What would a US bankruptcy cause?

The Biden administration has until June 1st, so that the US does not end up in default, which in turn will bring a series of “chain” reactions that will cause a global economic shock. And the reason is very simple: American banks are “loaded” with government bonds and may collapse if the debt ceiling is …

The Real-estate market in turmoil and how the EU & USA is hitting Growth

Investments in real estate are traditionally made with loans, the vast majority of which have a variable interest rate. Rising interest rates increase the cost of servicing loans and consequently reduce or eliminate the profit of the companies that own the properties. Already, internationally, the first effects are being observed, with many large companies that …

Pressure on Emerging Economies from the Overvalued Dollar

The rise of the US currency depletes their limited foreign exchange reserves and stunts growth by making their exports more expensive. The strengthening of the dollar over the past year due to continued interest rate hikes by the US Federal Reserve has put severe pressure on many emerging economies, which have seen their national currencies …

Shrinkflation: Less Product but the Same Price

From bread for toast to chocolate bars, companies are hiding rising costs due to inflationary pressures by downsizing many everyday products. For companies it is a way to maintain high operating profit margins, for consumers a constant cause for concern and for statistical agencies a real headache. The reason for the phenomenon of shrinkflation, i.e. …

Debt and Stagnation threaten Developing Economies

The news brought by the World Bank’s Global Economic Prospects report was not good. First we have the forecast for global growth (https://www.worldbank.org/en/publication/global-economic-prospects). This is now down to 1.7%, well below the 3% previously forecast in June. For developed economies, the forecast is for growth of just 0.5% in 2023, just above the typical recession …

FED: Raised interest rates to 15-year highs

In a new increase in interest rates, this time by 50 basis points, the US Federal Reserve proceeded in an attempt to contain inflation that “runs” at a multiple rate of the 2% target. The Fed’s key dollar lending rate is now in the range of 4.25% to 4.50%, the highest since 2007. Federal Reserve …

The Reasons That Lead the Global Economy to “Difficult Paths”

The world economy is likely to be headed for a new recession and overall a time of difficulties. Things are not so good. This has to do with the combination of a number of structural trends currently permeating the global economy. 1. Inflation is here to stay There is a more structural dimension to inflation, …

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