Collapsing Economies

American companies lose billions due to the dollar

Shortages have triggered an energy crisis in the developing world. Violent protests have broken out in several countries. While US multinational companies are losing billions due to a strong dollar.

Russia’s military operation in Ukraine and the subsequent Western sanctions on Moscow might push the global economy into geopolitical fragmentation, the IMF warned in a report published on July 26.

“A serious risk to the medium-term outlook is that the war in Ukraine will contribute to fragmentation of the world economy into geopolitical blocs with distinct technology standards, cross-border payment systems, and reserve currencies,” the report states.

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Still, the IMF predicts that increasingly tight sanctions on Russia will eventually result in a drop in Russia’s oil exports to the global market and a “decline to zero” of Russian gas exports to Europe, which in turn would make “inflation expectations more persistently elevated” across the globe and tighten financial conditions as governments attempt to deal with rising prices.

“In this scenario, the shock would have a widespread impact, as higher global commodity prices and tighter monetary and financial conditions would affect almost all countries, albeit to different extents. Europe would be particularly affected in this scenario, with 2023… near-zero regional growth,” the IMF states.

Still, according to analysts, “taming inflation should be the first priority for policymakers” despite the costs of tighter monetary policy, as “delay will only exacerbate [the costs].”

www.rt.com/business/559819-world-economy-risk-deglobalization

Argentina’s Government Collapsing, People Refuse to Work Amid Major Subsidy Cuts

Only 43 percent of adults have a job, as inflation soars above 60 percent

Protests have erupted in Buenos Aires over the past 90 days and continue to build inside the capital as residents battle with their center-left government over sizeable amendments to social programs.

Cuts to subsidies in the energy sector based on household income already began in June.

Other subsidies, including the country’s notorious welfare program, are also on the chopping block, triggering thousands of angry residents to take to the streets.

State-sponsored aid for civilians has soared in the past 20 years, leaving 22 million Argentinians dependent on some form of government assistance.

In the first quarter of 2022, the national employment rate was 43 percent, according to government figures.

The country’s state funded programs extend to nearly every aspect of the economy, from wages to utilities, education, and health care.

Argentina already spends an estimated 800 million pesos per day—a sum of more than US$6 million—on state benefit programs.

Concurrently, inflation in the South American nation hit 58 percent in May and soared above 60 percent in July. By comparison, national inflation was just over 14 percent in 2015.

Harry Lorenzo, chief finance officer of Income Based Research, told The Epoch Times the spending habits of Argentina’s government are at the root of the escalating problem.

“The Argentine government has been grappling with a collapsing economy for some time now. The main reason for this is the government’s unsustainable spending, which has been funded in part by generous welfare programs,” Lorenzo explained.

www.theepochtimes.com/argentinas-government-collapsing-people-refuse-to-work-amid-major-subsidy-cuts_4625861.html

‘Ukraine is bankrupt’

Ukraine has lost its financial independence as it cannot meet its obligations to its citizens without Western help, Russian State Duma Speaker Vyacheslav Volodin wrote on Monday.

Taking to Telegram, Volodin claimed that “collected taxes form only 40% of the country's budget,” more than 60% of which covers military spending. Ukraine’s monthly deficit amounts to $5 billion, Volodin reminded.

“Ukraine is bankrupt,” he said.

The same numbers were reported on Friday by the Wall Street Journal.

In the speaker’s opinion, “without the help of Washington and Brussels, Kiev can no longer fulfill its obligations to citizens.”

www.rt.com/russia/560850-ukraine-budget-bankrupt-moscow

Argentina Raises Interest Rate to 69.5%

Argentina is out of options. I reported on the ongoing widespread protests occurring across the country. The majority of the nation is unemployed, and the currency is basically worthless. The people can no longer rely on the socialistic promises as the government is unable to fund its programs. Basic necessities are no longer available, and the people are suffering.

After inflation reached 60%, the nation decided to stop printing money entirely. The central bank just voted to raise the benchmark rate by 950 bps to 69.5%. Inflation now sits at 71% after prices rose 7.4% in July.

Estimates state that inflation could reach 90% in Argentina by the end of the year. The government has run the economy into the ground, 6 feet under, and it will need a complete overhaul for the people to begin living comfortably again.

www.armstrongeconomics.com/armstrongeconomics101/socialist/argentina-raises-interest-rate-to-69-5

Desperate Times in Lebanon

The Lebanese lira declined by over 90% against the USD. The country’s GDP fell to $20.5 billion in 2021, and real GDP per capita declined 37.1%. The World Bank deemed the crisis a “deliberate depression” that was “manifested by a collapse of the most basic public services; persistent and debilitating internal political discord; and mass brain drain.” Inflation in Lebanon reached 210.08% in June, and the lira is utterly worthless. Food prices have spiked 332.35%, transportation 462.4%, and housing by 132.38%.

Billionaire Prime Minister Najib Mikati, one of the richest men in the Arab world, has done nothing to help the people. Time has run out for Lebanon, and the people need a complete political transformation to regain any quality of life.

www.armstrongeconomics.com/international-news/middle_east/desperate-times-in-lebanon