Skip to main content

Top Financial Stories 2024


This is my annual post on the top Financial stories of the year now ending. As usual, I do not try to rank them, merely listing one Big Story for each of the twelve months of the year. Each story is accompanied by a (bold) acknowledgement of the theme it may illustrate. But my emphasis is on the story, not the theme.  Something happened with a particular who-what-when-where structure in each of these twelve instances. 

Despite all the storm-and-stress over the election campaign in the US, and the obvious financial significance of the result both within the US and without, you will not find much of that campaign in this post. It isn't even featured in the November entry. Yet four of our grafs are US-focused. They focus not on the racehorse of the campaign, but on the stakes.

If there is a theme here, though, it is the significance of financial/economic sanctions in wartime. Most of the "western world" has sanctioned Russia for its assault upon the sovereignty of Ukraine. And, as a supplementary matter, it has found ways to support Ukraine in getting through the opportunity costs of war. That has not brought Russia to its knees in a war-ending way (these non-lethal weapons seldom work that well).  But it has mattered.   

The entries for April and May both address that nest of issues from different directions. In December we will come back to the nest from a somewhat different flight path. 

That understood, let us get right to work. 

January: Commercial real estate. United States. In the US, among financial institutions concerned with the issue of how much we owe each other, this month sees an outbreak of worry about a "maturity wall". Or, to change the metaphor, a maturity cliff.  Is too much debt coming due too soon in the near future? If so, various underlying businesses, especially perhaps the commercial real estate market, will have to focus on refinancings until the wall can be overcome. 

February: Commercial real estate. United States. It becomes clear this month that the bankruptcy proceedings in the matter of WeWork (a case filed last November) turn on the issue of how badly a bankrupt debtor can stiff landlords. (And it is doing pretty well at that.) So, on the one hand the CRE owners are going to have to work hard on refinancing debts over the next two-three years, and on the other hand their bankrupts tenants may end up paying them less through the chapter 11 proceedings than they had previously had reason to hope. Happy still-new year to them. 

March:  Alternative fuels. Malaysia. The World Trade Organization upholds a decision by the EU  that biodiesel fuel made from palm oil from Malaysia should NOT count as a renewable biofuel. [Under EU rules, member countries are obliged to get the share of biofuel used in transportation up to 14% by 2030.] A conflict between two policy goals. Malaysia has promoted its palm oil exports as renewable/sustainable, but the spreading palm oil plantations are replacing forests. I wrote about an earlier stage in this very dispute, in some depth, back in Feb. 2020.

April. The impact of sanctions. Eastern Europe.  The lasting Russo-Ukraine war is driving Russia into a closer economic relationship with the People's Republic of China. CNN reported in April that in 2023, an amazing 90 percent of Russia's micro-electronics imports came from China. The micro-electronics are used for missiles, tanks and aircraft. The PRC is also critical in that it offers a market for Russian oil. The passage of a US aid bill later in the month ensures that the war will continue: so this relationship will become even tighter over time. 

May: Financing a war.  Eastern Europe. The lasting Russo-Ukraine war is making some of the creditors holding Ukraine's sovereign bonds nervous.  BlackRock, Pimco and others accepted a suspension of payments in the wake of the Russian attack two years ago. Now in May they make it clear they want payments to resume, although they are willing to forgive a big chunk of the debt in return. Servicing the interest of the affected creditors could cost Ukraine $500 million annually. [The parties reached a deal in July, what Reuters called an "unprecedented debt rework." ]

June: Continued viability of fossil fuels. Saudi Arabia. On June 2, Saudi  Arabia began selling shares in Saudi Aramco, in an effort to raise money to diversify the economy. It sold only a small sliver of the value of the company, less than 2/3s of one percent (0.64%) and received $12 billion. This implies a valuation of the whole enterprise of roughly $1.7 trillion. But the new sale, and the fact that the slice the Kingdom put on the market sold out within hours, certainly indicates that the world markets continue to expect that a lot of hydrocarbons will continue to sell for a long time to come.  

July: IMF austerity measures cause disorder. Africa. Isn't that just what the IMF does? This time around the site of the disorder is Kenya.  IMF pressure produced a "Kenya Finance Bill," which in turn produced riots that killed roughly 50 people. Under pressure President Ruto (a) announced that he would not sign the bill after all, and (b) he replaced his entire cabinet. The current 4-year program, with its IMF disbursements, will run out in April of next year, and further drama is very likely around that time.

August: Microcredit. Bangladesh. A strange twist of fate played itself out this month with regard to Muhammad Yunus, long-time advocate of micro-credits and the winner of the Nobel Prize in economics in 2006. After protests against some ruling-class employment privileges unexpectedly morphed into a revolution, the heads of the former government of the country took flight. The successful but half-accidental revolutionaries turned out to be admirers of Yunus. He took office as Chief Advisor, in effect the head of the new government. Micro-credits as a development tool may get itself scaled up. 

September: The business cycle. United States. The Federal Reserve met on the 17th-18th of this month. This meeting produced the first Federal funds rate decrease since the spring of 2020 and the start of the Covid crisis. The Fed cut the rate to essentially zero back then. When  the crisis was deemed to have passed, nearly two years later, the Fed entered a round of increases followed by a frustrating period of holding-them-steady.  Now: full circle to another decrease, perhaps the first in a line of them.   

October: Climate change. United States. A powerful one-two punch, Hurricanes Helene and Milton smack against the Gulf Coast of Florida and crystallize a recent shift in the debates over climate change. Such matters as average global temp, sea level, etc., are fading from discussion as the issue of extreme event attribution becomes paramount. Category Five monsters "are no longer outliers, freak disasters or storms of the century." They are the new normal, with all the predictable-though-irregular costs -- human and financial -- they entail. 

November: Stimulus plans. China. In Beijing, leading officials met over the issue of local government debt (widely considered a dangerous time bomb threatening the economy there.) They came out of the meeting announcing a debt swap plan and ... investors reacted with disappointment. Put off for example by the absence of any move toward bank recapitalization.  

December: Tightening sanctions (Syria/Russia). The government of Syria, which has been the possession of the Assad family for half a century, suddenly collapsed this month. This is bad news for Russia, since the Assad-run Syrian govt made itself a useful ally of Russia in the avoidance of western sanctions. So this will make the question discussed in the April paragraph above, how Russia continues to finance this war, more difficult even if China continues to be 'game'. 

Comments

Popular posts from this blog

A Story About Coleridge

This is a quote from a memoir by Dorothy Wordsworth, reflecting on a trip she took with two famous poets, her brother, William Wordsworth, and their similarly gifted companion, Samuel Taylor Coleridge.   We sat upon a bench, placed for the sake of one of these views, whence we looked down upon the waterfall, and over the open country ... A lady and gentleman, more expeditious tourists than ourselves, came to the spot; they left us at the seat, and we found them again at another station above the Falls. Coleridge, who is always good-natured enough to enter into conversation with anybody whom he meets in his way, began to talk with the gentleman, who observed that it was a majestic waterfall. Coleridge was delighted with the accuracy of the epithet, particularly as he had been settling in his own mind the precise meaning of the words grand, majestic, sublime, etc., and had discussed the subject with William at some length the day before. “Yes, sir,” says Coleridge, “it is a maj...

The Lyrics of "Live Like You Were Dying"

Back in 2004 Tim McGraw recorded the song "Live Like You were Dying." As a way of marking the one-decade anniversary of this song, I'd like to admit that a couple of the lines have confused me for years. I could use your help understanding them. In the first couple of verses, the song seems easy to follow. Two men are talking, and one tells the other about his diagnosis. The doctors have (recently? or a long time ago and mistakenly? that isn't clear) given him the news that he would die soon. "I spent most of the next days/Looking at the X-rays." Then we get a couple of lines about a man crossing items off of his bucket list. "I went sky diving, I went rocky mountain climbing, I went two point seven seconds on a bull named Fu Man Chu." Then the speaker -- presumably still the old man -- shifts to the more characterological consequences of the news. As he was doing those things, he found he was loving deeper and speaking sweeter, and givin...

Five Lessons from the Allegory of the Cave

  Please correct me if there are others. But it seems to be there are five lessons the reader is meant to draw from the story about the cave.   First, Plato  is working to devalue what we would call empiricism. He is saying that keeping track of the shadows on the cave wall, trying to make sense of what you see there, will NOT get you to wisdom. Second, Plato is contending that reality comes in levels. The shadows on the wall are illusions. The solid objects being passed around behind my back are more real than their shadows are. BUT … the world outside the the cave is more real than that — and the sun by which that world is illuminated is the top of the hierarchy. So there isn’t a binary choice of real/unreal. There are levels. Third, he equates realness with knowability.  I  only have opinions about the shadows. Could I turn around, I could have at least the glimmerings of knowledge. Could I get outside the cave, I would really Know. Fourth, the parable a...