Daily updates on climate change and the global economy.

4th October 2021 Today’s Round-Up of Economic News

While the news about the energy crisis focuses in on Europe right now, the truth is that this is rapidly becoming a global crisis impacting global markets

The stark reality is that there will be no quick fixes from here, for the simple fact that none are available… winter is coming, and potential energy disaster is coming with it.

[Apologies for the stupid picture – I couldn’t resist.]


Surging natural gas prices, a cold winter, and reopening of international airline travel could push oil prices to $100 per barrel and trigger the next economic crisis, Bank of America says

“…oil potentially soaring to $100 could be the trigger to a global crisis due to high inflationary pressure… BofA is bullish on oil not only in the near term, but in the longer term as well, due to the chronic underinvestment in new supply…”


US shale drillers cannot contain oil price rise, Pioneer boss says.

“US oil producers are not able to increase supply to tame soaring crude prices that remain “under Opec control”, according to the shale patch’s biggest operator.”


Global economy facing bout of stagflation as soaring prices and chaos in supply chains and energy market wreak havoc for businesses

“‘Year to date, tin prices are up 74 per cent, gasoline prices are up 60 per cent, coffee is up 52 per cent, aluminium up 47 per cent, and the list goes on. The energy crisis is already of historic proportions, with gas prices in Italy up 385pc year-to-date.”


Silicon’s 300% surge throws another price shock at the world.

“A metal made from the second-most abundant element on Earth has become scarce, threatening everything from car parts to computer chips and throwing up another hurdle for the world economy.”


Coal Surges to Record as Global Scramble for Energy Accelerates.

“High-quality thermal coal loaded on ships at Newcastle port in Australia surged to $203.20 a ton, breaking the previous record set in July 2008.”


China Relaxes Coal Mine Safety Efforts on Electricity Crisis…

“The National Development and Reform Commission told miners at a meeting on Thursday that accidents will no longer result in the shutdown of nearby mines for safety inspections…”


China’s power crisis shocks Australia’s wool industry. Price of farm inputs also tipped to rise… for Australian farmers, it could lead to fertiliser and glyphosate prices going even higher

“Australian Council of Wool Exporters president Josh Lamb [aptly named!] said Chinese buyers expected potential shutdowns for up to six months.”


According to India’s power ministry, the 135 thermal power plants of Asia’s third-largest economy had an average of just four days of coal stocks as of Friday

“The shortage now raises the prospect of imminent, large-scale power cuts, higher consumer electricity prices… in an economy where coal-fired plants now account for around 66 per cent of power generation.”


From fast food to farming, Covid-19 has accelerated the rise of the worker robots. This in turn will put more jobs at risk and makes the need to reframe society ever more urgent…

“As British farms confront the absence of seasonal workers who once flooded in from eastern Europe, interest in agricultural robots is growing.”


Robots Take Over Italy’s Vineyards as Wineries Struggle With Covid-19 Worker Shortages.

“Italian winemakers have increasingly relied on migrant workers for the autumn harvest, but travel restrictions and soaring wage costs are pushing many to turn to machines.”


Venezuela to subtract six zeros from currency, second overhaul in three years.

“Venezuela on Friday will launch its second monetary overhaul in three years by cutting six zeros from the bolivar currency in response to hyperinflation, simplifying accounting but doing little to ease the South American nation’s economic crisis.”


Puerto Rico is on the brink of a power supply crisis. Protesters demand answers.

““It’s not normal to have blackouts, it’s not normal that our students cannot study properly, it’s not normal to have to live with generators,” a community activist said.”


Nigeria: Protests Rock Abuja on Independence Day Celebration…

“They demanded the resignation of the president for enacting anti-people policies and for failing to provide the appropriate response to the country at the time it was facing unprecedented security challenges… The policemen led by ASP Altine Daniel, released several canisters of tear gas to disperse the protesters.”


Unrest in Sudan: Khartoum Protest Broken Up By Force…

“Sudanese security forces dispersed a protest by residents of Khartoum on Thursday, underscoring strains in the relationship between the civilian and military factions of the country’s post-revolution transitional government.”


Turkish company cuts off electricity supply to Lebanon.

“The move by Turkish company Karpowership, which has provided electricity for the past eight years, was expected. It had said earlier that Lebanon’s state power company owes Karpowership overdue payments in excess of $100 million.”


Iraqis march in Baghdad to mark protests anniversary.

“Iraqis commemorate the victims of a crackdown against protesters demanding an overhaul of Iraq’s ruling class, days before a new parliamentary vote.”


Elderly in Iran’s Kurdistan scrape by during financial crisis, pandemic…

“Iran, already suffering under American sanctions, is one of the nations hardest by the COVID-19 pandemic. Many of the country’s elderly, who number around 8 million people, were left struggling with little financial support and in constant fear of the virus.”


Kyrgyzstan turns off lights to prepare for crisis… There will be no escaping discontent this winter…

“Shop windows will go dark, as will advertising hoardings. Routine inspections are being organized to ensure compliance. The blackout will affect streets too, plunging large sections of the capital, Bishkek, into obscurity.”


Kabul faces blackout as Taliban falters on electricity bills payment.

“Ahead of the harsh winter season in Afghanistan, the country’s capital city Kabul could dive into darkness due to non-payment of dues of Central Asian electricity suppliers by new Taliban rulers.”


A Deep Freeze This Winter Hinges on La Nina and the Polar Vortex.

With the energy crunch worsening, scientists hunt for insights into how low the Northern Hemisphere’s temps will go.


‘A perfect storm’: supply chain crisis could blow world economy off course.

“From Liverpool to LA, shortages of energy, labour and transport are threatening recovery from Covid… economists believe central banks might have to move more quickly to raise interest rates if inflation takes hold across the developed world.”


Buckle up because global markets are in for a bumpy ride in the days and months ahead… Problems… are emerging on a number of fronts. And it’s not just the toll the Delta variant is exacting on growth.

“In no real order, they are as follows: the disruption to global trade from shipping constraints; a rapidly emerging energy crisis; serious concerns about China’s property market and its entire growth model; and an escalating dispute within the US Congress that threatens to destabilise the 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 means a lot.

29th September 2021 Today’s Round-Up of Economic News

China electricity shortage: industrial production grinds to halt and traffic lights fail amid rationing.

“Half of China’s provincial jurisdictions mandate rationing of electricity, but poor communication and unclear timeline leave angry public in the dark. One local government warns that entire power grid at risk of collapse if electricity is not rationed.


China energy crunch triggers alarm, pleas for more coal.

“As a severe power crunch roils China’s northeastern industrial heartland, senior officials face mounting pressure from alarmed citizens to ramp up coal imports thick and fast in order to keep lights on, factories open and even water supplies flowing.


China’s coal shortage could leave other countries in the dust.

China is in dire need of more coal, and it’s willing to pay ‘any price’ to secure more of the world’s dirtiest fossil fuel – which means other countries risk literally being left in the coal dust.”


India’s coal stockpile dangerously low as inventories dry up, lowest since November 2017.

“The short supply may force plants to buy expensive imported coal or pay hefty premiums at domestic auctions, and raise costs across an economy already battling high fuel prices.”


Mining meltdown: Iron ore price slump sends shockwaves through industry as fall in demand from China catches market by surprise…

The price of this vital steel-making ingredient is highly volatile. But the speed and scale of the slump, driven by falling demand for steel from China, has caught the market by surprise.”


China tightens abortion controls as population crisis looms.

“China is tightening controls over abortions for “non-medical purposes” as policymakers heap pressure on women in their battle to counter a demographic crisis.”


Evergrande: Struggling firm to raise $1.5bn as debt payment looms.

“Chinese property giant Evergrande has said it is selling a $1.5bn (£1.1bn) stake it owns in a commercial bank, as it scrambles to raise money owed to customers, investors and suppliers. The almost 20% stake in state-owned Shengjing Bank is effectively being bought back by the bank.”


China Hidden Local Government Debt Is Half of GDP, Goldman Says.

“China’s hidden local government debt has swelled to more than half the size of the economy, according to economists at Goldman Sachs Group Inc., who said the government will need to be flexible in dealing with this as revenue is already under pressure due to a slowdown in land sales.”


China is banning the export of phosphate, a major component of commercial fertilizer, through 2022 [not good for food prices, of course!]

““Fertilizer prices have increased dramatically in recent years, and the news coming from China will more than likely help this trend continue,” said Theresa Sisung, field crops specialist for the Michigan Farm Bureau.”


U.K. Fuel Panic Deepens the Pain in Crisis-Prone Economy.

“Major U.K. industries from food processing to utilities were already reeling from the effects of Brexit, a supply-chain crisis and record surge in energy prices. The sudden disruption to road-fuel supplies threatens to spread that pain even deeper into the economy, leaving small businesses, care workers and taxi drivers unable to do their jobs.”


Surge in UK wholesale gas prices fuels winter energy crisis fears [we have to hope we have an unusually mild winter, although with La Nina brewing that may not happen].

“Wholesale gas prices have reached new all-time highs, stoking concern that a cold winter could deepen a crisis that has led to the collapse of multiple energy suppliers and raised fears of factory shutdowns and soaring bills.”


European Energy Prices Surge to Records as Supply Crisis Spreads. European energy markets from natural gas to carbon permits jumped to records early on Tuesday as the shortage of supplies will only get worse just as the winter season starts.

“Stocks of everything from natural gas to coal and Norwegian water for electricity production are dwindling…”


Gas-Starved Europe Can’t Look West as U.S. Faces Its Own Crunch.

“… for a multitude of reasons, U.S. shale is in no position to bail out Europe. Indeed, supplies are so tight that Americans are staring down their own supply squeeze and the accompanying sky-high utility bills.


U.S. consumers are gloomy about their finances and that means a recession could be near.

“It’s a bad sign that U.S. consumers are more optimistic about the overall economy than they are about their own finances. That’s because similar discrepancies in the past often presaged a recession.”


Venezuelan migrants in Chile face fiery anti-immigration protests.

“On the weekend thousands of local Chileans marched with anti-immigration slogans and set fire to belongings of Venezuelan migrants, tossing clothes and mattresses in bonfires in the street, after a camp was cleared by police on Friday.”


Bolivia coca farmers battle for control as protests turn violent.

“Bolivia’s coca farmers are battling for control of the leaf’s main market in the highland city of La Paz, a conflict which has seen producers and police clash in the streets with slingshots and tear gas, and even a building set on fire.”


Vietnam posts record GDP slump in Q3 due to COVID-19 curbs.

“Vietnam’s gross domestic product contracted 6.17% in the third quarter of 2021 from a year earlier as pandemic restrictions hit, the sharpest quarterly decline on record, government data released on Wednesday showed.”


Myanmar’s junta powerless as currency drops 60% in four weeks, economy tanks.

“Myanmar’s currency has lost more than 60% of its value since the beginning of September in a collapse that has driven up food and fuel prices in an economy that has tanked since a military coup eight months ago.”


Afghanistan’s financial system is about to collapse, lender warns, as the US keeps nearly $10 billion in reserves frozen from the Taliban…

“Syed Moosa Kaleem Al-Falahi, the chief executive of the Islamic Bank of Afghanistan, told the BBC that Afghanistan’s financial industry was dealing with an “existential crisis.””


Pakistan’s dependence on natural gas is turning into a nightmare…

“The surge in global gas prices due to shortages in Europe has pushed Asian LNG to records for the time of year. That’s forced Pakistan to pay the most ever for spot shipments to top up supply under long-term contracts, or even forgo them altogether.”


Pakistan’s Rupee hits fresh record low of 169.97 [against the $]…

“The research house has revised its expectations following the deepening financial crisis in Afghanistan and spike in commodity prices in international markets. The situation would increase demand for dollars in the domestic economy.”


Rising food prices could ignite unrest, instability in Nigeria, other African countries…

“The pain could be particularly acute in Africa, where purchasing power and social safety nets are limited, and discontent with underperforming governments is simmering. Current conditions – supply chain disruptions, climatic shocks, rapid spikes in commodity prices and lockdowns – have created fertile ground for unrest.”


Why global food prices are higher today than for most of modern history… Global food prices shot up nearly 33% in September 2021 compared with the same period the year before…

“Based on real prices, it is currently harder to buy food on the international market than in almost every other year since UN record keeping began in 1961.”


The world economy is facing a buildup in stagflationary forces as surging energy prices boost inflation and slow the recovery from the pandemic recession.

Oil’s climbed to more than $80 a barrel for the first time in three years… Food prices are also advancing, driven in part by crop failures in Brazil, with a benchmark UN index up 33% over the past 12 months.”


Inflation and Supply Shortages Are Waking Up the Bond Bears.

“Central bankers continue to insist that the recent price pressures that are driving inflation higher will prove temporary. But based on what’s happening to bond yields and in the inflation swaps market, investors are growing less convinced. Something’s got to give.


Is the world hurtling towards a debt bubble burst?

“…the threat to the global economy from a debt bubble blow out is still a live issue.”


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 means a lot.

27th September 2021 Today’s Round-Up of Economic News

Europe’s Energy Crisis Is Coming for the Rest of the World, Too. Millions of people around the globe will feel the impact of soaring natural gas prices this winter.

“This winter, the world will be fighting over something that’s invisible, yet rarely so vital—and in alarmingly shorter supply… there isn’t enough gas to fuel the post-pandemic recovery and refill depleted stocks before the cold months.”


Energy crisis is moment of truth for Europe’s green ambition… The imminent prospect of citizens unable to keep the lights on is the stuff of any government’s nightmare

“Europe’s decarbonisation agenda requires making fossil energy use more expensive. That was always going to be a tough sell. Now that higher prices are suddenly here, it is going to be harder still.”


Angela Merkel’s bloc sees worst election result since 1949.

“An exit poll for ARD public television put voters’ support at 25per cent each for the Social Democrats which is putting forth outgoing Vice-Chancellor Olaf Scholz for chancellor and Merkel’s Union bloc under would-be successor state governor Armin Laschet.”


Tension mounts as Monte dei Paschi di Siena [bank] nears its end – UniCredit is poised to carve up world’s oldest lender, sparking consolidation of Italy’s banking system…”

With thousands of jobs on the line, “Operazione Monte Paschi” has become a battleground in Italian politics…”


“Italy to spend €3bn on keeping household energy bills down as prices soar across Europe…

““In the absence of government intervention, in the next quarter the price of electricity could increase by around 40 percent, and that of gas by 30 percent,” Mario Draghi said.”


Boris Johnson prepares to call in army as panic buying drains UK petrol pumps…

“…at least half of petrol stations outside the motorway network have run out of fuel after Britons engaged in panic buying… One senior government insider said: “The situation in England is very bad.””


Stanlow oil refinery ‘on brink of collapse’ as crisis talks continue.

“Essar Energy, which owns the Stanlow oil refinery in Ellesmere Port, Cheshire, is negotiating with HM Revenue and Customs (HMRC) over a £223m VAT payment, delayed because of the pandemic. The Stanlow oil refinery supplies about a sixth of Britain’s road fuel…


China’s Power Crisis Moves From the Factory Floor to Homes… Shortage of coal and gas now affecting residential life…

“China’s energy crisis is beginning to hit people where they live, adding the risk of social instability on top of potential global supply chain disruptions.”


Chinese cities seize Evergrande presales to block potential misuse of funds…

“At least two local governments in China have taken control of sales revenue from Evergrande properties, even as Beijing remained silent about the unfolding liquidity crisis at the world’s most indebted developer and investors braced for more missed bond payments.”


The chairman and chief executive of bankrupt Chinese conglomerate HNA Group, one of the country’s most prominent buyers of international assets, were taken away by police, according to a statement issued by the company on Friday…

“No further details on the allegations against them or their current whereabouts were provided.”


Everything has exploded now’: on the streets with Thailand’s protesters…

“Din Daeng intersection… has turned into a battleground with nightly clashes taking place between young protesters, mostly students from vocational colleges and poorer neighbourhoods, and the police, who routinely fire rubber bullets and teargas.”


Turkey: Student housing protests highlight soaring prices.

“Nightly student protests across Turkey against unaffordable rents are a sign of a wider cost of living crisis.”


Tunisia: Opposition officials resign amid political crisis… international rights groups have slammed a “power grab” by President Kais Saied…

Saied’s extraordinary executive measures have come as the North African country grapples with an economic crisis due to high public debt and unemployment.”


Lebanon: What life is like in a ‘failed state’…

“With a breakdown of the financial and banking systems since 2019, decades of rampant corruption, and the coronavirus pandemic – the health sector is just one of many that has collapsed.”


The head of one of Asia’s biggest ocean shipping companies has warned that governments may need to intervene to “restore order” to a global logistics market tormented by chronic delays, supply chain disruption and record container rates.

“Takeshi Hashimoto, president of Mitsui OSK Lines, which is part of Ocean Network Express… said that the industry had miscalculated how long the disorder of the coronavirus pandemic would last…”


Cargo Delays Are Getting Worse, but California Ports Still Rest on Weekends.

“Despite mounting shipping delays and cargo backlogs, the busiest U.S. port complex shuts its gates for hours on most days and remains closed on Sundays. Meanwhile, major ports in Asia and Europe have operated round-the-clock for years.”


Container ships now piling up at anchorages off China’s ports.

“There are over 60 container ships full of import cargo stuck offshore of Los Angeles and Long Beach, but there are more than double that — 154 as of Friday — waiting to load export cargo off Shanghai and Ningbo in China…”


Semiconductor suppliers suspend factory operations in China amid power crunch…

“Multiple semiconductor suppliers for Tesla, Apple and Intel including ESON, Unimicron and ASE Groups, which have manufacturing plants in the Chinese mainland, recently announced they will suspend their factories’ operations to follow local electricity use policies.”


Semiconductor firms can’t find enough workers, compounding chip shortage.

“A survey from IPC found that 80% of chipmakers are having a hard time finding employees with the right training to handle the highly toxic compounds used to manufacture semiconductors…”


In charts: bonds with negative yields around the world…

Bonds worth $14.8tn — more than a fifth (21.6 per cent) of the debt issued by governments and companies around the world — are currently trading with negative yields…”


Textbook Stagflation [US] Rising Faster Than Any Time Since IHS Began Tracking…

It’s a global phenomenon that holds as true for the UK, for example, as the US where IHS reports…”


Charting the Global Economy: Inflation Is Nudging Central Banks. In the U.S., Federal Reserve officials are now split on whether to raise their benchmark interest rate by the end of 2022.”


An end to super-cheap money? Central banks begin tightening cycle…

” Along with Norway’s monetary tightening, the first in any advanced economy since the pandemic began, four emerging economy central banks — Pakistan, Hungary, Paraguay and Brazil — also raised the cost of borrowing this week, while the US Federal Reserve and Bank of England both signalled a move towards tightening monetary policy.”


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 means a lot.

24th September 2021 Today’s Round-Up of Economic News

Evergrande bondholders left in the dark as crucial deadline passes.

“Investors in an Evergrande offshore bond say they have yet to receive a closely watched [$83.5 million] interest payment that was due on Thursday, adding to uncertainty over an unfolding liquidity crisis at the world’s most indebted property developer.”


China asks local goverments to get ready for possible collapse of Evergrande…

The officials characterized the actions being ordered as “getting ready for the possible storm,” saying that local-level government agencies and state-owned enterprises have been instructed to step in only at the last minute should Evergrande fail to manage its affairs in an orderly fashion.”


European Central Bank President Christine Lagarde believes Europe’s direct exposure to the embattled Chinese property company Evergrande would be “limited.”

“It comes at a time when global stock markets are on high alert over Evergrande’s massive debt problems.”


Work on an ‘iconic’ town centre tower block [Croydon, UK] seems to have been halted, as reports from China suggest the company behind the project may be struggling

“A series of reports in the Chinese press this month suggest that R&F Properties is struggling to meet the Beijing government’s new rules to reduce developers’ debt.”


Government ministers urged Brits not to panic buy fuel and goods as the shortage of lorry drivers is increasingly hitting supplies across the UK.

“Yesterday, BP said a number of its filling stations are closed due to a lack of fuel available, while Esso owner ExxonMobil also said some of its Tesco Alliance petrol forecourts have been impacted.”


The chill winds that signal a second Winter of Discontent is coming [UK]…

“A chill wind beckons, with fuel shortages and runaway inflation added to a list of woes that already included empty supermarket shelves, spiralling energy bills, a tax rise in the spring and an extraordinarily badly-timed cut to universal credit for the poorest families.”


How the natgas crisis emulates the Northern Rock crisis…

“…a fact largely missing from the coverage is just how closely the structural situation resembles the one that drove the collapse of Northern Rock in 2007, and which later catalysed the wider financial crisis of 2008… the natgas market… has a historical susceptibility to extreme price moves and volatility.”


Norway hikes rates, becoming the first central bank in the developed world to do so.


Japan’s Sept manufacturing activity growth slows

“Japan’s factory activity grew at the slowest pace in eight months in September as output and orders contracted, while that of the services sector remained in its downturn, underscoring the protracted impact of the coronavirus pandemic.”


Seoul warns of debt hangover as apartment price growth hits 15-yr high…

“Koreans have been borrowing more than ever before, and South Korean policymakers are increasingly worried the debt pile could become unsustainable as rates rise, hurting people’s purchasing power and long-term growth.”


Subprime Lender Accused by SEC of Fraud on $100 Million Deal…

“The complaint alleges Collins and DiMeo included ineligible loans in the deal, extended loan repayment dates without borrowers knowing about it, and forgave payments due from delinquent borrowers.”


A record number of cargo ships are stuck outside LA. What’s happening?

“Southern California is dealing with a traffic jam unlike any other, as a record number of container ships have been stuck waiting in the waters outside the ports of Los Angeles and Long Beach to unload cargo.”


Semiconductor shortage appears to be worsening, as coronavirus causes new supply problems in Southeast Asia.

“The White House on Thursday will hold its second summit in five months with semiconductor manufacturers and buyers, in part to gain more clarity on the scope of the problem, senior administration officials said Wednesday.”


China’s Evergrande saga threatens to cast a shadow on one of the economic engines of recovery: global trade, suggests key bellwether.

“The growth pace of South Korea’s exports almost halved in the first 20 days of September from the same period last month as shipments to China and semiconductor sales to rest of the world slowed significantly.”


Police chief: Politically motivated unrest escalates [Thailand]…

“Protesters are stepping up violent and politically motivated activities while enjoying legal protection from some supporters, national police chief Pol Gen Suwat Jangyodsuk said on Thursday.”


UN: Myanmar Human Rights Situation Is Deteriorating.

“The UN’s High Commissioner for Human Rights said on Thursday that Myanmar now “faces a vortex of repression, violence and economic collapse” as civilians come increasingly under attack.”


Lebanon could run out of electricity within a week.

“Power cuts across Lebanon can currently last up to 23 hours a day, but state power company warns that fuel shortages could plunge the country into total darkness.”


16 million in Yemen ‘marching towards starvation’ as food rations run low…

“The situation in Yemen, which has been torn apart by civil war, has been described as “rapidly deteriorating” by experts. The World Food Programme (WFP) has raised grave concerns about the number of people facing starvation over the coming weeks and months.”


Tigray mothers share shocking accounts of dire famine conditions.

Testimonies from parents of severely malnourished children, medics, IDPs and residents who beg for food suggest dramatic worsening of situation in Ethiopia’s war-hit region.”


A climate reckoning is coming for the world’s government debt.

“For years, climate scientists have warned about the ferocious bushfires and hurricanes that are now overwhelming many communities around the globe. Today, alarms are ringing about a related financial danger: risks lurking within government bonds, the biggest part of the global debt market.”


You can read the previous ‘Economic’ thread here. I’ll be back over the weekend 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 means a lot.

22nd September 2021 Today’s Round-Up of Economic News

The global supply chain crisis could fuel a severe dose of stagflation. Economic observers should heed the warnings now – rising prices and slowing growth are a very real threat

“…we may end up with far worse than mild stagflation or overheating: a full stagflation with much lower growth and higher inflation. The temptation to reduce the real value of large nominal fixed-rate debt ratios would lead central banks to accommodate inflation, rather than fight it and risk an economic and market crash.

“But today’s debt ratios (both private and public) are substantially higher than they were in the stagflationary 1970s. Public and private agents with too much debt and much lower income will face insolvency once inflation risk premia push real interest rates higher, setting the stage for the stagflationary debt crises that I have warned about.


OECD warns over ending stimulus policies despite inflation pressures…

“The west’s leading economic thinktank has warned governments and central banks against an over-hasty withdrawal of support for growth amid concerns that recovery from the pandemic-induced recession is incomplete.”


US Treasury Secretary Janet Yellen issued a fresh plea for Congress to raise the federal debt ceiling on Sunday, arguing a default on U.S. debt would trigger a historic financial crisis

“She pointed out that the U.S. has always raised the debt ceiling before exceeding its limit. “The US has never defaulted. Not once.””


Britain’s poorer households face a cost of living crisis this winter and next spring…

“All families will face higher energy and food bills in the autumn with those coming off fixed price energy contracts or cheap deals facing increases of up to 50 per cent in their bills.”


UK power firms stop taking new customers amid escalating crisis.

“The British government held an emergency meeting with small power suppliers on Tuesday, and by the late afternoon Igloo, Green, Ampower, Utilita and NEO Energy had posted notices on their websites saying they were closed to new business.”


Britain warns food industry: Carbon dioxide prices will rise sharply. Britain warned the food industry on Wednesday that carbon dioxide prices would rise sharply after offering tens of millions of dollars of state support to a fertiliser company to avert a food supply crunch.


The UK carbon dioxide shortage threatening industries from steel to food is spilling over into Europe, one of the world’s largest distributors of the gas has warned.

“Nippon Gases, which sold almost $1.5bn of industrial gases on the continent last year, said “other countries in Europe will also suffer shortages” of CO2, estimating that its supplies had fallen 50 per cent across the region.”


IEA urges Russia to increase gas supply to Europe. The International Energy Agency has called on Russia to send more gas to Europe to help alleviate a shortage, becoming the first major international body to address claims that Moscow has restricted supplies.”


Europe’s lorry driver crisis to deepen next year, warns haulage boss. Shortages expected to disrupt Christmas, with new EU rules set to put further strain on supply chains…

“Gomez said there would be no easing off of the industry-wide crisis next year because of tougher EU labour laws on commercial road transport, known as the Mobility Package, that come into force in February…”


Credit Suisse’s Archegos disaster exposes cracks in bank regulation.

“When Archegos Capital Management blew up, it saddled Credit Suisse Group AG with $5.5 billion in losses. One reason investors and regulators were blindsided: a gap in the regulatory oversight of big international banks.”


China’s property slowdown sends chill through the economy…

““Government policy doesn’t support home purchases,” said Zhou Miao, a property agent at the Jinan branch of PowerChina Real Estate Group. “Many people have put off their house purchase plans until next year in the hope the authority relaxes credit controls.””


Iron Ore Woes Endure as Chinese Steel Demand Faces ‘Last Hurrah’… [not good news for Australia]

“Iron ore’s rollercoaster ride this year is set to end with a whimper as the contraction in China’s steel industry heralds further declines.”


Australia’s central bank ramps up warnings about soaring house prices, instability risk…

“The warning comes as Australian house prices are expected to climb by more than 20% in 2021, fueled by ultralow interest rates, the promise that interest rates will stay low for some time, and a tax system that encourages property-sector investment.”


Brazil among countries most susceptible to Chinese economic slowdown – Wells Fargo.

“Given China’s standing as the world’s second largest economy, a slowdown in Chinese growth is likely to have negative consequences for the global economic outlook and financial assets worldwide.”


El Salvador president declares himself ‘dictator’ in response to first mass protests.

“Thousands of people marched in capital San Salvador last week protesting Nayib Bukele’s recent decision to make bitcoin legal tender, and alleging that he holds too much power.”


Global Supply Shortages Reach All the Way to a Haitian Aid Group.

“Continuing disruption to factory production and bottlenecks in shipping are leaving nonprofit groups short of goods for vulnerable communities worldwide.”


South Africa moves closer to basic income in wake of civil unrest.

“South Africa is considering introducing a basic income grant after poverty and record joblessness helped inflame the nation’s worst post-apartheid violence. More than 330 people died during a week of violence in July…”


Lebanon’s inflation rate is worse than Zimbabwe’s and Venezuela’s…

“The consumer price index rose 137.8% from a year earlier in August, compared with 123.4% in July, according to the Lebanon Central Administration of Statistics. Consumer prices rose 10.25% from a month earlier while food prices rose 20.82%.”


How Thailand’s idle taxis beat back Covid slowdown with veggie gardens…

“The plants are grown on the bonnets, roofs, inside empty tires and in the boot of the cars. From chillies, eggplants, cucumbers, holy basil and spring onions, the taxi stands are looking more like an art installation.”


Malaysian tourism industry on brink of collapse…

““The Malaysian tourism industry is on the brink of total collapse and the Ministry of Finance needs to be specific in its allocation to not only preserve tourism business and workers but to prepare and empower the industry for a major comeback,“ Matta President Datuk Tan Kok Liang said in a statement today.”


Japan’s Liquidity Trap – Are We in the Same Boat…

We have yet to see any country successfully reverse a zero-interest rate policy or meaningfully curtail stimulus spending. Debt is ballooning world-wide and the balance between interest rates, inflation, and asset prices is increasingly delicate and precarious.”


Whether it’s homes or jobs, our dreams are moving further out of reach every year…

“…the transformation of housing into an asset class is only one of the economic pincer movements people now find themselves caught in. The other is the dwindling supply of “good jobs” that once made the investment in college education worthwhile.”


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

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20th September 2021 Today’s Round-Up of Economic News

Alarm bells are ringing unheeded in a world yearning for optimism… Investors have waved through deal after risky deal this year as they look for places to park their cash.

“The lending has been mammoth, swelling the US corporate bond market to nearly $11tn — more than a tenth bigger than it was at the end of 2019 before the Covid-19 pandemic, according to Sifma, the securities industry’s trade group. But the terms at which these money managers have agreed to lend have been astonishingly poor.

“Credit rating agencies are already warning the seeds of the next crisis, or at least the next default cycle, are being sown today. The pain will be particularly acute in the junk bond and leveraged loan market…”


Unease about [global] economic outlook grows as rising prices fuel stagflation concerns…

“Concerns about the regulatory environment in China, soaring energy prices, debates about whether inflation is transitory or persistent, how much the global economy is slowing, and whether central banks can …taper, is increasingly keeping investors nervous, and that uncertainty appears to be growing…”


The Fed’s Time Is Running Out for a Timely Taper.

“The central bank should start pulling back on its $120 billion monthly bond purchases and signal when it will lift rates, but it probably won’t.”


Crunch time for Biden’s economic plan: ‘Failure is not an option’…

“The haggling in Congress this month over ambitious spending bills will be a defining moment for his presidency…

We’ve set a goal, and the goal is achievable. I promise you, I promise you,” the president said…


The Global Housing Market Is Broken, and It’s Dividing Entire Countries.

“The dream of owning a home is increasingly out of reach. Democratic and authoritarian governments alike are struggling with the consequences.”


UK property prices hit all-time high.

“The national average price of properties coming to market in the UK hit an all-time high, Rightmove’s latest house price index revealed, as fierce competition among buyers for the record low number of available properties for sale continues.”


Mounting fears of a 1970s-style three-day week as Britain’s energy crunch deepens… The cost squeeze threatens to abort the economic recovery just as the furlough scheme winds down and fiscal stimulus fades.

“In a worst case scenario it could lead to systemic havoc akin to the industrial paralysis and candle-lit evenings endured in the 1970s… The UK is now at the mercy of global events… Downing Street can only hold its breath, and hope.”


UK Taxpayers face multibillion-pound bill to bail out failing energy firms, soaring bills and empty supermarket shelves – amid fears dozens of gas companies could go to the wall in gas supply crisis…

“Ministers are in talks with energy companies over a bailout that could help the beleaguered sector…”


Sterling under threat from stagflation bets… It has been frenetic since the Brexit vote, proving vulnerable as Britain thrashed out its new relationship with the European Union.

“The moves were extreme enough that sterling was repeatedly compared to emerging market currencies in terms of volatility.”


A fresh protest over post-Brexit rights for fishing vessels to access Jersey’s waters has been held in France.

More than 100 fishermen gathered on Armanville beach in Normandy on Saturday, where the power cable which supplies the Channel Island lands.”


France cancels defence summit with UK in protest at Aukus submarine deal…

“Florence Parly, the French minister of the armed forces, personally took the decision to drop the bilateral meeting that was due to be held in London this week, sources told Reuters.”


Europe Faces Bleak Winter Energy Crisis Years in the Making.

“Faced with surging gas and electricity prices, countries… will need to count on mild temperatures to get through the heating season. Europe is short of gas and coal and if the wind doesn’t blow, the worst-case scenario could play out: widespread blackouts that force businesses and factories to shut.”


Europe Faces Worst Corporate Credit Supply Shortfall Since 2005.

“Dwindling supply will typically limit liquidity in credit markets, making the pricing of risk more challenging. The issue is already prevalent in Europe’s sovereign bond market…”


The editor-in-chief of state-backed Chinese newspaper Global Times warned debt-ridden property giant Evergrande that it should not bet on a government bailout on the assumption that it is “too big to fail”.

“It was the first commentary to appear in state-backed media casting doubt on a government bailout for the country’s No.2 property developer…”


Shares in China’s Evergrande plunge again as fears of contagion grow…

“Shares in the embattled Chinese property company Evergrande have plunged again as investors weigh up whether the group’s massive debt problems could trigger a broader sell off across all financial markets.”


Iron ore tumbles 22% in worst week since 2008 financial crisis… as Chinese steel mills dumped the commodity in response to government production curbs and a cooling property market

“The steelmaking raw material, which hit a record high above $230 a tonne in May, traded at $100.80 on Friday, down 22 per cent over the week…”


The perfect storm of the Chilean economy.

“Economists from different political sectors agree that the problem lies in a disorderly way out of the pandemic crisis, due to the great impact of the consecutive withdrawals of pension funds on the financial system.”


“European Union-style bloc pitched for Latin America, Caribbean…

Bolivian President Luis Arce called on Saturday for a global agreement to lower debts for poor countries at a diplomatic summit in Mexico, as he and other heads of state seek to boost a new Latin American and Caribbean diplomatic block.”


Costa Rica warns of unrest in developing world without more Covid aid…

“Developing countries are at risk of sliding into instability under the weight of the pandemic without more financial support from richer nations and the IMF, Costa Rica’s president has warned.”


The Bahamas and Trinidad and Tobago have been fingered as the next two Caribbean countries expected to default on their sovereign debt, with widespread repercussions for their economies, populations, creditors and, eventually, the corrective policy prescriptions that are likely to come to bailout vehicles such as the International Monetary Fund (IMF).”


Puerto Rico’s progress still stalled four years after Maria.

“Some of the most important reconstruction work, like modernizing the electric grid, hasn’t begun as the U.S. territory faces a critical phase in restructuring its debt.”


South Africa’s ruling African National Congress is riven by factionalism and “thugs and gangsters” have infiltrated the process for selecting electoral candidates, according to an internal report cited by the City Press newspaper…

“Campaigning has been hit by violent disputes between supporters of rival candidates and money woes that left ANC staff unpaid for three months.”


Nigeria’s Worst Security Crisis…

“We hide behind the cliché that… we are in an economic recession, when the reality – unacceptably high rate of unemployment, unacceptably high crime rates, untold insecurity and killings, unacceptable inflation rates alongside low growth, unacceptable poverty, disease and hunger – show that we are at least in an economic depression, if not worse.”


Dueling Tunisian protests erupt over president’s power grab…

“The protest, accompanied by a heavy police presence, was the first since Saied declared on July 25 he was sacking the prime minister, suspending parliament, and assuming executive authority.”


Lebanon crisis: Father of girl with cancer says economic crisis is hitting hospitals and food supplies: ‘There’s no money and no work’.

“The crisis affecting the healthcare system is a symptom of a much wider crisis… compounded by corruption and bad governance. The UN estimates that 78% of Lebanon’s population is now living in poverty, leaving some scavenging for whatever they can find.”


Honda says Japan output 60% below plan on parts shortage.

“The automaker expects the impact to extend beyond this month and said production in early October will also fall short of initial expectations.”


Fake chips slipping into supply chain, industry insiders warn…

“TOKYO — Electronics makers grappling with an unprecedented global chip crunch are increasingly turning to unconventional supply channels to meet their needs — and many are getting stuck with knock-off, substandard or reused semiconductors.”


The computer chip industry has a dirty climate secret…

“The industry presents a paradox. Meeting global climate goals will, in part, rely on semiconductors. They’re integral to electric vehicles, solar arrays and wind turbines. But chip manufacturing also contributes to the climate crisis. It requires huge amounts of energy and water.. and creates hazardous waste.”


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 means a lot.