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.
“Money supply growth fell again in November, and this time, it turned negative for the first time in 33 years…
“It should be emphasized that it is not necessary for money supply growth to turn negative in order to trigger recession, defaults, and other economic disruptions.
“With decades marked by the Greenspan put, financial repression, and other forms of easy money, the Federal Reserve has inflated a number of bubbles and zombie enterprises that now rely on nearly constant infusions of new money to stay afloat.
“For many of these bubble industries, all that is necessary is a slowing in money supply growth, brought on by rising interest rates or a confidence crisis.”
“Defaults on US junk loans expected to climb as rate rises squeeze earnings…
“Deutsche Bank expects the default rate on leveraged loans in the US to climb to 5.6 per cent next year — up from 1.6 per cent — before rising to 11.3 per cent in 2024. That would leave defaults close to all-time highs set in 2009. Strategists at UBS forecast a default rate for low-grade loans of 9 per cent in 2023 alone.”
“It may be one of the most anticipated recessions of all time, but that doesn’t mean it won’t hurt.
“Barclays Capital Inc. says 2023 will go down as one of the worst for the world economy in four decades. Ned Davis Research Inc. puts the odds of a severe global downturn at 65%. Fidelity International reckons a hard landing looks unavoidable.”
“Third of world economy to hit recession in 2023, IMF head warns…
“The new year is going to be “tougher than the year we leave behind,” IMF managing director Kristalina Georgieva said on the CBS Sunday morning news program Face the Nation on Sunday. “Why? Because the three big economies – the US, EU and China – are all slowing down simultaneously,” she said.”
“UK faces worst and longest recession in G7, say economists.
“A clear majority of the 101 respondents in the FT’s annual poll of leading UK-based economists said the inflationary shock caused by the pandemic and the Ukraine war would persist for longer in the UK than elsewhere, forcing the Bank of England to keep interest rates high and the government to run a tight fiscal policy.”
“UK firms less likely to borrow than at any time since financial crash…
“The quarterly survey by the accountancy firm Deloitte found CFOs now more reluctant to borrow from banks or issue debt than they had been since 2008. With the Bank of England having raised interest rates to 3.5%, about 70% of those questioned now rate credit as costly, and almost half said that new credit was hard to get.”
“Sweden swept by ‘major bankruptcy wave’ amid inflation, energy crisis.
“The Nordic country is entering a long-term recession that is expected to last until 2025, with shrinking GDP and rising unemployment, according to the Swedish government. According to the business and credit reference agency UC, the number of bankruptcies in Sweden reached a decade high in the second half of 2022.”
“The Ministry of Finance says the Finnish economy will slide into a recession in early 2023.
“The Ministry of Finance presented its latest economic forecast last month, revealing that it expects the gross domestic product to contract by 0.2 per cent in 2023 before growing by 1.2 per cent in 2024 and 1.4 per cent in 2025.”
“Italy is the eurozone country most susceptible to a debt crisis as the European Central Bank raises interest rates and buys fewer bonds in the coming months, economists say.
“Nine out of 10 economists in a Financial Times poll identified Italy as the eurozone country “most at risk of an uncorrelated sell-off in its government bond markets”.”
“Hong Kong home sales drop to lowest level since 2008 financial crisis.
“Hong Kong home sales have fallen 40 per cent year-on-year to their lowest level since the 2008 global financial crisis, data from the local land registry and projections from real estate agencies have shown.”
“Don’t expect Asia to save the global economy in 2023.
“…much of the inflation that energy and food subsidies have managed to mitigate in 2022 might appear in 2023 as Asian economies can no longer put up with the fiscal cost of such subsidies… All in all, Southeast Asian economies, as well as India, are expected to decelerate in 2023…”
“Sri Lanka’s cancer patients struggle amid the country’s economic chaos.
“Hospitals countrywide have struggled to contend with severe drug shortages, which have worsened over the last eight months, a representative of Sri Lanka’s largest doctors union told Reuters… Specialist facilities like cancer and eye hospitals are running on donations, Dr Ratnasingam said.”
“Reeling under Chinese debt and rocked by an unstable law and order situation, Pakistan is on the verge of bankruptcy.Most government departments in Pakistan are facing a severe cash crush and the condition of Pakistan Railways is no different.
“Pakistan Railways is currently in a lot of trouble as it has only three days of fuel reserves left.”
“Pakistan is facing a crippling gas crisis this winter, with the nation resorting to rationing fuel.
“Videos shared on social media claim that people have been filling balloons with cooking gas to use later. While Firstpost cannot confirm the veracity of such videos but they emerge amid reports of shopkeepers in the country illegally selling locally manufactured plastic bags filled with cooking gas.”
“Protesters in Tehran’s bazaar have chanted slogans denouncing the regime amid tight security measures on the 107th day of public protests in Iran.
“Online account “1,500 Tasvir,” which closely follows the Iranian protests, published a video showing a state of panic in the bazaar and chants of “death to the dictator” and “poverty, corruption, and high prices will overthrow the regime.””
“Impact of Iraq protests on the oil sector of Iraq.
“With the ongoing protest and the history of the country there exists many problems for new businesses. With rampant corruption and militancy, the protest only further makes it difficult for new and existing businesses to function. Since the country on an average only gets 6 hours of electricity a day most businesses cannot function.”
“Syria weakened its official exchange rate to 4,522 Syrian pounds to the dollar…
“An economic crisis in the country has been triggered by years of conflict, Western sanctions, a currency squeeze in part due to a financial meltdown in neighboring Lebanon and the government’s loss of its northeastern oil-producing territories.”
“…the demonstrations in Jordan’s south, which have since spread to Kerak, Tafileh, and other areas, reflect the socioeconomic failures of successive governments and have been fueled by public discontent with declining living conditions and a lack of government transparency.”
“Strike over pay paralyses transport in Tunisian capital.
“Metro and bus traffic in Tunisia’s capital ground to a halt on Monday after employees of state transport company Transtu held a strike over delays in payment of wages and bonuses. The strike in Tunis highlights the financial problems faced by public companies on the verge of bankruptcy…”
“2023: No respite for Nigerians as fuel scarcity, queues persist.
“Early hopes of the current fuel scarcity easing off appear dashed as Nigerians again woke up to the reality of petroleum product shortages in the New Year. Indeed the New Year celebration for most Lagos residents was completely marred by the energy crisis…”
“Malawians demonstrated courage, resilience in 2022 – Chakwera.
“During the year, the Chakwera administration failed to take appropriate measures to deal with rising cost of living which was worsened by Chakwera’s decision to devalue the Malawi Kwacha by 25 percent in May. Apart from the increase in prices of goods and services, Malawians also had to deal with forex and fuel shortages as well as 8-hour daily blackouts…”
“Bolivia farm region blocks borders, grain transport as protests lead to clashes.
“Protesters in Bolivia’s farming region of Santa Cruz are blocking highways out of the province, threatening to snarl the domestic transport of grains and food, as anger simmers following the arrest of local governor Luis Camacho.”
“”It’s hard to overstate the extent to which the security situation in Haiti collapsed in 2022,” said the UN in its review of 2022, noting that “practically nowhere in the capital, Port-au-Prince, could be deemed safe, as rival gangs fought over territory, terrorising increasingly desperate citizens, already struggling to survive a humanitarian catastrophe”.”
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.
“Stocks and bond markets shed more than $30 trillion in ‘brutal’ 2022.
“Global stocks were on Friday set to close out the worst year since the 2008 financial crisis after the battle by central banks to tame inflation and the war in Ukraine sent powerful waves rushing across asset markets.
“The broad MSCI All-World index of developed and emerging market equities has shed nearly a fifth of its value in 2022, with bourses from Wall Street to Shanghai and Frankfurt all notching up significant losses.
“Bond markets also endured heavy selling: The US 10-year government bond yield, a global benchmark for long-term borrowing costs, has shot up to 3.8 per cent from about 1.5 per cent at the end of last year — the biggest annual increase on Bloomberg records stretching to the 1960s…
“The grim year for financial markets came as central banks led by the US Federal Reserve ratcheted up borrowing costs in an attempt to control the worst spell of inflation in decades.”
“Wealth managers are grappling with one of their worst years in a century after high inflation and a sell-off in stocks and bonds hammered returns. The threat of stubbornly higher inflation presents a challenge to preserving wealth in real terms that has not been faced in decades…
““This year is one of the most significant years of wealth destruction in nearly 100 years,” said Renaud de Planta, who leads Pictet, the 217-year-old Swiss partnership…”
“The Charts That Show World Economy’s Turbulent Course Over 2022. Above all, it was the year of inflation.
“The cost of living soared all over the world in 2022. Pandemic price pressures, dismissed as transitory, turned out to be enduring with Russia’s war in Ukraine causing a fresh spike in food and energy costs. In June alone, inflation was mentioned in more than 250,000 news stories on the Bloomberg Terminal.”
“Bumpy 2023 for markets as central banks face high inflation and low growth.
“Driving in a straight line is relatively easy, but going around a corner requires greater skill. For central bankers, 2022 would seem like a straight road, given what could come in 2023. The risk of policy error is rising.”
“Here’s what could tip the global economy into recession in 2023.
““It is likely that the world economy will face recession next year as a result of the rises in interest rates in response to higher inflation,” Kay Daniel Neufeld, director and head of forecasting at the Center for Economics and Business Research, said this week.”
“Central banks buy gold at fastest pace in 55 years; Analysts are pinning China and Russia as big buyers.
“Data compiled by the World Gold Council (WGC), an industry-funded group, has shown demand for the precious metal has outstripped any annual amount in the past 55 years. Last month’s estimates are also far larger than central banks’ official reported figures…”
“Fed reverse repo facility hits record $2.554 trillion.
“The New York Fed said that its reverse repo facility took in $2.554 trillion in cash from money market funds and other eligible financial firms, besting the prior high water mark seen on Sept. 30, when inflows totaled $2.426 trillion… The reverse repo facility takes in cash from eligible financial firms in what is a de facto loan from the Fed.”
“Funding strains emerge as banks build wholesale borrowings.
“Wholesale borrowing by banks has been shooting up as a deposit surge in 2020 and 2021 has started to reverse. Systemwide wholesale funding levels remain considerably lower than before the pandemic, but analysts say the data could indicate pockets of acute stress.”
“As the UK falls into a recession that could soon swallow Europe, this town offers clues on England’s cost-of-living nightmare…
“Nowhere is the UK’s cost-of-living crisis more keenly felt than in Burnley, which is experiencing the highest rates of inflation in the UK… While the country’s inflation rate sits at 10.7 per cent, Burnley’s inflation rate hit 11.7 per cent last quarter, according to the Centre for Cities thinktank.”
“Rail strikes ‘cost UK hospitality sector £1.5bn in December alone’.
“The rail strikes have cost bars, pubs, restaurants and hotels in the UK at least £1.5bn in December alone and – coupled with the cost of living crisis – will result in a “huge swathe of businesses and jobs lost”, industry bodies have warned.”
“Farmers appeal for fair prices to avoid shortages.
“Soft fruit, vegetables and pork produced locally will follow eggs as the next food items to be rationed, Scotland’s farming union has said… The rising cost of energy, wages, fuel and animal feed have all added to pressure on the bottom line for farmers and crofters.”
“Lützerath: How Germany’s energy crisis reignited coal…
“Lützerath has been occupied by protesters since 2020, when plans emerged to demolish the village and dig up the brown coal — or lignite — beneath it. Since the end of World War II, around 300 towns in Germany have been demolished for lignite mining, causing more than 120,000 people to be resettled.”
“Europe’s energy sacrifices: the winter test of resolve…
““It is good that we are saving energy and we have to keep on saving energy,” Ursula von der Leyen, European Commission president, said in a speech this month as she warned that next year could be even harder than the last.”
“European Bonds Plagued by Inflation Set for Record Annual Loss.
“European bonds tumbled, extending their worst year on record, as signs of persistent inflation rekindled concern over how much further the central bank will have to raise interest rates… The ECB is also expected to start shrinking its balance sheet in March…”
“Bank of Japan makes unscheduled bond purchases for third straight day.
“The Bank of Japan continued a run of unscheduled purchases of government bonds in an attempt to control a surge in yields caused by speculators betting it will pivot away from its ultra-loose monetary policy.”
“South Korea plans to raise its electricity rates by an unprecedented amount next year as the state-run utility faces a record loss from sky-high fuel costs.
“Electricity prices will be increased by 13.1 won per kilowatt-hour (1 US cent) for the first three months of 2023, according to a statement Friday from Korea Electric Power Corp.”
“South Korea chip output falls most since financial crisis.
“South Korea’s semiconductor production last month fell by the highest rate since the global financial crisis, weighing on the nation’s industrial output and pointing to a further cooling of overseas demand for tech components as the world economy slows. Chip production shrank for a fourth straight month, falling 15 percent from a year earlier…”
“China Factory Activity Worsens in December as Covid Spreads.
“China’s manufacturing activity contracted at a steeper pace in December as the country suddenly reversed its Covid Zero policy and the virus swept through major cities, causing people to stay home and businesses to shut… High-frequency data suggested that economic activity was pushed off a cliff…”
“Hong Kong Exports Drop Most in Almost 7 Decades on Global Slump.
“Hong Kong’s exports plummeted in November by the most in nearly seven decades as a slump in China’s economy and global demand worsened, making the road to recovery even tougher for the financial hub. Overseas shipments plunged 24.1% last month from a year earlier…”
“Indian economy confronting strong global headwinds amid global recessionary risks: RBI.
“The Reserve Bank of India (RBI) on 29 December released the 26th issue of the Financial Stability Report (FSR) and said that with the global economy facing formidable headwinds with recessionary risks looming large, India is confronted with strong global headwinds.”
“Worst year for Pakistan’s economy and businesses.
“The major victims of the economic recession in 2022 were the textile industry and its allied sectors; agriculture, import material-based industries and automobiles. All of this has led to a fear of major unemployment in the country.”
“Over 100 arrested as Gwadar unrest grows (Balochistan, Pakistan)…
“The police have rounded up some 100 protesters in the last four days after tensions erupted in the district after months of peaceful protests for basic rights… Maulana Hidayatur Rehman, who is leading the protests, said people were simply asking for their basic rights like water, electricity and jobs…”
“Fresh Unrest In Iran As Memorial Gatherings Turn Into Protests.
“Memorial services for several protesters killed by security forces turned into new protests in several Iranian cities Thursday, including in the capital Tehran. “This blossom killed in the bud was an offering to the homeland”, a large crowd of protesters who gathered around Hamidreza Rouhi’s grave at Behesht-e Zahra Cemetery in the south of Tehran chanted…”
“Iran central bank governor resigns amid currency crisis.
“The replacement comes after weeks-long sharp declines in the value of the rial, and one day after it dropped to all-time lows, with one US dollar sold for 440,000 rials. The troubled market had triggered the removal of the central bank’s foreign exchange chief only two weeks ago.”
“Arab region registers world’s highest unemployment rate, UN survey find…
“Meanwhile, poverty measured against national lines also surged, affecting 130 million people in Arab countries, revealed the Survey. Excluding Libya and Gulf Cooperation Council countries, more than one-third of the region’s population is affected.”
“Debt spiral engulfs Turkish voters months before polls.
“The growing pile of debt notices covering the Ankara district mayor’s desk hint at the scale of the economic crisis facing Turkish voters months before crucial presidential polls… Turkish media say the total number of debt recovery cases rose by about 1.5 million in a year and exceeded 24 million at the height of the crisis in August.”
“Lebanon in 2023: A demographic bomb on verge of exploding…
“According to Dr. Faour, Lebanon has experienced unheard-of economic, social, and demographic changes since 2019. By the end of 2022, the situation had reached a comprehensive economic and financial collapse, followed by the failure to approve a plan for an economic and financial recovery.”
“Tunisia Hikes Rates As Inflation, Policy Tensions Surge.
“Tunisia hiked rates Friday, as the cash-strapped North African nation grapples with surging inflation and growing public anger over spending cuts… concerns have been building about the nation’s ability to withstand more economic shocks.”
“From historical food inflation rates, low purchasing power, hiked fares, power cuts, and unpaid Christmas bonuses to civil war, and food insecurity, Africa had one of its worst Christmas moments in recent years.”
“At the start of 2022, sub-Saharan Africa was reeling from Covid-19. The year is ending with many nations staring down another crisis: unsustainable debt.
“It’s been in the making for years with long-term loans more than doubling to $636 billion in the decade to 2021 — that exceeds the combined gross domestic product of more than 40 African nations.”
“Brazil arrests four people for alleged coup attempt in Bolsonaro riots.
“Brazilian police said they had arrested at least four people and carried out nationwide raids on Thursday in investigations into an alleged coup attempt during riots by supporters of defeated far-right President Jair Bolsonaro.”
“Protesters in Bolivia attacked buildings, torched cars and blocked highways over arrest of right-wing regional governor on a ‘terrorism’ charge.
“As night fell on Friday, protesters in parts of Santa Cruz torched cars and tires and hurled fireworks toward police forces, who used tear gas to try to disperse the crowds.”
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.
This will be my final thread until the 30th. Happy Christmas/Holidays, everyone! Could you please raise a glass to my noble webmaster and fairy doom-mother, Anne? She both pays for this site and deals with all the technicalities. I literally could not do this without her.
“But like all dreams, I’m afraid this won’t last forever. On the stroke of 12, the spell will be broken and nothing will be as it was before.”
“After about a year of uncertainty in 2022, global economy is in a steep slowdown, according to the latest report by World Bank.
“While speaking about growth in its report, 2022 in Nine Charts, it said, “The global economy is now in its steepest slowdown following a post-recession recovery since 1970 – with global consumer confidence already suffering a much sharper decline than during the run-up to previous global recessions.”
“…The World Bank in its report also said that an increase in the severity of natural hazards continues to illuminate the social and economic impacts of climate change.”
“Global semiconductor revenue to shrink by 4% in 2023, the first contraction since 2019…
“Gartner’s practice VP Richard Gordon, in a forecast said, “The short-term outlook for semiconductor revenue has worsened. Rapid deterioration in the global economy and weakening consumer demand will negatively impact the semiconductor market in 2023.” For Gartner, the global semiconductor revenue is projected to decline 3.6% in 2023.”
“Taiwan’s export orders likely contracted again in November, a Reuters poll showed on Monday, as global demand for the island’s technology-related goods cools and at a faster clip than the previous month.
“The median forecast from a poll of 18 economists was for export orders to fall 11.2% from a year earlier.”
“Mounting global price pressures threaten to trigger more rate rises.
“Underlying price pressures are still mounting in most major developed economies despite the recent falls in headline inflation… Core inflation — which excludes changes in food and energy prices, and is viewed by rate setters as a better measure of the persistence of price pressures — is accelerating in many parts of the world, according to an analysis of official statistics by the Financial Times.”
“A record central bank gold rush has been triggered by fears of Western sanctions after Russia was made a pariah state in the wake of its invasion of Ukraine, according to the World Gold Council.
“Officials in many countries outside the West are rethinking their foreign currency reserves after the sanctions meant Russia’s central bank lost the use of its war chest, hampering its ability to protect the ruble and its banking system.”
“Billions of Dollars in Fed Discount Window Suggests All Is Not Well in Banking…
““It is surprising that in spite of the available amount liquidity in the system, usage at the discount window still increased,” write JPMorgan Chase & Co. analysts led by Jay Barry. “Borrowing at the discount window is often seen as a last resort for banks in terms of sourcing funding, and hence there is an implicit stigma associated with it.””
“Financial risks grow in shadowy corner of markets, worrying Washington…
“One area that has some analysts concerned is the roughly $1.5 trillion market in private lending, which has more than doubled in size over the past several years and now rivals junk bonds as a source of corporate funds… Private equity companies use much of that borrowed money in leveraged buyouts.”
“Car repossessions are on the rise in warning sign for the [US] economy.
“A growing number of consumers are falling behind on their car payments, a trend financial analysts fear will continue, in a sign of the strain soaring car prices and prolonged inflation are having on household budgets.”
“‘Britain is already in the longest recession since records began’…
“Chief economist Yael Selfin said the decline is being driven by the soaring energy and food prices facing households. They have suffered the biggest drop in living standards on record as the surging cost of living eats into wages.”
“UK government digs in as industrial action escalates.
“…Prime Minister Rishi Sunak accused Mike Lynch, general secretary of the RMT trade union of behaving like the “Grinch” who stole Christmas and said unions were “causing misery for millions with transport strikes in particular cruelly timed”.”
“UK ‘prepper’ movement growing with more people hoarding supplies at home in case current crises escalate…
“Barry is a so-called prepper, part of a growing community in the UK defined by the phrase: “Hope for the best, prepare for the worst.” …Online prepping forums and YouTube channels, including Barry’s own, are attracting thousands of new members every week, as people ask for advice about what to buy and how to store it.”
“Electricity companies warn they remain at risk of cash crunch.
“Electricity companies are urging the UK government to boost access to a £40bn state-backed liquidity support scheme, as continued price volatility in wholesale power markets reignites fears that some suppliers and generators might run out of cash.”
“EU countries agree gas price cap to battle energy crisis…
“Following the announcement of the deal, Kremlin spokesman Dmitry Peskov said that the decision was an attack on market pricing, according to Russia’s Interfax news agency. “This is a violation of the market price-setting, an infringement on market processes, any reference to a [price] cap is unacceptable,” Peskov was cited as saying.”
“Europe’s $1 Trillion Energy Bill Only Marks Start of the Crisis.
“After this winter, the region will have to refill gas reserves with little to no deliveries from Russia, intensifying competition for tankers of the fuel. Even with more facilities to import liquefied natural gas coming online, the market is expected to remain tight until 2026…”
“Orban’s Food Price Caps Backfire for Hungarian Holiday Shoppers.
“A plan to shield Hungarians from the European Union’s highest inflation before the holidays has backfired, with retailers rationing staple foods in a throwback to the nation’s communist past… The government sees what is the EU’s fastest inflation — at 22.5% — accelerating to 25% by year-end.”
“Workers, civil servants and students staged protests Saturday in Athens to draw attention to the soaring cost of living. Demonstrators gathered in front of the parliament building, responding to the call of The All-Workers Militant Front, a trade union affiliated with the Communist Party of Greece, to protest.”
“China’s cities fall quiet amid warning of three Covid waves over winter.
“Across major cities people appear to be staying inside, either with the virus or in fear of contracting it, but authorities have pushed on with the reopening. There are also mounting questions over the full impact of the current outbreak.”
“Chinese business confidence falls to lowest in almost a decade on COVID.
“China’s business confidence fell to its lowest since January 2013, a survey by World Economics showed on Monday, reflecting the impact of surging COVID-19 cases on economic activity with the abrupt lifting of many pandemic control measures.”
“Violent protests in Peru evoke memories of darkest days of civil war.
“Huamanga, a picturesque Andean city of cobbled streets and whitewashed plazas, was eerily silent. Shop doors were bolted, and the tiny taxis known as ticos were absent in the aftermath of the worst violence it has seen in decades.”
“Crunch Time for Giant Copper Mine as Panama Readies Halt Order…
“In an announcement that sent ripples across the mining industry and the copper market, Panama’s cabinet last week authorized the commerce minister to issue a resolution placing the Cobre Panama mine on care and maintenance after tax talks collapsed.”
“Liberians protest over economic hardship and president’s absence…
“Large protests have taken place sporadically during Weah’s five years in office, but anger over his government’s management of the economy has grown as Liberians grapple with rising food and fuel prices linked to the Ukraine war and fallout from the COVID-19 pandemic.”
“Ghana to default on most external debt as economic crisis worsens.
“Ghana on Monday suspended payments on most of its external debt, effectively defaulting as the country struggles to plug its cavernous balance of payments deficit. Its finance ministry said it will not service debts including its Eurobonds, commercial loans and most bilateral loans…”
“Syrian student Ziad al-Ezz can no longer get to university as severe fuel shortages cripple the capital Damascus, pushing residents to seek alternatives for heating and shuttering businesses.”
“Three Jordanian police officers killed in raid as social unrest continues…
“The shooting erupted during an operation to arrest a man suspected of killing a senior police commander last week. Jordan’s public security directorate said five other officers were wounded during the raid in the Ma’an governorate, a restive area in the south of the country…”
“Social media report protests by Iranian oil workers for higher wages.
“The activist HRANA news agency said on Saturday that a group of oil workers protested outside the Pars Oil and Petrochemical Company in Asaluyeh in the southern Bushehr Province on the Gulf coast. It said in addition to wage increases and pension bonuses, the removal of high income taxes and salary cap, improved welfare services and health conditions were among the protesters’ demands.”
“Without biodiversity the global economy would crumble…
” the market economy can be thought of as a system of creating wealth from applying human ingenuity to the gifts that nature provides us. We harvest the bounties of nature, and bring them to market to trade for a profit… dig deep enough into any value chain and eventually you end up where we started: transforming environmental resources into states that facilitate human consumption.”
You can read the previous “Economic” thread here. I’ll be back on the 30th with a new thread and I wish you all a very Happy Christmas/Holidays in the meantime.
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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About This Site
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.
“2023: Expect a financial crash followed by major energy-related changes.
“#245: 2023 – Navigating the narratives…
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“Apple has reportedly canceled the next iPhone SE.
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