The Looming Bank Collapse
The U.S. financial system could be on the cusp of calamity. This time, we might not be able to save it.

George Wylesol
Story by Frank Partnoy

After months of living with the coronavirus pandemic, American citizens are well aware of the toll it has taken on the economy: broken supply chains, record unemployment, failing small businesses. All of these factors are serious and could mire the United States in a deep, prolonged recession. But there’s another threat to the economy, too. It lurks on the balance sheets of the big banks, and it could be cataclysmic. Imagine if, in addition to all the uncertainty surrounding the pandemic, you woke up one morning to find that the financial sector had collapsed.

You may think that such a crisis is unlikely, with memories of the 2008 crash still so fresh. But banks learned few lessons from that calamity, and new laws intended to keep them from taking on too much risk have failed to do so. As a result, we could be on the precipice of another crash, one different from 2008 less in kind than in degree. This one could be worse.

Australia is 100 days from an economic cliff

By business reporter Daniel Ziffer
Posted 2hhours ago

Circle your calendar for the end of September: we're approaching an economic cliff in 100 days.

The time of year we'd normally allot to football finals will see billions of dollars in financial stimulus end — programs supporting millions of workers, apprentices, small businesses, renters and people with mortgages — almost simultaneously.

"It's a bit like trying to whip out the tablecloth from under your set of china," warns economist Nicki Hutley.

"It's not going to come away smoothly — there's going to crashes and broken plates everywhere."

The UK is likely to be the hardest hit by Covid-19 among major economies, the Organisation for Economic Co-operation and Development has warned.
Britain's economy is likely to slump by 11.5% in 2020, slightly outstripping falls in countries such as Germany, France, Spain and Italy, it said.
If there were a second peak in the pandemic, the UK economy could contract by as much as 14%.
"The crisis will cast a long shadow over the world," the OECD added.
It said that in what it called a "single-hit scenario", with no second peak, there could be contractions of 11.4% in France, 11.1% in Spain, 11.3% in Italy and 6.6% in Germany.
In its latest assessment, the OECD found that the UK's largely service-based economy meant that it had been particularly badly hit by the government's lockdown restrictions.
The services sector, including financial services, hospitality and tourism, makes up about three-quarters of the UK's GDP.

Indonesia's Bank Central Asia may support banks needing liquidity
Maikel Jefriando
3 MIN READ
JAKARTA (Reuters) - Bank Central Asia (BCA) (BBCA.JK), Indonesia’s largest bank by market value, may join a government programme to lend to banks to improve their liquidity, its president director told Reuters.

Japan's debt mountain: How is it sustainable?
June 11 04:01 pm JST 31 Comments
By Etienne BALMER
TOKYO
Already the global leader in accumulating debt, Japan is adding nearly $2 trillion to its mountain this fiscal year with record stimulus packages to cushion the impact of coronavirus.

With debt levels around two and a half times the size of its economy, Japan manages to keep government bond yields ultra low and investor confidence high enough that it can avoid default.

What’s Behind the Bad-News Market Boom
Amidst a pandemic and bankruptcies and shuttered businesses and rent defaults and double-digit unemployment and massive civil unrest, the Dow and Nasdaq are near their highs. Thank the Fed—and don’t get too comfortable.

So let me get this right: There are at least 40 million Americans out of work (and probably more if you believe Nobel Prize–winning economist Joseph Stiglitz who says the official Labor Department statistics overlook the self-employed and those who have given up trying to get a job); we have been in an economic recession since February and second-quarter GDP could be a bottomless pit; we remain in the midst of an unprecedented viral pandemic that has already taken the lives of more than 110,000 Americans; we have worse-than-zero political leadership in Washington; and we have, in many cities across the country, nearly nonstop protests by Americans of all stripes in the wake of the brutal killing of George Floyd, allegedly by a Minneapolis police officer. And yet, the Nasdaq is at an all-time high, while the Dow Jones Industrial Average and the S&P 500 indexes are within striking distance of their February highs.

What gives? How can this be happening? How can so much bad news in the real world result in such surprisingly good news in the stock markets?

Alan B wrote:And all this boils down to the fact that most politicians who claim to 'run' their country are scientifically illiterate. They have to have the science of a situation (the present pandemic, for instance) explained to them in 'sciency baby-talk'. If they then grasp what is going on they then consider what goes 'in and out of their pocket' - figurativly speaking, of course - which then takes precedence and sod the science.
An example of this is when it was pointed out to them four years ago that such a pandemic could happen and that the world should prepare, nobody in power took any notice. The Far Eastern countries did, because of their recent similar experience, but their experience in these matters was totally ignored by the rest of the world. And now we are here...

The Real Economic Catastrophe Hasn’t Hit Yet. Just Wait For August.
After a terrifying spring spent in lockdown and a summer of protests in the streets, things are going to get a lot worse in the fall.
Tom Gara
BuzzFeed News Opinion Editor
Posted on June 10, 2020, at 11:32 a.m. ET

Macdoc wrote:

What’s Behind the Bad-News Market Boom
Amidst a pandemic and bankruptcies and shuttered businesses and rent defaults and double-digit unemployment and massive civil unrest, the Dow and Nasdaq are near their highs. Thank the Fed—and don’t get too comfortable.

So let me get this right: There are at least 40 million Americans out of work (and probably more if you believe Nobel Prize–winning economist Joseph Stiglitz who says the official Labor Department statistics overlook the self-employed and those who have given up trying to get a job); we have been in an economic recession since February and second-quarter GDP could be a bottomless pit; we remain in the midst of an unprecedented viral pandemic that has already taken the lives of more than 110,000 Americans; we have worse-than-zero political leadership in Washington; and we have, in many cities across the country, nearly nonstop protests by Americans of all stripes in the wake of the brutal killing of George Floyd, allegedly by a Minneapolis police officer. And yet, the Nasdaq is at an all-time high, while the Dow Jones Industrial Average and the S&P 500 indexes are within striking distance of their February highs.

What gives? How can this be happening? How can so much bad news in the real world result in such surprisingly good news in the stock markets?

https://www.vanityfair.com/news/2020/06 ... ource=digg

Coronavirus: Why US is expecting an 'avalanche' of evictions
By Jessica Lussenhop
BBC News
3 hours ago

As hair salons, churches and restaurants reopen across the US, so are eviction courts. Advocates and experts say that an unprecedented crush of evictions is coming, threatening millions of Americans with homelessness as a possible second wave of the pandemic looms.
Sitting in her car parked outside of the little white house in Kansas City, Missouri, where she'd lived for two years, Tamika Cole was overwhelmed. She'd worked a long shift as a machine operator the night before, at a factory where she makes detergent bottles for $18 an hour. It's good, stable work. Nevertheless, Cole was on the brink of losing her home. Her nerves were shot.
"What am I supposed to do?" she said. "I'm tired of crying."

Fri 19 Jun 2020 16.25 BST Last modified on Sat 20 Jun 2020 00.24 BST
Merkel speaks to the media after the video conference with other EU leaders.

Angela Merkel voiced fears that people do not appreciate what it will mean to slump into the “deepest recession since the second world war”, as EU leaders clashed over a recovery fund for the countries hit hardest by the coronavirus pandemic.

During a video conference call among the 27 heads of state and government, the German chancellor gave her backing to the French president, Emmanuel Macron’s call for agreement before the summer holidays on a €750bn rescue package.

Merkel said Europe faced “very, very difficult times” and mused on whether the gravity of the situation was truly understood as she addressed her counterparts phoning in from around the EU, according to diplomatic sources. The value of the economies of some member states are expected to shrink by up to 10% in 2020.

quas wrote:

Macdoc wrote:

What’s Behind the Bad-News Market Boom
Amidst a pandemic and bankruptcies and shuttered businesses and rent defaults and double-digit unemployment and massive civil unrest, the Dow and Nasdaq are near their highs. Thank the Fed—and don’t get too comfortable.

So let me get this right: There are at least 40 million Americans out of work (and probably more if you believe Nobel Prize–winning economist Joseph Stiglitz who says the official Labor Department statistics overlook the self-employed and those who have given up trying to get a job); we have been in an economic recession since February and second-quarter GDP could be a bottomless pit; we remain in the midst of an unprecedented viral pandemic that has already taken the lives of more than 110,000 Americans; we have worse-than-zero political leadership in Washington; and we have, in many cities across the country, nearly nonstop protests by Americans of all stripes in the wake of the brutal killing of George Floyd, allegedly by a Minneapolis police officer. And yet, the Nasdaq is at an all-time high, while the Dow Jones Industrial Average and the S&P 500 indexes are within striking distance of their February highs.

What gives? How can this be happening? How can so much bad news in the real world result in such surprisingly good news in the stock markets?

https://www.vanityfair.com/news/2020/06 ... ource=digg

Singers can't have concerts or do album promotions, actors can't shoot movies, talkshow hosts are out of job because they can't have live audience on their studio... When even the most profitable jobs are impossible, everyone's forced to play the stock market as their only source of income.

quas wrote:Yea, are things the same as before? Or are they all doing virtual new formats that audience didn't find as enjoyable as pre-covid era entertainment?

IDEAS
The Second Great Depression
At least four major factors are terrifying economists and weighing on the recovery.
6:00 AM ET

The International Monetary Fund has lowered its global growth forecast for this year and next in the wake of the coronavirus pandemic.
It now predicts a decline of almost 5% in 2020, substantially worse than its forecast only 10 weeks ago in April.

The UK economy is expected to contract more than 10% this year, followed by a partial recovery in 2021.
That would be one of the most severe declines, although not as deep as forecast for Italy, France or Spain.
The IMF's managing director, Kristalina Georgieva, had already warned that the April forecast had been overtaken by events, and that the likely path of the global economy was looking worse.
That is reflected in the new projections for both the world and the British economy. The previous April forecasts were a 6.5% decline for the UK and 3% for the world.

Unusual
The gloomier outlook partly reflects the fact that data since April have pointed to a sharper downturn than the earlier forecast envisaged.
The IMF how expects a larger hit to consumer spending. The report points out something that is unusual about this downturn.

Usually people dip into savings, or get help from family and welfare systems to reduce the fluctuations in their spending. Consumer spending usually takes a much smaller hit in a downturn than business investment.
But this time, lockdowns and voluntary social distancing by people who are wary of exposing themselves to infection risks have hit demand.
The IMF also expects people to do more "precautionary saving", reducing their consumption because of the uncertain outlook ahead.
International Monetary Fund (IMF) Managing Director Kristalina GeorgievaImage copyrightAFP

The report also warns there is likely to be more economic "scarring'". More firms going out of business and people being unemployed for longer may mean that it is harder for economic activity to bounce back as quickly as hoped.
There is also a danger that, for firms that do survive, their efficiency is likely to be in undermined by the steps they take to improve safety and hygiene - to reduce the risk of workplace transition of the coronavirus.

Dramatic slowdown
The biggest contractions in economic activity envisaged by the IMF this year are in developed economies particularly in Europe. The UK is likely to be one of the deepest.