My apologies for the lack of a thread on Saturday; incipient collapse seems to be waging a war of attrition against Climate & Economy. My Internet is still down after four days but I now have a working mobile broadband device. Sobering how we have self-domesticated and come to utterly rely on these fleeting and vulnerable technologies.
I thought the economy seemed marginally more interesting than the climate today but I’ll be back with a climate thread tomorrow.
“The latest annual survey from global communications firm Edelman found people’s hopes for their financial futures suffered a “massive collapse” worldwide over the past year, with most developed nations seeing economic optimism hit all-time lows.
“The 2023 Edelman Trust Barometer released Sunday found that citizens in half the countries surveyed had year-over-year double-digit declines in the belief that their families would be better off in five years.”
“Global economic slowdown ‘to force more workers into poorly paid jobs’…
“In its latest assessment of the state of the labour market, the Geneva-based ILO warned that “high and persistent” uncertainty over the state of the global economy was depressing business investment, eroding real wages and pushing workers back into informal employment…”
“Top global companies write down billions as deals make way for gloom… With a third of the global economy forecast to be in recession this year, world leaders will this week gather in Davos, Switzerland, to discuss what the World Economic Forum has called a “polycrisis” as business leaders engage in a painful reckoning over their empire building.”
“Nobody really knows what is the leverage of these global banks (with derivative markets running in notional value in quadrillions see my article here) so there is not even a way to quantify the market. This is why Warren Buffet rightly calls derivates as ‘financial weapons of mass destruction’.”
“Gold hits fresh record high in January; next target seen at $1,960.
“Bullish momentum in gold continued in the second week of January, too, as the metal continues to attract investors on its safe-haven appeal and bright prospects this year on the worrisome situation of the global economy.”
“Britain has been made a whole lot poorer – and there is no way out…
“The bottom line is that as a nation, we have just become a whole lot poorer. A combination of rising energy, food, and interest rate costs have eaten deep into disposable incomes. There are a lucky few who have seen their incomes rise in line with inflation, but the vast bulk of the country has not. We can no longer afford to live the way we did.”
“Buy now, pay later demand soars among all age groups in the UK…
““The fact that people of all ages are turning to buy now, pay later as they are struggling to meet payments due to rising inflation shows the need for urgent regulation of these schemes,” said Jane Goodland, trustee of the Centre for Financial Capability.”
“Soaring energy prices might have forced the UK to increase its coal imports. BEIS data shows in the third quarter of last year, coal imports rose to 1.7 million tonnes, nearly 39% up from 2021. The US, Australia, South Africa and Colombia accounted for 78% of total coal imports.”
“Lützerath: German police oust climate activists after clashes near coal mine.
“Hundreds of officers cleared around 300 activists from Lützerath in an operation that began on Wednesday. Police say they removed activists waiting in treehouses, a day after clashes broke out between both sides.”
“Germany’s Energy Crisis Sends It Tumbling Down Investment Rankings. The energy shortages plaguing Europe’s largest economy since 2021 have affected its attractiveness as an investment destination. According to a report in the German daily Augsburger Allgemeine, Germany now ranks 18th out of 21 countries, falling four places…”
“Germany’s Debt Dilemma Tempts Finance Chief Into Bending Rules…
“At issue is how Christian Lindner, who leads the business friendly Free Democrats in a coalition government with the Social Democrats and Greens, uses accounting gymnastics to reconcile restoring the debt brake with the €200 billion ($215 billion) he has unleashed to cushion businesses and households from the energy crisis.”
“Credit Suisse set to cut 10% of European investment bankers…
“The crisis-plagued Swiss lender announced in October that it planned to cut as many as 9,000 roles globally over the next three years from its 52,000 workforce. But those plans have stepped up in recent weeks as the bank prepares to announce its second consecutive annual loss next month.”
“France is about to show Britain how bad industrial unrest can really get… For all their differences, the two nations face similar looming economic challenges…
“On both sides of the channel it is a popular pastime to compare national performance with the neighbour across the water. In today’s troubled times, this is especially interesting.”
“Tens of thousands of Spanish health workers protest for better future.
“Tens of thousands of health workers protested in Madrid on Sunday over what they say is the destruction of the public health system by the conservative regional government.”
“EU Ban on Russian Diesel Nears, Whether Market’s Ready or Not…
“In less than three weeks, the EU is banning Russian diesel and other refined fuels, and it’s not clear the market is ready for the shock. Historically, Russia was Europe’s biggest supplier of diesel and the continent has continued to buy big volumes right up to the cutoff. The new Feb. 5 sanctions will prompt a massive rerouting of global diesel flows — at a risk of higher prices.”
“Bank of Japan’s yield curve control in danger as policy backfires…
“The BOJ is in a bind. Further cosmetic tweaks could simply ignite market expectations of a near-term rate hike. But raising the yield targets would run counter to its narrative that stronger wage growth must accompany rising inflation before it can overhaul or phase out YCC.”
“South Korea’s state-owned electricity monopoly Kepco announced the largest quarterly price increase in over 40 years last month, as turmoil in global energy markets threatens a central pillar of the national export model that built Samsung, LG and Hyundai. It was the latest sign of a crisis that has also roiled the country’s bond market, which has had to absorb a record amount of debt issuance…”
“Growth in 2022 likely to mark China’s weakest in 40 years…
“Ten experts interviewed by Agence France-Presse (AFP) forecast an average 2.7% year-over-year rise in the gross domestic product (GDP) for the world’s second-largest economy, a sharp plunge from China’s 2021 growth of more than 8%. It could also be China’s slowest pace since a 1.6% contraction in 1976 – the year Mao Zedong died.”
“China Home Prices Slump After Covid Outbreaks Stifle Rescue…
““Struggling property developers get to breathe some air temporarily after Chinese authorities made efforts to ease their liquidity pressure,” said Esther Liu, credit analyst at S&P Global Ratings. “But the only path lifting them out of the current crisis is a revival of sales.””
“Victims of bank Ponzi-like scheme in China unable to withdraw money from frozen accounts…
“Since April last year, at least 40 billion yuan ($8.5 billion) has been frozen in four of the small-sized banks, including Mr Kang’s bank, Yuzhou Xinminsheng Village Bank, as well as Shangcai Huimin Village Bank, Zhecheng Huanghuai Village Bank and Kaifeng Xindongfang Village Bank.”
“Peru declares state of emergency in Lima after deadly protests.
“Peru has declared a state of emergency in the capital Lima and three other regions as protests against President Dina Boluarte spread around the country. More than 42 people have been killed during the unrest triggered by the ousting and arrest of leftist former president Pedro Castillo…”
“‘Command your troops, damn it!’ How a series of security failures opened a path to insurrection in Brazil…
“The violence has shocked the country, with many wanting answers as to how so many people managed to enter some of the most highly securitized buildings in the country, with practically no resistance. Questions are mounting as to whether members of the security forces tasked with protecting the area and their leaders were just overstretched, incompetent or even actively assisted the protesters.”
“Violent protests erupt in Phoenix [Durban, South Africa] as residents go 40 hours without electricity…
“Residents of Phoenix have closed off roads by burning tyres following service delivery issues. Videos of burning tyres and rubble have gone viral on social media… It is alleged some Phoenix residents have been without electricity for two weeks.Yesterday, residents blocked off Phoenix Highway.”
“Ramaphosa Ditches Davos as ‘Extreme’ Blackouts Hobble Economy.
“South African President Cyril Ramaphosa canceled his attendance at this year’s World Economic Forum to deal with an escalating energy crisis that’s hobbling the nation’s economy. Ramaphosa will meet officials from the state power utility, Eskom Holdings SOC Ltd., the National Energy Crisis Committee and political party leaders this week…”
“Kenya, Nigeria tread a fine line after Ghana debt default, analysts say.
“Ghana’s domestic debt restructuring followed by a default on most of its international debt has focused attention on the sustainability of African government finances… Kenya, Egypt and Nigeria are the African sovereigns which “stand out” due to the high proportion of government revenue used to make interest payments…”
“Tunisia: Anti-gov’t protests take place on revolution anniversary.
“Thousands of protesters are marching in the Tunisian capital against President Kais Saied‘s increasingly authoritarian drift, demanding he step down. Protesters are also marking 12 years since the Arab Spring revolution erupted across the region.”
“Egypt sentences 38 people to life in prison over 2019 protests…
“Authorities arrested hundreds of people at the time in Cairo and across the country. Many were released but others were referred to trials… Egypt’s government has in recent years jailed thousands of people, mainly Islamists, but also secular activists involved in the 2011 Arab Spring uprising that toppled longtime ruler Hosni Mubarak.”
“Tens of thousands of Israelis have rallied in three cities to protest plans by Prime Minister Benjamin Netanyahu to implement changes to the country’s legal system and weaken the Supreme Court.
“Saturday’s protests in the cities of Tel Aviv, Jerusalem and Haifa present an early challenge to Netanyahu and his ultranationalist national security minister, Itamar Ben-Gvir…”
“Yemen parliament speaks up against fuel, power, water price hike plan.
“Yemen’s parliament has publicly condemned the government’s plan to hike fuel and utility prices, among other revenue-generating methods, the latest in a string of outraged responses to the policies.”
“Natural Gas Shortage In Iran Shuts Schools, State Organizations.
“While Islamic Republic officials predicted a bad winter in Europe, offices, and schools in Iran have been closed for days due to a serious natural gas shortage. Gas supplies to homes, which the government tried to protect in past cold season crunches, have also been interrupted in some regions.”
“In an acknowledgement of just how hard this cold winter is hitting, authorities in Tajikistan last week announced the suspension of an electricity-rationing regime.
“While power utility company Barki Tojik has said households will receive uninterrupted supplies of electricity, it pleaded with the public on January 11 to avoid excessive use so as not to strain the grid.”
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 patron of my work via Patreon. And if you are already a subscriber or have donated – thank you! It is an enormous help as the cost-of-living crisis ratchets up here in the UK.
No post today because Panopticon still doesn’t have internet access. He is a victim of a complex system fraying around the edges (palpable there with the Internet down, postal service failing, NHS imploding, teachers striking, local nuclear power plant being decommissioned due to old age, local Amazon warehouse closing with loss of 300 jobs, etc.)
He is working on a workaround and hopes to have a post up on Monday. We will keep you posted. Thanks for your understanding and patience!
“The global economy is “on a razor’s edge” and risks falling into recession this year, World Bank officials have warned as the institution unveiled its latest projections for global growth…
““The risks that we warned of six months ago have materialised and our worst-case scenario is now our baseline scenario,” said Ayhan Kose, the World Bank economist responsible for the report…
“If the World Bank’s gloomy prognosis was realised, the current decade would become the first since the 1930s to experience two global recessions.The report follows similarly stark forecasts from the IMF.”
“Majority of CEOs fear recession could be worse than the financial crisis.
“The vast majority of CEO respondents (98%) are bracing for an economic downturn characterized by geopolitical tensions, supply chain disruption and ongoing COVID-19-related uncertainty, but appear split on its length, depth and severity. These are some of the findings of the EY CEO Outlook Pulse – January 2023 that underline the uncertainty that looks set to define the business environment in 2023.”
“A Myriad Of Uncertainties Are Set To Keep Oil Prices Volatile.
“Energy prices are expected this year to pick up where they left off in 2022—swinging wildly in volatile trading amid a whole host of uncertainties. Geopolitical uncertainties, China’s exit from three years of Covid restrictions, interest rate hikes from central banks, and looming recessions in many economies will continue to pull oil and natural gas prices in both directions, depending on the prevailing market sentiment.”
“Computer system glitch causes chaos after all flights grounded across US [a reminder of how brittle and vulnerable man-made complexity can be].
“The Federal Aviation Administration said it was working to restore its Notice to Air Missions system which alerts pilots of potential hazards along a flight route. Some 4,948 flights within, into or out of the US have been delayed, according to a flight tracking website, and 868 cancelled.”
“The average U.S. household owes more than $165,000 in debt, according to a new NerdWallet study.
“That amount of average household debt has pushed the national total to $16.5 trillion, a 7.65 percent increase from a year before. Study crafters also found that the credit card balances carried from month to month have gone up over the past year, now totaling roughly $460 billion.”
“Consumers Roll Over Debt Without Knowing Their Interest Rate.
“More US consumers are relying on their credit cards each month — and many are doing so without knowing the interest rates they’re paying. Around 46% of cardholders don’t pay off credit cards in full each month, according to data collected by Bankrate LLC in December, up from 39% a year earlier.”
“UK minister reassures Washington on restored stability, fiscal plans.
“Britain’s financial services minister sought to reassure U.S. counterparts on Wednesday that the UK’s bout of debt market instability last fall was a one-time event and it has returned to stable government and remains a solid partner for Washington and Wall Street.”
“Bank of England criticises UK banks’ risk management systems…
““During 2022, the market reaction to Russia’s invasion of Ukraine, and volatility in the nickel and long-dated gilt markets, reinforced the importance of a robust risk culture and sound risk management practices at firms,” the letters stated. “However, despite regular messaging from the PRA on the subject, these events demonstrated that firms continue to unintentionally accrue large and concentrated exposures to single counterparties, without fully understanding the risks that could arise.””
“More than three quarters of a million UK households are at risk of defaulting on their mortgage payments in the next two years, the country’s top financial regulator has warned…
“The figures underline the pressures being felt by ever more people as a result of the cost of living crisis. If 770,000 households did default, that would mean about 9 per cent of the UK’s mortgages were overdue.”
“Government introduces laws to mitigate the disruption of strikes on the public [UK government press release].
“Millions of hard-working people across the UK will be protected from disruptive strikes thanks to new laws introduced today, which will allow employers in critical public sectors to maintain minimum levels of service during strikes.”
“The NHS is not just in crisis, it’s in an emergency
“…we are facing an emergency on a national scale. This is not just about the unacceptable numbers of avoidable deaths, waiting times, bed shortages and intolerable conditions for medical staff. It is also threatening our understanding of what it means to be British.”
“French people travel to Italy to buy medicines amid shortages.
“Several pharmacies in Ventimiglia, the closest accessible Italian town to the southern French border, are reporting an increase in the number of French customers visiting with prescriptions as France faces shortages of hundreds of common drugs.”
“Hardships grow for German consumers as gas shortages worsen.
“Germany’s capital Berlin and eastern regions are facing gasoline shortages and high fuel prices, as Russian oil has no longer been flowing to Europe since January 1. The PCK refinery in Schwedt, in the eastern German state of Brandenburg, which was previously supplied exclusively with Russian pipeline oil, is only running at around 50 percent capacity…”
“German coal mine standoff escalates as police move on protesters.
“On Wednesday morning, officers in riot gear moved into Luetzerath, where hundreds of activists have been holed up trying to stop the expansion of the nearby Garzweiler coal mine run by energy firm RWE.”
“Nearly half of Europeans say their standards of living have ‘already’ declined as crises mount.
“The cost-of-living crisis triggered by the Ukraine war, the energy crunch, surging inflation and the coronavirus pandemic has become the greatest worry for European Union citizens, according to a new Eurobarometer that shows 45% of respondents are currently having “some” or “a lot” difficulties with their personal income.”
“Europe’s mild weather reprieve this winter may come to bite by summer.
“…the balmy conditions – which some meteorologists have described as the worst winter heat wave on record – come with a downside: Sharply lower snow cover and rainfall that leave the region vulnerable to drought, reduced hydropower generation potential, and possible logistical challenges on key river systems later in 2023.”
“Debt-heavy Asian companies are headed for a reckoning this year when $314 billion of bonds come due, just as refinancing costs for lower-rated firms have risen close to historic highs.
“Firms from India’s Vedanta Resources Ltd. to stressed property developers such as China Evergrande Group have US-currency debt maturing in 2023…”
“China’s Covid patients face medical debt crisis as insurers refuse coverage…
“Insurance companies have been reluctant to approve Covid-related claims after previously selling tens of millions of low-cost plans as the industry seeks to avoid liability for enormous payouts during an “exit wave” of cases. China’s health policy has also made it difficult for claimants to establish proof of infection.”
“Riots add to investors’ fears over Brazilian politics…
“The greater threat comes in the medium to long term. Lula won October’s election by the narrowest of margins, showing how deeply polarised Brasil has become. If the economy performs badly — and growth is certainly slowing this year — he will be less willing or able to push for unpopular reforms, especially any designed to raise government revenues or cut spending.”
“Peru protests spread to Cusco, gateway city to Machu Picchu…
“Clashes between protesters and police have broken out in Peru’s tourist city of Cusco as a month of demonstrations, which have now left at least 47 people dead, continued over the removal of the country’s ex-President Pedro Castillo.”
“Life in Cuba means living with constant blackouts.
“Electricity is being rationed in Cuba, with daily life dominated by power outages that can last 18 hours a day. It’s a frustrating situation, one that’s fuelling the biggest migration crisis since the revolution.”
“South African power cuts worsen as Eskom extends worst-ever outages…
“Eskom said in a statement that 11 of its generators had suffered breakdowns since Tuesday morning. The beleaguered utility supplies the vast majority of South Africa’s electricity, relying mainly on an ageing fleet of coal-fired power stations that are unreliable and prone to faults.”
“Zambia extends electricity rationing to mining firms.
“Zambia has started rationing electricity supply to mining firms following reduced power generation after a big drop in water levels in lake Kariba, the chairman of state-owned power utility Zesco said on Tuesday.”
“Moroccan households’ confidence is at its lowest level since the 2008 global economic crisis…
“According to new data from Morocco’s High Commission for Planning (HCP), the country’s Household confidence index, which tracks households’ attitudes on the state of the economy, dropped to 46 points at the end of 2022, down from 61 points the previous year.”
“‘Dangerous’ Tunisian droughts threaten food security…
“Since September only 110 million cubic meters of rain fell in Tunisia, about a fifth of the normal rate, and officials in the farmers union and the main trade union warn that grain crops will suffer – adding to existing problems of food supply.”
“Egypt’s pound plunges to new low as authorities try to stem currency crisis…
“Since the central bank said it would move to a flexible currency rate in October, the pound has lost nearly 35 per cent… The weakness of the pound is adding to the pain of millions of Egyptians as it fuels inflationary pressure, with urban inflation hitting 21.3 per cent in December, its highest level in years.”
“Syrians struggle with soaring prices, currency collapse and fuel shortages.
“Syrians say they’re facing worse economic hardship than at any other time during more than a decade of civil war — even though the president’s regime has solidified its hold on much of the country.”
“People Fighting Over Sacks Of Flour In Pakistan Leads To Stampede Amid Severe Economic Crisis.
“This scarcity of wheat has led to public unrest in Pakistan. A stampede broke out as people scrambled to purchase subsidised flour, resulting in the death of a 40-year-old man.”
“Sri Lanka’s government cuts expenses as economy tanks…
“Unsustainable government debt, a severe balance of payments crisis and the impact of the COVID-19 pandemic led to a shortage of essentials such as fuel, medicine and food. Soaring prices have caused severe hardships for Sri Lankans…”
“Bangladesh opposition holds rally seeking PM Hasina’s resignation.
“Thousands of supporters of Bangladesh’s main opposition party have rallied across Bangladeshi cities to demand Prime Minister Sheikh Hasina’s resignation and the formation of a caretaker government to conduct general elections.”
“Coinbase cuts 20% of global workforce amid crypto collapse…
“The company has announced the third round of layoffs in a year as part of a restructuring plan. The move follows the sharp downfall in the value of cryptocurrency and has been blamed on that as well as the slowing global economy.”
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 patron of my work via Patreon. And if you are already a subscriber or have donated – thank you! It is an enormous help as the cost-of-living crisis ratchets up here in the UK.
My apologies for the lack of a proper thread this morning but I must get me old gnashers seen to.
In lieu of one, I highly recommend these two new overviews by Gail Tverberg and Tim Morgan, respectively. Gail has long been an influence of mine and to a large extent it was her story I was telling when I started putting together economic threads many years ago on Facebook.
“2023: Expect a financial crash followed by major energy-related changes.
“Why is the economy headed for a financial crash? It appears to me that the world economy hit Limits to Growth about 2018 because of a combination of diminishing returns in resource extraction together with rising population. The Covid-19 pandemic and the accompanying financial manipulations hid these problems for a few years, but now, as the world economy tries to reopen, the problems are back with a vengeance.”
“The facts of the matter are simply stated. The harnessing of abundant, low-cost energy from coal, oil and natural gas triggered two centuries of remarkable economic growth. Now, though, fossil fuel energy has ceased to be low-cost and can be expected, in consequence, to become a lot less abundant as well. With no complete replacement available for the energy value hitherto sourced from fossil fuels, the economy can only contract.“
“Global economy hinges on US wage growth as policymakers fight inflation and recession…
“If earnings do not slow meaningfully, underlying inflation will remain high and the Fed – which effectively determines the level of global borrowing costs – will have little choice but to keep policy exceptionally tight…
“…even a softish landing could prove deceptive if central banks halt their rate-raising campaigns only to be forced to resume tightening in response to renewed inflationary pressures.”
“Central banks should sacrifice ambitions of a perfect economic landing…
“The big risk for 2023 is that rate-setters become so paranoid about losing face that they put their money where their mouth is and don’t just talk tough but impose multiple large rate rises. Rapid increases in borrowing costs would almost certainly push economies into recession. They could also spark bouts of financial turmoil that make the gilt market panic of last autumn look like a blip.”
“The global stock of negative-yielding bonds has dwindled to zero after last month’s unexpected policy shift by the Bank of Japan undermined the last bastion of sub-zero yields…
“…last year’s abrupt end to the era of easy monetary policy sparked a historic bond sell-off that rapidly shrank the pile, as central banks in the eurozone and Switzerland brought down the curtain on years of negative interest rates.”
“The Food and Agriculture Organization’s (FAO) food price index, which tracks international prices of the most globally traded food commodities, averaged 143.7 points in 2022, up 14.3% from 2021, and the highest since records started in 1990, the agency said on Friday.”
“Samsung profits fall 69% as demand for semiconductors slumps.
“Samsung Electronics’ operating profit slid nearly 70 per cent in the fourth quarter to an eight-year low, according to its preliminary numbers, highlighting how a slowing global economy is crushing demand for semiconductors and electronics products.”
“Apple has reportedly canceled the next iPhone SE.
“We may not be getting a new iPhone SE in 2024, according to analyst Ming-Chi Kuo, who bases his predictions on sources in the supply chain… Kuo thinks the reason the phone is getting axed could be that Apple’s lower-end phones were selling worse than the company hoped.”
“U.S. service sector contracts in December, price increases slow, ISM survey says.
“U.S. services industry activity contracted for the first time in more than 2-1/2 years in December amid weakening demand, while the pace of increase in prices paid by businesses slowed considerably, offering more evidence that inflation was abating.”
“Why worries over subprime auto bonds might be only getting started.
“Investors already bracing for a recession and rising borrower defaults now face another kind of worry after a new lawsuit claimed Credit Acceptance Corp misled them in more than $7 billion worth of its subprime auto bonds… Since the summer, delinquencies and losses on subprime auto ABS have been shooting up(see chart) as pandemic stimulus faded.”
“ADHD Drug Shortages Spread to Generic Ritalin Amid Supply Issues…
“Now, another type of ADHD medications — methylphenidate drugs — is in short supply, according to the University of Utah’s Drug Information Service, which tracks shortages. These drugs, along with amphetamines, also treat narcolepsy.”
“Britain has never faced decline like this before.
“Britain’s economy is in a bad way. Almost every forecaster agrees that the country is in recession, with debate shifting to how long the downturn will last. Yet even as output falls, inflation remains uncomfortably high (10.7 per cent), leading to a deep squeeze of household incomes. Taken together, 2022 and 2023 look likely to be the worst two years for living standards since the 1930s.”
“UK Train Stoppages Continue as Threat Grows of Broader Strikes…
“Industrial action could intensify in the coming weeks and months. The head of Britain’s biggest transport union called on Friday for coordinated strikes, potentially involving tens of thousands of public sector workers including teachers, firefighters and nurses. Newly-trained doctors are considering joining the wave of unrest.”
“[UK] Households are using cat litter to heat their homes, according to pet shop bosses, after the Ukraine war sparked a shortage of wood pellets.
“Jollyes, one of the UK’s largest pet food stores, said its cat litter suppliers were “working overtime to fulfill demand” for wood pellets, after a sharp jump in sales earlier this winter.”
“German Factory Orders Plummet as Manufacturers Under Siege…
“Demand declined 5.3% from the previous month, more than the 0.5% that analysts had predicted in a Bloomberg survey. The slump was driven by foreign orders, especially from the euro zone, and the drop was exacerbated by large-scale orders, the German statistics office said Friday.”
“Back to basics: wood-fired oven shields French baker from soaring energy costs.
“While many of his colleagues are teetering on the brink of financial collapse, Burgaud says the cost of firewood has only risen by 3 to 5% over the past year. “This is not even remotely close to the electricity prices and, in case of power outage, a wood-fired oven will always work,” he told Reuters.”
“Record-High Temperatures across Europe Ease Energy Crisis Imposed by Russia’s War.
“Extreme heat has provided some relief from Europe’s punishing energy crunch… But Europe’s troubles are not over. Russian gas imports will be far lower than last year, meaning the European Union will need to continue looking for alternative sources…”
“Europe’s Coming Bond Avalanche Will Test the ECB…
“The 10 largest euro nations are expected to sell some €1.3 trillion ($1.38 trillion) of sovereign bonds this year. A little over half of that will be new money, after allowing for maturing debt. It’s a scarily large jump… Someone, somewhere is going to have to step up and buy all of these new securities. Unfortunately, the timing is poor as central banks globally have become net sellers…”
“China’s financial system simply won’t be able to generate the same levels of credit growth that it has in previous years. This means that Beijing will have far less control over the direction of its economy than it has in the past. Growth in total societal financing (TSF), a measure of funds provided by the financial system to the real economy, is at all-time lows, and other credit metrics are decelerating.”
“China: Footage of protesters destroying police car in Henan shared online.
“Angry locals in Luyi County, Henan, destroyed a police car after an officer tried to enforce a fireworks ban during New Year celebration.. Footage of the incident was shared online in the latest example of protesters defying censorship in China.”
“North China Gas Shortages Leave Villagers Shivering.
“Rural residents in North China’s Hebei province have experienced gas shortages this winter that have left them without enough of the fuel to adequately heat their homes and cook amid sub-zero temperatures, as local distributors failed to secure enough cheap gas from upstream suppliers, Caixin has learned.”
“An Iranian member of parliament from Sistan-Baluchestan province has criticized bread and gasoline shortages, reporting long queues at gas stations and bakeries.
“ISNA news agency in Tehran quoted Abdol Naser Derakhshan Thursday as saying that the shortage of bread and gasoline in various cities of the relatively poor province has worsened during the past few days.”
“Pakistan economic crisis: No flour in Lahore; prices of sugar, ghee up by 25% to 62%.
“Amid dwindling forex reserves and an unstable government at the helm of affairs, there is a massive shortage of flour in Pakistan’s Lahore. The prices of flour have gone up in the city and the commodity was not available across most shops in the second most populous city in Pakistan.”
“Lebanon facing total collapse: people face starvation in the face of power vacuum…
“Week after week, legislators cast blank votes while the people beg for bread and jobs. It is a paralysis for the country that comes at the same time as foreign policy attempts are being made to revive ties with the Gulf states following Hezbollah’s dominance over the past decade.”
“As young Gazans die at sea, anger rises over Hamas leaders’ travel…
“A rising number of Gazans, seeking better lives abroad, are drowning at sea. The devastating procession has prompted a rare outpouring of anger against the territory’s militant Hamas rulers, a number of whom are making their own — very different — exodus. In recent months, high-profile Hamas officials have quietly decamped to upscale hotels in Beirut, Doha and Istanbul…”
“Nigeria’s Nationwide Fuel Scarcity May Worsen as Tanker Drivers Threaten Strike.
“The current fuel supply shortages nationwide may get worse in the coming days if the Petroleum Tanker Drivers branch of the National Union of Petroleum and Natural Gas Workers known as PTD-NUPENG, makes good its threat to embark on a nationwide strike.”
“Peru’s tourism sector hurt by protests amid mass cancellations.
“Weeks of deadly protests in Peru after the ouster and detention of President Pedro Castillo have taken a toll on the country’s economy, particularly its tourism sector, a minister and industry representatives said. Up to 60% of travel bookings for the first half of the year have been canceled since the protests began.”
“At least 12 people were injured, including four police officers, during clashes as anti-government protesters allegedly tried to take over an airport near Peru’s border with Bolivia on Friday, officials said.
“Protesters marched outside the Inca Manco Capac airport in Juliaca, in Peru’s southern Puno region.”
“Mexican city [Mazatlan] erupts in violence, residents ordered to stay indoors after drug cartel leader’s arrest. Multiple airports in Sinaloa state are closed after an Aeromexico flight was reportedly hit by gunfire…
“Mexican authorities on Thursday confirmed the arrest of Ovidio Guzman, a 32-year-old senior member of the Sinaloa Cartel and a son of jailed kingpin Joaquin “El Chapo” Guzman. His arrest unleashed a violent backlash by gang gunmen…”
“Hope vies with death for Cubans on 90-mile voyage to America.
“…amid deepening economic hardship, social repression and political punishment, more and more people are gambling on the voyage as a risk worth taking, contributing to a humanitarian crisis both at sea and on land as the US authorities struggle to cope with their end of the biggest ever Cuban migration.”
“Florida is seeing a rise in the number of migrants from Cuba and Haiti arriving by boat. The Miami sector of U.S. Customs and Border Protection has reported a 400% increase in migrant encounters since October.
“Dry Tortugas National Park, which is about 70 miles west of Key West, temporarily closed this week after more than 300 migrants made 10 landings there.”
“Migration rights advocates in the United States have condemned the Biden administration’s new border restrictions for asylum seekers, saying the expansion of a contentious expulsion policy put peoples’ lives in danger.
“US President Joe Biden unveiled the new measures on Thursday, including the forced return to Mexico each month of as many as 30,000 migrants…”
“Crypto Panic at Silvergate Spawns a New Breed of Bank Run.
“In other modern bank crises, such as the 2008 credit crunch that claimed Bear Stearns Cos. and Lehman Brothers Holdings Inc., problems began as souring loans and other assets chewed holes in lenders’ balance sheets. As those losses mounted, funding sources panicked and pulled away assets.
“But in Silvergate’s case, the firm made relatively few loans… Instead, the pressures started on the other side of Silvergate’s balance sheet. Almost 94% of the firm’s liabilities were deposits, with about $11.9 billion from digital-asset customers. That figure plunged to $3.8 billion by the end of the fourth quarter.”
“Genesis Global Trading, one of crypto’s oldest and most storied institutions, is in dire straits. In November, in the wake of the implosion of the crypto exchange FTX, the company’s lending unit was forced to freeze customer withdrawals—never a good sign. Almost two months later, Genesis is reportedly on the brink of bankruptcy.”
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 patron of my work via Patreon. And if you are already a subscriber or have donated – thank you! It is an enormous help as the cost-of-living crisis ratchets up here in the UK.
“The world economy faces a huge stress test in 2023… With inflation on the rise and the era of ultra-low interest rates over, there could well be a systemic crisis.
“The fact that the world did not experience a systemic financial crisis in 2022 is a minor miracle, given the rise in inflation and interest rates, not to mention a massive increase in geopolitical risk.
“But with public and private debt having risen to record levels during the now-bygone era of ultra-low interest rates, and recession risks high, the global financial system faces a huge stress test. A crisis in an advanced economy – for example, Japan or Italy – would be difficult to contain.”
“Global regulators to step up scrutiny of risks outside banking system.
“Global regulators are set to sharpen their scrutiny of hedge funds, clearing houses and pension assets this year after a run of crises has shifted watchdogs’ focus towards risks outside the banking system… Regulation of NBFIs, which now account for almost half of global financial assets, is unfamiliar territory for policymakers in more ways than one.”
“Oil falls again as concerns grow over global economy, China COVID cases…
““Worries about the state of the global economy are front and centre of traders’ minds and will remain so for the foreseeable future,”PVM Oil analyst Stephen Brennock said.”
“Demand slump sees 2m “ghost ship” sailings out of Asia.
“The high number of blanked sailings from Asia to North Europe is leading to some carriers operating “ghost ship” loops on the tradelane… The immediate outlook for the tradelane is “grim”, according to a UK-based carrier contact, who told The Loadstar recently he could not recall such a slump in demand in his many years in the liner industry.”
“Amid a turbulent few years for the global economy, one researcher says another big change is on the horizon. Robert Davies, a Utah State University physicist, predicts that economic growth will end, and it will end soon.
“The reasoning is simple, he says: The global economy has gotten too big, and — according to the laws of thermodynamics and exponential growth — that kind of growth isn’t sustainable in the long run.”
“December S&P Global U.S. Manufacturing PMI: Deteriorating Faster.
“The December S&P Global US Manufacturing PMI came in at 46.2, down 1.5 from the final November figure and in contraction territory for the second consecutive month. S&P Global US Manufacturing PMI is a diffusion index: A reading above 50 indicates expansion in the sector; below 50 indicates contraction.”
“Fed wants ‘more evidence’ of easing inflation and backs fresh rate rises…
“Minutes from the December gathering, when the US central bank raised its benchmark rate by half a percentage point, showed the Fed intends to continue squeezing the economy to try to tackle price pressures, which they warned could “prove to be more persistent than anticipated”.”
“Mortgage demand plunges 13.2% to end 2022, as interest rates head higher again.
“After a brief reprieve in the first half of December, mortgage interest rates shot up again to end the year, weighing on mortgage demand. Mortgage application volume was down 13.2% at the end of last week from two weeks earlier…”
“Pharmacists in UK and US report shortage of cold and flu medicines…
“Sufferers are buying the medicines to treat the symptoms of Covid-19, flu, and other conditions, including Strep-A and RSV, which have seen a resurgence after two winters of lockdowns. The supply problems come on top of a global shortage of antibiotics…”
“Record 13.3% UK food inflation raises fears of ‘another difficult year’.
“The figures came as concerns grew about the strength of the British economy, with the headline inflation rate at its highest level since the early 1980s, driven by soaring gas and electricity bills. Manufacturers suffered a further downturn in activity in December, with production, new orders and employment all in decline.”
“Europe’s energy crisis is now hurting France’s national treasure, the baguette…
“France’s iconic baguette has been under an increasing threat as bakers struggle with sharp hikes in the price of butter, flour and sugar, but with astronomical electricity bills looming this year some have been warning their ovens will remain unlit.”
“Bordeaux winegrowers demand money to uproot vines… As French winemakers struggle with declining exports and increased red tape…
“To demonstrate the urgency of the situation, the industry staged a protest in the city centre in December, with several hundred attending. It was the first protest by winemakers since 2004, when the global economic crisis after the burst dot-com bubble had a knock-on effect on business.”
“‘Yellow vest’ leaders call for resurgence to protest French pension reform,
“Four years after the start of the start of one of France’s most powerful protest movements, the ‘yellow vests’ (Gilet Jaunes) have announced plans to mobilise on Saturday, to protest rising inflation and the government’s plans to push forward pension reform.”
“How France’s prized nuclear sector stalled in Europe’s hour of need.
“…rather than enjoying the benefits of its vaunted nuclear industry, France found itself importing electricity from Germany in 2022. By November, a record 26 of France’s 56 nuclear reactors were shut for repairs… Meanwhile the French government is fully nationalising EDF, the state-controlled energy company running the power stations, to stop it going bankrupt.”
“European Debt Defaults Seen Surging in Echo of Covid Turmoil…
“The increase in defaults is expected as companies in Europe struggle with challenges including an energy crisis, soaring materials costs and cash-strapped customers. At the same time, refinancing existing debt has become increasingly expensive after central banks globally hiked rates to tackle soaring inflation last year.”
“Rising interest rates threaten to test the eurozone to destruction…
“With monetary conditions tightening precipitously, the euro is about to face its second great test…. Whatever its pretences, the European economy is still essentially just a collection of individual sovereign economies with little that connects them beyond free trade and a shared currency. Legal, insolvency, entitlement and tax systems remain wildly varied, while a properly functioning banking union is still just a distant aspiration.”
“BOJ Boosts Bond Buying for Fourth Day to Cap Rise in Yields.
“The Bank of Japan’s decision to double its 10-year yield ceiling was meant to improve market functioning. So far it’s triggered even heavier intervention from the central bank, threatening to reduce liquidity further in the local bond market.”
“Japan’s nuclear restart hit by engineer and manufacturing capacity shortages.
“Japan’s ambitions to reboot its nuclear industry risk being set back by a shortage of engineers and manufacturing capacity that has atrophied in the decade following the Fukushima nuclear disaster… the industry’s nuclear supply chain is under strain, warned industry executives and experts.”
“Beijing warns of need to minimise China’s debt risks as it shores up economy…
“The world’s second-largest economy is also facing slower export growth and a property market downturn, while dwindling local government revenue has raised concerns about the recovery of regional economies and mounting debt risks.”
“Chinese Builder Defaults on Bonds Despite State Help for Sector.
“A Chinese developer has defaulted on two dollar bonds and is halting payments on offshore notes, the latest delinquencies despite a plethora of recent government steps to ease the sector’s liquidity crunch. Times China Holdings Ltd. didn’t pay coupons on two dollar notes…”
“Peru roadblocks resume as president urges ‘peace, calm, unity’.
“Anti-government demonstrations and roadblocks have resumed in Peru after a two-week pause as the South American nation continues to reel from last month’s impeachment, arrest and detention of former President Pedro Castillo.”
“Fireworks fly as protesters clash with police [Bolivia]…
“The clashes come as the country faces divisions and unrest following the government’s decision to delay the country’s census until 2024. The province had been expecting greater funding and congressional representation due to a surge in its population.”
“Kerala [India] in deep fiscal crisis; to write to centre seeking more borrowing.
“Thiruvananthapuram: Faced with an “unprecedented financial crisis”, the Kerala Government is all set to write to the Centre, requesting the Union Government to exclude debts incurred by state-run autonomous bodies like Kerala Infrastructure Investment Fund Board (KIIFB) from the state’s annual borrowing limit so as to facilitate more borrowings.”
“Balochistan Chief Minister Mir Abdul Quddus Bizenjo here on Wednesday demanded the federation to immediately play its role to address wheat shortage and financial crisis in order to provide facilities to the people of the province.”
“Pakistan to shut markets and restaurants early to save power amid economic crisis.
“Pakistan’s economic woes show no signs of letting up in 2023. The South Asian nation announced a new energy conservation plan Tuesday as its fragile economy continues to struggle with multiple challenges. The government has ordered all markets to close by 8.30 pm and restaurants by 10 pm, according to a tweet by its ruling party.”
“EXPLAINER: Why has Syria’s economic crisis hit a new low?
“Syria’s economy has hit its lowest point since the start of its civil war nearly 12 years ago, with spiraling inflation, a currency plunge and severe fuel shortages in both government-run and rebel-held areas. Life in Damascus has come to a near standstill.”
“The Egyptians are under the weight of high prices, rationing, and the scarcity of the dollar.
“From restrictions on withdrawals from personal accounts outside Egypt, to rationing the amount of rice an individual can buy, to advertising campaigns about the health benefits of eating chicken legs, Egyptians are suffering greatly from the economic crisis their country is going through while it is burdened with debt.”
“Tunisia central bank warns of consequences if inflation rockets.
“Tunisia’s central bank governor warned on Wednesday inflation could spiral out of control if it did not raise interest rates… Economy Minister Samir Saeed said on Tuesday the hike would have negative repercussions for small and medium companies as the government contends with Tunisia’s worst economic crisis.”
“World’s Largest Manmade Dam Has Less Than 1% of Usable Water.
“Water levels at the Kariba reservoir plunged to a record low of less than 1%, curtailing power supply to Zambia and Zimbabwe and shuttering the tourism and fishing industries… Zambia began power rationing on Tuesday because of the critical low levels. Zimbabweans have been subjected to 19 hours of power outages a day…”
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 patron of my work via Patreon. And if you are already a subscriber or have donated – thank you! It is an enormous help as the cost-of-living crisis ratchets up here in the UK.
“As far as I know, your work is unique in pulling together stories from all over the world. Very sobering but a better and more complete view. Terrific and necessary work. Thank you!” – Simon
“With the inundation of so much depressing news, Justin Panopticon presents it in a succinct format that one can quickly go thru and see the big picture of climate and economics/politics to stay current and if a particle topic is of interest one can delve into the details… I try never to miss any of his posts…I am a Patreon of his work.”
– Karina S.
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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.
“The latest annual survey from global communications firm Edelman found people’s hopes for their financial futures suffered a “massive collapse” worldwide over the past year, with most developed nations seeing economic optimism hit all-time lows.
“Global economic slowdown ‘to force more workers into poorly paid jobs’…
“Fault lines in the Modern Financial System…
“Gold hits fresh record high in January; next target seen at $1,960.
“Britain has been made a whole lot poorer – and there is no way out…
“Buy now, pay later demand soars among all age groups in the UK…
“UK coal imports rise 39%.
“Lützerath: German police oust climate activists after clashes near coal mine.
“Germany’s Debt Dilemma Tempts Finance Chief Into Bending Rules…
“Credit Suisse set to cut 10% of European investment bankers…
“France is about to show Britain how bad industrial unrest can really get… For all their differences, the two nations face similar looming economic challenges…
“Tens of thousands of Spanish health workers protest for better future.
“EU Ban on Russian Diesel Nears, Whether Market’s Ready or Not…
“Bank of Japan’s yield curve control in danger as policy backfires…
“Energy crisis roils Kepco and local debt market…
“Growth in 2022 likely to mark China’s weakest in 40 years…
“China Home Prices Slump After Covid Outbreaks Stifle Rescue…
“Victims of bank Ponzi-like scheme in China unable to withdraw money from frozen accounts…
“Peru declares state of emergency in Lima after deadly protests.
“‘Command your troops, damn it!’ How a series of security failures opened a path to insurrection in Brazil…
“Violent protests erupt in Phoenix [Durban, South Africa] as residents go 40 hours without electricity…
“Ramaphosa Ditches Davos as ‘Extreme’ Blackouts Hobble Economy.
“Kenya, Nigeria tread a fine line after Ghana debt default, analysts say.
“Tunisia: Anti-gov’t protests take place on revolution anniversary.
“Egypt sentences 38 people to life in prison over 2019 protests…
“Tens of thousands of Israelis have rallied in three cities to protest plans by Prime Minister Benjamin Netanyahu to implement changes to the country’s legal system and weaken the Supreme Court.
“Yemen parliament speaks up against fuel, power, water price hike plan.
“Natural Gas Shortage In Iran Shuts Schools, State Organizations.
“In an acknowledgement of just how hard this cold winter is hitting, authorities in Tajikistan last week announced the suspension of an electricity-rationing regime.
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“#245: 2023 – Navigating the narratives…
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“Apple has reportedly canceled the next iPhone SE.
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