“The economic impact of recurrent power cuts, rising unemployment and the loss of the last investment-grade rating on South Africa’s debt have only been exacerbated by the coronavirus outbreak.”
““When you have lost your leg, your home, your stability and certainty, nothing matters anymore. What else do you have to lose?”
“Refugees in Lebanon are struggling to cope with the deteriorating economic crisis, made worse by the pandemic. “
“Thousands of people urgently require emergency shelter and aid after a fire destroyed Europe’s largest refugee camp, on the Greek island of Lesbos.
“As the Athens government declared a state of emergency and a delegation of officials rushed to the north-eastern Aegean island, the sheer scale of devastation wrought by the overnight blaze became increasingly evident.”
“Act now to help more fragile countries weather the coronavirus crisis, or pay a far greater price later, the UN’s humanitarian chief has warned rich countries and global financial institutions.
“Lambasting the “tepid” response seen so far, Sir Mark Lowcock told The Telegraph that not taking more action now would lead to more poverty, starvation and child death across the world – the perfect conditions for conflict, insecurity and extremism to thrive.”
“Financial markets are being pulled in different directions by two big forces: the injection of liquidity from central banks and concerns over a “second wave” of Covid-19 infections. Daily news headlines can lead us to believe that, of the two, coronavirus is the dominant force for markets.
“The coming months are likely to show that it is not. Investors should back central bankers to win this tug of war, and set up their portfolios accordingly.”
[Says the FT]
[The Washington Post begs to differ]
“Jerome Powell, chair of the Fed, has repeatedly said that his institution can’t keep equity and debt assets propped up if the economy continues to deteriorate.
“Businesses are still going bankrupt. Low- and moderate-income renters who are unemployed are preparing to fight evictions in the coming months, as moratoriums end. And workers in industries hardest-hit by the pandemic — think airlines and big hotel chains, among others — who initially kept their jobs are now joining the ranks of the unemployed.
“Amid all this, one thing remains clear: For Wall Street, too, there will be a reckoning.”
You can read the previous ‘Economic’ thread here and visit my Patreon page here. I’ll be back tomorrow with some more climate news.