IMF: MORE MONEY INJECTIONS NEEDED. The world’s economy is resilient enough to recover from the global economic shutdown at a brisk pace if policymakers act quickly and inject more money into the financial infrastructure, digital technology, and environmental safeguards, Kristalena Georgieva, managing director of the International Monetary Fund, said on 2 December at the Financial Times’ Global Banking Summit.
The world is “desperate for that because productivity has to go up, investment has to go up,” she said, noting that the shutdown will cost the world’s economy $28 trillion in productivity through 2025. In tourism alone, 120 million jobs around the world have been lost, she said.
“We have to be decisive, and we have to act together,” she stressed. “We are in a resilient place but we cannot take financial stability for granted.”
The same decisiveness is needed in confronting the debt crisis the shutdown has wrought among emerging economies, Georgieva emphasized.
“Our advice is to confront it,” she said. “Act decisively on debt restructuring and… have resolution mechanisms in place.”
TREND FORECAST: Again, the economic future is certain. The Banksters are committed to injecting massive amounts of digital money backed by nothing and printed on nothing into failing economies. By artificially propping them up, equity markets will continue to rise and economies will moderately rebound, providing a New ABnormal illusion that “Happy Days are here again”… while the lives of the plantation workers of Slavelandia sink deeper into hardship and despair.
EU BANKS UNPREPARED FOR LOOMING WAVE OF BAD LOANS, SAYS ECB. Many of Europe’s major banks are failing to prepare adequately for an expected wave of loans that will default because of the pandemic and economic shutdown, Andrea Enria, head of the supervisory board of the European Central Bank (ECB), said in remarks at the Financial Times’ Global Banking Summit on 2 December.
Several of the 117 banks the ECB his office supervises are “all over the place” in preparing for a significant number of loans to go bad, Enria said, causing his office “concern.”
The ECB is sending what Enria called “a ‘Dear CEO’ letter to banks under our supervision in which we will highlight some issues we want them to address in terms of their approach to credit risk.”
In a worst-case scenario the bank has modeled, Europe’s banks could face an extra €1.4 trillion in bad debts, sending the banks over a “cliff-edge” with sour loans that could “clog their balance sheets and leave them unable to support [Europe’s economic] recovery,” he said.
In March, the ECB ordered commercial banks to stop issuing stock dividends and buying back their own shares. Banks’ prudence in setting aside enough capital to cover the expected number of new bad loans will factor in supervisors’ decisions whether to lift those bans, Enria said.
TREND FORECAST: The above article is a rarity. The looming loan defaults building across the globe have been marginalized by the mainstream business media and ignored by the political establishment. With millions of businesses going out of business and hundreds of millions of lives and livelihoods destroyed, defaults on loans will sharply escalate next year.
Thus, we forecast when the “Greatest Depression” hits, banks will not have the funds to cover their losses.
In a repeat of the Panic of ’08, failing banks will again be deemed “Too Big to Fail” by the government and will be bailed out by the central bank partners and American taxpayers. It should be noted that following the Panic of ’08, at least $29 trillion was spent to bail out the Bigs, according to the Levy Institute.
OECD CUTS FORECASTS: SEES NEW ECONOMIC WORLD ORDER. The Organization for Economic Cooperation and Development (OECD) has cut its global growth forecasts for 2021.
The world’s economy will expand 4.2 percent next year after contracting by the same amount this year, making 2020 a wash in terms of growth, the group foresees.
The OECD had forecast 5 percent growth next year but pared back its outlook as the COVID virus’s resurgence prompted new business shutdowns and stay-at-home orders.
The OECD also trimmed its 2021 forecast for Europe from 5.1 percent to 3.6 percent and its U.S. prediction from 4 percent to 3.2.
It left its outlook for China unchanged at 8 percent.
The overall global economy will be emerging from the shutdown’s impacts by late 2021 because of widespread vaccine distribution, the OECD says, although it sees any recovery as uneven.
At that time, China’s economy will be 9.7 percent bigger than it was in 2019’s final quarter, the group expects.
Britain’s economy will be 6 percent smaller at the end of 2021 than it was at the end of 2019, in the OECD’s view.
Among major economies, only Argentina’s will fare worse than Britain’s, with an 8-percent shrinkage, according to the forecast.
The U.K.’s economy will contract 11.2 percent this year, then grow 4.2 percent in 2021 and 4.1 percent in 2022, the OECD predicts. It called on the government and the Bank of England to maintain support programs for businesses and households until a recovery is firmly underway.
Also, if Britain fails to ink a trade agreement with the European Union this month, the failure would “entail serious additional economic disturbances in the short term and have a strongly negative effect on trade, productivity, and jobs in the longer term,” the OECD warned.
Globally, a third of all new economic growth in the next year will belong to China, the OECD foresees. The U.S. will return to pre-pandemic GDP levels before 2022, while Europe’s GDP will be 3 percent smaller than at the end of 2019.
The economies of India and South Africa, like those of Argentina and Britain, will have notably smaller economies a year from now than last year.
Again, as forecast, 2021 marks a great reset and realignment of the global economy.
EUROPE BECOMES CHINA’S TOP TRADING PARTNER. During the first six months of this year, the value of trade between China and the European Union rose 2.6 percent to €328.7 billion, according to Eurostat, the E.U.’s statistical agency.
The E.U.’s commerce with China through that period topped the U.S.’s China trade by €5.2 billion, or about $6.16 billion, vaulting the E.U. to the position of China’s top trading partner for the first time.
China also gave Europe trade considerations and material support as E.U. members struggled to recover from the pandemic and economic shutdown.
The deeper, broader alliance between China and Europe is reaching beyond trade.
On 30 November, officials from China, Germany, and the E.U. held a virtual summit, during which they pledged mutual cooperation on a range of issues.
The leaders agreed to establish a China-E.U. High Level Environment and Climate Dialog and a China-E.U. High Level Digital Cooperation Dialog, formalizing partnerships related to green and digital technologies.
The varied partnerships focus on the interests that China and Europe have in common, rather than on their geopolitical differences, the Chinese Global Times newspaper said, adding that the pacts will overcome trade tensions “created by an increasingly destructive U.S. government.”
TREND FORECAST: The proof is in the numbers. As America goes down, China keeps rising. Just as Gerald Celente had forecast for years, and is now one of our Top Trends for 2021, the 20th century was the American century, the 21st century will be China’s.
And, while most major economies will register negative GDP in 2020, China’s economy should grow another 5 to 6 percent this current quarter and close the year with a 12-month growth rate of 2 percent.
ASIAN BUSES & SUBWAYS BACK TO NORMAL VOLUME. In New York City, subway riders now number about 70 percent fewer than a year earlier, according to the city’s Metropolitan Transit Authority.
Italian cities reopened their public transit systems as summer gave way to fall; Milan’s buses were carrying 55 percent of their capacity in October, only to find that buses and subways become centers for spreading the virus.
Getting it Right
Asian cities can offer a lesson in what “getting it right” looks like.
Buses and subways in many Asian cities such as Seoul and Shanghai are carrying almost as many passengers as before the pandemic arrived, a report by the Wall Street Journal found, while the COVID virus remains at bay in those locales.
Universal mask mandates for passengers and constant cleaning of carriages has kept public transport facilities from being venues for COVID contagion, transit officials in those cities said.
In Beijing and Shanghai, subway stations are disinfected at least five times every day, more at stops closer to hospitals and other key centers.
Keeping public transport operating safely has been key to cities’ economic recovery, the Journal noted.
COVID’S IMPACT UNKNOWABLE, SAYS CANADIAN FINANCE MINISTER. Discussing the Canadian government’s economic rescue plan, which includes $100 billion in stimulus spending over three years and running a $381.6-billion deficit this year, finance minister Chrystia Freeland said she could not rule out more spending if needed because economists have been “consistently wrong” about the financial impact of the pandemic and shutdown.
“People underestimated the initial impact of the coronavirus on the economy,” she said in a 4 December interview quoted by BNN Bloomberg. “Then they underestimated how strong the recovery would be in the summer and… people have underestimated what the impact of the second wave of the virus would be.”
“We all need to be very humble and very aware… that there’s huge uncertainty out there,” she said.
Critics have said the government’s relief measures so far lack details of how money will be spent. Freeland did not discuss specifics but promised “if we do spot holes in the programs, we’ll do what we can to fix them” as part of the government’s plan to create a “robust” support net to carry households and businesses through until summer when vaccines become widely available.
“We’re trying the create a bridge for Canadian businesses to that endpoint, which is now is sight,” she said.
ONTARIO RESTRICTIONS MAY “DECIMATE” RETAILERS, CEO WARNS.
A decision by Ontario’s provincial government to shut down “non-essential” retailers could “decimate” the province’s retail industry, David Bensadoun, CEO of the Aldo Group footwear company, warned in a 3 December interview with BNN Bloomberg.
In an open letter published last week, Aldo and more than 45 other companies called on Ontario premier Doug Ford to open all stores in the province immediately, saying that leaving most stores shut risks mass business failures and are ineffective in preventing the spread of the COVID virus.
“It’s important for the government of Ontario not to be picking… which retailers should survive and which should die,” Bensadoun said.
“We’re going to decimate Canadian retail,” he added. “When we lock down stores, we shift sales to online and online gets gobbled up by Amazon. We’re writing our own ticket to the morgue for Canadian-based retail.”
“We’re not asking for subsidies,” he emphasized. “We’re just asking for our doors to be open.”
TORONTO HOUSING MARKET BOOMS. In October, 8,766 homes were sold in Canada’s largest city, 24.3 percent more than in October 2019, but 17 percent fewer than in September this year, the Toronto Regional Real Estate Board wrote in its 3 December monthly report.
The average sale price was $955,615, up 13.3 percent year over year but dipping slightly from October’s average of $968,318, the board said.
Detached homes sold best, particularly in Toronto’s suburbs, where sales of stand-alone houses jumped 33.6 percent above those in October 20190.
Condo sales barely budged, gaining just 0.8 percent on those a year earlier, with the average sale price slipping 3 percent to $640,208.
The supply and demand in the metro area’s condo market is “more balanced than in previous years” but “this may be a short-term phenomenon,” Jason Mercer, the board’s chief market analyst, wrote in a press announcement accompanying the sales report.
“Once we move into the post-COVID period, we will start to see a resumption of population growth, both from immigration and a return of non-permanent residents,” Mercer noted. “This will lead to an increase in demand” for condos.
