Daily updates on climate change and the global economy.

Economy 26 February 2019 Corporate Debt Crisis Looms

“The ballooning edifice of corporate debt securities across the world is of ever lower quality and potentially more dangerous than it was at the outset of the Lehman crisis, the OECD club of rich nations has warned.

“Global issuance of company bonds has doubled to $13 trillion over the last decade and standards have deteriorated dramatically, raising the risk of “fire sales” and a self-feeding chain reaction in times of stress.

““In the case of a downturn, highly leveraged companies would face difficulties in servicing their debt, which in turn, through higher default rates, may amplify the effects,” said a detailed report by the OECD’s corporate finance division.

““Any developments in these areas will come at a time when non-financial companies in the next three years will have to pay back or refinance about $4 trillion worth of corporate bonds. This is close to the total balance sheet of the US Federal Reserve,” it said.

“The share of investment grade bonds with a precarious BBB rating has soared to 54pc from around 30pc in 2008, the report found.

“The OECD said $500bn of investment grade bonds could crash into the junk league within a year of any downturn, amplifying the recessionary damage through a cascade across the financial system. These figures do not include the vertiginous issuance of leveraged loans that so worries regulators in Britain and the US.

“When the dam breaks it can be ugly. Yields on BB-rated bonds in the US surged 800 basis points to over 16pc during the global financial crisis, greatly compounding the credit crunch.

“The volumes then were a fraction of today’s gargantuan issuance…

“The OECD suggested that the easy money climate of recent years may have flattered the ‘interest rate coverage ratios’ of companies and given investors a false sense of security. Higher real rates would expose the fallacy of this in short order.

“The report was written by the head of the OECD’s corporate affairs division, Mats Isaksson, a world expert on company debt.

“It is a meta-study of the known scholarship from central banks and universities across the world. It commands authority and will confirm the worst fears of global regulators.”

https://www.telegraph.co.uk/business/2019/02/25/corporate-debt-bubble-could-spark-devastating-fire-sale-bonds/


“Young Americans have yet another thing to worry about: debt.

“According to figures from the New York Federal Reserve Consumer Credit Panel, Americans ages 18 to 29 had debt exceeding $1 trillion at the end of 2018. It’s the highest debt exposure for this age bracket since late 2007, the start of the global financial crisis.”

https://www.businessinsider.com/us-millennials-saddled-with-1-trillion-in-debt-mostly-student-loans-2019-2?r=US&IR=T


“The delay in reaching an agreement on Britain’s scheduled March 29 exit from the European Union is turning into a full-blown economic crisis, the head of the country’s aerospace industry group said on Monday.

“”Today we are able to track the very real economic damage being caused by a poorly managed political process of agreeing the Withdrawal Agreement and Political Declaration,” ADS Chief Executive Paul Everitt said.

“”The continued delay is turning the UK’s political failure into a full-blown economic crisis.””

https://www.euronews.com/2019/02/25/brexit-delay-becoming-full-economic-crisis-aerospace-group


“Italy and Germany are countries of particular worry, because together they make up about 40% of the eurozone economy, and Germany’s economy shrank in the third quarter and stagnated in the fourth. Italy’s economy is officially in recession, with two consecutive quarters of decline. France’s economy is not doing much better, with only minimal growth of less than 1% compared with same quarter from last year. Things are already looking bleak going forward as well…”

https://seekingalpha.com/article/4244104-eu-serves-early-warning-nears-economic-crisis


“The South African infrastructure market is in crisis, says financially troubled listed construction and engineering group Aveng.

“Eric Diack, the executive chairperson of Aveng, said yesterday that this reflected the marginal economic growth experienced in South Africa, which was exacerbated by “unprecedented and widespread threats of violence, community unrest and protest action on construction sites which employers (clients) seemingly expect contractors to accept as the new normal”.”

https://www.iol.co.za/business-report/companies/sa-infrastructure-market-is-in-crisis-says-aveng-19504818


“Concerns that China had imposed an import ban [on Australian coal] flared late last week after a Reuters report said five harbours overseen by Dalian customs – Dalian, Bayuquan, Panjin, Dandong and Beiliang – would no longer allow Australian coal to be cleared. The report cited an unnamed official as the source of the information. Given coal is Australia’s biggest export earner, the news from Reuters sent the Australian dollar tumbling…”

https://www.theguardian.com/world/2019/feb/24/australias-trade-minister-raises-concerns-about-chinas-coal-processing-delays


“A Chinese state-owned enterprise from the country’s remote north-west has failed to repay a US dollar bond in Hong Kong, the first offshore default in 20 years…”

https://www.ft.com/content/45270b1c-3984-11e9-b72b-2c7f526ca5d0


“Real estate is the main game in Hong Kong, and as the drop in housing prices nears correction territory, concern is mounting about the toll the downturn will exact on the city’s economy.

“Home values in the world’s most expensive property market have fallen about 9 per cent from their August peak…”

https://www.businesstimes.com.sg/real-estate/how-hong-kongs-property-slump-could-clobber-the-economy


“South Korean exports likely fell the most in nearly three years in February as China demand falters…

“Exports are expected to have contracted 10.8 percent from the same period a year earlier, the third consecutive month of declines and a much sharper drop than January, according to a median estimate of 12 economists. Exports fell 5.8 percent in January.”

https://www.nasdaq.com/article/skorea-feb-exports-seen-sliding-most-in-nearly-3-years-20190226-00121


“India Inc. is not doing well. The Business Standard reported that the declared corporate results have been unusually poor. The third quarter (Q3) profit results for the current year shows a pattern of slowdown experienced in other countries currently, marked by falling margins.

“In India, the moderation in economic activity manifested itself in lower air passenger traffic, low vehicles sales, smaller capital goods production and in general deceleration of industrial growth. IIP growth and export growth have both been lower than before recently.”

https://www.orfonline.org/expert-speak/india-economy-all-not-well-48474/


“Indian markets dived on Tuesday after the country’s military aircraft conducted air strikes on militant camps inside Pakistan, escalating tensions between the two nuclear-armed neighbours…

“The confrontation follows the Feb. 14 suicide bombing in Kashmir, when 40 Indian paramilitary police were killed by a Pakistani-based militant group. New Delhi blamed Islamabad, which denies having a role in the attack.”

https://uk.reuters.com/article/india-kashmir-markets/update-1-indian-markets-slump-after-air-strike-on-militant-camps-in-pakistan-idUKL3N20L1VC


“As Iran marked the 40th anniversary of its Islamic Revolution, a white-turbaned Shiite cleric at one commemoration targeted President Hassan Rouhani, a fellow clergyman, with this sign: “You who are the cause of inflation; we hope you won’t last until spring.”

“Already lashed by criticism over his collapsing nuclear deal and renewed tensions with the US, the relatively moderate Rouhani faces anger from clerics, hard-line forces and an ever-growing disaffected public that now threatens his position.

““We need someone who creates jobs and firmly pushes the brake pedal on rising prices.””

http://www.evartha.in/english/2019/02/25/economic-crisis-irans-president-faces-calls-to-resign.html


“Countries one through four on the list of the world’s biggest oil consumers in 2017 are pretty much who you’d expect them to be — the world’s four biggest economies. 1 No. 5 is something else:

“Saudi Arabia has just 33 million people, less than one-fourth as many as Russia, the country just below it on the list. Yes, it’s rich, but its gross domestic product ranks in the high teens worldwide, not fifth. By global standards, then, it clearly uses an inordinate amount of oil.”

https://www.bloomberg.com/opinion/articles/2019-02-25/persian-gulf-countries-are-having-their-own-oil-crisis


“Be careful what you wish for. That’s the phrase haunting the world’s largest investment banks as they lick their wounds after a painful fourth quarter. For years, bankers complained that markets were too calm.

“But when bonds and stocks tumbled in the last few months of 2018, almost all trading divisions suffered. It doesn’t bode well for business if markets stay choppy.”

https://uk.reuters.com/article/us-global-banks-breakingviews/breakingviews-investment-banks-have-a-problem-with-volatility-idUKKCN1QE202


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

Economy 25 Feb 2019 Global Recession May Stymie Central Banks

“A decade after the crash, many nations are still on emergency monetary policies, even before a new downturn strikes…

“Central banks and finance ministries had better hope that the action taken so far will be enough to avert a recession because they will soon run out of conventional policy options.

“In 2008-09, the response to the financial crisis was fivefold: the central banks cut interest rates aggressively; they pumped cheap money into their economies through QE; finance ministries bailed out the banks with taxpayers’ money; governments ran bigger budget deficits as a way of boosting growth; and international cooperation kept trade flowing.

“But today interest rates are still either zero or just about zero in most of the developed world; QE has been subject to the law of diminishing returns and has proved politically controversial; the public appetite for another round of bank bailouts is nonexistent; government debt levels are much higher than they were a decade ago; and economic nationalism is on the rise.

“Krugman said in a Bloomberg interview: “We’re clearly in worse shape. We came into the last crisis with interest rates well above zero, we came into the last crisis with debt substantially lower than it is now … and we came into the last crisis with substantially better leadership … Our current treasury secretary [Steven Mnuchin] is no Hank Paulson.

““I think we’re in much worse shape. We probably don’t have a crisis of that magnitude about to hit us – God help us if we do – but we’re in much worse shape to deal with whatever shocks come along than we were 10 years ago.””

https://www.theguardian.com/business/2019/feb/23/global-economy-slowing-down-what-can-governments-do


“US politicians from both sides of of the political divide have bucked recent partisan bickering and united around an unlikely issue to lambast Wall Street for the booming practice of share buybacks… The practice sees companies with spare money repurchase their own shares from the market, putting cash directly back into investor’s pockets while at the same time improving the value of the shares…

“According to TrimTabs data, the value of stock repurchases announced by US companies surged to more than $1 trillion last year, around seven times the amount in 2009.”

https://www.theweek.co.uk/99806/what-are-share-buybacks-dubbed-corporate-cocaine


“Home and automobile sales could be in for a big correction, due to “pent-down” demand. Homes and autos aren’t selling that well lately. Total vehicle sales in the US dropped to 16.70 million units in January from 17.55 million in December of 2018. While that number is still above the long-term average (1993-2019 period), it’s well-below the all-time high of 21.77 million reached in October of 2001.

“Meanwhile, sales of previously owned homes in the US dropped 6.4% to a seasonally adjusted annual rate of 4.99 million in December of 2018.”

https://www.forbes.com/sites/panosmourdoukoutas/2019/02/24/home-and-auto-sales-could-be-heading-for-a-2008-9-style-crash/#2419c8251f12


“The current economic expansion will hit a decade in June of this year , which would match the longest on record of April 1991 to March 2001. It would also be almost twice as long as the 58 months experienced for the past 11 cycles starting in 1945… The economy has been helped by interest rates decreasing over the past 40 years…”

https://www.forbes.com/sites/chuckjones/2019/02/24/the-odds-for-a-trump-recession-are-inching-higher/#6cdfb7b05ee0


“The U.S. and China appear to be close to ending a tariff fight that hurt financial markets and dented economic activity worldwide, but that’s not going to stop the slowdown already seen in the global economy, experts said on Monday.”

https://www.cnbc.com/2019/02/25/trade-war-us-china-deal-wont-stop-global-economic-slowdown.html


“A Chinese state-backed borrower’s failure to make good on a payment on a dollar bond on Friday threatens to overturn assumptions that officials would step in to avert defaults by companies closely linked to local authorities.

“Qinghai Provincial Investment Group Co., an aluminum producer that was seen by some analysts as a bellwether for assessing government support due to its struggles to make payments on offshore debt last year, had failed to wire funds for a coupon payment due Feb. 22 as of late afternoon China time…”

https://www.bloomberg.com/news/articles/2019-02-23/a-surprise-china-debt-default-upends-assumptions-on-official-aid


“India’s property developers are finding it hard to borrow money, raising the prospect of a wave of debt defaults from the sector hitting shadow lenders that are trying to survive a funding crunch of their own.

“Developers have to repay about 1.29 trillion rupees a year on outstanding debt but generate less than half the amount in income that can be used for repayments, according to an analysis of about 11,000 companies by research firm Liases Foras.”

https://www.financialexpress.com/industry/banking-finance/real-estate-defaults-could-trigger-next-crisis-for-struggling-indian-nbfcs/1497864/


“Turkey’s latest labour force statistics for November 2018 depict an alarming picture for the country’s job market. According to figures released by the Turkish Statistical Institute on Feb. 15, the labour force in Turkey, which includes those in employment and looking for work, increased to 32 million in November 2018. Those who are unemployed but not looking for a job, including discouraged workers – people who would accept to work if there were jobs available – are not included in the numbers.”

https://ahvalnews.com/turkish-economy/turkeys-unemployment-figures-ring-alarm-bells


“Sudanese President Omar al-Bashir swore in a new prime minister on Sunday as riot police confronted hundreds of demonstrators calling on the veteran leader to step-down after he imposed a state of emergency across the country…

“Protest organisers have vowed to continue with daily rallies, accusing Bashir and his officials of economic mismanagement that has led to soaring food prices and shortage of foreign currency.”

https://www.alaraby.co.uk/english/news/2019/2/24/sudan-protesters-rally-against-president-bashirs-state-of-emergency


“Zimbabwe underwent a de facto devaluation on Friday as its central bank began trading a sharply discounted replacement currency, attempting to ease a cash crunch that has hobbled the economy and plunged millions deep into poverty.

“The country adopted the dollar in 2009 but, as a chronic hard currency shortage worsened, introduced a parallel system of bond notes pegged at 1:1 to the U.S. currency.”

https://www.standardmedia.co.ke/business/article/2001314333/zimbabwe-devalues-currency-as-economic-crisis-deepens


“This commentary, being written on Thursday, February 21, 2019, is about troubling developments in Haiti and the constraints upon the Caribbean Community countries that prohibit them from playing a meaningful role in averting further violence. Since the time of writing, the feared escalation might have occurred…

“If economic conditions in Haiti worsen as a consequence of deadly protests that have been continuous since February 7, 2019, Haitians will continue to seek refuge everywhere.”

http://www.jamaicaobserver.com/the-agenda/haiti-s-persistent-problems-may_well_overspill_157864?profile=1096


“Republican Sen. Marco Rubio shared an image Sunday showing a bloodied Muammar Gaddafi, the former authoritarian leader of Libya, in the moments before he was killed…

“…drawing criticism from some who read the Florida lawmaker’s message as one of support for United States-led regime change in Venezuela.”

https://www.miamiherald.com/news/nation-world/world/article226732089.html


“The quarterly survey [UK] revealed that sentiment declined among both business & professional services and consumer services firms.

“In the business & professional services sector – which includes accountancy, legal and marketing firms – optimism about the business situation fell at the fastest pace since financial crisis.”

http://www.cbi.org.uk/news/service-sector-optimism-deteriorates-at-fastest-pace-since-financial-crash/


“Interest rates could be slashed into negative territory for the first time in history to combat the fallout from a chaotic no-deal Brexit, a former Bank of England policymaker has warned. David “Danny” Blanchflower – who sat on the Bank’s Monetary Policy Committee from June 2006 to June 2009 – told the Press Association that policymakers may be left with little option but to take rates below zero if a no-deal Brexit sends shockwaves through the economy.”

https://www.aol.co.uk/news/2019/02/23/negative-rates-could-be-on-the-cards-in-no-deal-brexit-chaos-a/?guccounter=1&guce_referrer_us=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_cs=Ij71b37HFB4rK2aVN855gg&guce_referrer=aHR0cHM6Ly93d3cuYW9sLmNvLnVrLw&guce_referrer_sig=AQAAAGbXw-UYHayKiKmak_LilHnkdh6ZVZEWs6bclQWCWdffL8Er3sL6SMmICmOtfMhOcTwwhQ3DyQEShHylvFv2Ogzv0o-wUOpWKcvzRKlBoosAGaaAeFcYps15-F1_TDNMqw6vjOvqg7ZuCdq8rOW1LdK8N1_G6pWjDDhX7ejR7TBI


“The risk of global recession has suddenly jumped several notches, as the accumulated damage from US President Donald Trump’s trade wars and worldwide monetary tightening is taking a bigger toll than hoped. A mounting weight of evidence suggests the world is one shock away from a contractionary vortex that would be extremely hard to control. In the US, the Federal Reserve’s instant tracking gauges of GDP growth have halved since late January. They are approaching stall speed.”

https://www.stuff.co.nz/business/world/110842731/debtclogged-world-close-to-tipping-point-of-recession


“Since 2008, the global economy has grown far too dependent on huge central bank balance sheets and accommodative monetary policy. The U.S. economic boom President Donald Trump loves to tout is largely fake, engineered by artificial policy settings. Such dependence is dangerous and, for various reasons, could well backfire…

“…central bank actions are already an implicit acknowledgement that rising debt levels are unsustainable at higher rates and under tighter liquidity conditions. In the U.S., a record 7 million Americans are 90 days or more behind on their auto-loan payments, according to the Federal Reserve Bank of New York — a significant signal of distress among low-income groups who typically prioritize such payments…

“Printing money was always going to be easier than withdrawing it later. In effect, central banks are boxed into a situation where they can’t normalize policy and must maintain low rates and abundant liquidity, lest they destabilize fragile asset markets and spur low growth and disinflation. This state of “infinite QE” risks miscalculations and major policy errors. If central banks are, as is now fashionable to state, the only game in town, then the game is lost.”

https://www.bloombergquint.com/view/relying-on-central-banks-for-growth-is-a-bad-idea#gs.ugvCbikT


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

Economy 20 Feb 2019 Global Trade is Slumping

“A quarterly leading indicator of world merchandise trade slumped to its lowest reading in nine years on Tuesday, which should put policymakers on guard for a sharper slowdown if trade tensions continue, the World Trade Organization said on Tuesday.

“The WTO’s quarterly outlook indicator, a composite of seven drivers of trade, showed a reading of 96.3, the weakest since March 2010 and down from 98.6 in November. A reading below 100 signals below-trend growth in trade.

““This sustained loss of momentum highlights the urgency of reducing trade tensions, which together with continued political risks and financial volatility could foreshadow a broader economic downturn,” the WTO said in a statement…

““Indices for export orders (95.3), international air freight (96.8), automobile production and sales (92.5), electronic components (88.7) and agricultural raw materials (94.3) have shown the strongest deviations from trend, approaching or surpassing previous lows since the financial crisis,” the WTO said.”

https://www.reuters.com/article/us-trade-wto/wto-warns-of-global-trade-slowdown-as-indicator-hits-nine-year-low-idUSKCN1Q812U


“Japan reports its exports tumbled 8.4 percent in January from a year earlier, as slowing Chinese growth pushed its monthly trade deficit to the highest level in nearly five years.

“Exports to all of Asia dropped 13 percent year-on-year, largely due to the 17 percent plunge in shipments to China, where growth recently has fallen to its slowest pace in three decades.”

https://www.daytondailynews.com/business/japan-trade-deficit-highest-yrs-hit-china-doldrums/aaO782MarOsV7u2YQvWQ4H/


“China’s slowdown is troubling U.S. companies that have enjoyed strong exports to that giant economy. Caterpillar missed earnings estimates partly because of China.

“3M warned of a sales slowdown related to weak China business. Apple and NVIDIA warned about consumer sales being weaker than expected in China, and automakers see slower car sales in the country.”

https://www.forbes.com/sites/billconerly/2019/02/19/chinas-economic-sneeze-is-americas-flu/#5a276f1b7546


“The U.S. economy lost a lot of momentum during the fourth quarter and suffered a serious wobble in December, which should give policymakers pause before doing anything that could unsettle fragile sentiment further.

“Freight movements by road, rail, air, barge and pipeline fell more than 3 percent in December compared with November, according to the U.S. Bureau of Transportation Statistics. Freight shrank by the most in any one month since March 2009…”

https://uk.reuters.com/article/uk-usa-economy-kemp/column-slowing-us-economy-can-ill-afford-any-more-shocks-idUKKCN1Q81QP


“The Reserve Bank of Australia (RBA) recently downgraded its forecasts for Australian economic growth this year. It also acknowledged that downside risks have increased in recent months, especially from downturn in Australia’s housing market spilling over into other parts of the economy…

“Based on recent leading economic indicators, those downside risks appear to be already materialising.”

https://www.businessinsider.com.au/australia-economy-gdp-growth-rba-cash-rate-2019-2


“South Africa’s Finance Minister Tito Mboweni faces a balancing act with his maiden budget if he is to reassure investors in the country’s troubled public electricity company without alienating union allies ahead of national elections.

“He is under pressure to bail out the state power utility Eskom – along with its $30bn mountain of debt – which is at the centre of the country’s mounting economic troubles.”

https://www.aljazeera.com/news/africa/2019/02/south-africa-deliver-budget-faced-huge-debt-blackouts-190220051223970.html


“Kenya’s government faces increased refinancing or roll-over risks as more domestic bonds mature within the next year than in the past year, the Finance Ministry said.

“The International Monetary Fund bumped up the East African nation’s debt distress risk to moderate from low in October, citing rising external commercial borrowing and growing interest payments on public debt.”

https://www.iol.co.za/business-report/economy/debt-crunch-looms-for-kenya-19378071


“Official statistics on Turkish gross domestic product won’t be out until March 11, but three economic indicators suggest the economy slipped into recession at the end of 2018, according to research by Bloomberg Economics.

“While the magnitudes differ, gauges for industrial production, banking credit and manufacturing PMI all point to a contraction in the fourth quarter.”

https://www.bloomberg.com/news/articles/2019-02-19/is-turkey-s-economy-in-recession-three-gauges-say-yes-chart


“Saudi Arabia’s annual consumer price index fell 1.9 per cent in January from a year earlier as housing, water and energy prices all dropped. Deflation returned to the Middle East’s biggest economy for the first time since 2017…

“Housing, water, electricity and gas prices fell 7.7 per cent in January from a year earlier, the data showed. The consumer price index dropped 0.3 per cent from December 2018, according to data from the General Authority for Statistics.”

https://gulfbusiness.com/saudi-january-consumer-prices-fall-1-9-deflation-returns/


“Tariq Bajwa, the Governor of Pakistan’s central bank, yesterday said that Pakistan has come out of the financial crisis with the help of friendly countries and the economy has been set on the right path.

“However, the numbers tell a different story… Inflation galloped to a four-year high…”

https://www.businesstoday.in/top-story/no-pakistan-is-not-out-of-financial-crisis-their-top-bank-governor-remark-doesnt-make-sense/story/320244.html


“India is struggling to sell its bonds at recent auctions, and that’s even before Prime Minister Narendra Modi embarks upon a record borrowing program. Underwriters rescued a longer-tenor bond sale on Friday following poor buying support that’s seen the bid-to-cover ratio — a gauge of demand — drift lower in the last two auctions from levels seen in January.”

https://www.bloomberg.com/news/articles/2019-02-19/weak-bond-auctions-flash-warning-on-india-s-record-debt-sales


“Vehicle sales opened 2019 with a 15-percent drop in January, following the 16-percent slump in 2018, data from the Chamber of Automotive Manufacturers of the Philippines Inc. and the Truck Manufacturers Association Inc. show…

“Both passenger and commercial car sales suffered slower sales in January. Sales of passenger cars dropped 13.3 percent… while sales of commercial vehicles declined 15.8 percent…”

http://manilastandard.net/business/transport-tourism/288216/car-sales-continued-slump-with-a-15-drop-in-january.html


“The world is cooling off its love affair with cars, and that is a factor pushing the global economy toward recession, according to two economists at HSBC.

“”Parts of the world are already in industrial recession,” Henry and Pomeroy said in a note to clients seen by Business Insider.”

https://www.businessinsider.com/automobile-car-industry-production-global-recession-2019-2?r=US&IR=T


“The Swedish krona fell to its lowest level against the US dollar in 16 years on Tuesday…

“A lower-than-expected inflation rate on Tuesday saw the Swedish krona slump to its worst levels against the US dollar in 16 years, fuelling fears that Sweden’s Central Bank will be unable to flip the country’s negative repo rate into positive territory any time soon.”

https://www.thelocal.se/20190219/swedish-krona-tumbles-to-worst-levels-against-dollar-in-16-years


“The Dutch consumer confidence index has fallen to -2 in February, the first time in four years the index has been in negative territory. The index has been falling steadily since July last year.

“The national statistics office CBS says consumers are more unhappy about the economic climate and are less willing to make major purchases.”

https://www.dutchnews.nl/news/2019/02/dutch-consumer-confidence-slips-again-hits-a-four-year-low/


“The question is very simple: How much longer can the average dairy farmer endure their on-going financial crisis that the majority of dairy farmers are continuing to live with?

“Pennsylvania dairy farmers are being shortchanged at least $550 million dollars each year, and New York dairy farmers are facing a $650 million dollar shortfall, which should make everyone anxious to do something to correct these criminal prices that dairy farmers are facing every day. Our figures indicate that the total underpayments to all the US dairy farmers each year are approximately 12 Billion dollars.

“Time is running out, and with spring around the corner, and with nothing being done for dairy farmers, you may witness hundreds, maybe even thousands of dairy farmers being forced out of business. With all these problems facing dairy farmers, it is having an adverse effect on our beef farmers.”

https://www.pennlive.com/opinion/2019/02/how-much-longer-can-the-average-dairy-farmer-endure-their-financial-crisis-opinion.html


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

Btw, my apologies for the brutal national stereotyping in the pictures, lol. I always tend to be in a tearing hurry when pulling together these threads and finding new pictures that fit at least somewhat is hard.

Economy 19 Feb 2019 Global Growth Weakest Since Crisis of 2008

“The global economy’s loss of momentum has left expansion now looking like its weakest since the global financial crisis, a development that has already sparked a shift among central banks.

“A UBS model suggests world growth slowed to a 2.1 percent annualized pace at the end of 2018, which it says would be the weakest since 2008-2009…

“China car sales dropped in January, and data last week showed U.S. retail sales posted their worst drop in nine years in December. In Europe, where the slowdown has been particularly marked, sentiment indicators continue to weaken, and the latest OECD leading indicator has also declined.”

https://www.bloomberg.com/news/articles/2019-02-18/global-economy-stuck-with-downside-risks-in-the-near-term


“Among one of several signals that young adults are being forced to wait until much later in life to reach key milestones, the Office for National Statistics said it took until the age of 34 for more than half of the population to own their own home, compared to 26 in 1997.

“Average house prices in Britain have skyrocketed by more than 270% over the past two decades…”

https://www.theguardian.com/money/2019/feb/18/uk-house-prices-raised-age-of-ownership-by-eight-years-since-1997


“Some 16,000 jobs could be put at risk when Japanese car firm Honda announces the closure of its factory in Swindon today. The expected announcement will hit 3,500 people employed at the Wiltshire plant as well as another 12,500 whose jobs depend on the Honda supply chain.

“Jobs could also be at risk in companies who depend on the Swindon workforce for their business, as Honda was urged to rethink the ‘devastating’ decision. It is the latest blow to Britain’s car industry after Nissan announced it would no longer build the X-Trail at its Sunderland plant and Land Rover said it would cut 4,500 British jobs.”

https://www.dailymail.co.uk/news/article-6719189/Fears-16-000-jobs-supplying-Honda-plant-Swindon.html


“On and on and on it goes … Theresa May appealed (again) to the Commons for more time to seek substantive changes from the EU27 to the Northern Ireland backstop, which pretty much all concerned know she is not going to get…

“Over at equally conflicted Labour, seven MPs resigned from the party over Jeremy Corbyn’s leadership, including his approach to Brexit and in particular a second referendum. They will sit as a new independent group.”

https://www.theguardian.com/politics/2019/feb/19/brexit-weekly-briefing-we-now-officially-have-two-revolting-parties


“Brussels is afraid that the euro zone’s fourth-largest economy [Spain] could be affected by the same kind of political instability seen for years in Italy, which is currently led by a populist and euro-skeptic government.

“The risk of seeing Spain follow in Italy’s footsteps is creating apprehension among EU institutions, which view Spain as one of the few member states that supports European integration and remains free of extremist parties.”

https://elpais.com/elpais/2019/02/18/inenglish/1550477002_732280.html


“Turkey cut the amount of cash lenders are required to hold in reserves for the first time in six months as the central bank tries to rouse credit growth without signaling a more drastic change in its tight policy stance.

“Turkey’s economy probably slipped into recession after capping last year with two consecutive quarters of contraction as the lira’s crash and the ensuing jump in borrowing costs ripped through the Middle East’s largest economy.”

https://www.bloombergquint.com/global-economics/turkey-takes-baby-step-to-easing-with-cut-in-bank-reserve-ratios#gs.awhvm0xn


“India holds the dubious distinction of having the worst non-performing loan ratio among the world’s major economies, having surpassed Italy.

“A $190 billion pile of soured and stressed debt has cast the future of some lenders in doubt and curbed investments.”

https://economictimes.indiatimes.com/markets/stocks/news/indias-bad-loan-ratio-now-worst-among-top-10-economies/articleshow/68061112.cms


“China will provide further support for banks’ perpetual bond issuance, including examining ways to broaden the investor base for such bonds, to help boost lending in the economy, a vice central bank governor said on Tuesday.

““Perps” – bonds with no maturity date – are seen as a major step toward recapitalisation of banks, whose lending capacity to the real economy is largely limited by their capital adequacy.”

https://www.reuters.com/article/us-china-pboc-perpetuals/china-pledges-more-support-for-banks-perpetual-bonds-to-boost-lending-idUSKCN1Q80BG


“Brazilian President Jair Bolsonaro fired a key political ally and cabinet member amid a campaign funding scandal, raising doubts over his government’s unity and the prospect of economic reforms.

“Secretary-General Gustavo Bebianno’s dismissal was confirmed by the presidential spokesman on Monday afternoon, after days of intense speculation. The ruling PSL party that Bebianno headed and Bolsonaro joined less than a year ago allegedly misused campaign funds during last year’s election, according to Folha de S.Paulo.”

https://www.bloomberg.com/news/articles/2019-02-18/brazil-s-bolsonaro-fires-ally-in-crisis-that-raises-reform-doubt


“With top ally Venezuela in crisis, Cuba is moving to cover its oil needs elsewhere, seeking possible alternative supplies in Qatar and Algeria, officials said Monday.

“Foreign Trade Minister Rodrigo Malmierca was in Qatar on Sunday, and headed to Algeria Monday, the foreign ministry said.”

https://www.france24.com/en/20190218-cuba-eyes-qatar-algeria-oil-with-venezuela-crisis


“Risky corporate debt, particularly in the form of leveraged loans, has been on the rise for a number of years, with analysts suggesting the recent build up could be a significant risk to global GDP growth.

“Since 2015, world private sector debt has risen by around 15% of world GDP — a level higher than it was prior to the global financial crisis, according to Oxford Economics.

“Growing global debt is a major concern for the world economy because recent evidence has indicated that credit booms often end in busts of seismic proportions.”

https://www.businessinsider.com/global-debt-levels-are-not-at-financial-crisis-levels-yet-2019-2?r=US&IR=T


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Economy 18 Feb 2019 China Car Sales Continue Slump

“Auto sales in China continued to fall in the first month of this year after the first full-year slump in sales last year following more than two decades of growth.

“Wholesale passenger vehicle sales fell by 17.7% YoY to 2.02 million units last month to make seven straight months of monthly declines for the world’s largest auto market. The decline follows a 15.8% fall in sales during the month of December and an overall 4.1% decline for the whole year.”

https://www.chinaknowledge.com/News/DetailNews/85313/Car-sales


“Overseas orders for Japanese machinery posted their biggest tumble in more than a decade in December, as trade frictions dented global supply chain demand

“…manufacturers predicted further declines in orders this quarter.”

https://www.streetinsider.com/Reuters/Foreign+demand+for+Japanese+machinery+slumps+by+most+since+2007/15145409.html


“Debt by self-employed individuals has been rising at rapid pace over recent years to underscore alarm about the impact from the weakening in the self-employed sector that makes up around a quarter of the working force in Korea.”

https://pulsenews.co.kr/view.php?year=2019&no=98293


“Singapore’s trade sector began 2019 on a whimper with non-oil domestic exports (NODX) for January sliding a worse-than-expected 10.1 per cent from a year ago as both electronic and non-electronic shipments shrank… The drop in January 2019 was biggest since October 2016’s 12 per cent slump and comes after a 8.5 per cent fall in December last year and 2.8 per cent decline in November.”

https://www.businesstimes.com.sg/government-economy/singapore-january-non-oil-exports-fall-101-biggest-drop-in-over-2-years


“Student-loan delinquencies surged last year, hitting consecutive records of $166.3 billion in the third quarter and $166.4 billion in the fourth.

“Bloomberg calculated the dollar amounts from the Federal Reserve Bank of New York’s quarterly household-debt report, which includes only the total owed and the percentage delinquent at least 90 days or in default.”

https://finance.yahoo.com/news/u-student-debt-serious-delinquency-140103419.html


“On Friday, the 15th of February, a Federal Reserve report revealed that the US manufacturing data had dwindled deeply in January, mostly effectuated by the biggest fall in auto production since the era of recession, the latest indication that the US economy had been losing momentum.”

https://www.financial-world.org/news/news/economy/1055/us-auto-posts-biggest-drop-since-recession-manufacturing-output-sinks/


“Iceland’s economy is cooling fast after end of decade-long tourism boom. Central bank governor plays down concerns of a housing bubble…”

https://www.bloomberg.com/news/articles/2019-02-17/empty-luxury-flats-dot-reykjavik-as-iceland-braces-for-slowdown


“British regional airline Flybmi announced on Saturday it had ceased operations and was filing for administration, blaming spikes in fuel and carbon costs and uncertainty over Brexit.

“Parent company British Midland Regional Limited said it had cancelled all flights with immediate effect, and would not be able to buy, rearrange or reschedule any bookings on behalf of customers.”

https://www.aljazeera.com/news/2019/02/brexit-fuel-prices-regional-uk-airline-operation-190217090832735.html


“The timing of the European Central Bank’s first post-crisis rate hike hinges on whether the eurozone’s current slowdown is a blip or a more protracted downturn, ECB policymaker Francois Villeroy de Galhau said in an interview published on Sunday.

“The ECB has said it aims to keep interest rates at current record lows at least through the summer, but its long-standing rate guidance is increasingly out of sync with market expectations as growth has slowed.”

https://www.businesstimes.com.sg/banking-finance/ecb-rate-move-hinges-on-economic-downturns-duration-villeroy


“The pharmaceutical sector is the latest field where Turkey’s economic crisis is producing alarming consequences.

“The severe depreciation of the Turkish lira last year and the corresponding increase in foreign exchange prices have led companies to curb supply, with 20% of patients said to be returning empty-handed from drugstores.”

https://www.al-monitor.com/pulse/originals/2019/02/turkey-patients-left-without-medicines-amid-economic-woes.html


“Details obtained by the Sunday Standard indicate that the government has borrowed a Sh100 billion syndicated loan with two regional banks as it seeks to repay the Eurobond it took three years ago…

“Kenya is expected to repay debts amounting to Sh1.4 trillion between January and December 2019, pointing to a looming cash crisis. The total debt stood at 5.3 trillion as at June last year, up from 4.4 trillion the previous year.”

https://www.standardmedia.co.ke/business/article/2001313458/brace-for-lean-times-as-state-set-to-repay-sh1-4-trillion-debt


“Zimbabwe’s annual rate of inflation for January 2019 rose to 56.90 percent, up from 42.09 percent in December last year, driven mainly by increases in prices of basic goods. Statistics released by the Zimbabwe National Statistics Agency on Friday showed monthly inflation for January climbing up to 10.75 percent, up from 9.03 percent of the previous month. The continued rise is against the background of fuel price hikes by more than 100 percent last month.”

http://www.globaltimes.cn/content/1139066.shtml


“The latest string of data from StatsSA shows that the economy lifted in December, but overall growth remained woefully below initial forecasts for the year. The GDP figures will be released by StatsSA on March 5… SA plunged into recession for the first time since the global financial crisis in the first half of the year, which saw economists and institutions alike revise down their growth forecasts. Annual growth has failed to breach the 2% mark in the last five years.”

https://www.businesslive.co.za/bd/economy/2019-02-17-sa-limped-out-of-2018-with-growth-below-1/


“Former Mozambican president Armando Guebuza’s son was arrested at the weekend in connection with a $2 billion (£1.5 billion) government debt scandal, state-owned media and a judicial source said.

“The arrest comes just over a month after three ex-Credit Suisse bankers were charged in the United States with fraud over their role in a 2013 deal in Mozambique that involved borrowing to fund projects including a state tuna fishery.”

https://uk.reuters.com/article/uk-mozambique-credit-suisse/mozambican-ex-presidents-son-arrested-in-2-billion-fraudulent-debt-case-idUKKCN1Q60OC


“The Haitian government vowed to deepen the investigation into alleged corruption in the PetroCaribe oil programme and to reduce its expenses, seeking to meet some of protestors’ demands as demonstrations roil the country.

“During a televised address on Saturday night, Prime Minister Jean-Henry Ceant announced nine measures aimed at alleviating the country’s economic crisis…”

https://www.euronews.com/2019/02/17/haiti-vows-to-trim-expenses-and-investigate-petrocaribe-amid-protests


“US military planes have been delivering humanitarian aid for Venezuela in the Colombian border town of Cucuta.

“The aid is being stockpiled at the request of the Venezuelan opposition leader, Juan Guaidó, who declared himself interim president last month. President Nicolás Maduro has alleged that the aid is part of a US plot to disguise an invasion into Venezuela.”

https://www.bbc.co.uk/news/world-latin-america-47268039


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