Essentially, the central banks thought that unlimited amounts of free money could reverse the impact of ageing populations. WeWork’s bankruptcy suggests that the bills for this mistake are now coming due, after 20 years of what the Wall Street Journal called “The most reckless monetary and fiscal experiment in history”
Chemicals and the Economy
Hertz goes bankrupt as non-essential consumer demand disappears
The US Federal Reserve has now spent $7tn bailing out Wall Street. But it couldn’t save the 102-year old Hertz rental company from filing for Chapter 11 bankruptcy protection for its US business on Friday night. Sadly, Hertz won’t be the only casualty. Its collapse instead marks the moment when the problems created by two […]
Asian downturn worsens, bringing global recession nearer
The chemical industry is the best leading indicator for the global economy. And my visit to Singapore last week confirmed that the downturn underway in the Asian market creates major risks for developed and emerging economies alike. The problem is focused on China’s likely move into recession, now its stimulus policies are finally being unwound. […]
Economy faces slowdown as oil/commodity prices slide
Oil and commodity markets long ago lost contact with the real world of supply and demand. Instead, they have been dominated by financial speculation, fuelled by the vast amounts of liquidity pumped out by the central banks. The chart above from John Kemp at Reuters gives the speculative positioning in the oil complex as published […]
Brazil’s PE market shifts from import to export as recession bites
4 years ago, Brazil’s polyethylene market flagged up the first warning signs that its GDP was hitting headwinds, as China’s stimulus programme begin to slow. Today, sadly, the economy is in major recesssion, with the impeachment process against President Rousseff adding further pressure: World Bank data shows GDP fell 3.7% last year: it forecasts “only” […]
China’s empty cities create global lending risk
More details continue to surface of the wasteful spending that underpinned much of China’s GDP growth in recent years. The empty city of Ordos (first highlighted 3 years ago in the blog) is just one example. House prices there have recently fallen 50%, and the shadow banking system (critical for privately-owned companies) is reportedly in […]
5 signs of a failing business
The Toyota problems, with over 9 million autos being recalled around the world, has set the blog thinking about how to spot corporate disaster in the making. One excellent source of insight is Prof Jim Collins’ book, ‘How the Mighty Fall’, published last year. This suggests that doomed businesses pass through 5 key stages. Encouragingly, […]
China’s polyethylene imports surge 63%
The above chart, courtesy of trade data experts GTIS, shows the extraordinary leap in China’s polyethylene imports this year. They have surged 63% January – October in 2009 (blue bar) to 6.7 million tonnes versus 4.2 MT in 2007 (green bar) and 2008 (orange bar). Many countries have seen massive rises. Iran exported 404kt vs […]
Insolvent US banks can’t lend
Many US policymakers are still in denial about the underlying causes of the downturn. They argue it is due to a lack of liquidity, and are thus encouraging ‘hot money’ to flood into financial markets. But the new ‘bubbles’ created by this wishful thinking, such as today’s $80/bbl oil prices, are making the underlying problem […]
US housing loans still toxic assets
There are two main views on the financial crisis that began last September. The mainstream view, as expressed by the US Federal Reserve, is that it was a problem of liquidity. Banks became frightened to lend, and so the Fed stepped in as “lender of last resort”. So given time, everything will soon be back […]