Global Financial Crisis 2.0 - 2023 Edition

[noobcarbuyer]

https://www.reuters.com/technology/intel-plans-cut-thousands-jobs-face-pc-slowdown-bloomberg-news-2022-10-11/

Intel plans to cut thousands of jobs hit by PC slowdown - Bloomberg News

Oct 11 (Reuters) - Chipmaker Intel Corp (INTC.O) is planning a major reduction in headcount, likely numbering in the thousands, in the face of a slowdown in the personal computer market, Bloomberg News reported on Tuesday, citing people with knowledge of the situation.

The layoffs will be announced as early as this month and some of Intel's divisions, including the sales and marketing group, could see cuts affecting about 20% of staff, according to the report.

 

[Throttle2]

On 10/12/2022 at 2:13 PM, noobcarbuyer said:

https://www.reuters.com/technology/intel-plans-cut-thousands-jobs-face-pc-slowdown-bloomberg-news-2022-10-11/

Intel plans to cut thousands of jobs hit by PC slowdown - Bloomberg News

Oct 11 (Reuters) - Chipmaker Intel Corp (INTC.O) is planning a major reduction in headcount, likely numbering in the thousands, in the face of a slowdown in the personal computer market, Bloomberg News reported on Tuesday, citing people with knowledge of the situation.

The layoffs will be announced as early as this month and some of Intel's divisions, including the sales and marketing group, could see cuts affecting about 20% of staff, according to the report.

 

We should also do some retrenchment in Singapore.  
too fat already. 
 

 

[noobcarbuyer]

https://www.bloomberg.com/news/articles/2022-10-12/boe-warns-households-may-face-strain-similar-to-pre-2008-crisis

BOE Warns Households Face Strain Similar to Pre-2008 Crisis

• Central bank and FCA to toughen standards for pension schemes
• Mortgage costs are climbing after UK mini-budget roiled market

The Bank of England has warned that some UK households may face a strain over debt repayments that is as great as before the 2008 financial crisis, if economic conditions continue to be difficult.

“It will be challenging for some households to manage the projected rises in the cost of essentials alongside higher interest rates,” the central bank’s Financial Policy Committee said in its quarterly Financial Policy Summary report released Wednesday.

Households overall are in a stronger position than they were before 2008. But if mortgage financing costs continue to rise, some may face pressure over their mortgage and other costs that are similar to the peak before the financial crisis, the BOE said.

Companies’ earnings will come under strain because of the higher cost of credit, according to the BOE. Higher costs and lower demand will weigh on the earnings for many businesses, especially those with large exposure to energy and fuel prices, the BOE said.

Foreign investors may also choose to steer clear of UK assets, which could feed through to falling prices and tighter credit conditions for households and businesses, the BOE warned. There may be a particular impact in areas such as commercial property where overseas investors have a big presence, it said.

Market Uncertainty

Ever since Chancellor of the Exchequer Kwasi Kwarteng announced a vast package of unfunded tax cuts last month that undercut the BOE’s inflation-fighting program, UK markets have been gripped by turmoil and the threat of collapse of a key part of the pensions industry.

The central bank was forced on Tuesday to expand its emergency measures to tackle chaos in the bond market, adding inflation-linked debt to its purchases in an effort to stop “fire sale dynamics.” The intervention followed a severe sell-off on Monday that saw UK inflation-linked yields surging by the most on record.

The BOE said it would work with the pensions regulator and the Financial Conduct Authority to ensure that tougher standards are in place for pension schemes and LDI managers in the future.

“While it might not be reasonable to expect market participants to ensure against all extreme market outcomes, it is important that lessons are learned from this episode and appropriate levels of resilience are ensured,” the BOE said. 

LDI Challenge

UK pension plans have offloaded all kinds of holdings in recent weeks to meet margin calls on derivatives they used to help ensure they have enough money to pay retirees decades in the future. Their sales were initially triggered by a proposed UK budget that would have brought the nation’s biggest tax cuts in five decades.

The central bank said it supported boosting the liquidity preparedness of market participants in the LDI sector, especially non-banks, for margin calls. Further sharp corrections in global asset prices could trigger further and faster redemptions from money market funds and open-ended funds that invest in less liquid and riskier credit assets, the BOE said. 

Britain’s mortgage costs continued to climb this week after last month’s mini-budget roiled the market and caused some house sales to collapse. The average five-year fixed-rate mortgage on a home rose to 6.29% on Tuesday, the highest since November 2008 and up from 5.75% a week ago, according to Moneyfacts Group Plc. That’s as the two-year fixed-rate deal climbed to 6.43%, the most since August 2008.

House prices in the UK look set to slide next year as the cost of paying a mortgage is no longer cheaper than renting, according to UBS Group AG. Mortgage repayments as a proportion of income have increased to more than 40% after hikes to interest rates, analysts Gregor Kuglitsch and Marcus Cole wrote in a note Monday. That’s a “key pinch point” that will result in house prices dropping by 10% next year, they say.

[Wt_know]

BJ must be damn happy 

it’s NOT my problem

UK pension fund jit dong jeng liao?

 

Edited October 14, 2022 by Wt_know

[Jman888]

[jcmm]

Dun worry too much.... next year, GST will help us.

Edited October 14, 2022 by jcmm

[Atonchia]

Will this help in a global financial crisis? 

 

IN FOCUS: 4-day week in Singapore – some workers want it, but are businesses ready? 

https://www.channelnewsasia.com/singapore/4-day-work-week-singapore-employees-business-life-balance-3007396?cid=internal_sharetool_androidphone_15102022_cna

[Stary]

1 hour ago, Atonchia said:

Will this help in a global financial crisis? 

 

IN FOCUS: 4-day week in Singapore – some workers want it, but are businesses ready? 

https://www.channelnewsasia.com/singapore/4-day-work-week-singapore-employees-business-life-balance-3007396?cid=internal_sharetool_androidphone_15102022_cna

Frankly, if the amount of work that need to be done is about the same, then having 4-day work week would means cramping and more rush during that 4 days.  This to me, is even more stressful. In addition, for those with overseas team, may still have to reply their emails during their "off-day"

Then public sector may want the same .....and you have shorter number of days to get things transacted or done. This may also add stress. 

A better way is keep to the 5 days but one day work from home. Simple and don't make it complicated. 

Edited October 15, 2022 by Starry

[Throttle2]

Nowadays most multinats are already applyinghybrid working successfully.

I dont think there is a need for 4 day work week.  
 

companies can simply accord employees with perhaps a few more days of leave.which to me is better overall.

 

 

[noobcarbuyer]

https://fortune.com/2022/10/14/dr-doom-nouriel-roubini-warns-financial-crises-insolvencies-global-recession/

‘Dr. Doom’ Nouriel Roubini warns the next decade could bring ‘massive insolvencies and cascading financial crises’

Nouriel Roubini has a reputation on Wall Street as a bit of a pessimist. 

Okay, maybe more than a bit. 

The 64-year-old NYU economics professor and CEO of Roubini Macro Associates has shared so many bleak predictions over the years that he has earned the moniker Dr. Doom.

But many younger market watchers forget that Roubini actually gave himself the nickname in the mid-2000s when he was attempting to warn the world of an impending financial crisis.

In 2006, when investment banks were still routinely making bullish predictions about the U.S. economy, Roubini was telling anyone who would listen that a U.S. housing bust was on the way.

His bearish views were featured in an International Monetary Fund paper that year, alongside other economists who made far more positive forecasts. The paper recounts how Roubini told a group of 300 IMF staffers at a meeting in Washington D.C. that a U.S. housing crash would ultimately cause a deep global recession.

“When the United States sneezes, the rest of the world gets a cold,” he said, arguing that even Federal Reserve interest rate cuts wouldn’t save the day.

Of course, Roubini was right. The U.S. housing market began to unravel in 2007, ultimately sparking the Great Financial Crisis a year later, and the Fed wasn’t able to rescue markets.

So it might make sense to pay attention to Roubini’s warnings of impending economic doom this time around, even if they can get a bit repetitive.

And they certainly have been repetitive. Roubini has previously argued that the U.S. economy will fall into a deep recession by the end of this year, going so far as to call those who believe that a “soft landing” is still possible “delusional.”

Now, the economist is claiming that we’re headed for a “stagflationary crisis unlike anything we’ve ever seen.”

In a Time op-ed published on Thursday, Roubini said that a toxic economic combination of low growth and high inflation will lead to “massive insolvencies and cascading financial crises” worldwide in the coming years.

His argument is based on the idea that we’re entering a new era for the global economy after “hyper-globalization,” relative geopolitical stability, and technological innovation helped keep inflation at bay since the Cold War.

Roubini believes that our new era of “Great Stagflationary Instability” will be fueled by inflationary trends like aging populations, climate change, supply disruptions, greater protectionism, and the reshoring of industry—or the process of moving businesses that are now operated overseas back to their original countries.

And to fight inflation in this environment, he argues that central banks will be forced to raise interest rates back to historic norms after years of moving in the opposite direction.

“Rapid normalization of monetary policy and rising interest rates will drive highly leveraged households, companies, financial institutions, and governments into bankruptcy and default,” Roubini argued, noting that private and public debt as a share of global GDP has jumped from 200% in 1999 to 350% this year.

But unlike many other economists and business leaders, he warns that central bank officials can’t “wimp out” and decide to stop raising interest rates anytime soon, otherwise inflation will be a persistent problem worldwide. Essentially, Roubini believes central banks are trapped between a rock and hard place due to our current inflationary environment.

“When confronting stagflationary shocks, a central bank must tighten its policy stance even as the economy heads toward a recession,” he said.

Roubini concluded his piece with some sage advice for investors: Avoid stocks and long-term bonds. 

“Investors need to find assets that will hedge them against inflation, political and geopolitical risks, and environmental damage: These include short-term government bonds and inflation-indexed bonds, gold and other precious metals, and real estate that is resilient to environmental damage,” he said.

[noobcarbuyer]

https://www.ft.com/content/ab52e693-ec4a-43d9-ab88-4538a46c0778

Pessimism mounts over a global economy facing multiple shocks

Bleak outlook weighs on mood at first in-person IMF and World Bank meetings since pandemic began

In one of the bleakest meetings of the IMF and World Bank since the financial crisis, Sri Mulyani Indrawati, Indonesia’s finance minister and chair of the Group of 20 leading economies, summed up the mood.

“The global economic situation has become more and more challenging,” she said in her closing remarks to the gathering of finance ministers and central bank governors in Washington, DC on Thursday. “The world is in a dangerous situation.”

Indrawati and others were full of talk of geopolitical disagreements, negative economic spillovers from one country to another, and the unintended side-effects flowing from the IMF’s message that countries should “stay the course” on fighting inflation by raising borrowing costs fast.

Kristalina Georgieva, managing director of the IMF, said the world was witnessing a transition from predictability, where interest rates and inflation were low, to instability.

“Shock upon shock upon shock,” she said, characterising the situation facing participants. “We have to really work on changing our mindset to be much more precautionary and be prepared for much more uncertainty.”

She pleaded with countries “to identify [the] problems and then muster the will to solve them”.

There was action on the former, at least.

Participants shared the IMF’s view that the global economy was in a tough spot – and that the worst was yet to come. Indeed, many thought the fund’s latest projections of growth of 2.7 per cent next year, downgraded substantially from estimates made during the spring, were still too optimistic. The world economy was heading toward a recession, which would be potentially amplified by financial instability of the sort witnessed during the week in the UK. Inflation would remain uncomfortably high into 2023 too, forcing central banks to keep tightening.

“We’re seeing developments and challenges that are either entirely new or are unlike anything that’s been around for at least decades,” said Nathan Sheets, chief economist at US bank Citi. “It is creating stresses and difficulties for policymakers as they devise approaches to be able to achieve their objectives, including inflation, macro stability and financial stability.”

A problem globally, almost everyone agreed, was the rapid rise in US interest rates. While the Federal Reserve had aimed to tame soaring domestic prices, the impact on the dollar’s strength was causing difficulties beyond US borders, driving up inflation elsewhere and raising the prospect of market volatility.

“What is necessary is a comprehensive understanding of the [cross-border] spillovers of policy,” said Mark Carney, former Bank of England governor.

However, the Fed is poised to extend its string of supersized interest rate increases for yet another meeting, after new data published on Thursday showed a worrying acceleration in underlying inflation. It next meets in early November. Economists now consider a fourth consecutive 0.75 percentage point rate rise — which would shift the federal funds rate to a new target range of 3.75 per cent to 4 per cent — a foregone conclusion. The Fed is also expected to keep interest rates at a level that actively restrains the economy for longer than initially expected.

Bringing inflation back down to central banks’ longstanding 2 per cent targets will take time, warned Marcelo Carvalho, BNP Paribas global head of economics, and prove hard to do.

The general view was that central banks, including the Fed, should continue raising interest rates. However, economists acknowledged that finding the right balance between containing price pressures and destroying demand was fraught with difficulty.

Policymakers must proceed with “a lot of hope and heart, because you really don’t know what is going to work”, Sheets said.

Some economists think that the action taken by policymakers so far has even been counter-productive. The measures used in combating high inflation, a slowing economy, an energy and food crisis and the lingering effects of Covid-19 have amplified volatility and economic difficulties, according to Mohamed El-Erian, chief economic adviser to Allianz.

Nowhere did this view apply more than in the UK. The shambles that has followed the new government’s “mini” Budget has been the talk of Washington, cited universally as a perfect case study in what can happen if governments are not careful with the co-ordination of fiscal and monetary policy. On Thursday, Kwasi Kwarteng, the UK chancellor, flew home early from the meetings to hold emergency talks with prime minister Liz Truss.

The IMF had urged the UK to make modifications quickly. “Don’t prolong the pain,” Georgieva said, while her colleagues at the fund talked in various motoring metaphors about the situation in Britain. The government was flooring the accelerator while the BoE applied the brakes, IMF officials said. Alternatively, they said ministers were steering to the left while the central bank tugged the steering wheel to the right. In both formulations, they implied the UK economic vehicle was heading for a crash.

Few felt much sympathy.

As ministers prepared to go home after the first in-person meetings since the pandemic started, many connections had been re-established and valuable discussions had been held. But with domestic problems plaguing most of the membership, the usual IMF calls for co-operation went unheeded.

Concrete results on global economic management were so thin on the ground that, when asked to name them, Indrawati struggled. One came to mind, however: economic leaders had been “recognising the challenging tasks [ahead] for both fiscal and monetary policy”, she said.
 

[noobcarbuyer]

On 10/14/2022 at 8:10 PM, jcmm said:

Dun worry too much.... next year, GST will help us.

Future PM said the same thing, so it must be true. LOL

https://www.channelnewsasia.com/singapore/gst-increase-responsible-inflation-lawrence-wong-spending-expenditure-needs-3007771

'More responsible' to proceed with GST increase amid uncertain inflation outlook: Lawrence Wong

This will help Singapore secure the revenues needed for its growing expenditure needs, says the Deputy Prime Minister.

[Khng8]

@noobcarbuyer

https://www.businesstimes.com.sg/government-economy/inflation-in-singapore-expected-to-peak-in-q4-and-stabilise-lawrence-wong?amp

I thot he just said inflation will peak in Q4?

 

[noobcarbuyer]

1 hour ago, Khng8 said:

@noobcarbuyer

https://www.businesstimes.com.sg/government-economy/inflation-in-singapore-expected-to-peak-in-q4-and-stabilise-lawrence-wong?amp

I thot he just said inflation will peak in Q4?

 

Well, LW did say that inflation will peak, but how much it will ease thereafter and where it will stabilize at are big unknowns. 

If you read between the lines, LW expects inflation to peak and then come down for the near term, but there could be a strong possibility of inflation roaring to a new peak next year.

The watch-words of the day are "higher for longer" inflation.

I expect a long drawn out fight against inflation for the middle term at least. 

[noobcarbuyer]

https://www.todayonline.com/world/goldman-sachs-sees-deeper-uk-recession-after-tax-u-turn-bloomberg-news-2021241

Goldman Sachs sees deeper UK recession after tax U-turn - Bloomberg News

Goldman Sachs analysts have downgraded Britain's economic outlook after Prime Minister Liz Truss removed Kwasi Kwarteng as chancellor and reversed a freeze in corporation tax, Bloomberg News reported on Sunday.

"Folding in weaker growth momentum, significantly tighter financial conditions, and the higher corporation tax from next April, we downgrade our UK growth outlook further and now expect a more significant recession," Bloomberg cited the investment bank's report as saying.

Goldman revised its 2023 UK economic output forecast to a 1per cent contraction from an earlier forecast for a 0.4per cent output drop, with core inflation seen at 3.1per cent at the end of 2023, down from 3.3per cent previously, Bloomberg said.

On Friday, Truss said Britain will go ahead with corporation tax rise to 25per cent next year, making an U-turn on a pledge to freeze it at 19per cent.

Goldman Sachs did not immediately respond to a Reuters request for comment.

[noobcarbuyer]

https://fortune.com/2022/10/14/larry-summers-global-recession-uk-market-turmoil-government-debt/

Larry Summers thinks he knows what could be triggering a giant global recession right now and warns ‘the fire department is still in the station’

The idea that the world economy is teetering on the brink of a recession seems to carry more weight every day. And now former Treasury Secretary Larry Summers says we might have already crossed a major inflexion point: the U.K.’s market turmoil. 

“What’s happened in the United Kingdom, some of that is a self-inflicted wound, but some of that is tremors of what’s happening in the global system,” Summers said at the Institute of International Finance’s annual meeting on Friday. “And when you have tremors, you don’t always have earthquakes, but you probably should be thinking about earthquake protection.”

Summers was speaking the same day that the U.K.’s recently appointed prime minister, Liz Truss, fired her own recently appointed finance minister, Kwasi Kwarteng, whose presentation of their joint economic plan sparked a violently opposed market reaction that saw the pound hit a record low against the dollar and the largest ever one-day government bond selloff in the U.K., forcing the Bank of England to take emergent action and temporarily purchase long-term bonds. 

This last part of the British crisis is what has Summers worried. For much of the last several decades, low interest rates have allowed governments to easily turn to the debt markets to fund themselves. With inflation at 40-year highs and central banks worldwide following the lead of the Federal Reserve and dramatically hiking interest rates as they seek to fight it, that era seems to be over, if the U.K. markets are any indication. 

The economic challenges experienced by the U.K. aren’t unique, either. Countries throughout Europe are working to cope with a deepening energy crisis after Russia cut the continent’s supply of natural gas. And almost every place in the world has faced setbacks from supply chain disruptions, while others are still experiencing shocks from the COVID-19 pandemic—all of which has led to the aforementioned extremely high inflation and faltering stock markets.

Summers, who has been saying for over a year that the Fed was asleep to the major economic challenges facing it, said he hasn’t seen anything to change his mind.

“We’ve got the most complex, disparate, and cross-cutting set of challenges that I think I can remember in the 40 years I’ve been following this stuff,” Summers said. “And in all honesty, I think the fire department is still in the station.”

The Federal Reserve has raised interest rates five times this year, with the last three interest rate hikes each being by 75 basis points, as it seeks to bring down inflation to its 2% target. Central banks around the world have followed suit in what may be the largest coordinated central bank hike in history. 

Still, many economists, including Summers, have criticized the institution for waiting too long to act on high inflation. And after Thursday’s CPI report revealed inflation was up 8.2% in September versus a year earlier, it’s likely the Fed will continue to raise rates. But its aggressive strategy has a lot of economists and investors suggesting it’ll send the U.S. into a recession. 

Summers says most recession scenarios would be far better than the economic purgatory of “stagflation.”

“If you try to avoid that you just find yourself with a stagflation situation and having to do something harder a little later,” he said. “But that’s got all kinds of collateral consequences for the rest of the world.”

The stagflation portmanteau combines high inflation with a stagnating economy, and it famously occurred throughout the 1970s until a painful rate hike and recession in the early 1980s ushered in “the Great Moderation.” Getting back to that now seems a long way off, but Summers wants more to be done.

“Somebody should be proposing something substantial here and moving it along,” he said, without specifying what that proposal could be. 

[Throttle2]

Everybody tries to act guru. 
We all know clock strike 12 twice a day.

put money where mouth is

[Sdf4786k]

On 10/15/2022 at 1:40 PM, Starry said:

Frankly, if the amount of work that need to be done is about the same, then having 4-day work week would means cramping and more rush during that 4 days.  This to me, is even more stressful. In addition, for those with overseas team, may still have to reply their emails during their "off-day"

Then public sector may want the same .....and you have shorter number of days to get things transacted or done. This may also add stress. 

A better way is keep to the 5 days but one day work from home. Simple and don't make it complicated. 

How does that reduce cost? 4 day work week means pay cut as well not more free days