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General in a word: Polycrisis

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Noun: A collective term for interlocking and simultaneous crises of an ecological, geopolitical, and economic nature

Shortly before the October meetings of the International Monetary Fund and the World Bank in Washington, D.C., former US Treasury Secretary Lawrence Summers surveyed the global landscape. “I can remember earlier moments of equal or greater gravity for the global economy,” he said. “But I cannot remember the moments when there were . . . many crosscurrents as now.”

Summers noted that accelerating inflation has begun all over the developed world, forcing central banks to tighten monetary policy more or less simultaneously. Meanwhile, the energy shock caused by the Russian invasion of Ukraine hit Europe especially hard. And concerns have grown about the direction of Chinese policy-making, particularly the country’s handling of Covid-19, not to mention Beijing’s plans on Taiwan.

Summers thought the term “multiple crises,” popularized in recent months by economic historian and Financial Times contributing editor Adam Tose, “appropriate” as a means of capturing a historical moment characterized by multiple global crises unfolding simultaneously on an almost unprecedented scale.

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But Tooze didn’t coin the word. It appears to have been used for the first time in the late 1990s by the French sociologists Edgar Morin and Anne-Brigitte Kern, who employed it to describe the “intertwined and overlapping crises” facing humanity, especially in the environmental field.

The term returned to wider circulation in 2018, in a speech by Jean-Claude Juncker, then-President of the European Commission. In the middle of that decade, he noted, the EU was in danger of “sleepwalking from one crisis to the next without waking up” — from the sovereign debt crisis, through the influx of migrants and refugees fleeing war in the Middle East, to Brexit and the rise of populism. But he has since declared, “We have slowly but surely turned the page on this so-called crisis.”

In the wake of the global upheaval caused by the pandemic and the intensification of great-power competition, Juncker’s confidence that Europe, or the world for that matter, has put the multiple crisis behind them seems utterly misplaced.

jonathan.derbyshire@ft.com

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Resilient Germany overcomes energy crisis

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The author is the German Finance Minister

Once again, German industry and society proved more resilient and adaptable than some people had feared. Horror scenarios of dangerous energy rationing or a massive recession in our economy are often played out. But we’re not even close to that. With a challenging year just behind us, this is good news – not just for Germany, but for Europe as well.

companies and families He reacts quickly to sharp increases in energy prices. They installed more efficient production or heating facilities, and turned to imported substitutes and intermediates. The results are encouraging: German households and businesses have significantly reduced their gas consumption, despite the recent cold weather. From the start of the war in Ukraine until mid-December, industrial gas consumption in Germany (temperature-adjusted) was about 20 percent lower than the average level for the previous three years. even if some companies reduced production, especially in energy-intensive sectors, industrial output as a whole has fallen by only 1 percent since the beginning of 2022. In addition, in survey Released by the Ifo Institute in November, more than a third of German companies saw the possibility of further reducing gas consumption without jeopardizing production.

Rather than imposing excessive laws and regulations, we relied on price signals and the wisdom of market participants to create the right incentives and reduce gas consumption.

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We will take this approach in the coming months, when energy savings will still matter. Our latest relief measures will not distort price signals. To this end, the The Bundestag agreed The brakes on gas and electricity prices are in their last session in 2022. They are designed to operate without any interference with markets or prices. This system will pay a fixed amount for previous years’ depreciation and the current difference for a reference rate – regardless of current depreciation.

Energy price brakes are the main component of the German “protective shield”. Up to 200 billion euros available For measures in the period from 2022 to 2024. Given the size of the German economy, its high dependence in the past on Russian energy imports and the fact that the measures will end in 2024, these are balanced and fast mechanisms. Unlike the tools used in other countries, our new arrangements will not affect the process of price formation driven by supply and demand, or the incentives to save gas. Firms and households will continue to save at full market price when they reduce consumption by a unit of gas or electricity. In this way, price brakes also avoid creating additional demand for gas at the expense of consumers in other European countries. You don’t have to be afraid of distorting the competition or buying gas. In fact, A recent working paper from the International Monetary Fund On mitigating the impact of higher energy prices on households, he openly praises the German energy price brake.

Current developments confirm the effectiveness of a market-based approach – and show that we must also rely on price signals when it comes to reducing CO2 emissions. Last year, households and businesses only had a few weeks to adjust, but we’ve already seen a strong response. The effect of carbon dioxide prices can be stronger, as adjustment is possible over a much longer period and they additionally influence long-term expectations and decisions. Regulatory interventions and support schemes, even if well targeted, cannot compete with market coordination and incentives that support individual decision-making and foster innovation.

Europe and Germany can get through this crisis without collapsing industrial production. We also have the opportunity to efficiently deal with the transition to climate neutrality. Either way, we must trust price signals as well as the ability of individuals and companies to innovate and adapt.

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European Stocks Start 2023 On An Upbeat Note On Encouraging Factory Data By Reuters

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© Reuters. A chart of the German stock price index DAX is pictured at the Frankfurt Stock Exchange, Germany, December 30, 2022. REUTERS/Staff

By Bansari Mayur Kamdar

(Reuters) – European stocks rose in the first trading session of 2023 on Monday as manufacturing data in the euro zone indicated the worst had passed after a year marred by fears of a recession as central banks raised interest rates globally.

The regional index rose 0.8%, supported by consumer discretionary stocks. The auto and spare parts sector increased by 2.5%, and luxury names such as LVMH and keyring (EPA 🙂 added about 1.5% each.

“With 10-year yields above 2.50%, slowing year-end trading and a potential drop in HICP inflation raise hopes for an optimistic start to the year,” Commerzbank Research (ETR:) analysts said in a note. Eurozone consumer price inflation data is due later this week.

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An early indicator was data showing that the slowdown in manufacturing activity in the eurozone has likely bottomed out as supply chains begin to recover and inflationary pressures ease, leading to a revival of optimism among factory managers.

The STOXX 600 ended 2022 with sharp losses, driven by strict central bank policy to curb soaring prices, an economic slowdown, the Russia-Ukraine conflict adding to inflationary pressures and growing concerns about COVID cases in China.

Price-sensitive tech stocks, among the worst performers last year, rose 1.5% on the day, despite hawkish signals from the European Central Bank.

European Central Bank President Christine Lagarde said that wages in the eurozone are growing faster than previously thought, and the central bank must prevent this from adding to already high inflation.

Bond yields for Germany, Europe’s largest economy, have fallen from their highest levels in more than a decade as investors brace for inflation data this week.

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Germany’s finance minister expects inflation in Europe’s largest economy to fall to 7% this year and continue to fall in 2024 and beyond, but he expects higher energy prices to be the new normal.

Germany gained 1.0%, while other European stock exchanges started the year on a positive note. The London and Dublin stock exchanges are closed for the New Year’s holiday.

The energy sector rose 1.3 percent, following constant crude prices.

Croatia kicked off the new year with two historic changes, as the European Union’s youngest member joined the EU’s border-free Schengen area and the single currency of the euro.

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IIFL Finance to raise funds via public issue by Reuters

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MUMBAI (Reuters) – India’s IIFL Finance plans to raise at least 1 billion rupees ($12.10 million) through the public issuance of a non-convertible bond, according to a product note.

The issuance, which also contains Greenhoe’s option to retain the oversubscription of Rs 9 billion, will open for subscription on Friday and close on January 18.

The company offers bonds maturing in two, three and five years at an annual coupon in the range of 8.50% to 9% for investors.

Equirus Capital, Edelweiss, Trust Investment Advisors and IIFL Securities are the lead managers for the bond issue, which is rated AA by CRISIL and ICRA.

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Fundraising through public issuances is expected to pick up slightly in 2023 as retail investors bet on attractive interest rates and companies look to diversify their funding portfolio amid tightening liquidity conditions.

($1 = 82.6600 Indian Rupees)

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