1st December 2020 Today’s Round-Up of Economic News

Companies and governments have issued a record $9.7 trillion of bonds and other debt this year, as extraordinary support from the Federal Reserve and other central banks has fueled a borrowing bonanza…

The IIF says it isn’t clear how global debt levels can be brought back down without significantly hurting economic activity. Sonja Gibbs, the IIF’s Washington, D.C.-based head of sustainable finance, said it was concerning that credit ratings and bond spreads weren’t fully pricing in potential risks, with spreads on very risky triple-C-rated U.S. bonds nearing levels seen last year before the pandemic…

“Emerging government debt has risen nearly 10 percentage points to 61% of GDP this year, its largest one-year increase since the late 1980s, and the pandemic has made a string of financial crises more likely, said Ayhan Kose of the World Bank’s Prospects Group.


U.S. housing, manufacturing data suggest economic recovery slowing:

“…“Storm clouds are gathering,” said George Ratiu, senior economist at realtor. com. “This winter could pose an unusual challenge for many people across the country, unless Congress takes significant actions.””


The US Department of Labor has been both miscounting the number of people receiving unemployment benefits and underpaying those under a special program instituted to address the coronavirus pandemic, according to a government watchdog report Monday…

“Rather than provide compensation based on previous pay, states are paying out just the minimum level required. That has resulted in potential economic hardship as federal programs addressing the situation are about to run out.”


Canadians now owe more than $2 trillion, Equifax says:

“More than three million consumers have chosen to use payment deferral programs since the start of the COVID-19 pandemic, according to Equifax. Since the start of this year, some banks have offered consumers the option to suspend their loan payments for several months, in recognition of the financial strain the pandemic has created for many households.”


Fears of debt crisis as Scots shop on credit:

The study, released ahead of Cyber Monday tomorrow, showed that 13% of people are planning to pay for Christmas on credit cards, agreed overdrafts or secured loans – with a further 3% using payday loans, unagreed overdrafts or buy now pay later products which are widely available.”


UK Freelancers ineligible for state aid face closing down decades-old businesses and selling homes as the pandemic sparks the worst economic contraction for 300 years

The Office for Budget Responsibility has predicted that house prices will fall by more than 8pc in the new year as the pandemic shrinks the economy by 11.3pc…

“…and cash-strapped families unable to cover mortgage payments are forced to sell.”


Irish real estate funds have been placed on watch by the Central Bank of Ireland amid concerns that an investor exodus could trigger a liquidity crisis, forcing a fire sale of commercial real estate into a market where values are already under pressure because of the coronavirus crisis.”


The eurozone is set to suffer the longest period of deflation since the financial crisis, heaping pressure on the European Central Bank to take more drastic action.

“The region endured a fourth straight month in dreaded deflationary territory in November as rate-setters battle to revive its inflation prospects, new figures are expected to show tomorrow.”


Brussels is planning to lay out a raft of proposals in a bid to make it easier for EU banks to offload soured loans as it anticipates the risk of a pandemic-related wave of corporate distress

“Europe is braced for a surge in insolvencies once national business support programmes lapse next year.”


“When the coronavirus began sweeping through China and then Europe, disrupting global supply networks, Mr. Macron declared that the pandemic could be “a game changer for globalization.” He said he wanted to create opportunities to secure supply chains and reverse a decades-long trend of companies sending production to low-cost countries.

“But the jobs are continuing to leave, as multinational firms relocate production from France to countries with cheaper labor and higher productivity.”


When coronavirus hit, Germany splashed out on Europe’s most generous package of emergency aid. Now, for the first time since the start of the pandemic, politicians are asking whether the country can actually afford such largesse.

“The debate was stirred by last week’s consultations on the 2021 budget. Olaf Scholz, finance minister, shocked MPs by nearly doubling the amount of new borrowing to €180bn. That comes on top of the €218bn of debt Germany is taking on in 2020, the largest amount in its postwar history.”


“According to Banca d’Italia’s statistics department, the Italian central bank now holds €529b of government debt – which is about one fifth of all of Italy’s debt. And just to put it into context, in 2012 at the peak of the Euro crisis that figure was only hovering near €100b…

Italy remains in a fiscal and monetary pickle without a realistic escape route.”


Nigeria’s national electricity grid collapsed on Sunday, the Transmission Company of Nigeria (TCN) said in a statement.

“Power outages in Nigeria, the most-populous nation in Africa, are common, but a system collapse is unusual.”


Inflation in Sudan has risen to one of the highest levels in the world, and the country risks slipping into hyperinflation unless it gets its budget deficit and money supply under control, economists say…

“The government has run up enormous budget deficits by subsidising the cost of fuel, then financed the deficits by printing money. This has debased the currency…”


“…based on the latest IMF and World Bank analysis, six sub-Saharan African countries are now in debt distress, while 11 are at high risk of distress.

“Before the pandemic, sub-Saharan Africa’s debt load was forecast at 56.4 per cent of gross domestic product for this year; the current projection is for 65.6 per cent.”


In the past two decades, China has poured billions of dollars into the construction of ports, railways, highways and hydropower dams in Africa.

But the continent is staring at a loan drought in the medium term as China and other lenders fear debt defaults in the fallout from the coronavirus pandemic, analysts say.”


A state-owned Chinese group caught up in the country’s spate of defaults owes billions of dollars to lenders, raising concerns that bond market tremors could also sweep through the banking sector.

“According to a creditor document viewed by the Financial Times, almost 70 Chinese and foreign banks, as well as trust companies, had Rmb33.5bn ($5.1bn) in outstanding lending to Huachen Automotive Group as of last year.

The revelation comes as the country’s multi trillion-dollar debt markets have been rocked by defaults at government-backed companies.”


How property-hungry Chinese millennials and shadow banking could fuel a financial crisis:

“China’s household debt has roughly quadrupled in the past five years to 62 trillion yuan (US$9.4 trillion). While detailed statistics are sketchy, data from some banks suggest that millennials are the main driver and betting on property appreciation the main motivation.”


International investors have cried foul over the sale of an insolvent finance company in India due to concerns surrounding the auction process, casting doubt on the effectiveness of the country’s overhauled bankruptcy code

“The episode has thrown a new spotlight on respect for due process in India and the speed of its bankruptcy resolution procedures at a time when the country’s economic troubles have led to a rise in distressed assets.”


Why I’m losing hope in India: …it breaks my heart to have to suggest to today’s rising generation that this crisis is different than others we have weathered, that the walls are closing in again, and the opportunity set for India is shrinking, perhaps for a very long time.

The national dream of emulating China’s rapid growth is receding — by some economic yardsticks, we can’t even keep up with Bangladesh.”


The coronavirus pandemic has wiped $63bn (£47bn) of revenue from the global advertising market this year, a decline that is double the rate of the Great Recession after accounting for inflation.

“According to the latest report from the World Advertising Research Centre (WARC), traditional media suffered its worst year on record, led by sharp cuts in automotive, retail, and travel and transport ad budgets.”


We’re making the same mistakes with Big Tech as we made with banks during the 2008 financial crisis – and consequences could be devastating.

“That’s the stark warning given by former HSBC chief, John Flint, this weekend in an article for the Financial Times in which he claimed that Big Tech poses a systemic risk to society.”


The Institute of International Finance recently reported that the ratio of global debt to gross domestic product will rise from 320 per cent in 2019 to a record 365 per cent in 2020

The IIF concludes starkly: “more debt, more trouble”. Financial markets have ignored these warnings.”


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

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28th November 2020 Today’s Round-Up of Economic News

The International Air Transport Association (IATA) released data revealing that the COVID-19 crisis has had a devastating impact on international connectivity, shaking up the rankings of the world’s most connected cities.

London, the world’s number one most connected city in September 2019, has seen a 67% decline in connectivity.

By September 2020, it had fallen to number eight.

Shanghai is now the top-ranked city for connectivity with the top four most connected cities all in China—Shanghai, Beijing, Guangzhou and Chengdu.

New York (-66% fall in connectivity), Tokyo (-65%), Bangkok (-81%), Hong Kong (-81%) and Seoul (-69%) have all exited the top ten.

The study reveals that cities with large numbers of domestic connections now dominate, showing the extent to which international connectivity has been shut down.”


Worldwide Airport Slot Board (WASB)… has sought for airport slot use relief for the northern summer 2021 season.

“For preserving essential air transport connectivity, the organisations called on regulators worldwide to quickly implement more flexible slot rules on a temporary basis.”


The World’s First Affluence Recession: Previous epidemics did not cause economic crises because most consumers were poor by today’s standards, and their discretionary spending was minimal…

“Today’s economy depends on a thousand luxuries large and small, from overpriced coffee to air travel, and these luxuries are what many consumers are now giving up.”


The Walt Disney Co has announced plans to lay off 4,000 more workers in its theme parks division in California and Florida due to the Covid-19 pandemic’s effect on the industry.

“…32,000 [Disney] workers will have their employment terminated in the first half of the 2021 financial year, which began last month.”


According to research by the Aspen Institute, nearly 40 million Americans could face eviction over the next several months.

“The only thing holding back the flood right now is the CDC’s eviction moratorium order and a patchwork of state and local protections for renters.”


Millions of Americans will spend this Thanksgiving having struggled to put food on the table after the Covid-19 pandemic has left hundreds of thousands of people unemployed and without financial assistance to fill the gap.

“More than 25 million Americans reported not having enough to eat in the past week, according to US census data.”


This era’s capitalism is driving many among the young to socialism: The Dow Jones Industrial Average hit a historic 30,000 recently and likely left younger generations feeling further alienated from capitalism.

“One must go back to the 1930s to find another generation so repeatedly hammered by economic collapse. Many saw capitalism as hopelessly outmoded, especially in the early years of the Depression.

“Socialism, communism and fascism made enormous gains.”


Britain’s struggle to emerge from the Covid-19 pandemic will result in pay packets being squeezed and taxes rising to fill a £40bn hole in the public finances, two leading thinktanks have warned.

“Despite record peacetime borrowing of £394bn this year, the Resolution Foundation and the Institute for Fiscal Studies said the run-up to the next general election would be marked by a hit to earnings and pressure on the government to balance the books.”


Traditional UK retail in crisis as shift to online accelerates:

“Today’s news of mounting financial problems at the UK’s Arcadia Group, owner of high street names such as Topshop and Burton, is the latest sign of distress from bricks-and-mortar retailers poleaxed by the pandemic.”


Britons are concealing a total of around £8.5billion worth of debt from their friends and family, new research claims.

“Swathes of secret shoppers are stacking up average hidden debts of around £600 each, with credit card use, going overdrawn, bank loans and not keeping up with bill repayments all proving problematic for many. Over a quarter of Britons keep quiet about their financial situation.”


Hungary and Poland’s veto of the Eurozone’s pandemic recovery fund could cause unemployment levels to explode.

According to the European Trade Union Confederation (ETUC), 40 million people have benefited from temporary unemployment schemes due to coronavirus.”


India entered an unprecedented recession with the economy contracting in the three months through September due to the lingering effects of lockdowns to contain the Covid-19 outbreak.

Gross domestic product declined 7.5% last quarter from a year ago.”


A struggling Indian bank being acquired by DBS Group Holdings Ltd. will write off 3.18 billion rupees ($43 million) of bonds before being purchased by the Singaporean group.

The Reserve Bank of India, which orchestrated the rescue, “has advised the need to fully write down” the Tier-2 debt…”


Between 2015 and 2019 the stock of household debt in China rose by about $4.6trn, close to the $5.1trn accrued by Americans over a similar period before the global financial crisis of 2007-09

“Delinquency rates have climbed above 30% [!] this year at many nonbank lenders, compared to 5% for banks.”


Debt risks continued to cloud the Chinese corporate bond market this week as another major state-owned enterprise defaulted on a trust loan after the shocking default of a state-owned coal mining firm earlier this month.

On Wednesday, Minmetals International Trust Co. Ltd. said that a wholly-owned logistics subsidiary of Jizhong Energy Group Co. Ltd., which is owned by the Hebei provincial government, had failed to repay principal and interest of a 500 million yuan ($76 million) trust loan due Monday.”


Australian coal reportedly worth more than $1.1 billion is being held up at Chinese ports because of apparent problems with environmental standards [ie simmering trade disagreements].

“According to The Australian, there are now more than 80 coal ships stranded off the coast, with 1500 seafarers aboard…

“…the move has prompted the ­Morrison government to raise concerns about “discriminatory action”.”


South Africa can’t implement a pay deal with public servants because it would precipitate a fiscal crisis, Finance Minister Tito Mboweni said.”


Negotiations to save [South Africa’s] Land Bank from collapse are on a knife-edge as lenders to the state-owned agricultural bank balk at a plan that seeks to restructure its financial affairs and smothering debt load.”


Poor Guatemala has just been hit by brutal, back to back hurricanes and was rocked by budget protests earlier this week, with angry protestors setting fire to their Congress building.

Guatemala has paid $37.7 million to an ICSIC creditor to lift an attachment on bond payments and avoid a sovereign default – though it still has to honour another award worth $55 million rendered in the same dispute.”


“Four people were shot dead and dozens wounded in Iraq’s south, medics said, in clashes between anti-government protesters and supporters of Shia Muslim leader Muqtada al-Sadr…

Iraq is facing its most dire fiscal crisis in decades following a collapse in oil prices earlier this year and the economic impacts of the COVID-19 pandemic, with the government unable to pay public sector salaries on time.”


Nearly a year into a pandemic that has ravaged the global economy like no time since the Great Depression, the only clear pathway toward improved fortunes is containing the virus itself

“[But] even after the coronavirus is tamed into something familiar and manageable like the flu, will people habituated to keeping their distance from others return to restaurants, shopping malls and entertainment venues in the same numbers? With videoconferencing established as a replacement for business travel, will companies shell out as much as before to put them on airplanes and in hotels?”


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

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26th November 2020 Today’s Round-Up of Economic News

No vaccine for a US economy that’s sicker than it looks:

“With COVID-19 still raging – and rates of infection, hospitalisation, and death now spiralling out of control (again) – the near-term risks to economic activity have tipped decidedly to the downside in the US and Europe. The combination of pandemic fatigue and the politicisation of public health practices has come into play at precisely the moment when the long-anticipated second wave of COVID-19 is at hand.

“Unfortunately, this fits the script of the dreaded double-dip recession that I warned of recently. The bottom-line bears repeating: apparent economic recoveries in the US have given way to relapses in eight of the 11 business cycles since World War II. The relapses reflect two conditions: lingering vulnerability from the recession itself and the likelihood of aftershocks. Unfortunately, both conditions have now been satisfied.”


Gripped by the accelerating viral outbreak, the U.S. economy is under pressure from persistent layoffs, diminished income and nervous consumers, whose spending is needed to drive a recovery from the pandemic.

“A flurry of data released Wednesday suggested that the spread of the virus is intensifying the threats to an economy still struggling to recover from the deep recession that struck in early spring.”


The holidays often make people more vulnerable to feeling depressed or anxious. But for the millions of Americans suffering from a pandemic-induced financial crisis, the risk is much greater this season.

“Many are at their wit’s end. And it doesn’t appear that help is on the way. Congress is still at odds over a package that would provide additional economic aid…”


The government has privately admitted the UK faces an increased likelihood of “systemic economic crisis” as it completes its exit from the European Union in the middle of a second wave of the coronavirus pandemic.

“A confidential Cabinet Office briefing seen by the Guardian also warns of a “notable risk” that in coming months the country could face a perfect storm of simultaneous disasters, including the prospect of a bad flu season on top of the medical strains caused by Covid.”


Britain is permanently poorer, and the British state weaker, as a result of Covid, the collapse in GDP and the gargantuan debt binge that has kept us going. Our economy is the most socialised it has ever been outside of war, and we have resorted to the printing presses to finance spending in a shockingly unprecedented way, pushing the great fiat money experiment close to breaking point…

That, in summary, is the economic devastation described or implied by the Office for Budget Responsibility (OBR) in what is easily the most terrifying official economic assessment from a developed nation I have ever read.”


British subprime lender Amigo reported a 36.5% fall in first half revenues and flagged “material uncertainty” about its future operations, citing worries over the pandemic…

“One of Britain’s biggest subprime lenders, COVID-19 has pummelled the economic resilience of its core customer base, forcing the firm to offer approximately 56,000 loan payment holidays as at Sept. 30.”


The French government is assembling an expert commission on how to repay the billions of euros it has borrowed to save the economy from the coronavirus crisis, Budget Minister Olivier Dussopt said on Tuesday…

“The list already features business leaders as well as top economists including Beatrice Weder di Mauro, a Swiss-Italian who has advised German Chancellor Angela Merkel.”


French Interior Minister Gerald Dermanin announced he was launching an investigation into the clashes that broke out late last night after police cleared up a makeshift migrant camp in Place de la Republique in Paris, adding that the footage of the clashes was “shocking,” Reuters reported.

“People posted photos and videos on social media in which police beats up demonstrators.”


German economy: ‘Fourth-quarter contraction seems inevitable’:

“Considering the partial lockdown in Germany, output looks likely to hit negative territory in the final quarter of the year, the president of the Munich-based ifo institute tells DW.”


The coronavirus crisis has hit Italy’s already historically-low birth rate, new projections from the national statistics agency reveal.

“Italy had last year already recorded its lowest number of births for 150 years, at 420,000. This could fall to 408,000 in 2020 and 393,000 in 2021, according to Istat.”


Peru labor groups protest for better wages: Labor groups in Peru took to the streets of Lima on Tuesday to demand better working conditions and increased wages.”



‘The fight continues’: Colombia protests persist despite pandemic.

“Anti-government protest organisers say the movement continues to evolve amid the coronavirus outbreak… Despite the months-long restrictions, the movement has continued activities.”


Zambia has become the first African country to default on its debts since the pandemic, leading to fears that a “debt tsunami” could engulf the continent’s most heavily indebted nations as the financial impact of coronavirus hits

“As financiers negotiate with finance ministers over repayment terms, the virus is depleting Zambia’s already fragile healthcare resources.”


Kenya Seeks to Refinance Foreign Commercial Debt at 5% Ceiling

“Total debt, undisbursed loans are close to borrowing limit. China is nation’s biggest bilateral lender with $6.7 billion.”


Protesters calling for jobs stopped Tunisia’s entire phosphate output on Wednesday by launching sit-ins at the sole producer of the key export during a day of strikes and protests around the country

“Tunisia’s phosphate output fell after the 2011 uprising and localised protests and strikes have since steadily cut into production and caused billions of dollars in losses.”


“Based on Hanke’s Annual Inflation Rate model, Lebanon is seen to have surpassed Zimbabwe, landing as the second most hyperinflated in the world, right after Venezuela.

“Lebanon’s inflation rate reached a high 365%, which is 3 times its percentage rate of August where it was at 120%.”


The International Monetary Fund’s October acknowledgment of the case for temporary debt monetization in Asia marked yet another example of how the pandemic has upended economic orthodoxy

“The IMF’s October report even gave qualified approval for central banks in some cases to directly buy their government’s debt, with a list of conditions.”


China’s state-owned enterprises are being forced to issue bonds at higher interest rates after a slew of high-profile defaults shattered investor confidence in what was once seen as a risk-free asset class

“This was 1 percentage point higher than the 4.7 per cent recorded in the first three quarters of this year.”


Tourism slump hits global retailers:

“International retail chains were on Tuesday counting the cost of the collapse in world travel, as Abercrombie & Fitch said it would speed up the closure of flagship stores in several major tourist destinations and Tiffany said its sales fell sharply in Europe and the Americas.”


Airlines are on course to lose a total $157 billion this year and next, their main global body warned on Tuesday, further downgrading its industry outlook in response to a second wave of coronavirus infections and shutdowns afflicting major markets…

“The bleak outlook underscores challenges still facing the sector despite upbeat news on development of COVID-19 vaccines, whose global deployment will continue throughout next year.”


The UN is to spend $25m (£19m) from its emergency fund to address what has been called the “shadow pandemic” of gender-based violence against women displaced by wars and disasters.

“The money will be divided between the UN population fund (UNFPA) and UN Women, and at least 30% of it must be given to women-led local organisations that prevent violence and help survivors access medical and legal help, family planning, mental health services and counselling.”


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

If you found value in this content, please help me continue this work by becoming a $2/month patron of my work via patreon.com.

24th November 2020 Today’s Round-Up of Economic News

The surging coronavirus is stoking fears of a fresh downturn for the world economy, heaping pressure on central banks and governments to lay aside other concerns and do more to spur demand.

“Hopes are mounting that Covid-19 vaccines will become available as soon as December, but widespread delivery will take months and infections are rising again in many large economies. Authorities are responding with more restrictions to limit the virus’s spread at the price of weaker economic activity…

“…policy makers hearing calls for more stimulus, even when central banks are already stretched and starting to worry about froth in financial markets. Meantime, politicians from the U.S. to Europe are clashing over just how much they can and should do with fiscal policy.”


Policymakers are often accused of preparing to fight the last war. But now, for once, perhaps that’s exactly right. The aftershocks left by the 2008 financial crisis have only been exacerbated by coronavirus.

“Central bankers and finance ministers are still faced with a triple threat of secular stagnation, liquidity trap and a growth model centred on leverage.”


Low global interest rates are here to stay: As global monetary easing is prolonged, it inevitably becomes a zero-sum game as the room for front-loading future demand diminishes. Further, since investment is undertaken according to the order of profitability, productive investment will decline over time.

The credit spread will be suppressed by aggressive monetary easing, which could lead to lower productivity growth resulting from hampering the allocative efficiency of credit markets. Lower potential growth coupled with bloated debt due to front-loading will increase the likelihood of a financial crisis.”


President-elect Joe Biden’s economic advisors are reportedly pressing congressional Democrats to quickly strike a stimulus deal with Republicans, fearing the US is on course for a recession as virus cases surge and a new aid package remains elusive.

“The New York Times reported on Sunday that the Biden team was also increasingly worried about the prospect of millions of Americans losing unemployment benefits next month, along with the expiration of federal eviction protections and student-loan deferrals.”


Investors fret over future of Fed crisis lending – Markets concerned response to potential virus surge will be curtailed due to Treasury rift with central bank.

“…The central bank made no secret of the fact that it wanted to preserve the credit facilities being axed by the Treasury secretary as a key weapon in its arsenal to keep markets healthy…

if financial markets were to experience new turmoil in the coming months, the Fed might struggle to limit the damage to investors in corporate debt, municipal and state debt, and asset-backed securities, whose markets were propped up by the lapsing facilities. And the fallout could be broader, given the nearly $40tn US equity market has been buoyed by the Fed’s intervention as well.”


Bank of Canada deputy downplays risks of consumer default wave:

“The massive policy response from the Bank of Canada and the federal government successfully prevented the country’s financial system from buckling, though vigilance is still needed, according to a top central banker.”


Canada’s stagflation problem: Stagflation is an economic ordeal characterized by the combination of rising inflation levels amidst low growth and therefore high unemployment. In this environment, the rising cost of goods and services outpaces the purchasing power of individuals and households in the real economy.

“Canada is a nation burdened by some of the highest debt levels of any advanced economy today. A confluence of record-high leverage levels for households, provincial and federal governments, and the private sector will complicate Canada’s economic recovery moving forward.”


The UK’s economic recovery is facing a ‘double-dip’ downturn as coronavirus lockdowns batter firms, according to a leading business survey.

Industry data released on Monday points to the sharpest decline in private sector output since May as economic restrictions left firms reeling after four months of expansion.”


Let’s not pretend a vaccine means a miracle cure for the economy: If we are facing stagflation, the [UK’s] public finances are in dangerous waters.”


In case no one has told you yet, debt’s piling up and there’s only one way out — growth… the chancellor, and the UK [are] in a perilous position — even though no one has yet explained to the public quite how bleak things really are.

Debt is still cheap. But the Treasury fears that, given the scale of the sums involved, even a small increase in the rates charged by those lending us the cash would blow a hole in the public finances. A significant rise would mean either massive cuts or borrowing to pay for borrowing — a path to the abyss.”


The UK Treasury will borrow almost £500bn this year as it scrambles to cover costs of the pandemic…

The staggering sum – equivalent to almost a quarter of the entire economy – is likely to be more than double the £227bn gilt sales in the year after the financial crisis…

In a sign of the uncertainty over the eventual sums needed to fund the pandemic response, the Treasury’s Debt Management Office took the unprecedented step of not publishing the gilt sales planned for the full year.


The [financial] risks UK councils are running are eye-watering.

Take Spelthorne, a small authority near London, with a core annual budget of around £11m. It borrowed more than £1bn to build a property portfolio mainly outside its own locality.”


The eurozone economy plunged back into a severe decline in November amid renewed efforts to quash the rising tide of coronavirus disease 2019 (COVID-19) infections.

“The data add to the likelihood that the euro area will see GDP contract again in the fourth quarter.”


Eurozone firms are increasingly vulnerable amid a pandemic-induced recession but public support, including cheap cash from the European Central Bank, have limited the damage so far, a new ECB report showed on Monday.”


Over 10% of Belgian businesses fear imminent bankruptcy.”


German Finance Minister Olaf Scholz plans to take on at least 160 billion euros ($190 billion) in new debt in 2021 to help stave off the economic impact of the COVID-19 pandemic

This is at least 64 billion euros higher than the 96 billion euros initially foreseen by Scholz for next year.”


Italy’s Bank Troubles Are Back to Haunt It:

The public outcry against bank bailouts during the financial crisis prompted European governments to constrain the use of public money to help lenders in crisis. New trouble at the region’s oldest bank [Monte dei Paschi di Siena] will test whether these rules can outlast the pandemic.”


Spanish banks seek mergers as outlook darkens.” [Spanish banks are the most exposed to Turkish debt ($64 billion).]


According to Goldman Sachs, Ankara spent more than $100 billion of its currency reserves in 2020 to support the Turkish Lira.

The Turkish government’s inability to deliver on its vague promises to secure the strengthening of national currency will accelerate the depreciation of the Turkish Lira, which could further worsen Turkey’s fragile external financial situation.”


Turkey has become a geopolitical balancing act between an increasingly capable and active military, and an increasingly volatile economy

The risk now is that a step too far militarily, or a mis-step economically could trigger a full blown crisis…”


India and China are engaged in an eight-month standoff at LAC in Eastern Ladakh. Both the countries are also engaged in military and diplomatic talks to resolve the border dispute…

Amid this, apart from aggressively developing infrastructure, China has started installing radars from Ladakh to Sikkim region.”


China’s military used microwave weapons to force Indian troops to retreat during a months-long border standoff in the Himalayas, according to an account that has emerged in Beijing.”


A string of defaults by Chinese state-owned companies has sent shockwaves across the world’s second-largest credit market

““Most of the onshore bonds hit hardest this time share a common symptom: their profitability has lagged far behind their debt growth,” said Li Yunfei, credit analyst at Pacific Securities Co.”


South Africa’s finance ministry said on Saturday the ratings downgrade by Moody’s and Fitch will increase the country’s borrowing costs and constrain its fiscal framework.

“”The decision by Fitch and Moody’s… is a painful one,” Tito Mboweni, Minister of Finance, said in a statement.”


Whites-only school prom’ protesters hit with tear gas and rubber bullets in South Africa:

Some of the mainly black demonstrators are seen carrying machetes, sticks and golf clubs, but are met by a heavy police presence.”


Ivory Coast Tests Euro Debt Market in First Foray Since Pandemic:

“Ivory Coast is preparing to sell sub-Saharan Africa’s first euro-denominated bonds since the start of the Covid-19…”


Ghana Central Bank Says Options Waning as Debt Hits Four-Year High:

“Ghana is running out of fiscal space as its debt-to-GDP ratio reached 71% by Sept. 30, the highest in nearly four years, following early attempts to cushion the population from the impact of the coronavirus pandemic, its central bank said Monday.”


Africa’s largest economy [Nigeria] has slumped into a recession in the third quarter as oil production dropped to a four-year low.

Nigeria’s gross domestic product shrank 3.6% in the three months through September from a year earlier, compared with a 6.1% contraction in the previous quarter…”


A judicial panel investigating claims that Nigerian soldiers shot dead peaceful protesters in Lagos viewed videos on Saturday appearing to show people hurt or saying that they were being fired on, but an army general dismissed the footage [as fake].”


Iraq is seeking an upfront payment of about $2 billion in exchange for a long-term crude-supply contract, the latest sign of Baghdad’s growing desperation for cash as its economy unravels.

“The Middle Eastern country is grappling with a crisis brought to a head by low oil prices and OPEC+ output cuts. As state coffers dwindle and school teachers go unpaid, the country risks a repeat of upheaval last year that brought down the government and saw hundreds of protesters killed.”


Oil-rich Kuwait faces reckoning as debt crisis looms:

“Kuwait, one of the world’s wealthiest countries, is facing a debt crisis. The pandemic has sent the price of oil crashing to all-time lows and pushed the petrostate toward a reckoning with its longtime largesse, just as a parliamentary election approaches in December.”


Could OPEC’s House of Cards Collapse?

As the cartel’s oil ministers prepare to meet in just over a week to decide on the next step in their record-breaking output deal, officials in the United Arab Emirates, normally a loyal Saudi ally, are privately questioning the benefits of participating, and may even be considering whether to leave the Organization of Petroleum Exporting Counties.”


Faltering Oil Demand Is Wreaking Havoc On The Tanker Industry:

“The tanker market is in “cash burn mode”, said the chief executive of Diamond S Shipping, as quoted by Lloyd’s List.”


More than a hundred pro-government civilians on Sunday mobbed a handful of protesters who showed up at Havana’s Central Park [Cuba] to support a group of dissidents on a hunger strike, while security forces watched on, according to a Reuters eyewitness.

“Police detained more than a dozen people for attempting to protest…”


Hundreds of protesters broke into Guatemala’s congress and burned part of the building amid growing demonstrations against President Alejandro Giammattei and the legislature for approving a budget that cut educational and health spending.

“The incident on Saturday came as about 10,000 people were protesting in front of the National Palace in Guatemala City against corruption and the budget…”


Protests in Bogota [Colombia] marking a year since 2019’s national strike against Ivan Duque’s government end with riots around a university site.”



Police violence in Chile has reached a shocking nadir, with reports that two young people, aged 14 and 17, were shot by armed police in the southern city of Talcahuano, in Chile, on Wednesday afternoon…

In Chile’s capital Santiago, hundreds of protestors took to the streets to demand an end to police violence but were met with repression, tear gas and arrests.”


Peru is planning to raise new public debt in the short term in order to finance the Andean country’s deep fiscal deficit and repay interest on old debt in 2021, interim President Francisco Sagasti told Reuters.”


The funeral of a black man who died after being beaten by supermarket security guards in Brazil has been held following protests that echoed those of the racial justice movement in the United States.

“”On Friday, demonstrators painted “Black Lives Matter” on the pavement of Paulista Avenue, one of the most famous in Sao Paulo, following a series of protests across the country.”


Researchers investigating a little-known deadly virus [Bolivia] that causes a fever, vomiting and internal bleeding have found that it can be spread from person to person.

“The recently-discovered Chapare virus, which claimed three lives during an outbreak in Bolivia last year, is thought usually to be spread to people through contact with infected rodents.”


The COVID-19 pandemic signals that civilization has breached a major ‘tipping point’ that could pave the way for a dangerous new era of interacting ecological emergencies.

“Scientific evidence accumulated over the last five years suggests that the pandemic didn’t come out of the blue, but is a direct consequence of industrial civilization’s breaching of key ‘planetary boundaries’…”


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

If you found value in this content, please help me continue this work by becoming a $2/month patron of my work via patreon.com.

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

The global economy could be facing a make-or-break moment in the Covid-19 pandemic as governments’ ability to cover the mounting costs nears its limits, the chief of the OECD warned.

Angel Gurria, who spent 14 years as the head of the Paris-based body, said while governments were right to open the spending taps this year to counter the worst recession in living memory, many are close to running out of fiscal firepower.”


The Virus Is Surging. Growth Is Slowing. And Millions of Americans Are About to Lose Jobless Benefits.

“The Cares Act was a gamble that the coronavirus would be eliminated quickly. That was a bad bet, and Americans are set to pay the price for it once again.”


U.S. Treasury Secretary Steven Mnuchin said on Thursday that key pandemic lending programs at the Federal Reserve would expire on Dec. 31, putting the outgoing Trump administration at odds with the central bank and potentially adding stress to the economy as President-elect Joe Biden organizes his administration.


Eight months into the pandemic, US clothing stores, restaurants, gyms and other businesses find themselves in a $52 billion hole. That’s the total amount of retail rent that’s been missed since April

““You’re going to have big bubbles that are going to be hitting next year or even in the fourth quarter,” said Andy Graiser, co-president of A&G Real Estate Partners, an advisory firm. “I’m not sure if they are going to be able to make those payments in addition to their existing rent.””


Two US banks failed in October, the first to collapse since the start of the coronavirus pandemic.

Banking experts say they won’t be the last. At least 50 of the country’s more than 5,000 banks are considered troubled, according to Bauer Financial…”

[non-bank lenders may be the ones to watch in the first instance though, as tighter regulations since the Global Financial Crisis have tended to push risk into the shadow lending system].


Lines are continuing to grow at food banks across the US as the financial devastation caused by the coronavirus pandemic is laid bare.

“Millions of Americans are currently going hungry, relying on volunteers and non-profit organizations to stay fed as Thanksgiving approaches.”


Rishi Sunak has warned there may need to be cuts as the UK’s debt reached a record high of more than £2 trillion. Public sector debt has reached £2.08 trillion at the end of October…

It is thought he will cap pay rises in the public sector to at or below inflation… teachers, police, members of the armed forces as well as NHS managers will all be affected.”


The UK economy contracted more than twice as much as that of any other G7 nation in the first nine months of the year, a report has confirmed.”


Almost three quarters of UK pubs and restaurants expect to shut permanently next year following damaging coronavirus restrictions, an industry poll indicated Thursday.

The British Beer and Pub Association, the British Institute of Innkeeping and UK Hospitality said in a statement that 72 percent of surveyed businesses “expect to become unviable and close in 2021″.”


UK Workers left with almost no money who are relying on handouts due to the pandemic have begged for help from the Government.

“Around three million people are facing financial crisis because they cannot access government help.”


Thyssenkrupp, the ailing German steel and materials group, plunged to a full-year loss of €5.5bn and said it would cut 7,400 more jobs, as

“…the pandemic increased pressure on the former conglomerate to speed up the sale of underperforming businesses.”


IBM is planning to cut 8,000 staff in Europe, including up to 2,000 in the UK and Ireland, according to a report by Channel Partner Insight (CPI).”


Russia’s gross domestic product fell 4.7% year-on-year in October, after a 3% decline in September, the economy ministry said on Friday.

“Economic contraction was mostly driven by a drop in output in the manufacturing and agriculture sectors, the ministry said…”


Arab Gulf oil producers are losing billions of U.S. dollars from oil revenues this year due to the pandemic that crippled oil demand and oil prices.

Because of predominantly oil-dependent government incomes, budget deficits across the region are soaring.”


The pricing of Aramco’s $8 billion jumbo bonds this week has made clear that markets look at the oil giant as a proxy for Saudi Arabia, investors say, a change from last year’s inaugural bond issue that valued its risk as lower than the government’s.”


It’s economic madness but China Borrows at Negative Rates for the First Time.

“Superlow interest rates in Europe helped China to sell its first negative-yielding debt, as it raised about $4.7 billion in a three-part deal in euros.”


China’s market regulator expanded its investigation into bond sales for a state-backed coal miner that unexpectedly defaulted on payments last week, dragging in a number of banks, rating and accounting firms.”


Why China could snarl global debt relief:

A new common framework for restructuring looks great, but there are complications.”


Japan’s core consumer prices fell in October at their fastest annual pace in nearly a decade as the boost from last year’s sales tax hike petered out, heightening fears of a return to deflation for an economy still dealing with COVID-19.”


Japan’s manufacturing decline sped up in November as output and orders sagged, a business survey showed on Friday, underscoring the fragile nature of the economic recovery from the COVID-19 crisis.”


African countries face another debt crisis and will need more long-term help than the latest G20 debt plan offers them to ward off trouble ahead and keep much-needed investments coming in…

Around 40% of sub-Saharan African countries were in or at risk of debt distress even before this year, while Zambia became the continent’s first pandemic-era default last Friday.”


Surging debt during the pandemic is creating dangers for investors and developed countries:

one of the big areas of concern is in developed markets, which are battling slow growth and rising debt at the same time.”


People are suffering’: G20 to call on private lenders to suspend debt repayments.

At this weekend’s meeting in Riyadh, leaders will urge action to free up resources to help stricken developing countries combat Covid-19.”


“Some advocates have continued to promote the G20 as the natural forum to discuss major issues confronting the world.

“But the G20 faces three major challenges: legitimacy, effectiveness and membership.”


Great Reset or grating global conspiracy theory? Either way, don’t dismiss genuine anxiety:

“…Earlier this month, [Australian] Senator Pauline Hanson moved a motion to reject the World Economic Forum’s “Great Reset”. The senator asked Parliament to “note that adopting the policies would devastate the economic wellbeing and individual freedoms of Australians” and that the Australian government should boycott all World Economic Forum events in protest over The Great Reset agenda.

“The motion referred to a theory that the global elite are planning to impose a new world order, using the COVID-19 pandemic as cover.”


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

If you found value in this content, please help me continue this work by becoming a $2/month patron of my work via patreon.com.

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

The COVID-19 crisis did not start as a financial crisis, but it is morphing into a global one,” according to Carmen Reinhart, chief economist at the World Bank.

She made the comments in The Economist’s highly anticipated The World in 2021 report… Her views echo those of Bank of England governor Andrew Bailey, who said on Tuesday at TheCityUK conference that changes to the structure of the UK economy were likely.”


Millions of people across the US continue to face unemployment, as the number of jobs in the US remains at more than 10m fewer than prior to the pandemic in February.

“More than 25 million workers in the US are suffering from the economic downturn, including those people claiming unemployment benefits, workers designated as having left the labor force due to the pandemic, and workers still facing cuts to work hours and pay.”


U.S. politicians are behaving like children by not passing a new stimulus bill that could help Americans whose income has been wiped out by the coronavirus pandemic, JPMorgan Chase & Co Chief Executive Jamie Dimon said on Wednesday at a New York Times conference.

““This is childish behavior on the part of our politicians,” Dimon said about an impasse between Democrats and Republicans…”


America: The world’s scariest emerging market economy:

“Americans have long viewed their economy as the shining city on the hill for other countries to emulate. Yet since the 2008 Lehman bankruptcy, and especially over the past four years, the U.S. economy has increasingly resembled the emerging market economies to which we have been so free with our economic advice.”


Rishi Sunak is preparing to publish what allies describe as a “scary” outlook for the UK economy in next week’s spending review, containing the largest downgrade in economic performance and the public finances since the second world war…

“…the UK economy will contract close to 11 per cent in 2020, the worst annual performance for more than 300 years.”


Digital currencies could reduce risk in the financial system and aid monetary policy with interest rates close to rock bottom, Bank of England chief economist Andy Haldane has said.

“Haldane also told The City UK’s annual conference that new technological infrastructure should be considered to help small and medium-sized businesses better access finance after years of difficulties.”


Europe’s leaders will demand today that the European Commission publish no-deal plans amid fears that Brexit negotiations are dragging on without businesses knowing what they need to prepare for in the worst scenario.

“Several European Union governments are growing frustrated that deadlines for trade, security and fishing talks are slipping…”


After a one-month reprieve, passenger car sales in Europe slumped again in October amid new restrictions in many countries aimed at containing a resurgence of the coronavirus, the European carmakers’ association reported Wednesday.

The European industry registered 953,616 new cars last month, a decrease of 7.8% and a reversal of fortunes after September marked the first increase of the year…”


Germany’s auto industry secured 5 billion euros ($5.9 billion) in government aid to help weather the coronavirus crisis and invest in the transition to electric cars.”


Police in Germany broke up a protest against the government’s efforts to prevent the spread of COVID-19 on Wednesday.

“As many as 10,000 people gathered in the government district of Berlin as lawmakers in the German Parliament voted to amend the country’s Infection Protection Act to clarify what kind of protective measures can be ordered by state governments.”


Journalists, human rights groups protest new French security bill…

“Macron’s centrist government has proposed a new “comprehensive security” law that would institute reforms such as giving more autonomy to local police — and potentially arming more of them — and expanding the use of surveillance drones in high-crime areas.”


A lone protest by an Italian girl against the closure of her school because of coronavirus restrictions is spreading around the country.

“For the last few days, Anita Iacovelli has set up a small blue desk, a pink metal chair and her laptop outside the school she used to attend in Turin.”


Italy’s government will seek parliamentary approval for 20 billion euros ($24 billion) of extra deficit on Thursday, according to people familiar with the matter.

“A cabinet meeting will sign off on the request, the people said asking not to be named discussing plans that will enable the virus-battered to further expand its public debt as soon as this year.”


Italy plans to widen an existing guarantee scheme for bank loans in a move that will help the country’s lenders cope with any future defaults sparked by the pandemic, a draft of the 2021 budget showed.”


The European Commission issued on Wednesday a warning to Athens that the market support measures during the pandemic should not be excessive so that they do not jeopardize the sustainability of the public debt.

“It also highlighted that the debt will remain at risk unless growth is supported, which makes it imperative that reforms continue…”


Hungary and Poland plunged the EU into political crisis on Wednesday by blocking a £1.65 trillion coronavirus rescue budget that they claimed ‘blackmailed countries into accepting migrants’.

“On Monday, the two countries blocked the 2021-2027 budget and the recovery plan, worth a combined 1.85 trillion euros, because access to the funds would be conditional on respecting the rule of law.”


Japan’s biggest labor union said COVID-19 won’t stop it demanding pay increases for its 7 million members, even after the worst year for corporate profits since the global financial crisis.

“Rikio Kozu, head of the Union, indicated in an interview Tuesday he’ll push for a 4% wage increase, including base pay, even though rising waves of the coronavirus are darkening the outlook for employers.”


General Motors Co has issued its strongest warning yet that persistent industrial unrest could drive it out of South Korea, just two years after it received a state-backed rescue package to stay

“The strikes and other industrial action have cost the company 17,000 vehicles in lost production, a number that will hit 20,000 by the end of the week.”


As Beijing reins in its largesse and credit stresses rise in China amid a wave of defaults, investors should wonder where the ructions will appear next.

“Going by the numbers, local government financing vehicles – with trillions of yuan outstanding – seem primed to come under pressure.”


Dozens of Hong Kong students turned their graduation ceremony on Thursday into a march to commemorate pro-democracy protests last year that included violent clashes with police across city campuses.

“Wearing black graduation robes and Guy Fawkes masks, the students marched through the campus of Chinese University of Hong Kong…”


Thousands of protesters in Thailand converged on the police headquarters in Bangkok on Wednesday night, defacing the building a day after violent protests left dozens injured.

“Angered by the government’s decision to reject a constitutional reform proposal – a key demand of protesters – and alleged police violence, demonstrators hurled buckets of colourful paint and sprayed graffiti on the Royal Thai Police headquarters’ building facade.”


Security forces in Uganda have fought running battles with supporters of the popular Ugandan reggae singer and opposition presidential hopeful Bobi Wine after the 38-year-old was arrested for breaching Covid-19 regulations shortly before a rally…

“In violent clashes, dozens were reported to have been hit by live rounds fired by police and as many as eight killed.”


Nigeria’s central bank has denied that it is unjustly targeting leaders of the anti-police brutality movement that brought Africa’s largest city to a standstill last month.

“The bank has blocked several bank accounts amid an “ongoing investigation by the Central Bank of Nigeria” into the activities of 20 people and organisations “who are alleged to be involved in suspected terrorism financing”, according to its filing with the Abuja federal high court.”


Protesters clashed with police officers in Port-au-Prince on Wednesday as they called for the resignation of Haitian President Jovenel Moïse amid corruption allegations against him.

“The demonstrators lit fires on the street and threw objects at police officers, who in turn responded by shooting live ammunition and tear gas at the protesters.”


Hundreds of people protested in Chile’s capital Santiago on Wednesday to demand the resignation of President Sebastian Pinera over police repression of the country’s social protests.

“Police fired tear gas and water cannon to keep around 500 protesters from approaching the Moneda presidential palace.”


Venezuelan oil could become world’s biggest stranded asset, say experts:

““…Oil will not save us this time around,” said Pedro Burelli, a former board member of Venezuela’s state-owned oil company PDVSA who now runs a consultancy in the US. “We have to reinvent ourselves as a country and as an economy.””


Estimates from the Air Transport Action Group suggest some 4.8 million aviation workers’ jobs are at risk as a result of air travel demand falling more than 75% in August 2020 compared with August 2019.

The impact of travel restrictions and quarantine measures have effectively closed down the aviation industry… “Aviation faces an unprecedented employment catastrophe,” said Alexandre de Juniac, IATA’s Director General and CEO.”


Norwegian Air has asked an Irish court to oversee a restructuring of its massive debt as it seeks to stave off collapse amid the coronavirus pandemic, the budget airline said on Wednesday.”


Governments and central banks have promised to shell out $19.5 trillion since the coronavirus erupted to “put a floor under the world economy,” according to the International Monetary Fund.

“Some countries need even more help to recover from the crisis, but they might not get it.”


The coronavirus crisis pushed global debt levels to a new high of over $272 trillion in the third quarter, the Institute for International Finance said, as it warned of the “attack of the debt tsunami.”

“The institute said global debt would break new records in the coming months to reach $277 trillion by the end of the year. This would represent a debt-to-GDP ratio of 365%.”


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

If you found value in this content, please help me continue this work by becoming a $2/month patron of my work via patreon.com.