Here’s what could really sink the global economy: $19 trillion in risky corporate debt
4 years, 9 months ago

Here’s what could really sink the global economy: $19 trillion in risky corporate debt

CNN  

London CNN Business — Companies have spent the years since the global financial crisis binging on debt. “This certainly is another match being lit the bonfire of corporate debt liabilities,” said Simon MacAdam, global economist at Capital Economics. “There’s definitely potential for systemic risk.” The coronavirus shock Investors became increasingly anxious about corporate debt this week as stocks sold off and crude prices nosedived. “Coronavirus’ rapidly increasing effect on air travel is placing downward pressure on global airline credit profiles, especially as there are risks that demand takes materially longer than previous shocks to recover,” Fitch Ratings said Thursday. Seeding systemic risk In its most recent financial stability report, the International Monetary Fund raised the alarm about piles of risky corporate debt, which it said could amplify problems and deepen the next recession.

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History of this topic

Global debt surges to record high as borrowing costs bite
10 months, 2 weeks ago

Global debt surges to record high as borrowing costs bite

The Telegraph  

Global debt has surged to a record high of $313 trillion, as higher interest rates drive up borrowing costs for companies and governments worldwide. Jan Friederich at Fitch Ratings said higher borrowing costs mark “a quite substantial change from the environment of. Speaking at the launch of the IIF’s Global Debt Monitor he said that “average interest expenditure relative to …

Why the world is drowning in debt – again
1 year, 2 months ago

Why the world is drowning in debt – again

The Telegraph  

Emre Tiftik, a director at the IIF, believes countries have become addicted to debt. And there’s this omnipotent feeling that central banks and governments can manage all of this stuff I’m cautious.” Mohamed El-Erian, chief economic adviser at Allianz, says the debt reckoning will not hit countries equally. “While debt burdens are rising in most countries around the world, the …

Why global financial markets are walking a tightrope
1 year, 2 months ago

Why global financial markets are walking a tightrope

ABC  

If the past few months are anything to go by, the era of dependable double digit super returns may be drawing to a close. Longer term, they have upended trading patterns and drawn the curtain on almost three decades of global trade liberalisation, ushering in a new Cold War that's threatening to turn hot. That's left money managers dazed and …

Global debt surges to record $307 trillion amid borrowing binge
1 year, 3 months ago

Global debt surges to record $307 trillion amid borrowing binge

The Telegraph  

Global debt has surged to a fresh record of $307 trillion as governments and financial services companies fuel a jump in borrowing. Borrowers added $10 trillion to the debt mountain in the first half of 2023, according to the Institute of International Finance. It comes as US government debt hit a record $33 trillion this month amid heavy borrowing and …

What it would mean for the global economy if the US defaults on its debt
1 year, 7 months ago

What it would mean for the global economy if the US defaults on its debt

Associated Press  

WASHINGTON — If the debt crisis roiling Washington were eventually to send the United States crashing into recession, America’s economy would hardly sink alone. Because the dollar’s dominance has made it the de facto global currency since World War II, it’s relatively easy for the United States to borrow and finance an ever-growing pile of government debt. “Even though we …

When Is a Global Economic Meltdown Expected? Five Financial Experts Lay It Down
1 year, 9 months ago

When Is a Global Economic Meltdown Expected? Five Financial Experts Lay It Down

The Quint  

Silicon Valley Bank failure, and the massive contagion it sparked, look like a classic banking run. The response from the US Treasury and the US Federal Reserve—which applied nineteenth-century British economist Walter Bagehot’s principle that, to stem panic, a lender of last resort is needed—also looks quite familiar. First, in 2008, the worry about collapse was so intense that a …

Will Republicans blow up the global economy? Here is what to watch for
1 year, 11 months ago

Will Republicans blow up the global economy? Here is what to watch for

Raw Story  

We barely had time to catch our breath from the wild spectacle of the Republicans finally electing a speaker when their next spectacle started with a bang. Take, for example, Rep. Marjorie Taylor Greene of Georgia, just named to the House Oversight and Homeland Security committees, who said this on Steve Bannon's podcast shortly after the November election: What we …

Impending economic crisis will dwarf coronavirus crisis, says credit insurer Allianz
2 years, 2 months ago

Impending economic crisis will dwarf coronavirus crisis, says credit insurer Allianz

NL Times  

The looming economic crisis will make the coronavirus crisis look like nothing, according to credit insurer Allianz Trade. Rarely have so many negative facts come together simultaneously,” Johan Geeroms, director of risk underwriting in the Benelux for Allianz, said in a press statement. And, partly due to the 10 percent increase in the minimum wage the government announced for next …

Global economic bailout is running at $19.5 trillion. It will go higher
4 years, 1 month ago

Global economic bailout is running at $19.5 trillion. It will go higher

CNN  

London CNN Business — Governments and central banks have promised to shell out $19.5 trillion since the coronavirus erupted to “put a floor under the world economy,” according to the International Monetary Fund. While coronavirus vaccine candidates point to improved prospects for the global economy next year, they won’t help countries much in the immediate future. In the United States, …

World economy: What else could go wrong before 2020 is done
4 years, 4 months ago

World economy: What else could go wrong before 2020 is done

Live Mint  

The world economy’s rebound from the depths of the coronavirus crisis is fading, setting up an uncertain finish to the year. Adding 1.4 million jobs in August was “a big step in the right direction,” said Ryan Sweet, head of monetary policy research at Moody’s Analytics. But the economy needs to maintain that kind of pace, he said, and “without …

Global economy continues to slide as coronavirus outbreak worsens; uncertainty to remain for several months: Moody's
4 years, 9 months ago

Global economy continues to slide as coronavirus outbreak worsens; uncertainty to remain for several months: Moody's

Firstpost  

A sharp contraction of the global economy, at least in the second quarter, appears imminent, it said in its latest special series ‘Credit Risks in Turbulent Times.’ The rapid spread of the coronavirus in the last two weeks, widespread business closures and unprecedented restrictions on social interactions will result in a permanent hit to global economic activity this year, according …

Global recession is here, according to S&P
4 years, 9 months ago

Global recession is here, according to S&P

CNN  

New York CNN Business — The coronavirus outbreak has plunged the world’s economy into a global recession, according to S&P Global. “The initial data from China suggests that its economy was hit far harder than projected, though a tentative stabilization has begun,” said S&P Global’s Chief Economist Paul Gruenwald. “Europe and the United States are following a similar path, as …

Coronavirus jolts global stock markets
4 years, 9 months ago

Coronavirus jolts global stock markets

Deccan Chronicle  

LONDON: The coronavirus panic is jolting stock markets, with steep drops in major indexes grabbing the public’s attention. This sudden flight to safety is causing havoc in markets for bonds, currency and loans to a degree that hasn’t been seen since the financial crisis of a dozen years ago. Francesco Papadia, who oversaw the European Central Bank’s market operations during …

The global coronavirus recession is beginning
4 years, 9 months ago

The global coronavirus recession is beginning

CNN  

London CNN Business — As restaurants, shops, airlines and factories shutdown around the world, from New York to Paris and Madrid, economists are warning that a global recession is no longer a looming threat. “Whereas 10 days ago there was some legitimate uncertainty about whether the global economy was in the process of going into recession — 10 days later, …

Corporate debt loads a rising risk as coronavirus hits economy
4 years, 9 months ago

Corporate debt loads a rising risk as coronavirus hits economy

India TV News  

A gyrating stock market is seizing headlines as the coronavirus threatens corporate profits and economic growth. Oxford Economics has warned that nearly $4 trillion of U.S. corporate bonds will come due within five years — a “massive wall of maturities,” it calls it. “High debt levels make the corporate sector in key economies, including the U.S., particularly vulnerable to the …

Coronavirus could trigger global recession: Rabobank
4 years, 10 months ago

Coronavirus could trigger global recession: Rabobank

NL Times  

If the new coronavirus Covid-19 turns into a global pandemic, economists at Rabobank foresee an economic recession in large parts of the world, including the Netherlands, Germany, Japan, Italy, and the United States. "This economic crisis could become even worse if it turned into a financial crisis, for example when the number of bankruptcies increase sharply worldwide," the Rabobank economists …

Who will save the world from a coronavirus recession?
4 years, 10 months ago

Who will save the world from a coronavirus recession?

Al Jazeera  

Why a shock US central bank rate cut may not be enough to save the global economy from the coronavirus outbreak. Growth could halve this year to 1.5 percent, the OECD warned in its worst-case scenario for the outbreak, a growth rate generally considered to indicate a recession. Rajiv Biswaz, executive director and Asia-Pacific Chief Economist at IHS Markit, adds …

Coronavirus pushes global economy toward 1st contraction since 2009
4 years, 10 months ago

Coronavirus pushes global economy toward 1st contraction since 2009

Live Mint  

Global economic growth will sink to levels not seen in over a decade as the coronavirus outbreak hammers demand and supply, challenging central banks and governments to respond to a fast-changing situation, according to the OECD. If the situation worsens, “co-ordinated policy actions across all the major economies would be needed” for health care and economic stimulus, it said. Things …

Global economy faces worst crisis since 2009 over coronavirus
4 years, 10 months ago

Global economy faces worst crisis since 2009 over coronavirus

CNN  

London CNN Business — The coronavirus is plunging the world economy into its worst downturn since the global financial crisis, according to the Organization for Economic Cooperation and Development, which warned Monday that growth could be cut in half if the outbreak continues to spread. Bank of Japan Governor Haruhiko Kuroda promised Monday that the country’s central bank would provide …

Coronavirus shook the foundations of a global stock market powered by debt
4 years, 10 months ago

Coronavirus shook the foundations of a global stock market powered by debt

ABC  

The news over the weekend was nothing short of grim. While western governments are sheeting home the blame for last week's market carnage on the virus, a much more sinister and barely concealed problem lurks at the heart of our financial system. Last October the International Monetary Fund warned that up to $US19 trillion of corporate debt could be "at …

Global stocks fall as central bank reassurances fail to ease virus fears
4 years, 10 months ago

Global stocks fall as central bank reassurances fail to ease virus fears

CNN  

New York / Hong Kong CNN Business — US stock futures and markets in Europe fell Monday despite reassurances from the world’s central banks that they stand ready to help limit the economic and financial damage caused by the novel coronavirus outbreak. The losses follow a brief respite for stocks in Asia, which rebounded after Bank of Japan Governor Haruhiko …

Coronavirus contagion spawns climate of panic on share markets
4 years, 10 months ago

Coronavirus contagion spawns climate of panic on share markets

ABC  

It's the word the world's top health authorities dare not utter. The coronavirus COVID-19, once contained in China's industrial heartland, has now spread to Europe and the Middle East, spawning a climate of panic that threatens to undermine not just financial markets, but the global economy. With so much debt issued at record-low interest rates, it has become almost impossible …

Coronavirus: Investors are betting on a quick recovery. What if they’re wrong?
4 years, 10 months ago

Coronavirus: Investors are betting on a quick recovery. What if they’re wrong?

CNN  

London CNN Business — A growing number of companies are warning that the coronavirus will prevent them from meeting sales or profit targets for the first three months of the year. There’s still time to contain the virus, Ghebreyesus cautioned, “but the window of opportunity is narrowing.” Coronavirus cases in South Korea, a major producer of the memory chips used …

The coronavirus is already hurting the world economy. Here’s why it could get really scary
4 years, 11 months ago

The coronavirus is already hurting the world economy. Here’s why it could get really scary

CNN  

London CNN Business — Nearly two decades have passed since a coronavirus known as SARS emerged in China, killing hundreds of people and sparking panic that sent a chill through the global economy. Car plants across China have been ordered to remain closed following the Lunar New Year holiday, preventing global automakers Volkswagen, Toyota, Daimler, General Motors, Renault, Honda and …

Way out for a debt-laden world? Yet more debt
5 years, 1 month ago

Way out for a debt-laden world? Yet more debt

Live Mint  

Zombie companies in China. “Previous conventional wisdom about advanced economy speed limits regarding debt to GDP ratios may be changing,” said Mark Sobel, a former US Treasury and International Monetary Fund official. “Given lower interest bills and markets’ pent-up demand for safe assets, major advanced economies may well be able to sustain higher debt loads.” A constraint for policy makers, …

Corporate debt is rising, but it’s safer than it looks
5 years, 6 months ago

Corporate debt is rising, but it’s safer than it looks

CNN  

Editor’s Note: Daan Struyven is a senior economist in the US Economics research group at Goldman Sachs in New York. And corporate debt has actually trended lower relative to corporate assets since the mid-90s.The lower debt-to-cash flow and debt-to-assets measures are more meaningful than debt-to-GDP, as they better capture the risks of bankruptcy and illiquidity. Most importantly, the large decline …

Why Corporate America’s debt problem matters
5 years, 7 months ago

Why Corporate America’s debt problem matters

CNN  

New York CNN Business — The next recession, whenever it arrives, could be deepened by Corporate America’s debt-riddled balance sheet. But the next recession will expose Corporate America’s debt problem, revealing that many businesses binged on too much debt. Business debt has clearly reached a level that should give businesses and investors reason to pause and reflect.” Federal Reserve Chairman …

Global financial stability risks still on the rise: IMF
5 years, 8 months ago

Global financial stability risks still on the rise: IMF

Live Mint  

Risks to the global financial system have grown over the past six months and could increase with a messy British exit from the European Union or an escalation of US-China trade tensions, the International Monetary Fund said on Wednesday. "There is a risk that positive investor sentiment could deteriorate abruptly, leading to a sharp tightening of financial conditions," the IMF …

Current economic global atmosphere 'a delicate moment', says IMF chief economist Gita Gopinath
5 years, 8 months ago

Current economic global atmosphere 'a delicate moment', says IMF chief economist Gita Gopinath

Firstpost  

Tensions in trade policy could flare up again and play out in other areas, with large disruptions to global supply chains, she cautioned. Washington: Describing current global economic atmosphere as “a delicate moment”, International Monetary Fund chief economist Gita Gopinath on 9 April said that while the global economy continues to grow at a reasonable rate and a global recession …

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