25th May 2020 Today’s Round-Up of Economic News

““As the economic carnage from the coronavirus pandemic continues, a long-forbidden word is starting to creep onto people’s lips: “depression”

The economic damage from the coronavirus… threatens to dwarf the 2008 downturn.”


[Here] are five key measures and accompanying charts showing that the coronavirus-induced US economic downturn is worse than the one that accompanied the Great Recession.”


Car rental firm Hertz has filed for bankruptcy protection in the US after the coronavirus pandemic caused demand to collapse.

“The firm, whose largest shareholder is billionaire investor Carl Icahn, said the “sudden and dramatic” impact of coronavirus on travel demand had caused a “abrupt decline” in revenue and future bookings.”


Jaguar Land Rover is reportedly seeking state support as car sales have collapsed under the lockdown.

“The high-end car maker could need more than £1bn of aid, Sky News reported, to help it bridge the slump in sales.”


Aston Martin is sacking its chief executive, Andy Palmer, following a 98% collapse in the luxury car company’s share price since it floated on the stock market less than two years ago

“…the company reported that losses had ballooned to £119m in the first three months of the year as the coronavirus pandemic caused the already struggling British car maker’s sales to plunge across the world.”


British finance minister Rishi Sunak has authorised a bailout plan to rescue companies that are seen as strategically important, with the Treasury saying it may step in to support crucial businesses on a “last resort” basis after other options run out.”


The UK is facing a “tsunami of job losses” when the Government’s huge support for workers’ wages is wound down, the boss of Britain’s biggest recruiter has warned.

“Some 856,500 people made new benefit claims in April, six times higher than any point in the financial crisis, while eight million are furloughed.”


Rising unemployment is toxic for the property market and low interest rates may not be enough.”


Prime Minister Boris Johnson is coming under increasing pressure to extend the deadline for the implementation of the Brexit withdrawal agreement to avoid a hard border in the Irish Sea.

“An influential UK think tank said businesses are focused more on “staying afloat” rather than understanding new trade agreements.”


A slump in capital investments, private consumption and exports pushed the German economy into a recession in the first quarter, detailed data showed on Monday, giving a glimpse of the damage caused by the coronavirus pandemic.”


The reopening of Italy’s restaurants, cafes and stores earlier this week brought hopes of a return to normality for many Italians after a punishing two-month coronavirus lockdown.

“But the picture is not so bright.”


“The U.S. and global economies are in a perilous state, and yet we may be underestimating the dangers. Just out of sight lies a second large threat: a global debt crisis that, centered in Europe, would further destabilize a world already struggling to combat the dreadful consequences of the coronavirus pandemic.

If some sort of financial rescue isn’t organized, Italy might be forced out of the euro, dragging along some other highly indebted countries.”


Europe’s leaders may be united on the need to throw money at economies during the coronavirus crisis, but they have yet to confront how to pay for it all.”


Some European economies have now adopted negative interest rates for the longest period in history. The controversial policy has turned banks’ business models upside down, leaving economists unsure of their next move.”


…it is nearly impossible to argue convincingly that a banking crisis will not emerge very soon, perhaps in as little as a month or two [in the EU or UK].

“A banking and systemic crisis will raise the costs for central banks and their governments considerably, not just because they will have to fund bailouts, but they will also have to cover the associated fallout, such as the inevitable evaporation of interbank credit in the financial sector and of bank credit from non-financial borrowers.”


Hong Kong police fired tear gas and water cannon to disperse thousands of people who rallied on Sunday to protest against Beijing’s plan to impose national security laws on the city.

“In a return of the unrest that roiled Hong Kong last year, crowds thronged the Causeway Bay shopping area in defiance of curbs imposed to contain the coronavirus.”


China’s central bank on Monday lowered its official yuan midpoint to the weakest since the 2008 global financial crisis, reflecting losses in the spot yuan on Friday after Beijing proposed a new national security law for Hong Kong.”


China’s army of 290 million migrant workers has been particularly hard hit by the pandemic, but most are unable to access unemployment support.

“Covid-19 is having a deeper impact on employment in China than the severe acute respiratory syndrome (Sars) outbreak and the global financial crisis.”


The national lockdown, which completes 68 days at the end of its fourth phase on May 31, has pushed India’s migrant worker population into a vortex of uncertainty and despair.

“Jobless and penniless, thousands of them continue to fight the unprecedented situation, hoping to make it to the other side of the crisis. Many, though, are losing the battle for survival.”


Just as early bets on an emerging-market recovery start fuelling appetite for stocks and currencies, an old bugbear is reappearing to haunt investors: US-China tensions.”


Japan’s economy is set for a deepening recession under the weight of the Covid-19 pandemic.

“After the annualised 3.4% GDP contraction in the last quarter, the April-June period is forecast to experience a 20%-plus decline — the worst in postwar history…”


Australia’s economy could collapse and ‘go off a cliff’ if government fiscal support programs are withdrawn in four months time, an economist has warned.

“The federal government’s JobKeeper and JobSeeker payments for businesses and workers impacted by the coronavirus crisis are set to expire in September- the same time banks plan to lift loan deferrals.”


““Deflationary Spiral

Such is the biggest problem for the Fed and one that monetary policy cannot fix. Deflationary “psychology” is a very hard cycle to break, and one the Fed has been clearly fearful of over the last decade.”


“…increasing unemployment negates headline inflationary pressures. US unemployment has hit a postwar high of 14.7 percent, and will almost certainly increase.

“With less people spending, prices tend to fall. The savings rate has also increased from 8 percent in February to 13.1 percent in March, the highest since November 1981. If this trend persists, so too will the deflationary spiral.”


As sections of the global economy tip-toe toward reopening, it’s becoming clearer that a full recovery from the worst slump since the 1930s will be impossible until a vaccine or treatment is found for the deadly coronavirus.

Consumers will stay on edge and companies will be held back as temperature checks and distancing rules are set to remain in workplaces, restaurants, schools, airports, sports stadiums and more…”


“Politicians have become more cautious about immunisation prospects. They are right to be…

So, is the virus here to stay? The simple answer is: yes.”


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22nd May 2020 Today’s Round-Up of Economic News

China wants to bypass Hong Kong’s legislature by imposing its own national security law on the former British colony, in a move that spooked markets on Friday..

“In the most emboldened of a series of aggressive foreign policy moves since the coronavirus outbreak, China outlined a draft law which would allow it to set up “agencies” to safeguard national security in the city that is supposed to retain its autonomy until 2047.

“Pro-democracy lawmakers said the move was a gross breach Beijing’s commitments to Britain when the city was handed over to China in 1997 and threatened to Hong Kong’s future as a regional financial centre.

“Fearing a loss of independence, there were calls for protesters to return to Hong Kong’s streets on Friday night.

“The proposed new law, which will exacerbate rising hostilities between Beijing and Washington, would allow China to punish any act to “subvert state power, organise and carry out terrorist activities and other behaviours that seriously endanger national security”.”


China made a rare decision not to set a target for its economic growth for 2020 due to uncertainties about the impact of the coronavirus.

““I would like to point out that we have not set a specific target for economic growth this year,” Chinese Premier Li Keqiang said in an English-language text of the work report delivered on Friday.”


While economists say China’s economic data can’t always be trusted, they now have a new dilemma – there is no data.”


Japan’s core consumer prices fell for the first time in more than three years in April on an annual basis, as weak oil prices and coronavirus lockdown measures heightened deflation risks.”


Japan’s central bank unveiled its own version of the U.S. Federal Reserve’s “Main Street” lending programme on Friday, to channel nearly $280 billion to small businesses hit by the coronavirus and stop the economy sliding deeper into recession.”


More than 2.4 million people applied for U.S. unemployment benefits last week in the latest wave of layoffs from the virus outbreak that triggered widespread business shutdowns two months ago and sent the economy into a deep recession.

“Roughly 38.6 million people have now filed for jobless aid since the coronavirus forced millions of businesses to close their doors and shrink their workforces, the U.S. Labour Department said Thursday.”


“Bankruptcy doesn’t need to mean the end of a company. It can be a shot to shed debt, reorganize and come out stronger. 

“But during the coronavirus pandemic, bankruptcy filings are increasingly spelling doom for retailers.

“In turn, it threatens thousands of more workers in an economy that has already suffered tens of millions of lost jobs.”


“Unemployed rates are now twice what they were in 1933 at the depths of the Great Depression. This trend is even more pronounced in the travel and hospitality segments of the economy.

At least eight million of the 15.8 million travel-related workforce that existed in the US just three months ago have evaporated into thin air. “


UK banks have hit out at the prospect of negative interest rates

“With big British lenders on track to boost reserves to £18.5bn for bad debts in 2020, the Bank of England’s admission this week that it was eyeing negative rates for the first time in its 324-year history has caused deep concern in the sector.”


Having crashed to what was by far its lowest reading in the survey’s nearly 22-year history last month, IHS Markit’s Flash Composite Purchasing Managers’ Index for the Eurozone, seen as a good gauge of economic health, recovered to 30.5 from April’s 13.6.

“But while that was much better than the median expectation of 25.0 in a Reuters poll, it was still a long way below the 50 mark separating growth from contraction.”


Covid-19 has killed more than 32,000 people in Italy and wreaked havoc on the healthcare system and economy. But as the country creeps out of lockdown, the toll on mental health is beginning to become apparent.

In a recent survey by Italy’s order of psychologists (CNOP), eight in 10 Italians said they needed psychological support to overcome the pandemic.”


“…tourism is what is keeping Italy’s economy afloat. Last year, for instance, Italy’s industrial output shrank by 2.4 percent while tourism grew by 2.8 percent…

“In a country plagued by unemployment, tourism offered jobs for guides, restaurateurs, waiters, cooks, and cleaners. The fact that Italy has a high percentage of home ownership allowed many families to turn their apartments or weekend houses into bed-and-breakfasts or Airbnbs. In the aftermath of the crisis, tourism provided a social safety net.

But the coronavirus lockdown changed all that…”


The looser lockdown has not spared Egypt an economic crisis, however. The private sector, weak to start, is in free fall… Citizens were already struggling after years of political turmoil and austerity; the state lacks the resources and reach to deliver large amounts of aid. Egypt may be first, but similar problems will clobber the Arab world’s other non-oil states in the coming months.

First to suffer was tourism, which employs one in ten Egyptians…”


Here and across Lebanon, prices have at least doubled over the past two months, leaving basic goods outside the reach of more than half the population.

““Even during the civil war there was money and no one starved,” said an unemployed public bus driver, Mohammad, in his late 50s, in the Hay el Sellom neighbourhood. “There were queues outside bakeries in tough times, but people were waiting to pay. Now it’s just welfare. Who would have thought?””


After about two months of quiet due to pandemic concerns, Iraqi protesters returned to the streets soon after the formation of the new government.

“As summer approaches, the protests are expanding in the southern provinces over a lack of electricity and clean water.”


In an unusual development for Tajikistan, there have been two episodes of mass unrest in the past few days. Both were suppressed by force.”


“DUBAI, United Arab Emirates —

A staggering 70% of businesses in Dubai expect to close their doors within the next six months as the coronavirus pandemic and global lockdowns ravage demand, a survey by the Dubai Chamber of Commerce revealed Thursday.”


“Lending credence to the dire forecasts rating agencies and brokerages had been lately making…

“…RBI governor Shaktikanta Das today said that India’s GDP growth would likely remain in the negative territory in 2020-21.”


Strict coronavirus lockdowns in Guatemala and El Salvador have so battered local economies that hundreds of families are flying white flags outside their homes or waving them in the street: not in surrender, but to seek food and assistance.”


After years of stress testing, financial companies might have been better positioned to withstand a market shock such as that triggered by the coronavirus. Instead, they’re standing out as persistent losers.

Down 29 per cent since January, banks and insurers have trailed the S&P 500 by 20 percentage points, their worst performance at this point of a year on record.”


“It would be easy watching the freight trains rumbling through Camden Road station in central London to assume that everything in the world’s logistics system was working as normal…

“Yet the apparent normality masks a profound trauma affecting the world’s logistics system. Earlier this year it was hit by coronavirus-related disruption in China’s factories and is now suffering from an unprecedented collapse in demand in North America and Europe.”


“Ten years ago, oil was one of the first industries to emerge from the crisis relatively unscathed, with demand strong and prices in the $80s.

“Now, it is likely to be among the last ones to recover from the double blow of demand destruction by the pandemic and the excess supply resulting from excessive production. And it may never recover fully.”


The PMI data doesn’t lie, and it’s telling you in no unequivocal terms we are still solidly on the downward slope towards the abyss.

Global growth hasn’t bottomed, there is no recovery in play, and you can darn well expect more downside from here.”


With global hunger projected to increase dramatically this year as a consequence of the coronavirus pandemic, humanitarian relief experts are calling on the U.S. government to play a leadership role in ensuring that global food supply lines remain open

“…time is of the essence if the United States wants to ease what could become the worst food crisis in a century – which could lead to political destabilization in countries where Washington has national security interests, such as Yemen, Afghanistan and Pakistan.”


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21st May 2020 Today’s Round-Up of Economic News

Note the reading below (87.6) was for February, ie *before* any nations outside China locked down:

International imports and exports have fallen to their lowest level for at least four years, according to World Trade Organization figures revealing the economic damage caused by the coronavirus pandemic.

“Warning there was little evidence of the downturn ending soon as Covid-19 brings the world economy to an effective standstill, the global authority on trade said it believed import and export activity would fall “precipitously” in the first half of 2020.

“The WTO’s quarterly goods trade barometer, which provides real-time information on the trajectory of world merchandise trade relative to recent trends, slumped to 87.6 on a scale where anything below 100 indicates a downturn. Suggesting a sharp contraction in world trade extending into the second quarter of 2020, the reading was the lowest value on record since the indicator’s launch in July 2016.”


President Donald Trump escalated his rhetoric against China, suggesting that the country’s leader, Xi Jinping, is behind a “disinformation and propaganda attack on the United States and Europe.”

““It all comes from the top,” Trump said in a series of tweets on Wednesday night. He added that China was “desperate” to have former Vice President Joe Biden, the presumptive Democratic nominee, win the presidential race.”


Canada’s consumer price index dropped sharply in April amid nationwide lockdowns, but prices soared for the goods Canadians were actually buying.

“The price index for all goods fell 0.7 per cent in April, and was down 0.2 per cent from a year earlier. That’s the first time Canada has seen a year-on-year deflation in prices since the financial crisis of 2008-09…”


The grim consequences for UK plc of the coronavirus crisis are becoming clearer with every passing day – as GDP goes into free-fall, public debt soars past £2trillion and millions become unemployed.

“Apocalyptic predictions from the Bank of England and others show the UK is on track for the worst recession in 300 years, when the Great Frost swept Europe.”


The possibility that Bank of England governor Andrew Bailey will take rates below zero into negative territory for the first time ever has become “very real” as inflation nearly halves during the first full month of Covid-19 lockdown.

“The UK Consumer Prices Index 12-month inflation rate slumped to 0.8% in April.”


Banks in Britain hoping to get easy access to European Union markets after Brexit are facing a setback after talks for a cross-border trade deal soured.

“With seven months until Britain leaves the EU’s single market and customs union, the gulf between the two sides widened this week…”


French economic activity shrank at a slower pace in May, though it’s still facing a huge slump this quarter, according to IHS Markit. Its latest monthly report showed prospects for a meaningful pickup remain well out of reach.”


Violence broke out on Wednesday evening in Madrid during a protest against the government’s coronavirus lockdown measures…

“There has been a growing wave of anti-government protests in Madrid over the past few days, with the central government refusing to allow the region to move out of phase zero of lockdown due to problems in the health system and the continuing number of infections.”


Japan’s exports fell the most since the 2009 global financial crisis in April as the coronavirus pandemic slammed world demand for cars, industrial materials and other goods, likely pushing the world’s third-largest economy deeper into recession.”


Up to 3.01 million jobs in Japan could be lost due to the new coronavirus pandemic in the year through next March… In fiscal 2009, the financial crisis triggered by the collapse of Lehman Brothers Holdings Inc. led about 950,000 people to lose their jobs in Japan.”


Chinese companies are facing a reality check after years of ramping up debt.

“…potential investors are reassessing risks. They’ve also grown more skeptical about the quality of Chinese issuers’ financial reporting. In one case, the China Securities Regulatory Commission found Kangde Xin Composite Material Group Co., a laminating film and equipment maker in Jiangsu province, had fabricated 11.9 billion yuan of profits during 2015-2018.”


Entire cities [in China] have been sealed again, with citizens forced to quarantine for as many as 35 days and to undergo nucleic acid tests.

“In Shanghai, 20 people were forced to quarantine after one infection was detected on Monday – the first in two months.”


Eminent economist Ross Garnaut warns Australia is among the countries most exposed to a trade war and what he predicts will be a deep recession and will have to perform better and do more to avoid being one of the worst hit.

“Dr Garnaut said there is now “no chance” of avoiding a deep recession but “we can work to ensure the recession is as shallow and short as possible”.”


Emerging market currencies snapped a three-day winning streak on Wednesday as concerns about a deep post-pandemic recession returned to the fore after a report cast doubts on the effectiveness of a potential coronavirus vaccine.”


“… the economic pain has spread as infections balloon, and Russia, dependent on oil revenues for a third of its state budget, finds itself poorly-equipped to offer the sort of economic support programs provided in the West.”


Turkey’s economy, under pressure from the coronavirus pandemic, has a major vulnerability: its local banks’ foreign debt.

“Investors are worried Turkish banks won’t have enough euros and dollars to hand and will struggle to raise funds overseas as a wall of debt comes due over the next year.”


The Bank of Thailand cut its benchmark interest rate to a fresh record low and said it was ready to use additional policy tools if needed with the economy expected to shrink further. By a 4-3 vote, the central bank lowered the policy rate Wednesday by 25 basis points to 0.5%, its third cut this year.”


Mexico – By fueling fears of militarization, President Lopez Obrador’s move to expand the army’s role in public safety tasks risk further damaging his administration’s reputation both at home and abroad…”


Coronavirus cases soared in Chile Tuesday as soldiers were deployed to back up riot police in Santiago following clashes with demonstrators angry about food shortages and job losses… Overnight Monday to Tuesday rioters looted a neighborhood gas station, while downtown a mob set a bus ablaze.”


Social distancing is keeping people off the streets of central Rio de Janeiro.

“And that has created serious challenges for its trans sex workers, who have seen their clientele, and their income, melt away.”


It is 7am and hundreds of children have come out on this chilly morning to queue for a plate of porridge

“The winding queue is a sign of the desperation that has gripped the populous township of Chitungwiza, on the outskirts of Harare, since Zimbabwe enforced national lockdown to prevent the spread of Covid-19, which has seen 46 cases and four deaths.”


South Africa has marshalled huge resources towards preventing its poor from starving because of COVID-19, but undocumented citizens and stranded migrants face hunger as they slip through the net, aid workers say.

“Some 11,000 families waited for charity food parcels on Wednesday in a queue stretching for several kilometres outside South Africa’s capital Pretoria, with some lining up from 4.a.m.”


Lebanon is at risk of a major food crisis and many Lebanese may soon find it hard to afford bread because of an acute financial crunch and the fall-out of COVID-19, the prime minister warned…

““Starvation may spark a new migration flow to Europe and further destabilize the region”, he said.”


“Unless we open up our economy, we have millions facing starvation.”

“That was the straightforward assessment of Pakistani Prime Minister Imran Khan on the impact of COVID-19 during a virtual meeting of the Forum’s COVID Action Platform on 20 May.”


“Food is expansively traded cross-nationally, which generates a world price that is typically indexed in U.S. dollars (still the currency that is most used internationally, by far). Changes to the value of the greenback have the potential to move a wide range of prices around the world, including the price of food.

“And the value of the U.S. dollar is most influenced by the actions of the Federal Reserve.”


Lifting social distancing requirements in order to reopen the economy is a false promise, according to Rebucci. An economic depression is inevitable, he believes, and the financial future of the country is unlikely to resemble the economy of the past. Instead, he says, in order for the U.S. economy to recover, the public needs an end to the pandemic.

“”What businesses and customers need to return to normalcy is safety and the certainty that the health risks have been brought under control,” he says. “Until then, it is difficult to see how we can go back to the new normal with adjustments here and there, relative to our pre-COVID-19 consumption habits and business models.”

“He adds: “Reopening an infected economy is no shortcut” to financial recovery.”


Read the previous ‘Economic’ thread here and visit my Patreon page here.

20th May 2020 Today’s Round-Up of Economic News

The pandemic is further widening the fissures between the two largest economies while undermining the foundations of economies throughout the world.

“The responses of central banks and governments to the virus mean it will leave legacies of staggering levels of debt and governments’ intervention within already-leveraged economies, higher levels of unemployment and social stress and an unwinding, to some degree, of global supply chains…”


“Clearly, the timing of renewed trade tension could not be worse,” wrote economists from S&P Global Ratings in a research note earlier this month.

“”The threat of higher tariffs and the intensifying technology cold war could yet disrupt technology trade and investment, de-powering what still promises to be an engine for recovery in 2020.””


China’s decision to impose tariffs on Australian barley imports has highlighted how reliant some sectors are on Chinese demand, with wool producers now “particularly exposed” by the threat of a further escalation in trade tensions.”


“This time it’s different. China is the place where the pandemic began and, for all the triumphalism from Beijing, the Chinese economy is in no way back in business.

“The stimulus tools available during the GFC—cheap money from a shadow finance sector and large-scale infrastructure spending—don’t make sense this time because the finance sector is now its own source of risk, and infrastructure oversupply won’t deliver a healthy economy.

“More significantly, Chinese consumer confidence is broken.”


The coronavirus lockdown has pummelled the US economy, with some 30m jobs destroyed and trillions of dollars of output and wealth lost.

“Compounding the havoc is an economic malady that has gone unnoticed: one of the most severe deflations in modern history. Unlike coronavirus, it shows no signs of abating.”


U.S. homebuilding dropped by the most on record in April and permits for future construction tumbled, underlining fears that the coronavirus crisis would lead to the deepest economic contraction in the second quarter since the Great Depression.”


“…if the federal government doesn’t act… furloughs will turn into permanent layoffs and the country will face an extended period of high unemployment that will do sweeping and unrelenting damage to the economy—and the people and businesses in it.”


…moribund companies in industries deeply scarred by the pandemic will just keep borrowing.

“Market watchers such as Deutsche Bank AG chief economist Torsten Slok fear that a new breed of so-called zombie companies — firms that don’t earn enough to cover interest payments and are kept alive in part by central bank largess — could have profound and painful consequences for everyone from workers to investors for years to come.”


One has to regret Federal Reserve Chairman Jerome Powell’s seemingly partial diagnosis of our present daunting economic challenge, especially considering his key role in defusing the crisis.

“In Powell’s view, our economic predicament has nothing to do with the possibility that years of ultra-easy U.S. monetary policy might have contributed to the creation of worldwide asset and credit market bubbles.

“Rather, he seems to believe that our economic challenge is solely the result of the supply side shock delivered to the economy by the coronavirus pandemic. “


Sweden’s highly contested response to Covid-19 left much of the economy open. Even so, the country is now headed for its worst recession since World War II.

“Scandinavia’s biggest economy will shrink 7% this year, Finance Minister Magdalena Andersson said on Tuesday. Shortly after she spoke, the debt office revealed an historic 30-fold spike in borrowing to cover emergency spending amid record job losses.”


“…UK environment secretary, George Eustice…acknowledged that only about a third of workers from eastern European countries who would normally come to the UK for the work were here already and only “small numbers” would continue to travel.

““One thing is clear and that is that this year we will need to rely on British workers to lend a hand to help bring that harvest home,” he said.”


The industrial group Rolls-Royce is to cut 9,000 jobs, almost a fifth of its workforce, as the coronavirus crisis takes its toll on the aviation industry.

“The jet engine manufacturer said it is targeting £1.3bn in annual cost savings to weather the protracted downturn caused by the Covid-19 pandemic that has grounded much of the world’s airlines.”


“Recently the share prices of the UK’s largest banks have collapsed, in common with those of many other companies. Banks such as RBS, Barclays and HSBC have seen their share price fall to levels not seen since the 2008 financial crisis. Some market-watchers suspect the sellers know something we don’t…”


The UK chancellor has warned of a “severe recession the likes of which we haven’t seen” as official figures showed a record rise in unemployment claims. Rishi Sunak told a parliamentary committee that there was “more hardship to come…””


Post-Brexit talks with the EU have turned sour, after the UK escalated tensions by accusing Brussels of only offering a “low-quality” trade deal.

“Downing Street’s chief negotiator, David Frost, said the agreement on offer amounts to “unprecedented oversight” of laws and institutions from 1 January 2021.”


This’ll help cratering car sales.

European-built cars imported to the UK from 2021 are set to become around £1,500 more expensive after the government confirmed that these vehicles would be subject to a 10 per cent tariff from 1 January.”


Riot police were deployed in force as youths set cars ablaze in some low-income housing estates in the Paris suburbs overnight, online news reports and postings on Twitter showed on Wednesday, amid tensions heightened by the coronavirus lockdown.”


Spanish public debt rose in March to a record high of 1.224 trillion euros ($1.34 trillion), mainly lifted by the financing of government measures to smooth the impact of the coronavirus outbreak, Bank of Spain data showed on Tuesday.”


Ueli Maurer [Swiss Finance Minister] has warned that the financial crisis following Covid-19 and the resulting instability in Europe are a danger for Switzerland.

“In an interview with public broadcaster RTSexternal link on Tuesday, he said that he is concerned about the repercussions on Switzerland of a possible debt crisis in certain countries, especially Italy.”


Our analysis suggests that most Emerging Market economies will face a painful adjustment of fiscal balances in the aftermath of the COVID crisis

“Six countries will likely need to make especially painful adjustments relative to the projected 2021 outcome: South Africa, Saudi Arabia, Kenya, Nigeria, Brazil, and Ghana.”


Turkey was recovering from its first recession in a decade when the coronavirus hit. Now the economy is on the brink again, and President Recep Tayyip Erdogan is running out of options.

“With a risk of mass unemployment, a collapse in tourism and an unstable currency, “the situation is extremely bad”, said Atilla Yesilada, an economist at GlobalSource Partners think tank.”


Argentina is currently engaged in intense negotiations with its creditors over at least $65 billion in government debt… that is mostly in dollars, and mostly owned by foreigners.

“Argentina’s 45 million residents, as well as hundreds of millions of people on this planet, have a large stake in the outcome of these negotiations. With vital foreign exchange earnings plummeting in the world recession, how much will be used for essential imports such as medicine or food, and how much to pay off debt?”


Ecuador said Tuesday it is closing several embassies and state enterprises to save money amid an economic crisis provoked by the coronavirus pandemic.

“”We will close … embassies and diplomatic offices,” President Lenin Moreno said in a speech on television and radio as he presented a plan to save more than $4 billion.”


Isolationist Turkmenistan, which proudly claims to be COVID-19-free, has nonetheless been affected by the pandemic.

A recent closure of its borders due to pandemic concerns has halted imports, reportedly leading to food shortages.

“The provincial situation became so dire before the borders were reopened that, on April 4, residents in the city of Mary (190 miles east of Ashgabat) apparently marched on the local government headquarters to protest rising food prices.”


North Korea is probably having difficulty importing grain due to the COVID-19 pandemic, while continuing to experience a shortage in food production, South Korea’s Ministry of Unification said Tuesday.

““COVID-19 is likely to have significantly hampered North Korea in importing resources from outside,” a Unification Ministry official said.”


Mass euthanasia of livestock, millions of gallons of dumped milk, piles of fresh vegetables left to rot in the sun: Images of farmers dumping their products stand in stark contrast to those showing mile-long lines for food banks.

“Over 36 million Americans are now unemployed, and food insecurity—which affected one in six Americans before COVID-19—will likely increase. Yet farmers say getting food into the hands of those who need it most is exceptionally difficult and often beyond their control.”


“…it would be truly extraordinary if governments locked down their economies into depressions to protect against a virus which is truly scary for inhabitants of nursing homes but should not be scary for the population at large, particularly for those aged under 50. Yet that is what will happen if these lockdowns persist in their present form for an extended period.”


Read the previous ‘Economic’ thread here and visit my Patreon page here.

19th May 2020 Today’s Round-Up of Economic News

Now we have recriminations over the pandemic potentially exacerbating the protectionism that was already slowing the global economy to a crawl in 2019:

“There are fears Britain could be dragged into a global trade war with China after Beijing slapped an 80 per cent tariff on Australian exports as punishment for demanding an independent coronavirus inquiry – which 100 nations including the UK supported.

“On Monday, the World Health Organization bowed to calls from most of its member states to launch an independent probe into how it managed the international response to coronavirus, which has been clouded by finger-pointing between the US and China.

“The ‘comprehensive evaluation’ over coronavirus, sought by a coalition of African, European and other countries, is intended to review ‘lessons learned’ from WHO’s coordination of the global response to the virus outbreak.

“Donald Trump took the row with China further last night when he threatened to permanently cut off funding for the WHO, which he has accused of bias towards Beijing.”


The COVID-19 outbreak unleashed an economic catastrophe [in the US].

“The stock market is betting that it will be brutal but short-lived, thanks to massive infusions of monetary and fiscal help. These charts show how brutal it has been. It remains to be seen if it will be as short-lived as the market hopes.”


“…state and federal jobless benefits aren’t getting to millions who are eligible and need the money.

“A report from the Brookings Institution’s Hamilton Project finds that according to the Treasury Department, federal and state governments had sent out $48 billion in unemployment checks by the end of April. But the amount of income that Americans lost in April from layoffs and lack of work due to the pandemic was at least $80 billion.”


Canadian cities are on the verge of a potential financial crisis caused by dropping revenues and rising costs during the COVID-19 pandemic, and they’re asking the federal government to step in.”


The number of people claiming unemployment benefits in the U.K. soared in April, as the coronavirus outbreak created mass job losses in the country, the latest data showed.

“U.K. jobless claims rose by 856,500 to 2.097 million, the Office for National Statistics (ONS) said on Tuesday…”


A trail of hunger left by COVID-19 is flooding the streets of Madrid.

“Spain has recently made huge strides in curbing its COVID-19 outbreak. But millions of residents are now paying the price of weeks of economic shutdown.”


Spain’s two main independent institutions have issued warnings about the steps that must be taken to avoid a debt crisis that could drag down the economy in the wake of the coronavirus recovery effort

“”What’s required from Europe is “a risk-sharing scheme to finance states in comparable conditions beyond the European Central Bank (ECB),” Bank of Spain governor Pablo Hernández de Cos said.”


So far this year, new car registrations [in Europe] are down 42.4%, with a drop of 83.8% in April on top of falls of 55.6% in March, 7.2% in February and 8.2% in January.

“The United Kingdom, Italy, France and Spain were the most affected markets, with falls of 97.3%, 97.6%, 88.9% and 96.5% respectively…”


“…it could take ten years for the European car industry to recover. For that to happen, he says there has to be above all a general economic recovery and a positive development in the job market.

“If people have the feeling they’re going to lose their jobs, they’re not going to buy a new car,” he said.”


A number of protests against the government’s coronavirus policy and restrictive measures took place in various Germany cities, including Berlin, Munich and Stuttgart, on Saturday.

“Lockdown fatigue has grown in Europe despite the gradual easing of restrictions.”


European banks could face greater credit losses from the economic impact of Covid-19 than those suffered in the aftermath of the global financial crisis — and what supervisory bodies usually test for…

“…the European banking sector could face capital and liquidity challenges.”


Like other small businesses around the world suffering steep declines with the spread of coronavirus, businesses in Jordan have had their profits take a pounding during the holy month of Ramadan

“Many small businesses – ones that prior to the pandemic anticipated a busy sales season during Ramadan but ended up shuttering their stores instead – are now facing mountains of debt or are on the brink of bankruptcy.”


For India, the Covid-19 pandemic has brought about general starvation.

“This can be seen all around. From households to businesses and the government, each is famished. Households in large numbers are starved of jobs, occupation and even food. Firms are credit-starved across the board and the government is resource-starved and short of revenue.”


While speaking about the economic stimulus package that was unveiled by Union Finance Minister Nirmala Sitharaman in several tranches, Swaminathan Aiyar, Consulting Editor, ET Now said that “economic package may be a sedative, not a stimulus.”

“He said that “This will not back demand. A stimulus package is something that will increase the GDP.””


Lockdowns around the world have dramatically reduced the number of street protests and political demonstrations.

“Photographs taken in Bangkok in May contrast with images from 10 years ago when the capital was in the throes of anti-government protests and occupations which culminated in a military crackdown that cost dozens of lives.”


Deflationary concerns are rising with the economy remaining sluggish and consumer prices moving in that direction.

“The Bank of Korea announced on May 18 that import prices dropped 14.1 percent year on year last month.”


Australia is facing an “unprecedented” economic contraction due to the coronavirus pandemic, though massive fiscal and monetary stimulus would help cushion the blow, minutes from the country’s central bank’s last meeting showed on Tuesday.”


Protesters and police have clashed on the outskirts of the Chilean capital Santiago amid tension over food shortages during lockdown.

“Local television showed police using tear gas and water cannon to quell unrest on the streets of El Bosque, where poverty is high.”


The one-two punch of the global coronavirus pandemic and the collapse of oil prices is hollowing out the budgets of oil-producing countries, raising fears of instability in certain corners of the globe.

“Many oil-producing countries are no strangers to war, corruption and economic challenges. But a global recession coinciding with an agonizingly oversupplied oil market magnifies the danger.”


Two reports out Monday [IHS Markit and Deutsche Bank Wealth Management] predict that global growth will struggle to bounce back from the lockdowns, travel restrictions and business closures meant to contain the pandemic.”


Risk managers expect a prolonged global recession as a result of the coronavirus pandemic, a report by the World Economic Forum showed on Tuesday.”


The global economy will take much longer to recover fully from the shock caused by the new coronavirus than initially expected, the head of the International Monetary Fund said, and she stressed the danger of protectionism.”


Read the previous ‘Economic’ thread here and visit my Patreon page here.

18th May 2020 Today’s Round-Up of Economic News

Welcome to the First Global Economic Depression of Our Lifetimes

We could well be looking at multiple defaults, which in turn could lead to the global financial crisis that policymakers are currently struggling to avoid, compounding global economic woes even further.”


Economists are slashing forecasts for Canadian output again as the country haltingly reopens with large parts of the economy still shut down.

Canada’s economy will shrink by 42% annualized in the three months through June 30 from the prior quarter, according to the median forecast in a Bloomberg survey of economists. The magnitude is staggering, with the expected decline almost five times the largest quarterly contraction during the 2008-09 financial crisis.”


These 7 economic signals flashed red this week, showing the continued damage being inflicted by coronavirus [on the US economy].”


Stunning aerial pictures show hundreds of aircraft parked in a desert ‘boneyard’ after airlines including Delta and United placed them in long-term storage as flight operations are cut to around 5% of normal operations due to the coronavirus.”


Economic analysts are souring on the prospect of a quick recovery that would see the economy bounce back once the coronavirus pandemic is brought under control

““The worry and increasing likelihood is that the downside is becoming the baseline again,” said Beth Ann Bovino, S&P Global’s chief economist for the U.S.”


America’s food banks — charities across the country that provide donated food for the hungry — are being pressed into service as never before as unemployment surges during the coronavirus crisis and many working-class and middle-class families seek help for the first time.

Feeding America, the largest US hunger relief organisation, representing 200 food banks across the country, said it had experienced a 70 per cent increase in those seeking food assistance since the crisis began. Roughly 40 per cent of the people wanting food are first-time visitors, it said. In April alone, the group said it served 433m meals.”


Close to 800,000 Americans across the country may wind up homeless by the summer as the coronavirus pandemic forces unemployment figures to resemble numbers not seen since the Great Depression.”


Post-Brexit talks have hit an impasse six weeks before a legally binding deadline expires ruling out any extension to the transition period.”


In its 21 years of official existence, the Eurozone has already been through two brutal crises — the Global Financial Crisis and one of its own doing, the Euro Debt Crisis — that nearly tore the bloc apart.

“Now, it is in the grip of another one that is already exacting a larger toll than the first two, despite having barely begun.”


Carmakers are negotiating with the EU and UK for subsidies to help boost demand for new vehicles, but campaigners are concerned that the stimulus could end up paying for pollution unless emissions restrictions are imposed.

“The carmakers argue that subsidies would help kickstart demand as lockdown measures ease and factories reopen, preventing tens of thousands of job losses amid a global slump in car orders.”


Goldman Sachs expects India will experience its deepest recession ever after a poor run of data underscored the damaging economic impact of lockdowns in the world’s second-most populous nation.

Gross domestic product will contract by an annualized 45% in the second quarter from the prior three months…”


Despite CPI growth, China’s greater risk remains low demand and deflation as the government seeks to speed up production before foreign markets recover and supply chains are restored.

“Figures released Friday suggest that production is picking up speed while consumption continues to lag behind.”


China has asked trading firms and food processors to boost inventories of grains and oilseeds as a possible second wave of coronavirus cases and worsening infection rates elsewhere raise concerns about global supply lines.”


Japan’s economy slipped into recession for the first time in 4-1/2 years, GDP data showed on Monday, putting the nation on course for its deepest postwar slump as the coronavirus crisis takes a heavy toll on businesses and consumers.

“The world’s third-largest economy shrank for the second consecutive quarter in the three months to March.” [In other words, Japan’s economy was contracting pre-coronavirus].


Profit at Japan’s regional banks may fall even more than forecast this fiscal year because the lenders haven’t fully accounted for the impact of the coronavirus-fueled economic slump on loan quality, according to Mitsubishi UFJ Morgan Stanley Securities Co.”


The COVID-19 economic crisis has increased the risk of defaults and restructurings of sovereign bonds, as it has coincided with the closures of mines, a hibernation in the tourism industry, and an oil price war that has decimated the oil markets.”


Ambulance workers are threatening to go on hunger strike in Russia, saying they have not received bonuses that President Putin promised for fighting coronavirus.”


Saudi Arabia is facing an unprecedented budget crunch because of the collapse of the oil markets and the global economic turmoil caused by the Covid-19 pandemic, which has reduced oil demand for the foreseeable future.

““I have no doubt, this is the end of an era. The era of the Persian Gulf having all this money is over,” said Bruce Riedel, a senior fellow at Brookings in Washington…”


The crash in international crude prices has not only burnt small Chinese investors who bought wealth management products from one of China’s largest banks but also a listed oil and gas firm that announced last week that it would default on a US$248 million bond.”


A large proportion of companies in Asia Pacific have been facing issues of unpaid receivables and late payments over the last three years, an industry survey found… Nearly 36% of respondents said they minimized exposure to less creditworthy customers, the most common method employed by companies to mitigate risks associated with trading at a time of heightened economic uncertainty, the survey found…

“Simply put, we consider this is the worst recession since WWII (World War 2),” Euler Hermes said in its report.”


Dividend payouts could tumble by nearly $500 billion this year, a steeper drop than during the global financial crisis, as the worst global recession in decades is forcing companies to preserve cash.

“The damage to dividends could endure well beyond the coronavirus pandemic, analysts say, as companies around the world facing a historic collapse in revenue consider permanently shoring up their cash buffers.”


“The blanket coverage by the Fed is broad, and that is driving the market. And expectations are that we’re going to have this nice V-shaped recovery and life is going to return to normal as we knew it before the pandemic. And my own view is that neither of those are likely to be true.

The recovery is unlikely to be V-shaped, and we’re unlikely to return to the pre-pandemic world. “


“This is no time to be a country that relies heavily on tourism to keep its economy going. Combine that with a huge debt load and weak fiscal policies, and that’s a recipe for financial disaster…

Three countries have already defaulted on their debt this year: Argentina, Ecuador and Lebanon. More are at risk, according to Fitch Ratings.”


The covid-19 pandemic’s impact on hunger around the world could be worse than the financial crisis of 2007 and 2008 when food prices spiked calamitously, a leading food security expert warns.

“Unlike the scarcity of food during the crisis 13 years ago, the big issue this time is economic downturns hitting the ability of millions of people to afford food.”


Read the previous ‘Economic’ thread here and visit my Patreon page here.