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Posts Tagged ‘global economy’

Global Economic Crisis Worsens As Covid-19 Pandemic Unleashes Massive Debt Crisis – U.S. Budget Deficit Will Likely Exceed 20 Percent of GDP

April 2nd, 2020 Comments off

As the coronavirus ravages our planet, decimating economies large and small in its wake, it distinguishes itself from the 2007-09 global financial crisis in this way: it is an economic disaster brought on by a health crisis, as opposed to the GFC, where economies were harmed by a major financial crisis. However, this distinction will soon vanish, for the following reasons.

The enforced shutdown of the global economy created by the health response to the Covid-19 panic has led to massive spikes in unemployment, at a faster pace than even during the Great Depression of the 1930s, while businesses large and small are shuttered, severely constricting activity, while households are on the verge of insolvency. To prevent complete economic and societal collapse, sovereigns have launched emergency stimulus measures, at unprecedented levels of deficit spending, typically in the range of 10 to 15 % of GDP, as in the United States with Congress recently passing a 2 trillion dollar stimulus bill (representing ten percent of pre-crisis GDP).

However, with millions of workers now jobless and corporate activity at a near standstill, tax revenue from personal and corporate income, as well as capital gains, will shrink precipitously.

Before the onset of the coronavirus crisis, the U.S. economy, supposedly operating at its best level of performance, and with unemployment at a record low, was still requiring an annual budget deficit of one trillion dollars to fund federal government operating costs. Factoring everything we now know, the actual U.S. government deficit for the current fiscal year will be substantially higher than 20 %.

Should large developed economies such as the United States run annual deficits in the range of 20 percent of a shrinking GDP, notwithstanding debt monetization by the Federal Reserve and other central banks, a sovereign debt crisis of unparalleled dimensions will complement the Covid-19 pandemic in its negative impact on the global economy, and endure long after a vaccine is developed for coronavirus.

The increasingly likely sovereign debt crisis makes it more certain that the global economic crisis will not only be long-lasting, but will manifest the characteristics of an economic depression as opposed to a less virulent recession. Furthermore, long-term monetary measures a sovereign debt crisis will compel policymakers to implement will heighten the risk of severe global inflation, leading to a period of prolonged stagflation.

 

Is President Trump the Herbert Hoover of 2020? Global Economy Collapsing in Freefall – Coronavirus Pandemic Is Now an Economic Catastrophe

March 18th, 2020 Comments off

The imposed shutdown and enforced demand destruction unleashed by sovereigns across the global in a frantic effort to contain the Covid-19 virus has now unleashed an economic contagion of devastating virulence. The underlying weakness in the global economy, mainly unprecedented corporate leveraging, hidden by artificially boosted stock market valuations, are now exposed and vulnerable to an extent that will likely exceed the Global Financial Crisis of 2008 in severity.

All indices of global economic trends – oil prices, equity markets, bond yields – are pointing to a massive global economic contraction, which might very likely become a full blown depression.

The social and political consequences will rival those of the public health emergency. One likely casualty will be President Donald Trump, who until recently seemed headed for reelection on the basis of perceived economic strength.

No longer.

As with Herbert Hoover in 1932, President Trump will have to campaign , not on the basis of the “best economy ever,” but with a depressed economy in freefall collapse, shedding jobs by the millions and with bankruptcies soaring.

The world is about to undergo radical change, unforeseen not even weeks ago.

Coronavirus Threatens To Unleash Next Global Economic Crisis

March 6th, 2020 Comments off

 

In 2007,just before the last great worldwide financial and economic crisis was unleashed, a book by Nassim Nicholas Taleb was published entitled The Black Swan. It explored how unpredictable and outlier can events can unleash extreme impacts of greave consequence. Though Taleb’s book foretold of the Global Financial Crisis that was about to occur, it is just as prescient regarding the unleashing of the Corona virus and its increasingly devastating impact on the global economy.

Seemingly out of nowhere, Corona virus, specifically the strain identified as Covid-19, began spreading like wildfire towards the end of 2019 in Wuhan, China. Since then, it has been occurring in dozens of countries, leading health authorities worldwide to label Covid-19 a pandemic. And though we are only in the early stages of the outbreak, the global economy is already in dire straits.

Stock markets are plummeting, global supply chains are being disrupted, the travel and tourism and related industries are being devastated, and economic fear is becoming as contagious as Covid-19 spread with virulence.

The economist noted for predicting  the 2007-2008 financial collapse, Nouriel Roubini, otherwise known as “Dr. Doom,” is now predicting massive economic collapse as the Corona virus spreads and intensifies. In his views, any equity recoveries are only temporary and the worst is ahead of us, with stock markets possibly contracting by 40 percent or more. Other elements, which Roubini describes as Whites Swans, such as tension with Iran and the China-U.S. trade war, will further exacerbate the economic consequences of Covid-19.

This is not a mere correction or cyclical recession that is being discussed, but a global economic depression of massive proportions. Central banks are already slashing interest rates to near zero, and other signs of panic are setting in. The next Global Economic Crisis appears to be just ahead, with the world geopolitically far more divided and conflicted than was the case back in 2008.

 

Nouriel Roubini Sees Sino-American Tension Driving Risk of Global Recession in 2020

June 22nd, 2019 Comments off

 

He was dubbed “Dr. Doom”  for his uncanny and highly accurate prediction of the 2008 global financial crisis and global recession. Now, Roubini is again making dire predictions of a catastrophic global economic recession. This time, however, the decisive driver of the meltdown won’t be subprime mortgages but rather the increasingly tense relationship between the two largest economies in the world – America and China.

In an article for Project Syndicate entitled, ” The Coming Sino-American Bust Up,” the noted economist  writes,  “Whether or not US President Donald Trump and his Chinese counterpart, Xi Jinping, agree to another truce at the upcoming G20 summit in Osaka, the Sino-American conflict has already entered a dangerous new phase. Though a negotiated settlement or a managed continuation of the status quo are possible, a sharp escalation is now the most likely scenario.

Roubini sees a global recession occurring as soon as 2020, a predictions that other economists have also prognosticated on. With the previous global economic crisis of 2008 having consumed all the policy perceptions that central  banks and sovereign fiscal stimulus had available for decision makers, the coming global economic recession will find policy makers with  few silver billets remaining. In the meantime, nationalism may replace rational economics in determining the course of the next recession, which Nouriel Roubini believes will be largely determined by the increasingly strife-ridden relationship between the United States and China.

Sheldon Filger-blogger for GlobalEconomicCrisis.com

IMF Issues Dire Warning On Global Economy

February 25th, 2016 Comments off

The International Monetary Fund (IMF) has just released a report warning  that economic growth worldwide is so fragile, policymakers in the top 20 economies, the so-called G20, must immediately prepare contingency plans. With repeated downgrading of its global growth forecasts, and further lowering of its projections likely, the IMF is in effect warning that the world stands on the precipice of a new global recession. It is urging policymakers in major sovereigns to prepare for future fiscal pump priming as a last measure to prevent further demand destruction.

Not surprisingly, the IMF report identifies two primary drivers of the underlying fragility of the global economy: China’s  slowing economic growth combined with turmoil in her equity markets and the collapse of the benchmark price of oil, inflicting massive fiscal turmoil on the world’s leading petroleum exporting nations. These factors have decimated global commodities and equities and have sown panic in financial markets across the globe.

Is this a repeat of the period just before the onset of the global economic and financial crisis of 2008, or perhaps something different, and even more ominous? Time will tell.

 

 

 


 

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Global Economy Shows Increasing Signs of Fragility: From Wall Street to Berlin, the Warning Lights are Flashing

October 10th, 2014 Comments off

In the past few days the equity markets, in particular the Dow Jones index, have displayed wild gyrations. One day stocks fall sharply, followed by a near equal climb the following day, only to shortly afterwards swing down sharply again. The sentiment-driven swings on the world’s bourses display extreme nervousness  by investors. Increasingly, they are beginning to catch on that the “recovery” was no secular recovery following the  global economic and financial crisis of 2008, but a short-lived stabilization. Now, reality is catching up fast.

For the past few months, there have been indications of stagnation in the world’s fourth largest economy, Germany, which has been the sole force holding together the debt-ridden Eurozone. Now comes the August figures on German exports: a decline of 5.8 percent (http://www.dw.de/german-exports-take-a-deep-dive-in-august/a-17983575), the worst contraction in Germany’s critical export sector since January of 2009, at the worst point of the global economic crisis.

The German export contraction is merely a hint of what is happening globally. Trade growth is slowing, inhibiting the ability of sovereigns to finance their massive structural deficits and cope with record high levels of unemployment. The geopolitical situation is very bad and getting worse, pointing to further erosion in economic confidence. It may be that the global economy is only one major crisis away from another catastrophe, as in 2008. And the sources of that next crisis are everywhere around us: the Islamic State war in the heart of the Middle East; looming tension with Iran over the nuclear issue; border tensions between India and Pakistan;  a territorial dispute in the Far East that pits China against Japan and Vietnam. Then there is the Ukraine crisis, pitting Russia against most of Europe and the United States. On top of the geopolitical flashpoints, there is now the emerging global health crisis involving the Ebola virus. Any one of these flash points can trigger a “Black Swan” event that could plunge all major economies into a severe recession.

While all those negative indicators envelope our world, central banks across the globe are giving increasing signs that sooner rather than later the policy of essentially zero-interest rates will have to be reversed, as the distorting effects  of artificially low rates cannot be maintained in perpetuity. Yet, it has been largely those low rates, in combination with the unleashing of a flood of liquidity, that are largely responsible for the limited economic growth that has occurred since 2008, along with the recovery of the world’s stock markets from their worst losses  incurred during the onset of the crisis.

The mood swings on Wall Street and elsewhere appear to be the tracing of a fiscal and economic electrocardiograph, delineating that not all is well with the global economy, and the warning signals are flashing red. Underlying and reinforcing those fears is the knowledge within the financial community that sovereigns expended so much of their capital in coping with the last worldwide economic crisis, there is little left for policymakers to react with when the next big financial and economic tsunami  strikes the global economy.

 

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

 

CLICK ON IMAGE TO VIEW VIDEO

Hillary Clinton Nude

Hillary Clinton Nude

 

 

 

Iraq Crisis Threatens Global Economy

June 13th, 2014 Comments off

 

The latest news from Iraq clearly has geopolitical implications. No less important are the economic ramifications.  The Iraq war, which began with the U.S. invasion in 2003, is entering a new phase, and perhaps far more dangerous territory.

A Salafist-Islamist  insurgent group which goes by the acronym in English of ISIS (and by other acronyms and names as well), said to be to the right of Al-Qaeda (if that is even possible), has seized Iraq’s second largest city, Mosul, with a population of approximately two million. ISIS has seized others towns and strategic locations, while boasting of a march on Baghdad. The Iraqi army appears to be crumbling.

Amid talk of the United States getting back into the Iraq war, or Iran intervening directly with its own military forces , the price of oil has begun to spike. Normally, any military conflict, especially in the Persian Gulf region, will elevate the per barrel price of oil. However, another factor is at play. Just as Iraq was approaching the pre-2003 level of petroleum extraction, the internecine conflict’s escalation into outright civil war threatens to torpedo any meaningful exports of Iraq’s crude oil in the future.

A disruption in the supply of Iraq’s oil on the world market could create a cascading effect on oil prices, already at $110 per barrel and climbing. It should be remembered that in the summer of 2008 oil’s climb to a price north of $140 per barrel was a key element in the unleashing of the global economic crisis, from which a feeble recovery is still underway. The global economy is  fragile and vulnerable to another oil shock.

Among all the calculations being weighed in Washington, Tehran  and elsewhere, policymakers must understand that the growing signs of disintegration of the unified Iraqi state, among other crises in the Middle East, may foreshadow a repetition of the oil price crisis of 2008. The unraveling of the American-installed Iraqi political structure may be a harbinger to a return to oil scarcity and elevated oil prices, with all the attendant negative effects on the global economy.

 

 

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

 

CLICK ON IMAGE TO VIEW VIDEO

Hillary Clinton Nude

Hillary Clinton Nude

Corporate Debt In China Soars To Record Levels

March 5th, 2014 Comments off

According to a survey recently conducted by Reuters of 945 Chinese companies outside of the banking  and financial services sector, corporate debt in China increased by 260 percent over a 5-year period. This rate of increase within the corporate sector that is occurring in China is unprecedented; no other nation’s example demonstrates such a cascade of corporate debt among any other major economy over a similar period of time.

At present, corporate debt in China outside financial services has reached the staggering level of 12 trillion dollars. This is equal to 120 percent of China’s GDP, and about 15 percent of global GDP. This is a startling figure of corporate leverage in China, and comes on top of the rapid rise  in local government debt in China, which I discussed in a previous blog post. There are implications of a worldwide character for this massive accumulation of private and public debt in China, which cannot have its impact in the entire global economy.

 

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

 

Hillary Clinton Nude

Chilling video about Hillary Clinton and the 2016 presidential election from the author of the provocative book, “Hillary Clinton Nude: Naked Ambition, Hillary Clinton And America’s Demise.”

HILLARY CLINTON NUDE

Hillary Clinton Nude

 

 

 

 

 

 

 

China’s Hard Economic Landing Appears Imminent

August 1st, 2012 Comments off

As a percentage of GDP, China’s economic stimulus program of 2009 was the largest in the world, and second place to the U.S. in monetary terms. Ironically, the supposedly communist economy of the People’s Republic of China became the last best hope of world capitalism, in the wake of the global financial and economic crisis that began in 2008. Now, it appears, things may be unwinding in a bad way for Beijing.

Copying its capitalist rivals, Beijing’s hybrid government/private economy poured massive amounts of cash into creating new asset bubbles, particularly in real estate. China built shopping malls with no customers, cities with no inhabitants and roads with no traffic. Extravagantly redundant infrastructure was constructed with stimulus money, goosing China’s GDP with annual double digit growth rates. This model was clearly unsustainable; China’s leaders were hoping to buy time so that the nation’s major export markets in Europe and the U.S. would recover with their own stimulus programs, and resume  their buying spree of cheap Chinese goods.

“Kick the can down the road” became the official credo of economic policymakers responding to the global economic crisis. As with other economies pursuing this shortsighted policy prescription, China failed to address the fundamentals of its economic challenge. The proportion of domestic consumption as a share of  GDP in China is less than half the ratio of its customers in the developed world. With its economic ascendancy dependant on overseas customers, the stagnation and contraction of the economies of those customers leaves a void that Beijing cannot cover by building the economic version of sand castles.

With the Eurozone tottering on the edge of the abyss, the U.K. mired in recession and the U.S. growth rate so anemic, even with trillion dollar plus annual deficits, that it is now at stall speed, it appears that the policymakers in Beijing may have lost their stimulus spending bet.  Domestically, the Chinese PMI  (Purchasing Managers Index)  has slumped to the lowest level in eight months. Other indicators, even amid the opaqueness of China’s official economic data, point increasingly towards a hard economic landing  for the world’s second largest economy. The consequences will be dire, not only for  China, but also for the global economy as a whole.

 

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WALL STREET KILLS--A CHILLING NOVEL ABOUT WALL STREET GREED GONE MAD

 To view and listen to the YouTube video audio excerpt  “Wall Street Kills,” click image below:

 

 

Sex, murder, financial power and pathological greed come together in the explosive suspense thriller by Sheldon Filger, WALL STREET KILLS: A NOVEL ABOUT FINANCIAL POWER, VIOLENT SEX AND THE ULTIMATE SNUFF MOVIE.
This video provides a free audio reading from chapter one of “Wall Street Kills.” The scene depicted involves two characters from “Wall Street Kills” having a business conversation in a Los Angeles suburb. One character is Peter Hoffman, director of new business development for a secretive Wall Street hedge fund and private equity group. The other character is Daniel Iachino, president of a major independent film company specializing in “adult entertainment” for niche markets. Hoffman is on a mission to investigate if portraying unsimulated violent death in the form of entertainment would be a lucrative business investment. The conversation between the two men quickly focuses on the phenomenon of snuff movies.

 

 

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Nouriel Roubini Issues New Warning On Global Economy

June 23rd, 2011 Comments off

In a piece for Al Jazeera entitled “black swan events and the global economy,” NYU economics professor Nouriel Roubini, the “doctor of doom,” has presented a new dark perspective on the current state of global economics. Roubini integrates a number of negative economic metrics and phenomena, including “black swan” events such as the Japanese earthquake and more mundane though far from rosy economic data that challenges the views of economists who are eternally optimistic. While the optimists believe the current negative economic factors are merely hiccups, and equity growth can resume in full force, Roubini warns that the dangers confronting the global economy are chronic, and may lead to a double-dip recession.

On the current Greek debt crisis, Roubini writes, “Global risk-aversion has also increased, as the option of further ‘extend and pretend’ or ‘delay and pray’ on Greece is becoming less desirable, and the specter of a disorderly workout is becoming more likely.”

One of the points Nouriel Roubini makes in his article is that  new financial and economic disasters on the scale of 2008 and would leave policymakers empty-handed, as the massive growth in public debt since 2008 leaves them without ammunition in the event of a new series of catastrophes. As Roubini puts it:

“This lack of policy bullets is reflected in most advanced economies’ embrace of some form of austerity, in order to avoid a fiscal train wreck down the line. Public debt is already high, and many sovereigns are near distress, so governments’ ability to backstop their banks via more bailouts, guarantees, and ring-fencing of questionable assets is severely constrained. Another round of so-called ‘quantitative easing’ by monetary authorities may not occur as inflation is rising – albeit slowly – in most advanced economies.”

In essence, Roubini offers a portrayal of the current state of the global economy that is laden with doom and gloom.