A strange thing happened to German 10-year interest rates last week – they rose quite sharply, by a further 0.2%. That may not sound a lot, but it is when the starting point is so low. On 20 April, they were at 0.07%, and on Friday they closed at 0.37% – for a total rise […]
Chemicals and the Economy
Mckinsey says global debt now 3x global GDP, and rising
A major new report from consultants McKinsey confirms my concerns over the dramatic increase in global debt levels since stimulus policies began in 2008. As their chart above highlights: Global debt has risen by $57tn to $199tn since 2007, nearly 3x global GDP Government debt is up by $25tn, with three-quarters of this in the developed […]
Stock markets focus on central banks, ignore debt default risk
Some extraordinary things are happening in global chemical markets. They indicate something is very wrong in the real world outside financial markets. The chart above highlights some key developments since 18 August when the Great Unwinding of policymaker stimulus began: Brent oil prices have halved and are down 51% (blue) Naphtha, the main feedstock for the global industry, has also halved […]
China’s earthquake opens fault-lines in debt-fuelled ‘ring of fire’
We can all hope that China’s ‘collateral trade’ turns out not to be as big a problem as seems likely. But history shows that this type of problem has a way of escalating once people start investigating more closely. Thus state-owned Citic revealed yesterday that it has lost $40m in the Qingdao scandal, as half of its […]
Qingdao probe the ‘straw on the camel’s back’ for world markets
The blog’s new Research Note in the ‘Your Compass on China’ series highlights the way that China’s commodity imports have been used to finance its housing bubble. This is clearly a shock for investors, who have till now believed the imports were a sign of its superior economic policies and long-term growth prospects. The Qingdao probe could […]
Central banks have created a debt-fuelled ‘ring of fire’
A new article by an IMF economist makes the point that in April 2008, not a single one of the mainstream economic forecasts covered by ‘Consensus Economics’ was forecasting a recession in 2009. The IMF itself expected growth to continue, as did the World Bank and the Organisation for Economic Co-Operation and Development. Even by […]
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