3rd March 2021 Today’s Round-Up of Economic News

China’s top banking regulator said he’s “very worried” about risks emerging from bubbles in global financial markets and the nation’s property sector, sparking fresh concerns about further tightening in the world’s second-biggest economy. Stocks dropped across Asia…

“China’s financial regulators are walking a fine line of trying to curb risks at home while limiting disruptions from abroad as the economy opens wider to foreign capital.”


Beijing’s decision to crack down on excessive borrowing by property developers was clearly driven by concerns that towering debt levels could undermine financial stability…

[But] by cracking down on borrowing by property developers, Beijing has created another problem – it has cut off an important source of funding for local governments, many of which are also carrying hefty debt loads.”


Bitcoin’s 300% price surge since October has revived China’s grey market in cryptocurrency trading, putting regulators on alert over financial risks and capital outflows as volatility spikes.

“China shut down its local cryptocurrency exchanges in 2017, smothering a speculative market that had accounted for 90% of global bitcoin trading.”


China on Monday denied accusations by Taiwan that a ban on pineapples from the island was about politics, saying it was purely a matter of biosecurity, in an escalating war of words that has added to existing tensions…

“Taiwan, which China claims as its own territory, says there is nothing wrong with its pineapples and that Beijing is using the fruit as another way to coerce the island.”


President Joe Biden’s administration will use “all available tools” to fight China’s unfair trade practices, said a report released by the Office of the U.S. Trade Representative.

“The report outlined the new U.S. administration’s trade agenda, including how it will address challenges posed by China.”


McConnell Says Republicans Will Fight Biden’s $1.9 Trillion Stimulus Bill ‘In Every Way That We Can’:

“During a Tuesday press briefing, McConnell described the package as “wildly expensive” and “largely unrelated to the problem,” echoing consistent criticism from the GOP that the bill contains unnecessary provisions… and carries a price tag that is much too steep.”


British finance minister Rishi Sunak plans to say in a budget speech on Wednesday that he will do “whatever it takes” to support the economy, and that the task of fixing the public finances will only begin once the country is recovering from the COVID-19 crisis…

Britain has suffered the biggest COVID-19 death toll in Europe and the heaviest economic shock among big rich countries…”


German exports to Britain plunged in January, as the downward trend since the country voted to leave the European Union gathered pace.

“Already curtailed by the economic impact of the coronavirus, Brexit helped trigger a nearly 30% slump in German exports to the U.K. in the first month of the year…”


The crisis engulfing Greensill Capital, a controversial bank that employs former UK prime minister David Cameron, mounted on Tuesday night when it emerged that Germany’s financial watchdog has taken direct oversight of operations at a local subsidiary of the London-based lender.

“Greensill Capital is seeking insolvency protection in Australia and a rescue deal with new and existing backers, after two Swiss banks announced they were closing funds linked to the business over concerns about its true value.”


Banks in Germany Tell Customers to Take Deposits Elsewhere: The banks say they can no longer absorb the negative interest rates the European Central Bank charges them. The more customer deposits banks have, the more they have to park with the central bank.

“That is creating an unusual incentive, where banks that usually want deposits as an inexpensive form of financing, are essentially telling customers to go away.”


Weak jobs and retail data point to double-dip eurozone recession:

“Spanish unemployment has hit a five-year high and German retail sales tumbled for the second month in a row, reinforcing economists’ expectations that restrictions to contain the coronavirus pandemic will drag the eurozone into a double-dip recession.”


Poorer countries need more global assistance: The global response to coronavirus has left much to be desired…

“…rich countries… have focused first on protecting their own citizens and only then on initiatives — however welcome — such as a G20 debt suspension drive and the WHO-backed Covax programme of vaccine distribution.”


Food Security in the Middle East During the Covid-19 Pandemic: From Bad to Worse.

“Many Middle Eastern countries were experiencing heightened levels of food insecurity even before the Covid-19 pandemic. Economic shocks related to regional and global lockdown measures, and conflict in some parts of the region have further reduced food security.”


Protesters blocked roads with burning tyres and dumpsters across Lebanon on Tuesday after the currency tumbled to a new low in a financial meltdown that has fueled poverty

“Crushed under a mountain of debt, Lebanon is grappling with a financial crisis that has wiped out jobs, raised warnings of growing hunger and locked people out of their bank deposits.”


A global microchip shortage is plaguing the entire cell phone manufacturing, as well as hitting personal computer making and car production… the chip shortfall is likely to last for months.

“A growing chorus of mobile phone vendors warned in recent weeks they cannot access enough chips to make their products.”


No way out of QE policy dead-end: Central banks are stuck with the wrong assets they bought during quantitative easing…

“What started as a temporary measure to provide some relief to distressed financial markets has become a long-term intervention in bond markets. Astonishingly, over a decade after quantitative easing was launched, no major central bank appears to have sold outright any of the bonds that they have bought.”


Australia’s treasurer warns global stimulus threatens financial stability:

“Australia has warned that unprecedented global stimulus efforts during the coronavirus pandemic are creating financial stability risks that will only intensify when interest rates inevitably rise.”


Derivatives helped trigger some of the most disastrous episodes in the history of finance. Now risk-averse institutional investors are increasingly turning to them for protection amid a perilous time for global debt markets.

“All manner of complex solutions, from put options to receiver swaptions, are gaining traction as a way to overcome the drawbacks of bonds as a hedge after debt failed to insulate portfolios at key moments last year.”


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1st March 2021 Today’s Round-Up of Economic News

Global food prices are going up, and the timing couldn’t be worse. In Indonesia, tofu is 30% more expensive than it was in December. In Brazil, the price of local mainstay turtle beans is up 54% compared to last January. In Russia, consumers are paying 61% more for sugar than a year ago.

“Emerging markets are feeling the pain of a blistering surge in raw material costs, as commodities from oil to copper and grains are driven higher by [IMO ill-founded] expectations for a “roaring 20s” post-pandemic economic recovery as well as ultra-loose monetary policies [plus shipping and and climate disruptions].

“Consumers in the U.S., Canada and Europe won’t be immune either as companies — already under pressure from pandemic-related disruptions and rising transport and packaging costs — run out of ways to absorb the surge…

“While never welcome, the coming round of food inflation will be especially tough. As the pandemic wrought havoc on the global economy, it ushered in new concerns about hunger and malnutrition, even in the world’s wealthiest countries”


The U.S. House of Representatives passed, by a vote of 219–212, a $1.9 trillion COVID-19 relief package early Saturday morning that includes $1,400 stimulus checks to individuals, an extension of unemployment benefits, and tens of billions in aid for small businesses and not-for-profits.

“The bill, titled the American Rescue Plan Act of 2021, H.R. 1319, also includes phased increases in the minimum wage that would bring it to $15 an hour by 2025.”


There was quite a spike in interest rates the last week of February with the 10-Year T-Note spiking from a 1.36% level as of the close on Wednesday to as high as 1.60% intraday…

“The immediate cause of the rate spike was the worst 7-year Treasury auction on record (i.e., the lowest bid to cover ratio). Notable was the lack of any Japanese participation, likely Chinese too. And with the upcoming massive “stimulus” package that passed the House of Representatives early Saturday morning, markets are seeing massive new debt that is likely to cause indigestion unless the Fed steps in with new rounds of QE.


In the past fortnight, and especially last week, global money markets have cratered and interest rates have soared. For many, it’s a shrug-your-shoulders incident, an obscure and esoteric event that has little bearing on everyday life.

“Except it isn’t. What has just occurred could have a profound impact on our future. It has the potential to delay and possibly derail the economic recovery now underway across the developed world. And, if it continues, it will wreak havoc with global stock markets during the next few months.”


Coal terminal facing export slump amid Australia-China trade bans:

“Australia’s coal producers have been hit hard since COVID-19 restrictions slashed demand for the commodity and worsening diplomatic ties between Canberra and Beijing led to China unofficially black-listing Australian coal imports.”


The value of Chinese investment in Australia collapsed last year in the face of tougher scrutiny by Canberra, a breakdown in bilateral relations and a global downturn in foreign investment owing to the pandemic.

“New data show Chinese investment fell 61 per cent to A$1bn (US$780m) in 2020, down from A$2.6bn a year earlier and a peak in 2016 of A$16.5bn.”


China’s exporters hit by global shortage of shipping containers:

“The surge in exports from China to the west, combined with disruption at ports due to coronavirus, has left many containers out of position, resulting in queues of ships outside ports and soaring freight rates. The Chinese media have dubbed it “a single box is hard to find”.”


The Caixin China General Manufacturing Purchasing Managers’ Index (PMI), which gives an independent snapshot of the country’s manufacturing sector, fell to 50.9 in February from 51.5 the previous month, according to a report published Monday.

“…the pace [of growth] slowed for a third consecutive month.”


A Chinese property developer backed by the country’s largest insurance group has defaulted on a $530m bond in the latest test for the country’s debt-laden real estate sector and the international investors backing it.

“The failure of China Fortune Land Development to repay the bond, investors in which include BlackRock and HSBC, comes against a backdrop of mounting pressure from Beijing on China’s biggest developers to reduce their debts.”


Chinese Super League in disarray as champions Jiangsu cease operations: Chinese football was thrown into disarray on Sunday as the owners of reigning Chinese Super League champions Jiangsu FC announced the club would cease operations with immediate effect…

“The Jiangsu announcement comes days after Chinese FA Cup winners Shandong Luneng had their expulsion from the Asian Champions League confirmed by the Asian Football Confederation due to “overdue payables”.”


Should the rich pay for the pandemic? Argentina thinks so. Other countries are taking a look.

“At his colonial-era estate in central Argentina, Gabriel De Raedemaeker says he’s already calculating what parts of his farm he might need to sell. It’s not that crops have failed or commodity prices are ailing. It’s the government’s new tax on wealth.”


Severe weather, culture clashes, hunger: Venezuelan migrants’ perilous journey to Chile.

“Venezuelan migrants trek on a mountain road crossing the high-altitude Chilean Altiplano and the Atacama Desert, considered the driest place on earth. The migrants face not only severe weather, but also a “culture clash” with local populations.”


Thousands of Haitians protested Sunday in Port-au-Prince and several provincial towns against a spike in kidnappings by gangs, as well as accusing the president of establishing a new dictatorship.

“Earlier Sunday in the capital city, a 63-year-old pediatrician was murdered in front of his clinic by unidentified assailants who had sought to abduct him, neighbouring residents told local media.”


Protests over the jailing of a Spanish rapper in a highly contentious free speech case turned violent again, after a brief respite, in the city of Barcelona where a police van was torched, and looting broke out on Saturday.

“Spain has been hit by widespread demonstrations since police jailed rapper Pablo Hasel on February 16. Several thousands of people marched peacefully on Saturday before small groups of people spun off and engaged in acts of vandalism.”


Clashes have erupted between Athens police and protesters supporting a jailed far-left hitman, who was hospitalized after a long hunger strike. Officers deployed irritant gases in an attempt to muscle the mob into a metro station.

“Scuffles between dozens of left-wing protesters and law enforcement erupted in central Athens on Friday.”


Algeria’s political protests poised to grow as economic crisis bites:

“The glue holding Algeria together is no longer binding. The country’s finances have been hit hard by low oil prices and the regime is unable to buy social peace as the currency, the economy and public services crumble further fueling the pro-democracy protests known as the Hirak.”


Tunisia: Thousands protest amid political standoff.

“A spat among Tunisia’s president, prime minister and parliament has brought the government to a grinding halt as the country battles COVID and an economic recession.”


Police in Kazakhstan detained dozens of protesters on Sunday (Feb 28) who were calling for the release of political prisoners in line with a resolution passed by the European Parliament.

“Government opponents were attempting their first protest since the resolution called for the European Union to prioritise rights in its relations with Kazakhstan, saying there had been a “worrying deterioration” in the oil-rich country.”


At least 21 protesters were injured Saturday in demonstrations in the provinces of Zikar and Najaf [Iraq].

“Fifteen demonstrators and six security officers were injured during the rallies in the two provinces as protests continue in Zikar for a sixth straight day because of a lack of public services.”


Last month, Malaysian authorities seized a Pakistan International Airlines Boeing 777 plane, with passengers still on board, at Kuala Lumpur airport for not paying leasing fees worth $15 million.

“The embarrassing incident became the subject of memes, derision, and despair in Pakistani media circles. Awkward as the incident was, the unpaid leasing fees are just the tip of the iceberg and Pakistan’s debt problem has been in the making for some years now.


Dozens were injured on Sunday as Bangladeshi police fired rubber bullets and tear gas at opposition activists to prevent new protests over the death of a writer in jail, police and a party official said.

“Live footage from local television station Channel 24 showed a road and footpath in front of the National Press Club — a favourite protest site in the capital Dhaka — turning into a battleground as police beat protesters with batons to disperse them.”


Police have fired on protesters in Myanmar killing at least 18, the UN human rights office says, on the deadliest day of anti-coup rallies.

“Deaths were reported in several cities including Yangon, Dawei and Mandalay…

“….police used live rounds and tear gas.”


The IMF no longer functions as the world’s safety net: The fund has deployed just 10% of its capacity during the pandemic, though it says it is ‘ready to help’…

“This begs the question, does the IMF provide help no one wants any more?


Economic devastation caused by the coronavirus pandemic is driving up hunger in fragile countries and threatening famine, Britain’s leading aid charities have warned.

“Thousands are likely to die this year as the knock-on effects of the world’s 15-month-long struggle against Covid-19 have left people unable to afford food.”


You can read the previous ‘Economic’ thread here. I’ll be back tomorrow with a ‘Climate’ thread.

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26th Feb 2021 Today’s Round-Up of Economic News

Democratic lawmakers and advocates are urging Joe Biden to back legislation proposing unprecedented investment in America’s ailing water infrastructure amid the country’s worst crisis in decades that has left millions of people without access to clean, safe, affordable water.

Boil advisories, leaky lead pipes, poisonous forever chemicals, bill arrears and raw sewage are among the urgent issues facing ordinary Americans

The majority of water and wastewater systems nationwide are also unprepared to cope with the climate crisis which is causing increasingly frequent unpredictable extreme weather events like the Arctic freeze that disrupted water and energy supplies across Texas last week.”


The Texas electricity crisis last week has morphed into a credit crisis in the state’s wholesale power market, where participants have begun defaulting on a portion of the $50bn in energy purchases made during record cold weather, according to an update from the grid operator…

“The extent of the potential liquidity crisis will become clear as more invoices are sent out.”


Biden is already backtracking on his promises to provide student debt relief… Let’s be clear about another thing. Biden absolutely has the legal authority to use executive power to cancel all federal student debt…

“As he rambled on, Biden gave the distinct impression that he preferred not to have the power to do so. That way he could blame Congress should his campaign promises go unkept.”


Powell pulls his punches on benefits of more fiscal stimulus: As the pandemic ravaged the US economy in 2020, Jay Powell publicly pushed Congress to approve more government stimulus to support the recovery and complement the central bank’s easy money policies.

“But in recent weeks, the Fed chair has switched to a more neutral stance on the need for more fiscal support, just as US President Joe Biden and Democratic lawmakers are trying to approve an additional $1.9tn in government spending.”


The Federal Reserve says its Fedwire Funds, Fedcash and some check clearing services have resumed normal operations after a more than three-hour disruption to more than a dozen critical central bank payment services forming the backbone of the U.S. banking system

““Our technical teams have determined that the cause is a Federal Reserve operational error,” the Fed said on Wednesday on its website.”


US President Joe Biden is to order a review of strategic supply chains in the pharmaceutical and electronics industries.

“He wants to identify areas in which the US is too dependent on other countries – a problem exposed by the Covid-19 pandemic.”


China has accused Australia of being part of an “axis of white ­supremacy” because of our intelligence alliance with Canada, New Zealand, the United Kingdom and the United States.

“In its state-run media mouthpiece – the Global Times – Beijing said the alliance, known as Five Eyes, was taking co-ordinated action against China. “They have formed a US-centred, racist, and mafia-styled community, wilfully and arrogantly provoking China and trying to consolidate their hegemony as all gangsters do,” the tabloid wrote.”


Chip shortage leads Japan automakers to post 4.5% slump in January global output.

“Global production at Japanese automakers including Honda Motor Co slipped 4.51% in January from last year as a widespread chip shortage forced the industry to cut production.”


JPMorgan warns that a consumer credit crisis could derail India’s economic recovery

“A major risk to India’s economic recovery is that millions of households and small businesses may potentially be cut off from the credit they need, according to JPMorgan’s chief emerging markets economist.”


Andrew Bailey has warned the European Union against mounting a raid on the City of London, saying the Bank of England will “resist very firmly” any moves by Brussels to force financial trading worth trillions of pounds to relocate following Brexit

“Bailey said steps forcing the relocation of euro derivatives clearing away from the UK would represent a “serious escalation”.”


“After more than a decade of balance sheet expansion the Bank of England is now sitting on £739bn of gilts, equivalent to 35% of the UK’s national debt. The BoE’s current programme of purchases will take it to £875bn…

The real question is how the BoE should manage its record-size balance sheet in an environment of high government debt.


Merkel’s coalition bickers over ‘wise men’ leadership and rising debt:

“A bitter row has broken out between Angela Merkel’s coalition partners over who to appoint as chair of the powerful economic council that advises the government, in a sign of rising political tensions ahead of parliamentary elections.”


Prime Minister Pedro Sanchez announced an extra 11 billion euro ($13.4 billion) package on Wednesday to help Spain’s small and mid-sized companies and the self-employed cope with the economic crisis…

“A government source said the plan, whose contents were still being discussed with the Bank of Spain and the banking sector, would include haircuts for state-backed loans and recapitalisations of SMEs.”


Rich countries’ governments borrowed $18 trillion from bond markets in 2020—more than ever before—but their borrowing costs hit a record low, due to a big rise in bond purchases by central banks, as well as a lack of concern about public debt levels among private investors.

The jump in government bond sales during the first year of the coronavirus pandemic was almost twice that recorded when the global financial crisis struck.


Developing nations at risk of debt crisis due to Covid-19: World Bank head:

“A debt crisis is a prominent risk for some of the countries at the bottom, and that has to do with the difficulty of getting new investment: David Malpass.”


Lebanon’s economic meltdown is not just leaving gaping holes in state coffers, with thieves now plucking Beirut’s manhole covers for scrap.

“Governor Marwan Abboud told AFP Wednesday that soaring poverty had led to a spike in the theft of manhole covers, because “they are made out of cast iron which has become much more expensive.””


Inflation worries have flared as Congress pushes forward with a $1.9 trillion fiscal relief package amid rising commodity prices and long-term interest rates

“[But] what’s needed is more production of the goods in the economy that are in short supply right now, not cutting off the flow of funds that supports that production.”


One of the most powerful US bond managers has warned of an “inflation head fake”, where misplaced concerns about a rise in consumer prices cause a jump in bond yields.

“The comments by Dan Ivascyn, chief investment officer at Pimco, which has $2.2tn under management, come after long-dated US Treasury yields climbed to their highest level in a year.”


While oil’s dizzying collapse is still fresh for many traders, rumblings are starting to emerge that by the end of next year prices could once again top $100 a barrel.

“Azerbaijan’s Socar Trading SA predicts global benchmark Brent could hit triple digits in the next 18 to 24 months, and Bank of America sees potential spikes above $100.” [We need to hope not as oil prices over $100 p/b are potently recessionary and oil price spikes can puncture debt bubbles, of which we have a few rather large ones.]


You can read the previous ‘Economic’ thread here. I’ll be back over the weekend with a ‘Climate’ thread.

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24th Feb 2021 Today’s Round-Up of Economic News

World risks collapse of everything: climate shocks such as record high temperatures and a “new normal” of wildfires, floods and droughts, are not only damaging the natural environment, said UN chief António Guterres, but also threatening political, economic and social stability.

““The science is clear: we need to limit the global temperature increase to 1.5 degrees by the end of the century,” the Secretary-General said.”


Federal Reserve Chair Jerome Powell, pushing back on suggestions that loose monetary policy risked unleashing inflation and financial risks in what may be an emerging economic boom, said the central bank would keep its attention focused on getting Americans back to work as a vaccine-related recovery proceeds…

“…Powell did not talk about the risks of rising bond yields or a possible spike in inflation, but of the roughly 10 million jobs still missing compared to a year ago, and the need for the U.S. central bank’s policy to stay wide open until that is fixed.”


US Consumer Demand Snaps Back. Factories Can’t Keep Up:

“Without restaurants to visit and trips to take, Americans bought out stocks of cars, appliances, furniture and power tools. Manufacturers have been trying to catch up ever since. Nearly a year since initial coronavirus lockdowns in the U.S., barbells, kitchen mixers, mattresses and webcams are still hard to find.

“A global shortage of semiconductors has forced many car makers to cut production in recent weeks.”


European producers are passing increased enter prices on to their prospects, sending eurozone inflation to its highest level for nearly a year as shortages of supplies and hovering delivery prices disrupt supply chains.

“Efforts to cushion rising prices are pushed by the sentiment that supply chain bottlenecks are unlikely to ease within the brief time period, based on business and delivery executives. More costly manufactured goods are in turn fuelling expectations of an extra surge in inflation, which Germany’s central financial institution is already warning will attain its highest degree since the 2008 monetary disaster by the end of this year.”


Thousands of European manufacturers have been hit by a surge in the price of polymer resins used to make plastic, which has risen to six-year highs because of strong demand and a slump in supplies.

“If prices remain elevated, extra costs may be passed to supermarkets, other retailers and consumers as margins of companies that convert plastic resins into a variety of household and industrial products suffer.”


UK Car-makers are “paddling furiously below the water” to maintain their supply chains, an industry leader has warned.

“Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, told MPs that the movement of parts has been “difficult” since the end of the Brexit transition period.”


China will put greater pressure on its regions to boost grain yields and step up support for its domestic seed industry as it strengthens its focus on food security after the COVID-19 pandemic [and last year’s floods, I’m sure], a key policy document issued late on Sunday showed.

“The annual rural policy blueprint, known as the “No 1 document”, placed greater emphasis on food security than in prior years, calling for all provinces to improve grain yields during the 2021-2025 period.”


The leaders of the OPEC+ alliance, Saudi Arabia and Russia, are reportedly once again at odds over oil supply management ahead of another crucial meeting of the group next week.

“OPEC’s top producer and de facto leader Saudi Arabia would likely prefer the March 3-4 meetings to decide that the OPEC+ coalition holds production flat in April… However, the key Saudi partner in the deal, Russia, will likely be pushing for further easing of the production cuts.”


High global oil prices may trigger Pakistan’s economic crisis:

“As international oil prices rise rapidly, Pakistan needs to gear up to face the economic challenges that it would trigger. This spike in the global oil prices is likely to result in a surge in inflation, a high import bill and an enlarged fiscal deficit.”


The World Bank threatened Tuesday to suspend financing for coronavirus vaccines in Lebanon as it investigated suspected favoritism amid accusations that lawmakers were inoculated in parliament without prior approval.

“A top Lebanese official supervising the vaccine rollout called it “outrageous” and threatened to step down amid an outcry on social media by Lebanese deeply mistrustful of their notoriously corrupt politicians.”


Lebanon’s cash for power generation may run out at the end of March: Lebanon, which is grappling with a deep financial crisis triggered by a mountain of debt, already lacks power generation capacity, so homes and businesses face power cuts for several hours each day…

““We are headed towards a difficult situation, if there is no fuel there will be no electricity,” Raymond Ghajar told Reuters.”


Commodities Hit Highest Since 2013 Amid Inflation Concern: Commodities rose to their highest in almost eight years amid booming investor appetite for everything from oil to corn.

“Hedge funds have piled into what’s become the biggest bullish wager on the asset class in at least a decade, a collective bet that government stimulus plus near-zero interest rates will fuel demand, generate inflation and further weaken the U.S. dollar as the economy rebounds from the pandemic.”


“…we humans, and hence the tinkerers in DC, have fallen in love with overspending, fiat currency printing, and zero interest rates. We are about to unleash the largest stimulus in history into the strongest recovery in history [this is the sharpest snapback, rather than the strongest recovery in history IMO but the point stands].

What could possibly go wrong Dr. Frankenstein?


The US economy is literally on perpetual life support. Recent events show too clearly that unless fiscal and monetary stimulus continues, the economy will fail and, by extension, the stock market.

“However, the Fed currently has no choice. Such is the consequence, and problem, of getting caught in a “liquidity trap.”

What the average person fails to understand is that the next “financial crisis” will not just be a stock market crash, a housing bust, or a collapse in bond prices.

It could be the simultaneous implosion of all three.”


You can read the previous “Economic” thread here. I’ll be back tomorrow with a “Climate” thread.

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22nd Feb 2021 Today’s Round-Up of Economic News

[He is right in his conclusion but in a sense his perspective is moot, as the financial system will inevitably continue to expand in creative ways as it attempts to compensate for ever-worsening energy and resource-constraints until it fails entirely. There’s no putting this genie back in the bottle.]

“The calm before the storm that pervades current fiscal behaviour is more suspect by virtue of the fact that central banks have embarked on an orgy of money printing that exceeds even the wanton excesses of governments. There are just no spending limits any more, anywhere, it seems.

“The coronavirus has blinded us to the huge debt obligations we will meet in an era of recovering interest rates. It is but small consolation to know that we are all in this together – up our necks. We are about to learn what a reality check really means.”


US Republican Senator Tom Cotton, who is on Beijing’s sanctions list, has joined the public debate among industry groups and think tanks in advocating US government support for the country’s semiconductor manufacturing industry as part of a broader effort to win the tech war with China.

“Cotton published a report last week, entitled Beat China, noting that American chip making ability has weakened over past decades…”


China’s foreign minister has urged Washington to lift sanctions and to stop interfering in the country’s internal affairs and suppressing its tech sector, in his first major speech on US-China relations since Joe Biden’s inauguration.

“Wang Yi called on Washington to “abandon irrational suppression of China’s technological progress” at a US-China forum in Beijing on Monday.”


Ports feel the chill as trade re-routes around Brexit Britain:

“In just seven weeks, [Holyhead’s] freight volumes have plunged by 50%. The port’s owner, Stena Line, part of the shipping line owned by the Swedish Olsson family, is warning that the slump could be permanent.”


An explosion in the number of [UK] people “living in destitution” is piling pressure on Rishi Sunak not to abandon help schemes in next month’s Budget.

“The total leapt from 197,400 to 421,500 households in 2020 – a rise of more than 200,000 in a single year – amid the devastating slump triggered by the Covid-19 pandemic, research has found.”


Currency crisis leaves Lebanese cupboards bare:

“Hunger threatens to reignite unrest as dollar peg slips and inflation soars in heavily import-dependent country… Lebanon’s financial crisis of more than a year, exacerbated by the coronavirus pandemic, has left the economy ravaged by hyperinflation, job losses and soaring poverty.”


The Syrian pound sank to a new record low on Sunday with a scramble for dollars in a country hit by sanctions and facing a severe foreign currency crunch, dealers and bankers said

“Traders said it cost as much as 3,450 Syrian pounds to buy 1 dollar on the street on Sunday, more than 18% lower than the end of last month.”


Displaced Yemenis eke out miserable living by scavenging: Years of war and blockade have plunged the Arab country into what the United Nations calls the world’s biggest humanitarian crisis.

“A staggering 80 percent of the country’s population, or over 24 million people, require some form of humanitarian assistance and protection, including more than 12 million children, according to data released by the United Nations.”


Sudan’s central bank sharply devalued the currency on Sunday, announcing a new regime to “unify” official and black-market exchange rates in an effort to overcome a crippling economic crisis and access debt relief.

“The change is a key reform demanded by foreign donors and the International Monetary Fund (IMF), but was delayed for months as shortages of basic goods and rapid inflation complicated a fragile political transition.”


Violence engulfs South Sudan as UN warns of looming famine:

“Ten years after independence, staggering levels of violence have engulfed more than three-quarters of South Sudan, while hunger looms over 60 per cent of the country’s population, UN agencies warn.”


Mass street protests are back in Algeria and the government is nervous.

“The authorities anticipate that the demonstrations that shook the nation from February 2019 will return to Algiers and for the last few weeks the capital has been on edge. A palpable police presence hangs around the city centre. Transport vans, water cannons and armoured trucks have been camping out.”


Two men have been shot dead in Libreville during curfew violations and protests against coronavirus restrictions, police in Gabon said on Friday.

“The two were shot late on Thursday as the country was hit by violent demonstrations in poor neighbourhoods against a stepped-up curfew and a ban on leaving or entering the capital.”


Starvation Looms in Nigeria, Feedmills Chief Warns:

“The Chairman and Chief Executive Officer of F.A Feedmills and Farms, Ijebu-Ode, Ogun State, Chief Fatai Adebayo Soewu, has warned of looming starvation, as he considers federal and state governments’ investment in the agricultural sector grossly inadequate.”


Piracy surges in Gulf of Guinea as falling oil prices rock lawless Niger Delta: Vessels passing through the Gulf of Guinea, a vast stretch of water from Senegal to Angola, are suffering increasingly violent attacks by gangs who operate with near “impunity” in its poorly-policed waters.

[gangs] are now ranging out hundreds of miles to sea and taking entire crews hostage for weeks at a time, forcing shipping firms to pay up hefty ransoms.”


‘Green bubble’ warnings grow as money pours into renewable stocks:

““I think we’re 100 per cent in a green bubble,” said Gordon Johnson, chief executive of GLJ Research. “Pretty much every solar company I cover, their numbers got worse and the stock, like, tripled . . . This is not normal.””


Bubble Warnings Go Unheeded as Everyone Is a Buyer in Stocks: The American love affair with stocks is deepening as everyone from frenetic day-traders to staid institutions dive further into the market…

Up 75% from March, the S&P 500’s gain dwarfs all previous bull markets at this stage of the cycle since the 1930s.”


Signs that inflation is making a comeback are unsettling big investors… inflation forecasts are now rising following massive increases in government spending and the torrent of liquidity unleashed by central banks in response to the coronavirus pandemic…

“…recent increases in energy and food prices have driven up inflation expectations among consumers.”


“It’s time for central banks to prepare financial markets to regain more influence over longer-term interest rates, breaking the move toward fiscal dominance and alleviating the threat of another economic collapse. Major central banks should envisage shifting gear… and starting monetary normalisation for when the Covid crisis is over.”

[Good luck with that! We didn’t manage monetary normalisation in the 12 years following the global financial crisis (quite the reverse, in fact), so how on earth are we going to manage it now?!]


You can read the previous ‘Climate’ thread here. I’ll be back on Monday with an ‘Economic’ thread.

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19th Feb 2021 Today’s Round-Up of Economic News

The world has never been more indebted after a year of battling Covid-19. And there’s even more borrowing ahead.

“Governments, companies and households raised $24 trillion last year to offset the pandemic’s economic toll, bringing the global debt total to an all-time high of $281 trillion by the end of 2020, or more than 355% of global GDP, according to the Institute of International Finance. They may have little choice but to keep borrowing in 2021, said Washington-based director of sustainability research Emre Tiftik and economist Khadija Mahmood.”


Another 861,000 Americans signed up for jobless claims in the week to 13 February.

“That’s a week-on-week increase of 16,000 in US jobless claims, according to the Department of Labor data.”


Canadian restaurants and bars suffered their worst year for sales on record in 2020.

“Sales at eating and drinking establishments in Canada dropped 28% from the year before, Statistics Canada reported Thursday in Ottawa. That’s the largest drop in records dating back more than two decades…”


The U.K. economy risks a jobless recovery from the coronavirus, with surging gross domestic product and lingering unemployment, a policy maker at the Bank of England said.

“Michael Saunders, a member of the central bank’s Monetary Policy Committee, said the pandemic has gone on longer than anticipated and is hurting the finances of businesses and households.”


German shipping investment that once helped shape the world’s maritime operations is in retreat, as years of steep losses lead many of the country’s biggest banks to abandon ship financing altogether.

“The number of German-owned oceangoing vessels has declined by nearly half over the past decade.”


Barricades burn in Spanish streets amid protests over jailed rapper:

“Police fired tear gas, rubber bullets, and sound bombs at two protests in Madrid and Barcelona on Wednesday, each attended by thousands, the day after a rapper was arrested on charges of glorifying terrorism and insulting royalty in his songs.”


Eurozone tries to patch up its broken debt rules: The bloc is under intense pressure to adopt a more flexible set of fiscal guidelines as Covid borrowing sends debt soaring.”


Europe’s Pandemic Debt Is Dizzying. Who Will Pay?

“For households trying to balance their budget each month, the fact that European countries are incurring trillion-euro debts is dizzying. In France alone, the national debt has topped 2.7 trillion euros ($3.2 trillion) and will soon exceed 120 percent of the economy.”


Inflationary pressures and currency weakness could force central banks in some key African economies to tighten monetary policy, even as the slow rollout of coronavirus vaccines and new mutations of the disease pose risks to economic growth.

“Mozambique and Zambia became the first two countries in the world to raise their benchmark interest rates this year, and Zimbabwe did the same on Thursday. Three of sub-Saharan Africa’s biggest economies — Nigeria, South Africa and Angola — could follow suit.”


The Covid-19 pandemic has posed difficulties for a host of sub-Saharan African countries that have borrowed substantially from China in recent years to fund major infrastructure projects.

“Verisk Maplecroft Research Associate Aleix Montana expressed concern about high debt levels in oil exporting countries such as Angola and the Republic of Congo. Zambia became the first country on the continent to formally default on its debt in November 2020…”


Chinese stocks briefly climbed to an all-time high on optimism for the country’s economic recovery from Covid-19 as traders returned from the lunar new year holiday.

“The CSI 300 index of large Shanghai- and Shenzhen-listed stocks jumped as much as 2 per cent to an intraday record of almost 5,931 points in early trading on Thursday…”


We were ‘dangerously close’ to collapse of ‘entire system,’ says Interactive Brokers founder ahead of GameStop hearing

“Clearinghouses play a crucial role in markets from equities to derivatives. They stand between the parties to a trade to guarantee payment if either reneges. That crucial piece of financial-market plumbing was at the center of the matter, Peterffy said.”


“President Biden came into office with plans to help the economy recover from the coronavirus pandemic and spur a domestic manufacturing revival for goods such as automobiles and semiconductors.

“But one month into his presidency, a global chip shortage has shuttered auto factories in the United States, slowed shipments of consumer electronics and called into question the security of American supply chains.”


What began as a power issue for a handful of U.S. states [due to the bitterly cold and snowy weather] is rippling into a shock for the world’s oil market.

“More than 4 million barrels a day of output — almost 40% of the nation’s crude production — is now offline, according to traders and executives.”


Peak oil demand is coming – but first brace for an almighty supply crunch: Investment of $600bn a year in non-Opec oil exploration and drilling is needed to keep the global show on the road. Spending collapsed after 2014 and has never recovered. Last year it was $300bn. It has been running at just 35pc of levels reached in the boom.

“This catches up with you in the end.”


“… many governments entered the pandemic with higher government – or sovereign – debt. And they had to print money all over again in the first big test since GFC

““Monetary policy has had to respond to an unprecedented shock and for many central banks the main tool to date has been further quantitative easing, in an unprecedented scale and pace of purchases.” In a nutshell, the latest pandemic-triggered sovereign debt has been piled on top of the money printed in the immediate wake of the GFC.”


In May 2013, bond investors threw a tantrum after hints the U.S. Federal Reserve might slow the money-printing presses. A similar selloff now, with another $70 trillion added to global debt, could prove to be far more vicious

““There is no doubt the risks are greater this time around than 2013 because of the high leverage in the system.””


You can read the previous ‘Economic’ thread here. I’ll be back over the weekend with a ‘Climate’ thread. If you found value in this work please consider subscribing to my Patreon.