“…it doesn’t take a catastrophe like war or drought to disrupt [food supplies]. In Venezuela, a country blessed with rich oil reserves, a political crisis driven by rocketing inflation has led to shortages of food and medicine, forcing families to live off rotten meat and leading millions to leave the country all together. The Eurozone crisis that sent Greece’s economy to the brink of collapse also brought food shortages to the struggling country.
“Meanwhile, disease, poor weather and rising prices have led to shortages of a number of popular crops in recent years. Soaring rice prices led to panic buying in the Philippines and other Asian countries in 2008, causing a supply crisis for this staple food. Bad weather in Europe in 2017 saw prices of many vegetables rise while there also were worldwide shortages of avocados after several countries were hit by poor harvests.
“The fuel protests that hit the UK in 2000, where farmers and hauliers blockaded oil refineries and fuel depots, led to supermarkets rationing food as they struggled to get deliveries to restock their shelves. Even the stockpiling of food by schools, care homes, hospitals and pessimistic shoppers in the UK ahead of Brexit show what effect even the mere rumour of food shortages can have…”
“The EU’s chief Brexit negotiator Michel Barnier said Tuesday that the bloc was prepared for a no-deal Brexit scenario.
“Barnier acknowledged that the UK’s House of Commons had voted against leaving the EU without a deal last week but cautioned: “Voting against a No Deal does not prevent it from happening.” His advice then followed: “Finalise all preparations for a no-deal scenario.””
“Trade body Oil and Gas UK has released its 2019 business outlook, setting out that new exploration is expected bounce back from last year, which saw lowest levels since the 1960s, while production is also on the rise.
“Meanwhile drilling activity is at a “record low rate” and supply chain firms remain under “significant financial stress”.”
“There was an important piece of economic news this month that most Irish people probably considered a good development. Mario Draghi, the governor of the European Central Bank, promised to keep the ECB base rate of interest at zero for at least the rest of the year…
“It was widely believed that the ECB would want to raise rates here, if only to build up some space for a cut before the arrival of the next recession, when it will be needed.”
“When Deutsche Bank and Commerzbank confirmed they are holding formal talks about a merger, critics were quick to question a tie-up that may lead to tens of thousands of job losses and the potential failure of a plan that may do little to address underlying problems at both banks.
“Now, the European Central Bank is adding its criticism to the mix.”
“That the region’s financial institutions, including some of the biggest, are in a state of grinding decline is a grave cause for concern—and not just for their stockholders and bondholders. Europe relies heavily on its lenders to fuel growth. Banks provide about three-quarters of financing to companies and nine-tenths of credit to households. In the U.S., corporations rely on capital markets—selling bonds and shares—for the bulk of their financing.
“BOTTOM LINE – Europe is even more dependent on strong banks to fuel its economy than the U.S. Yet the continent’s lenders can’t seem to find healthy profits.”
“Confidence among Japanese manufacturers hit its weakest in two-and-a-half years in March, a Reuters poll showed, as global trade friction fuelled concerns that a postwar record growth cycle driven by Abenomics may be over…
“The central bank will closely read the results of its official tankan due out April 1…”
“Chief financial officers and even average U.S. citizens have been bracing themselves for a recession, either this year or next… A potential economic slowdown could convince the Federal Reserve to put off another interest rate hike, according to the poll. In January, 78% of respondents expected a rate hike sometime this year. That is down to 60% now.”
“Almost half of Americans carry a balance on their credit cards, a new survey finds, and paying it off is proving a challenge: Only about 30 percent of people with credit card debt say they’ll be able to wipe it out this year.”
“Hard to believe just five weeks ago we were shoveling snow; now we’re getting to get a taste of July!
“Temperatures zoomed well into the low-mid 70s Monday afternoon which not only knocked off the daily record high but a 75-degree reading at 2: 45 p.m. set a record for the warmest winter day ever recorded in Seattle! The only other time it’s been near this warm in winter was … last year. It hit 73 degrees on March 12, 2018. Huh.”
“”Temperatures upwards of 10 degrees above normal,” meteorologist Matt MacDonald said. “We’re going to be breaking several records and a lot of these records date back to the last 100 years. So this is quite an exceptional little heat spell.”
“The warmer-than-usual forecast comes a day after temperature records were broken across British Columbia, including a 72-year-old record in Pitt Meadows.”
“The governors of Nebraska, Iowa and Wisconsin have declared states of emergency. “This really is the most devastating flooding we’ve probably ever had in our state’s history, from the standpoint of how widespread it is,”
“Nebraska governor Pete Ricketts tweeted on Monday. “In 2011, it took 108 days for water to subside, and this year the water is 4-5 feet higher.””
“Add one more tornado to the total from Thursday’s severe weather. The National Weather Service in Birmingham said on Monday that it had confirmed that an EF0 tornado touched down March 14 in Calhoun County north of Ohatchee.
“That makes for a total of 16 tornadoes statewide. Fifteen of them struck central Alabama and one touched down in north Alabama.”
“Cyclone Trevor has slammed into the north Queensland coast with ferocious winds of more than 200km/h that are ripping trees from the ground.
“The powerful category three storm made “howling” landfall at 5pm just south of Lockhart River, one of a handful of towns on the Cape York Peninsula that has been urged to remain indoors until the storm passes.”
“The death toll from flash floods in Indonesia’s Papua region has risen to at least 80…
“People are frightened and some are blaming climate change according to Derek Windessy from Indonesia’s Red Cross. “Because it is still raining, raining and raining again. Last night still raining and some rivers throw up and flood through in the villages, so it’s hard,” he said. “Almost three days or four days. People cannot sleep well. And then they scare. So they need to move to the safety place now,” said Derek Windessy.”
“Davao City Government on Monday, March 18, conducted preemptive evacuation in several barangays ahead of Tropical Depression Chedeng, which has been forecast to make landfall over Davao Oriental or Davao Occidental.
“The Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa) has placed the entire Davao Region under Tropical Cyclone Warning…”
“Drought has been declared in the western Indian state of Maharashtra, despite an ambitious government scheme to replenish ground water supplies.
So what went wrong? BBC Marathi investigates. “This year we received rains for only two days. But this is unlikely to last us for the next 15 days. The government will have to provide us water via tankers,” says Nana Dudhare, the head of Akhatwada village in Khultabad district.”
“A gritty, quick-acting cop jumped into the menacing water current of Al Beeh Wadi to rescue three families – comprising Emiratis and Asians – stuck in the flash floods [in UAE], triggered by thunderstorms and heavy rainfall, in Ras Al Khaimah on Sunday night.”
“A deadly tropical cyclone has destroyed as much as 90 per cent of the Mozambique city of Beira, raising fears for more than 500,000 people.
“According to the Red Cross, Cyclone Idai left devastation in its wake after it hit the major coastal city of half a million people on Thursday night with winds of up to 177 km/h (106 mph), before moving to Zimbabwe and Malawi.”
“As water supplies in Ghana’s capital grew increasingly erratic, Ms Beatrice Kabuki stopped customers from using her grocery store’s washrooms and installed a plastic storage tank at her home…
“Cities and towns in several other African nations including Mozambique, Zimbabwe and Ivory Coast have been plagued by similar water shortages in recent months, manifestations of a global supply squeeze brought on by drought, population growth, urbanisation and insufficient investment in dams and other infrastructure.”
“Monsoon-like conditions in North Yorkshire caused water to run from field into shed full of sheep.
“Environmental officials have put 20 flood warnings and 28 flood alerts in place across England today. Majority of alerts are in Yorkshire and the Midlands – and more rain is expected today in western parts.”
“Australia could be the “first domino to fall” in a global economic crisis for the first time in its 200-year history.
“That’s according to economist John Adams, Digital Finance Analytics founder Martin North and Irish financial adviser Eddie Hobbs, who argue Australia’s economy is looking increasingly similar to Ireland’s prior to the 2007 housing collapse…”
“Australian businesses are being warned that a blowout in invoice payment times in China could have a ripple effect here, given the massive trade links between the two countries.
“Figures by trade credit insurance provider Coface suggest that Chinese businesses are increasingly taking longer to pay their bills, as a trade war with the US and a general economic slowdown bite, coupled with a spike in the number of bankruptcy cases in China.”
“Wang Jingwu, head of the central bank’s financial stability department, expressed long-term concerns in an article in China Finance, a central bank publication.
““We need to pay high attention to the risk that the global economy will fall into a recession again in the medium- and long- term, and be alert to its gradual evolution that may trigger a new round of economic and financial crisis,” he wrote.”
“Asia’s exports slump is expected to deepen, with analysts saying regional trade is heading for its lowest point since 2015. Amid a slowdown in global demand, Asian exports will continue to decline until at least April, according to an index compiled by Nomura Bank.”
“Brexit Secretary Stephen Barclay has played down the prospect of asking the Queen to shut down parliament after the government was plunged into a “major constitutional crisis”.
“Prime Minister Theresa May will gather her top ministers on Tuesday morning as they try to find a way past a bombshell ruling by Speaker of the House of Commons John Bercow. In a major intervention on Monday, Mr Bercow cited a centuries-old convention as he blocked Mrs May from bringing back her twice-defeated Brexit deal for a third vote…”
“ECB in its last Governing Council meeting, announced new projections, which suggest that 2021 will be the ninth calendar year in succession that the central bank will fail to meet is inflation objection in terms of the annual year average, notes Nick Kounis, head of financial markets research at ABN AMRO…
“The most likely policy tool is a restart of net purchases under a broad asset purchase programme.”
“As part of a European business restructure announced in January, Ford is reorganising its workforce in the region by up to 5,000 jobs. “The goal is to significantly decrease structural costs, reduce bureaucracy, empower leaders and managers, and eliminate less value-added work,” the automaker said in a statement.
“It has now offered “voluntary separation” programmes for employees in Germany and the UK…”
“Federal Reserve officials say they’re willing to tolerate an overshoot of their inflation goal. If the opposite happens, the plan is less clear. Core inflation, excluding energy and food prices, is currently just shy of the central bank’s 2 percent target.
“Most economists and policy makers see that lasting, though there’s no guarantee: Inflation expectations have been stuck on the low side, and a cooler housing market is among several factors that could weigh on future price pressures.”
“I first suggested the U.S. economy was headed toward a recession more than a year ago, and now others are forecasting the same. I give a business downturn starting this year a two-thirds probability. The recessionary indicators are numerous:
“Tighter monetary policy by the Federal Reserve that the central bank now worries it may have overdone. The near-inversion in the Treasury yield curve. The swoon in stocks at the end of last year. Weaker housing activity. Soft consumer spending… Then there are the effects of the deteriorating European economies…”
“Now it’s the third month in a row, and the red flag is getting more visible and a little harder to ignore about the goods-based economy: Freight shipment volume in the US across all modes of transportation – truck, rail, air, and barge – in February fell 2.1% from February a year ago, according to the Cass Freight Index, released today. The three months in a row of year-over-year declines are the first such declines since the transportation recession of 2015 and 2016.”
“As the world braces itself for an economic slowdown, countries cannot treat the darkening skies over the global economy simply as passing clouds.
“Nations will need more than a normal, cyclical policy response, said Singapore Deputy Prime Minister Tharman Shanmugaratnam in a exclusive interview with Chinese business magazine, Caijing, published yesterday.
“In the next two years, the United States is likely to experience a downturn, and so is the rest of the global economy. But the world is witnessing never-before-seen risks, said Mr Tharman, who is also Coordinating Minister for Economic and Social Policies.”
“As China’s $9.1tn shadow lending industry cools for the first time in a decade, private corporate defaults are on the rise… Shadow funds have been the lifeblood of private companies in China for years, because as state-owned banks tend to prefer to lend to government-controlled companies.
With access to shadow funds cut off, many private companies will face financial strain and defaults are expected to rise this year…”
“Japan’s exports fell for a third month in February in a sign of growing strain on the trade-reliant economy, suggesting the central bank might be forced to offer more stimulus eventually to temper the effects of slowing external demand and trade frictions.”
“Japan’s government debt in 2018 hit the US$10 trillion mark, an ominous milestone. In the same year the nation’s population saw a record decline. Despite all this, 10-year yields are -0.04%. Punters, in other words, are effectively paying Tokyo for the opportunity to hold its debt.”
“Treasurer Josh Frydenberg has warned Australia’s housing market collapse could destroy small businesses and hit family budgets ahead of the next federal election.
“House prices have plunged by around 15 per cent in parts of Sydney and Melbourne in recent months amid fears the fall will harm the wider economy. In particular, small business owners that took out loans against the value of their houses may be badly affected.”
“The [South African] utility, which is struggling to emerge from a severe financial crisis and suffered a series of unplanned breakdowns, began rolling blackouts last week because of a shortage of generating capacity.
The situation worsened on Saturday after it lost 900 megawatts of electricity imports from Mozambique, which is cleaning up after a powerful cyclone knocked out communications and electricity pylons last week.”
“British companies look set to cut investment by the most in 10 years in 2019 because of Brexit, even if Prime Minister Theresa May gets a deal to ease the country out of the bloc, an employers group said on Monday…
“Weak investment by companies drags on productivity which puts a brake on wage rises and weighs on the overall economy.”
“As for Germany, over-reliance on the auto sector has left the economy cruelly exposed to the slowdown in China, by far the industry’s biggest export market.
“For Germany, a decline of just 10pc in Chinese car sales, which is what has happened, is equal to the entire size of its UK market. It would be most unwise to count on this being just a temporary setback.”
“Deutsche, the largest bank in Germany, Europe’s biggest economy, emerged unscathed from the financial crash but later lost its footing. In 2016, the International Monetary Fund called the bank the world’s biggest potential risk among peers to the financial system because of its links to other banks.
“German officials fear that a recession or big fine, for example, could derail the bank’s fragile recovery.”
“At one point during this partnership, Cuba was receiving more than 100,000 bpd of Venezuelan crude, an analysis by Oliver Pieper for Deutsche Welle said. Now, however, this is probably down by a half as Venezuela struggles to keep its fields producing.
“Even so, Venezuelan crude is an important part of Cuba’s energy mix and its elimination from this mix would almost certainly lead to power outages for Cuba as well.”
“It has been pointed out that extended periods of ultralow interest rates can have adverse effects. One of these is an increase in global debt. According to the Organisation for Economic Co-operation and Development (OECD), global outstanding debt in the form of corporate bonds issued by non-financial companies stood at almost 13 trillion U.S. dollars at the end of 2018 — more than double the amount outstanding in real terms before the 2008 global financial crisis.
“If investor sentiment turns around and a full-scale increase in interest rates resumes, then there is a risk that many companies will find it impossible to service and pay back this debt.”
“Here’s another disaster waiting to happen: Globally, financial markets today are seeing a rebirth of “collateralized loan obligations” (CLOs), instruments broadly similar to the “collateralized debt obligations” (CDOs), which helped to blow up the financial system in 2008.
“CDOs were asset-backed instruments, a “blended” security comprised of risky mortgage-backed bonds and much of the rest from theoretically safer tranches. The theory underlying them was that the lower the investment quality, the higher the compensating yield, but in reality most turned out to be toxic junk. What distinguishes CLOs from their CDO “cousin” is that instead of repackaging mortgages, subprime and otherwise, CLOs repackage corporate loans, and consumer credit, such as car loans.
“Unfortunately, in yet another instance of lessons unlearned from 2008, the collateralized loan obligations, like the CDOs, have virtually non-existent investor protection, “with over 70 percent lacking any covenants that would allow monitoring of financial condition and early intervention to manage problem borrowers.”
“The growing mystery of where China’s rapid slowdown is headed may become the biggest risk on the horizon, even as Brexit and a solution to U.S.-China trade tensions are kicked into the long grass…
“The global economy’s in its weakest shape since the financial crisis a decade ago, Bloomberg Economics analysis shows. And the reminders are all around: China got more affirming evidence of its big slowdown, with industrial output and retail sales softening…”
“China’s economic slowdown deepened in the first two months of the year, pushing unemployment sharply higher from…
“Against the backdrop of slowing global demand and domestic weakness, the jump in joblessness comes just days after Premier Li Keqiang announced an “employment first” strategy as a key part of economic policy for the coming year. That will feed into policymakers’ calculations as to if and when further stimulus measures to shore up the world’s second-largest economy are needed.”
“If you think China’s monetary policy became more lax in 2018, wait for 2019. Pushed by gloomier activity data, China’s policymakers have moved from an orthodox monetary policy to a much more heterodox one.
“The core of this more aggressive move is to exhort banks to lend more to the private sector, with specific targets on the amount of credit granted to private companies and, in particular, small and medium enterprises…”
“This round of currency intervention in Hong Kong is far from over. That’s according to analysts, who’re watching the interplay between the amount of money in the city’s financial system and local borrowing costs.
“Shorting the Hong Kong dollar will remain profitable until the latter starts to go up sharply, and the monetary authority will spend at least another HK$50 billion ($6.4 billion) defending the peg before that happens…”
“The Bank of Japan kept monetary policy steady on Friday but tempered its optimism that robust exports and factory output will underpin growth, a nod to heightened overseas risks that threaten to derail a fragile economic recovery. Factories across the globe slammed on the brakes last month as demand was hit by the U.S.-China trade war, slowing global growth and political uncertainty in Europe ahead of Britain’s departure from the European Union.”
“Axis Bank’s Shashikant Rathi says rupee debt market in ‘complete chaos’… India corporate note spreads rise to near highest since 2009. Rathi, who has dominated India’s local bond underwriting business for over a decade at Axis Bank, says the industry now faces its biggest challenge since the global financial crisis. Shock defaults since last year by shadow bank IL&FS group and a new electronic bidding platform have disrupted the $108 billion market where underwriters like Rathi help companies raise money by selling debt securities…”
“Turkey’s unemployment rate jumped to 13.5 percent in the November-January period, its highest level in nine years, official data showed on Friday, in a fresh sign of the impact of last year’s currency crisis.
“The economy contracted a sharper than expected 3 percent in the fourth quarter of 2018, its worst performance in nearly a decade, indicating last year’s near 30 percent slide in the lira had tipped it into recession.”
“Australia’s housing market is on track to experience a slump bigger than both the global financial crisis and the 1980s recession.
“National dwelling (houses and units) values slumped by 6.8 per cent since their peak in October 2017, driven mainly by sharp falls in Sydney (-13.2 per cent) and Melbourne (-9.6 per cent), according to new analysis by property data company CoreLogic.”
“Canadian home values fell last year for the first time in three decades amid falling prices in some of the country’s priciest markets, even as debt burdens increased. The value of residential real estate in Canada held by households dropped C$30 billion ($22.5 billion) in the fourth quarter to C$5.10 trillion, from C$5.13 trillion in the same quarter the previous year, Statistics Canada reported Thursday. The 0.6 percent decline is the first decrease in country-wide home values in data going back to 1990.”
“U.S. new home sales fell 6.9 percent to a seasonally adjusted annual rate of 607,000 in January, the U.S. Census Bureau said on Thursday. Over the year, sales of new homes declined 4.1 percent, according to the U.S. Census Bureau…
Even as low mortgage rates kept boosting home buyers’ interest, housing market remained gloomy in the United States.”
“The United States will strengthen military ties with Brazil to a level usually reserved for NATO allies during President Jair Bolsonaro’s visit to Washington next week, boosting growing cooperation between the Americas’ two largest militaries, two Brazilian government officials said on Thursday.”
“Russian oil company Rosneft spent a fortune on joint ventures in Venezuela even though it suspected it was losing out on millions of dollars, documents show. It continued investing, sources say, because the Kremlin wanted to support its ally in South America…
“Rosneft has poured around $9 billion into Venezuelan projects since 2010 but has yet to break even, Reuters has calculated…”
“Argentina’s inflation quickened to 3.8% in February, 51.3% per year. Argentina’s central bank will shrink its monetary base by an extra 10 percent before the end of the year to slow inflation that has proven difficult to tame.
““We need to be persistent, understanding that there are no immediate results,” central bank President Guido Sandleris told reporters in Buenos Aires.”
“Chinese factory output slowed to its weakest pace on record early this year, a sign that the economy remained under pressure from US tariffs and weaker domestic demand despite a series of economic stimulus measures in recent months…
“China is ramping up assistance for the economy as 2019 growth looks set to plumb 29-year lows, but support measures are taking time to kick in.”
“The downturn in China’s auto market worsened in January and February as an economic slowdown and a tariff fight with Washington chilled demand in the industry’s biggest global market. Sales of SUVs, minivans and sedans plunged 17.5 percent from a year earlier…
“The decline in sales of passenger cars in January was 15 percent… Last year’s auto sales suffered their first decline in nearly three decades, calling 4.1 percent from 2017 year to 23.7 million.”
“For years, China’s biggest borrowers relied on accounting alchemy to prop up their balance sheets. Those days are over.
“Corporate perpetual bonds have almost always been recognized by Chinese auditors as equity, not debt. That enabled state-owned enterprises to borrow billions of dollars without it showing up that way.”
“The single most pressing economic problem in Thailand is household debt. Actually, the household debt issue is currently the world’s most important economic issue too.
“With the prevailing debt in major economies, it is difficult to see the world’s economy moving beyond a 2% annual growth rate. The household debt problem has already triggered a global financial crisis, namely the Lehman Brothers crisis in 2008. And it can trigger a similar crisis in China any time.”
“New Zealanders have a debt problem. In the past seven years, household debt has skyrocketed…Kiwis are spending more money that they don’t have. It’s a signal to economists that the foundations are shaky.
“It’s also not hard to see why borrowing is going through the roof — property prices. Houses cost more. People have to borrow more to buy them. Wages are growing more slowly than house prices. The result? Ballooning debt.”
“While the overall level of [US] consumer borrowing is rising at a steady pace, one subset of loans, those linked to car purchases, has risen sharply over the past year.
“This is particularly true in the “subprime category” — those high-risk borrowers with a FICO consumer credit score below 620 (the bare minimum score required to be approved for a conventional mortgage in the US). More striking still, defaults on those subprime auto loans appear to have surged.”
“Brussels has said a vote by UK MPs to block a no-deal Brexit in any circumstances is a meaningless move, with one senior EU negotiator describing it as “the Titanic voting for the iceberg to get out of the way”.
“A European commission spokesman offered a withering assessment of the decision by MPs to ignore Theresa May’s assertion that no deal was the default position unless there was a deal in place by the time of the UK’s departure.”
““We love our city, we love our weather, we love the Greek people, but we are scared and afraid in a way, because the situation is not that good,” Dimopoulos said about him and his friends.
““We have to try harder and harder to make our own money … Sometimes we are talking (about going) abroad: If it is going to be better for us to leave Greece or if it is going to be better to stay in Greece and try harder. It is in our minds.””
“Turkey’s industrial output shrank for the fifth month in a row in January, the clearest evidence of continued weakness in the Middle East’s largest economy after it fell into a technical recession during the last quarter of 2018.
“Combined production of Turkish manufacturers, miners and power producers slumped 7.3 percent from a year earlier…”
“Protests initially erupted on December 19 after a government decision to triple the price of bread, while irregular fuel supplies have been a common feature for months across Sudan. “The economic issues need to be solved immediately as it impacts inflation and our currency rate,” said Eila. Although the bread price rise triggered the protests, anger had mounted across the country for years over soaring inflation and an acute shortage of foreign currency.”
“Venezuela’s largest private food supplier says massive looting and vandalism occurred at four facilities in the city of Maracaibo during nationwide power outages, complicating efforts to distribute food and drinks to people in the area.”
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Weekday updates on both climate change and the global economy. Stay current with what’s happening around the world with a quick scan of top news.