A Note by Justin Damien Guénette, M. Ayhan Kose, and Naotaka Sugawara.
[T]hree major findings. First, every global recession since 1970 was preceded by a significant weakening of global growth in the previous year, as has happened recently. Second, the global economy is in the midst of one of the most internationally synchronous episodes of monetary and fiscal policy tightening of the past five decades. The policy actions in many countries are necessary to contain inflationary pressures, but their mutually compounding effects could have larger impacts than envisioned—both in tightening financial conditions and in steepening the global growth slowdown. Third, if the degree of global monetary policy tightening markets now expect is not enough to reduce inflation to targets, experience from previous global recessions suggests that the additional tightening could cause significant financial stress and increase the likelihood of a global recession next year.
A lot of thoughtful analysis.
In the baseline scenario, we assume that headwinds from commodity markets and supply-chain disruptions subside. With respect to monetary policy, global short-term interest rates, measured as GDP-weighted averages of national rates, are assumed to rise from 1.6 percent in 2021 to a peak of 3.8 percent in 2023 (Table 1). This reflects market-based expectations of further tightening in several major economies. For example, benchmark policy rates are set to rise to 3.7 percent in the United States by the first quarter of 2023.29
In this scenario, global growth slows from 2.9 percent in 2022 to 2.4 percent in 2023, before recovering to 3 percent in 2024 (Figure 8A, Table 2A). The global economy would experience a slowdown next year with growth in per capita terms approaching that of the downturn episodes of 1998 and 2012. Global trade growth is projected to cool alongside the broad-based weakening of demand in 2023 and then accelerate in 2024 (Figure 8C). Growth in advanced economies would slow from 2022 to 2023 before recovering somewhat in 2024 (Figure 8D). In contrast to advanced economies, growth in EMDEs would steadily accelerate from 2022 to 2024 as global headwinds fade, allowing the post-pandemic recovery to continue (Figure 8E).
This baseline scenario may be seen as the best case scenario. Given that – I would ask monetary policies to back off from their austerity.
September 19, 2022
‘Crippling’ Energy Bills Force Europe’s Factories to Go Dark
Manufacturers are furloughing workers and shutting down lines because they can’t pay the gas and electric charges.
By Liz Alderman
The furnace, heated to 1,500 degrees Celsius, was glowing red. Workers at the Arc International glass factory loaded it with sand that slowly pooled into a molten mass. Nearby on the factory floor, machines transformed the shapeless liquid with a blast of hot air into thousands of delicate wine glasses, destined for sale to restaurants and homes worldwide.
Nicholas Hodler, the chief executive, surveyed the assembly line, shimmering blue with natural gas flames. For years, Arc had been powered by cheap energy that helped turn the company into the world’s largest producer of glass tableware — and a vital employer in this working-class region of northern France.
But the impact of Russia’s abrupt cutoff of gas to Europe has doused the business with new risks. Energy prices have climbed so fast that Mr. Hodler has had to rewrite business forecasts six times in two months. Recently, he put a third of Arc’s 4,500 employees on partial furlough to save money. Four of the factory’s nine furnaces will be idled; the others will be switched from natural gas to diesel, a cheaper but more polluting fuel.
“It’s the most dramatic situation we have ever encountered,” Mr. Hodler said, shouting to be heard over the din of clinking glasses. “For energy-intensive businesses like ours, it’s crippling.”
Arc is not alone. High energy prices are lashing European industry, forcing factories to cut production quickly and put tens of thousands of employees on furlough. The cutbacks, though expected to be temporary, are raising the risks of a painful recession in Europe….
Europe BAD, China GOOD
September 18, 2022
Goldman Sachs cuts 2023 U.S. GDP forecasts as rate hikes loom
Goldman Sachs cut its forecast for 2023 U.S. Gross Domestic Product (GDP) as it projects a more aggressive Federal Reserve tightening policy through the rest of this year, and sees that pushing the jobless rate higher than it previously projected.
Goldman analysts said in a note released late Friday that it now sees GDP growth of 1.1 percent next year, down from its prior call for 1.5 percent growth from the fourth quarter of 2022 to the end of 2023.
The Federal Reserve (Fed) is likely to raise U.S. borrowing costs faster and further than previously expected after data this week showed underlying inflation broadening out rather than cooling as expected.
The investment bank now expects the Fed to hike policy rates by 75 basis points at its meeting next week, up from 50 basis points previously and sees another 50 bp hikes in November and December, with the Fed funds rate peaking at 4-4.25 percent by the end of the year.
“This higher rate path combined with recent tightening in financial conditions implies a somewhat worse outlook for growth and employment next year,” Goldman analysts wrote.
It sees the unemployment rate at 3.7 percent by year-end, up from 3.6 percent, and rising to 4.1 percent by the end of 2023, from 3.8 percent forecast previously.
America BAD, China GOOD
Of course they miss how rising rates, dollar strength could lead to a capex boom as companies look to future growth at the expense of now. They completely are credit financial theorists. How wrong they are. It’s why the 90’s great depression was a blown call.
September 19, 2022
Chinese scientists find new way for robust DNA data storage: Nature
DNA is considered as an ideal storage medium under the era of data explosion due to its high density, long-term durability, and low maintenance cost. /CFP
Chinese scientists have found a way to handle DNA breaks and rearrangements, allowing them to store data for tens of thousands of years, according to an article * published on Nature Communication on September 12.
DNA is an ideal storage medium due to its high density, long-term durability and low maintenance cost. However, it could be highly unstable as DNA strands break and rearrangements frequently occur during DNA synthesis, amplification, sequencing and preservation, making data storage difficult.
Researchers from the Frontiers Science Center for Synthetic Biology and Key Laboratory of Systems Bioengineering at Tianjin University in North China developed a new strand assembly algorithm by using de Bruijn graph and greedy path search to meet such challenges, according to the article.
Simply put, the algorithm is a coding-decoding system that targets the innate defect of DNA. It also handles DNA breaks and rearrangements during the preservation of DNA molecules and polymerase chain reaction (PCR)-based data copying as means of error detection and correction.
The scientists have managed to store 10 pieces of murals found in Dunhuang, northwest China’s Gansu Province, in data equivalent of 6.8MB. They also tested its robustness by accelerated aging, multiple independent data retrievals, deep error-prone PCR, and large-scale simulations.
The result, which shows the robustness of their DNA storage algorithm, is proved by successfully retrieving the encoded information from a DNA solution that has been incubated at 70 degrees Celsius for 70 days without any particular protection.
That is “estimated to be equivalent to that under 9.4 degrees Celsius for more than 20,000 years,” the researchers said….
September 12, 2022
Robust data storage in DNA by de Bruijn graph-based de novo strand assembly
By Lifu Song, Feng Geng, Zi-Yi Gong, Xin Chen, Jijun Tang, Chunye Gong, Libang Zhou, Rui Xia, Ming-Zhe Han, Jing-Yi Xu, Bing-Zhi Li & Ying-Jin Yuan
DNA data storage is a rapidly developing technology with great potential due to its high density, long-term durability, and low maintenance cost. The major technical challenges include various errors, such as strand breaks, rearrangements, and indels that frequently arise during DNA synthesis, amplification, sequencing, and preservation. In this study, a de novo strand assembly algorithm (DBGPS) is developed using de Bruijn graph and greedy path search to meet these challenges. DBGPS shows substantial advantages in handling DNA breaks, rearrangements, and indels. The robustness of DBGPS is demonstrated by accelerated aging, multiple independent data retrievals, deep error-prone PCR, and large-scale simulations. Remarkably, 6.8 MB of data is accurately recovered from a severely corrupted sample that has been treated at 70 °C for 70 days. With DBGPS, we are able to achieve a logical density of 1.30 bits/cycle and a physical density of 295 PB/g.
China SO COOL (and implicitly everyone else BAD)
ISABELLA MURRAY and SHANNON K. CRAWFORD
Mon, September 19, 2022 at 2:05 PM·5 min read
Biden comments on American hostage in Afghanistan released in prisoner swap
Mark Frerichs — the last-known American hostage being held by the Taliban — has been released in a prisoner exchange, President Joe Biden confirmed in a statement on Monday. “His release is the culmination of years of tireless work by dedicated public servants across our government and other partner governments, and I want to thank them for all that effort,” Biden said. Frerichs was in Doha, Qatar, and in the care of the U.S. government, according to senior administration officials, who noted that that after an initial assessment he appeared to be in “stable health” and would be offered a “range of support” to acclimate back to regular life. The Taliban first confirmed at a press conference in Kabul on Monday that Frerichs, from Lombard, Illinois, was released in a prisoner swap for a senior Taliban detainee and notorious drug lord, Bashir Noorzai. The senior administration officials said Noorzai had been held in a federal prison in the United States but not at Guantanamo Bay as had been reported. Despite Noorzai’s history as a prolific drug trafficker, the officials said they had consulted experts who assured them his return to Afghanistan would not pose an increased threat to Americans or significantly impact the country’s drug trade. Still, Biden acknowledged, “Bringing the negotiations that led to Mark’s freedom to a successful resolution required difficult decisions, which I did not take lightly.” The officials confirmed Frerichs’ freedom was the result of “months of tough negotiations” with the Taliban, during which it became apparent that the release of Noorzai was “the key” to securing his safe return. The decision was made to authorize Noorzai’s release in June, they said, but it took time to work out the details of the exchange and once they were confident they had found a narrow window where they could carry out the swap, they moved “extraordinarily quickly.”
This is how a competent government gets things done.
Officials in Massachusetts, the U.S. Dept. of Justice, and others concerned for the well-being and civil rights of 50 or so asylum seekers from Venezuela, including children, flown to Martha’s Vineyard by Florida Republican Governor Ron DeSantis were reportedly given a brochure that said they would be eligible to receive “8 months cash assistance,” “assistance with housing,” and “job placement,” along with other benefits. Calling it “The smoking gun in Martha’s Vineyard,” Popular Information’s Judd Legum reports it “has obtained documentary evidence that migrants from Venezuela were provided with false information to convince them to board flights chartered by Florida Governor Ron DeSantis (R). The documents suggest that the flights were not just a callous political stunt but potentially a crime.”
DeSantis is an inhuman sick racist. This is the modern day version of the Reverse Freedom Trains. It is also a crime. I would lock DeSantis up for as many years as possible.
Please, I could care less about their civil rights. They have none. Ron Desantis is a trafficker. Arrest him.
they are legally in the usa. they have civil rights. to deny those is preposterous.
Don’t you know – in MAGA world, only white people have rights.
the world is reversing the largest synchronous monetary and fiscal policy loosening ever….
And CoVid lockdowns in China and drought in China, Europe, North America and a majar disruption in energy supply and China’s construction-sector troubles and a major disruption in food supply…
You got a small part right – not enough for a passing grade.
Just a passing note. FDIC Quarterly Banking Profile showed 2Q2022 aggregate deposits in all FDIC-insured institutions dropped [first time in nearly a decade] by about $400 billion to $19.6 trillion. Liquidity?
I cannot put into words how much I love and agree with this post. It puts me in the mind of our one-time blogger and all-’round Renaissance man James Kwak. Short, says something crucially important, and says something incredibly self-evident, yet for some wild reason, still badly in need of being articulated and stressing. This short post has a crucially important message, yet IMHO patently obvious. Yet few are seeing or noting. Very much in the flavor of James Kwak’s old posts on BaselineScenario blog.
Bravo, Professor Chinn. And Bravo Guénette, Kose, and Sugawara.