My sympathies to you on the other side of the pond – this election feels like a powder-keg. Here’s hoping it passes without major incident.
“International election observers are worried about the US vote. 2020 is the year where the unlikely, even the unthinkable, can happen.
“And election observers, organizers and commentators in Africa, Europe and the US fear that there are significant warning signs for the upcoming US elections… they worry that a protracted poll could lead to a constitutional crisis and even violence.”
“‘Our worst nightmare’: will militias heed Trump’s call to watch the polls? With the US dangerously divided, experts fear the president’s remarks will inspire armed factions to show up at polling places…
“FBI background checks – a direct indicator of gun sales – almost doubled year-on-year this summer, a reflection of the jitters that abound.”
“Some Americans worried about possible violence after the U.S. presidential election are forming community watch groups, others are working on conflict de-escalation and still others are purchasing guns, according to two dozen voters, online groups and data surveyed by Reuters.”
We are seeing social-cohesion fracture along multiple faultines with a rising tide of unrest around the world. Of course violence perpetrated by men against women is nothing new but I have noticed a growing wave of protests against rape and femicide. For example:
“‘I am tired of it’: Femicides spark outrage across Guatemala. Women are leading protests against gender violence and femicides this weekend in Guatemala, where the recent murder of a university student has sparked sorrow, outrage, and calls for action.”
“A second Dalit [untouchable] woman has died after alleged gang rape, sparking outrage and protests across India
“A 22-year-old woman died of severe injuries in India after being allegedly gang raped on Tuesday, according to authorities — the same day another 19-year-old woman died from a separate gang rape incident, prompting nationwide outrage and growing protests.”
“Bangladesh weighs death penalty for rapists as protests flare.”
“Protests rocked Bangladesh on Saturday as hundreds of people took to the streets to demand justice after a series of rapes and sexual assaults that have spurred the government to seek capital punishment for offenders.”
Fellow current-affairs junkies, it feels to me as if we are entering a new phase of the pandemic and accompanying economic and financial events. Here is my best guess as to what lies ahead:
I see a few months of moderate optimism, fuelled by economic data that can’t help but look amazing *relative to where we have come from* as pent-up demand is released, even allowing for the fact that some consumer habits will be constrained by fear of the virus.
This will probably be interspersed with and tempered by periods of worry about second waves and localised spikes and will ultimately give way to a huge dive in sentiment (consumer and investor) towards the end of the year when government support in developed nations is withdrawn and the reality dawns that we are stuck in a slow, deflationary choke-hold, drowning in debt, with job losses and defaults piling up, and (aside from the possibility of negative rates in the US) the major central banks have mostly shot their bolts.
Of course that dive in sentiment will be even worse if there is a severe resurgence of the virus and some governments opt for additional lockdowns. And, conversely, if a vaccine or cheap and efficacious treatment emerges, I could see a wave of euphoric relief keeping us buoyant for a year or two.
We may also see a return of the rising social unrest of 2019, as lockdown and social-distancing measures are eased. Public anger will no doubt be futher spiced by the economic fall-out from the pandemic.
The key thing to bear in mind is that the global economy was already flirting with recession in 2019. World trade volumes declined for the first time since the GFC (-0.4%). Global manufacturing was in contraction for much of the year. Japan, S Korea, the EU and UK were all showing minimal or no growth; some emerging markets like South Africa and Argentina were in recession. Global car sales were declining. India and China were slowing markedly. The World Bank, IMF etc. were *already* sounding the alarm on debt levels. Oil demand was lagging supply forcing OPEC+ into making cuts.
So, the pandemic is acting as an accelerant for existing issues, catapulting the financial system into its logical end-game and causing disastrous imbalances in supply and demand for services, goods and raw materials around the world.
Against this background, I feel fairly confident in saying that the global economy is not going to spring vigorously back to where it was before and from there chart a healthy growth trajectory.
In fact, although you can argue that nations like the UK have been in a situation of declining prosperity for a decade or two with rampant debt-accrual offering an uneven “pseudo-growth”, *the global economy as a totality* has never experienced sustained de-growth (only relatively brief recessions) and this is what we may now be facing. This time there is no new China emerging from the ashes to pull us all forwards.
As a growth-dependent dissipative structure, the global economy cannot survive sustained de-growth. It becomes chaotic and breaks apart. All we can really hope is that the timeline for this process of disintegration is more extended than one fears it might be and that we have several more years of hot showers and fresh groceries ahead of us.
“As city officials prepare to vote to a budget for the 2021 fiscal year, protesters have been camping outside of City Hall in lower Manhattan for just over a week, demanding that the New York City council reduce the $5.7bn New York police department budget by $1bn.”
“Some demonstrations [against police brutality in Trinidad & Tobago] reportedly turned violent; at least one video shared on social media channels showed protestors shooting at the police and officers returning fire.
“A third-floor window at the attorney general’s office was shot at. Protest actions also mushroomed, spreading to areas outside of the capital.”
“Food security has lately risen to the top of the national agenda in Cuba, with countless news headlines and televised roundtable discussions dedicated to the topic.
““Cuba can and must develop its program of municipal self-sustainability definitively and with urgency, in the face of the obsessive and tightened US blockade and the food crisis COVID-19 will leave,” José Ramón Machado Ventura, 89, deputy leader of the Cuban Communist Party, was quoted as saying…”
“Brazil’s national debt could top 100% of gross domestic product and the government’s primary deficit will probably rise above 15% of GDP, Economy Minister Paulo Guedes said on Tuesday, as the COVID-19 crisis blows a large hole in the public finances.”
“A British employers group demanded immediate action from finance minister Rishi Sunak after a record deterioration in business in the April-June period.
“The British Chambers of Commerce said on Wednesday its quarterly survey of 7,700 firms found the share of companies reporting growth in sales was far below even the low point of the global financial crisis of 2007-08.”
“Africa will need more financial help to avoid “long-lasting, terrible consequences” from the coronavirus pandemic, Kristalina Georgieva, managing director of the IMF, said as the fund predicted a region-wide contraction of 3.2 per cent this year, far worse than it had forecast just 10 weeks ago.”
“Tens of thousands of protesters have taken to the streets in Sudanese cities despite a coronavirus lockdown to demand greater civilian rule in the transition towards democracy after the removal of longtime ruler Omar al-Bashir last year.”
“At least 10 people died and more than 80 were wounded when the killing of a popular singer triggered blasts and protests in Ethiopia’s capitaland the surrounding Oromiya region on Tuesday, police and a doctor said. The unrest spotlights growing divisions in Prime Minister Abiy Ahmed’s Oromo powerbase…”
“Mohamad barely looks surprised when his phone vibrates with an update on the devaluation of the Lebanese pound. “Great, now my salary is worth $60,” the 30-year-old Syrian economics teacher turned refugee said, shaking his head.”
“In the past week alone, the Lebanese pound has lost over 40 per cent of its value.”
“Saudi Arabia’s economy contracted by 1% in the first quarter, official data showed on Tuesday, but the figures only marginally captured the collapse in oil prices and the coronavirus crisis, which deteriorated in March…
“The world’s largest oil exporter is facing its worst economic decline this year…”
“While the Army or the government from either side [India and China] has not disclosed what transpired during the talks, there were no hints of any consensus reached by the two countries to resolve the border dispute in Ladakh.
“Moreover, there are reports citing Army sources that the standoff may even continue well into the winters.”
“Protests have broken out in Hong Kong during its first day under controversial national security laws imposed by Beijing, and after China confirmed that some suspects could be extradited to the mainland under the new rules.
“On the 23rd anniversary of the handover from Britain to China, crowds defied a ban on protests and gathered on the streets…”
“The coronavirus crisis has severely affected livelihoods, local industries and the economy in general [Cambodia].
“It has also disrupted world trade, supply chains and also the production of food and agricultural products and commodities… the production of wheat and rice in Asia would be heavily impacted if lockdowns to curb the pandemic and virus restrictions continue to be enforced.”
“The coronavirus pandemic is dealing a serious blow to investments aimed at cutting shipping emissions.
“The European Community Shipowners’ Associations, an umbrella trade body of vessel owners that control nearly half of the global commercial oceangoing fleet, says an industry survey in May found that three-quarters of its members would either halt or reduce investments in cleaner ships.”
“Hedge fund launches in the first quarter slumped to their lowest level since the 2008 financial crisis while fund liquidations surged by over 50% from the previous quarter, illustrating the stark challenges the industry faces this year.”
“During the past week, three institutions well respected for their economic research – the International Monetary Fund (IMF), the Bank for International Settlements (BIS) and the United States Federal Reserve – have released reports about how the economic impact of the Covid-19 pandemic will play out.
“Overall, it’s a grim prognosis and full of uncertainties, which pose daunting challenges for policymakers.”
“How do you make a balance sheet look pristine in a fractional reserve system that is inherently unstable? That’s easy. Just put everything you don’t want to show in something called a “variable interest entity,” stuff it with a bunch of credit card and mortgage debt and call it all “off-balance sheet.”
“The dominoes are all lined up for another financial collapse.”
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– Karina S.
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