#ClimateCrisis Could Cause #Global Economic Collapse

"We’re then looking at the banks losing billions upon billions upon billions of dollars here, which is then going to ripple across the globe, including the countries who did what they were supposed to"

 

Climate Change Could Crash The Economy

 The United States Federal Reserve is way behind the curve compared to pretty much all other industrialized countries on the planet. And the reason is because our Federal Reserve here in the United States doesn’t quite know yet if they need to, you know, warn bankers and insurers about the dangers of climate change and force them to disclose to all their shareholders and members all of those dangers that climate change poses. But here is the good thing about all of that. The banks already know it. The insurers in this country already know it and both of those groups have actually known about it and have had internal discussions about it for well over a decade. That is how long these individuals and these corporations have been trying to add in climate change when talking about and thinking about and warning about risk because that’s what it’s all about for these industries. For the insurance industry, the risk is obvious, right?

 

 You know, we don’t want to insure a bunch of people who live, you know, within 50 feet of a coastline because in 20 years that house might quite literally be underwater. And then we figured if are underwater having to pay out all these claims, hundreds of billions of dollars, if not trillions of dollars in losses for the insurance industry, which would effectively cripple insurance across the planet. The banks are a little bit trickier, right? You know, what does a bank have to worry about climate change? Well, other than I guess maybe the fact they’re the ones who, uh, you know, gave the mortgage to the people whose home might be underwater and now they can’t get insurance. So we lose that money and there is no house to repossess unless you’ve got a good dive team. But that’s only a small part of it. Think about it this way. When you have industries out there that can either live or die based on whether or not we protect the climate, the entire agricultural industry.

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WHAT ARE THE POSSIBILITIES?

#ALERT: #Economy Heading Towards Massive #OMG Train Wreck

“I think (investments) that will most likely do best will be those that do well when the value of money is being depreciated and domestic and international conflicts are significant.”

 Ray Dalio

 

We’ve Arrived At The End Of The Road 

by Adam Taggart

When Richard Nixon closed the gold window in August 1971, fully severing the US dollar from its gold standard, the Federal Reserve and other world central banks found themselves liberated. No longer was their ability to provide liquidity constrained by the physical limitations of the gold supply.

The Fed started intervening more and more during times of slowing growth to goose the economy back to vigor. Cheered and further egged on by politicians happy for easy solutions and desperate to avoid having to make tough calls, central banks have been increasingly willing to provide liquidity in good times and bad.

Akin to removing the limit on a teenager’s credit card, with access to so much cheap money, the US went on a debt bender. One that has lasted for nearly half a century:

#OMG

 

 

Here we stand today with the national debt at over $22 trillion, total US debt outstanding of $70 trillion (shown in the above chart), and unfunded national liabilities of over $200 trillion. And we add to this every year with an annual deficit now exceeding $1 trillion.

This gigantic accretion of debt will never be repaid. And as the pile grows higher, the burden of servicing it — even at today’s historically low interest rates — is placing an increasingly heavy drag on economic growth.

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WHAT ME WORRY?

 

#Economic #Abstractions No Longer #Stimulate REAL Physical #Economy

"History shows that the collapse of economies is very common. Collectively, we have closed our eyes to this possibility ever happening to the world economy in the modern era. If the issue with collapsing demand causing ever-lower energy prices is as severe as my analysis indicates, perhaps we should be examining this scenario more closely."

EXPONENTIALS TELL THE FUTURE

Why stimulus can’t fix our energy problems

By Gail Tverberg

Economists tell us that within the economy there is a lot of substitutability, and they are correct. However, there are a couple of not-so-minor details that they overlook:

• There is no substitute for energy. It is possible to harness energy from another source, or to make a particular object run more efficiently, but the laws of physics prevent us from substituting something else for energy. Energy is required whenever physical changes are made, such as when an object is moved, or a material is heated, or electricity is produced.
• Supplemental energy leverages human energy. The reason why the human population is as high as it is today is because pre-humans long ago started learning how to leverage their human energy (available from digesting food) with energy from other sources. Energy from burning biomass was first used over one million years ago. Other types of energy, such as harnessing the energy of animals and capturing wind energy with sails of boats, began to be used later. If we cut back on our total energy consumption in any material way, humans will lose their advantage over other species. Population will likely plummet because of epidemics and fighting over scarce resources.

Many people appear to believe that stimulus programs by governments and central banks can substitute for growth in energy consumption. Others are convinced that efficiency gains can substitute for growing energy consumption. My analysis indicates that workarounds, in the aggregate, don’t keep energy prices high enough for energy producers. Oil prices are at risk, but so are coal and natural gas prices. We end up with a different energy problem than most have expected: energy prices that remain too low for producers. Such a problem can have severe consequences.

Let’s look at a few of the issues involved:

[1] Despite all of the progress being made in reducing birth rates around the globe, the world’s population continues to grow, year after year.

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Is #Austallia Setting Stage For 2008 #Meltdown?

"He said the loosening of loan underwriting by the regulator combined with the rate cut is 'a serious attempt to get consumers to digest greater amounts of credit'.

'It is a bubble and the day of reckoning is coming,' he prophesised. "

 

The credit fuse has been lit': Australia is heading for an economic crisis after new rules make it much easier for people to get massive mortgages, experts warn

• Lenders can set their own buffer interest rate when assessing ability to repay
• 'Financial stability thrown out the window':  economist Stephen Koukoulas
• 'It's too easy for the banks to write bad loans,' says economist Martin North
•  Move is unlikely to prop up falling house prices especially for units on the fringe

 

 However, several analysts believe that Australia is not facing a recession and the housing market will recover from its recent downturn. Pictured: Sydney's west

Economist Stephen Koukoulas said on Friday that the Australian Prudential Regulation Authority (APRA) and the Reserve Bank of Australia were trashing financial stability after APRA eased loan serviceability requirements.

'Financial stability has been thrown out the window... The credit fuse has been lit,' Koukoulas tweeted. 

As of Friday, APRA no longer requires banks assessing customers for a mortgage to ensure they could still repay their loan if interest rates increased to at least 7 per cent.

Instead, the minimum benchmark rate will move down from 7 per cent to 2.5 per cent above the current non-discount rate, the rate at which the bank lends at.

The regulator which had previously cracked down on loose lending has now allowed banks to set their own minimum interest rate floor. 

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Real Estate Bubble Continues To Burst

 

Is A #Global Economic #Meltdown In The Cards?

 "Things might get worse before they get better - and eventually settle at a less optimal level - due to the seismic shift in global trade relations"

Is it time to position for a global economic meltdown?

Global growth faces two major geopolitical threats. The US-China trade war and the rise of populism in Europe have ushered in a new era of market sensitivity. But beyond short-term fluctuations, are they having a significant impact on growth?

Earlier this year, China and Europe both displayed tentative signs of stabilisation, but recent data has failed to confirm the expected pickup in activity. While this may appear to be linked to macro events, investors need to distinguish the impact of political developments on market volatility from their impact on growth, to understand the implications for asset allocation.

A structural shift

The US-China trade war has been a game-changer. It has challenged the established order of trade relations and opened a ‘Pandora's Box' of renegotiations from which the most hopeful outcome will not be a return to the globalised world order.

This structural shift has ushered in a new paradigm of renewed market sensitivity. Additionally, the recent escalation in US-China tensions has increased downside risks and added uncertainty headwinds to the growth outlook. While we believe rationality will ultimately prevail, the tail risk has also grown whereby national pride will become the main driver in negotiation processes.

In Europe, the rise of populism is ubiquitous, evidenced by recent European Parliament elections and the ongoing Brexit 

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IMF 2019 OUTLOOK