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Nick Corbishley



Articles by Nick Corbishley

The $1.5 Trillion Global Tourism Industry Faces $450 Billion Collapse in Revenues, Based on Optimistic Assumptions

1 day ago

“We are temporarily a company with no product and no revenue.”
By Nick Corbishley, for WOLF STREET:
TUI, the global travel and vacation giant that owns six European airlines, 1,600 travel agencies, over 300 hotels and 14 cruise ships, desperately needs help. And it appears to have got it. On Friday, the company announced that the German government had approved a €1.8 billion loan to help keep the group afloat as COVID-19 brings the global travel sector to a literal standstill. The bridge loan, which still needs to be approved by TUI’s creditors, would be one of the biggest ever issued through German state-owned lender KfW.
“We are currently facing unprecedented international travel restrictions. As a result, we are temporarily a company with no product and no revenue. This situation

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Latin America Was Already Steeped in Economic Problems. Now Come the External & Internal Shocks of COVID-19

4 days ago

Not even Brazil and Mexico have the fiscal and monetary leeway to offset those shocks.
By Nick Corbishley, for WOLF STREET:
Covid-19 is beginning to gain a foothold in Latin America. Even in some of the region’s tropical areas, the case numbers are rising at a startling rate. Ecuador, which appears to have caught the bug a month ago as a result of its close connections with Spain, now has over 1,300 cases — more than any other country in the region except for Brazil, which has over 12 times Ecuador’s population.
If the virus spreads across Latin America with the same virulence as as it has in Europe, the U.S. and large parts of Asia, the results could be disastrous. The region’s cash-strapped governments simply cannot afford to provide the sort of financial support programs being

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Self-Employed Left Hanging after Spanish Government Promised to Protect Them from Worst of Covid-19 Fallout

7 days ago

During the last crisis, Madrid ramped up the tax burden on the self-employed to historic highs while wasting vast sums on corporations and banks. Same thing on an even bigger scale is now in the offing.
By Nick Corbishley, for WOLF STREET:
Since Spain was put on lockdown, ten days ago, its government has repeatedly said it will do everything within its powers to insulate the self-employed from the worst of the economic fallout. It was a lie. All Madrid has really offered them (or should I say, us) is the opportunity to get into (more) debt. That debt will be provided by the banks, who will get to enjoy all of the interest paid on it, but it will be underwritten by the government to the tune of 80%.
In other words, if you’re self-employed or a small business owner and most or all of

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New Currency Crisis Dawns: Mexican Peso Plunges to Record Low Against the Dollar

8 days ago

The flight into US dollars! Dollar-denominated debts of Mexican companies weigh heavily.
By Nick Corbishley, for WOLF STREET:
As the coronavirus crisis roils the global economy, the strengthening dollar is causing all manner of stress and mayhem for national economies and their respective currencies. Nowhere is this clearer than in Mexico, whose currency, the peso, never really recovered from the last crisis and is now collapsing all over again. As of 4 p.m. Monday (Mexican time), it had tumbled over 3% to a record low of 25.42 pesos to the U.S. dollar.
Even by historic standards, the sell-off has been relentless. In the past 16 days, the peso has experienced 16 record daily lows. Not since the height of the last peso crisis, five years ago, has the currency notched up so many new

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Australia’s Construction Industry “On Brink of Collapse”: Started Going to Heck Last Year, Now Comes COVID-19

10 days ago

Bailouts, please!
By Nick Corbishley, for WOLF STREET:
Australia’s construction industry, which accounts for 13% of Australia’s GDP and one in ten jobs, is unsustainable and on the brink of collapse, according to Joe Barr, the CEO of John Holland, one of Australia’s biggest infrastructure firms and a wholly owned subsidiary of China Communications Construction Company (CCCC).
“I won’t sugar coat it,” he told The Australian Financial Review. “Tier one contractors in Australia are not making any money, and governments across Australia keep having successive project cost blowouts.”
The underlying message was not exactly subtle: Unless the government recognizes the pressures the industry is under and allows construction companies to renegotiate contracts that are either behind schedule

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After Epic “Run on the Funds,” 10 More Real Estate Mutual Funds Shuttered as COVID-19 Batters UK Property Values

12 days ago

Triggered by the belated realization of the risks in mutual funds that offer daily liquidity but invest in illiquid assets.
By Nick Corbishley, for WOLF STREET:
Over the past two days, 10 open-end property funds in the UK have slammed their doors shut on investors, citing concerns about asset valuation. The funds’ two property valuers, CBRE and Knight Frank, say that it is currently impossible to accurately value the funds’ real estate assets amid the market chaos being caused by the response to Covid-19.
“The UK commercial property market is facing unprecedented circumstances as a result of the COVID-19 outbreak, and so valuation firms can no longer make reliable judgement on value. This is known as ‘material value uncertainty’,” said Paul Richards, managing director of the

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European Banks Face Financial Crisis 2, Shares Hit 1988 Lows

13 days ago

The ECB promised “to monitor markets closely.” Then it came out with a new bond buying binge.
By Nick Corbishley, for WOLF STREET:
Bank stocks in Europe plumbed fresh mutli-decade lows despite the release of a hurriedly improvised one-paragraph announcement by the ECB pledging to do just about whatever it could take to keep the banking system in tact. The ECB will continue “to monitor markets closely”, the message read, and is “ready to adjust all of its measures, as appropriate, should this be needed to safeguard liquidity conditions in the banking system.” In other words, the ECB is willing to throw what remains of the kitchen sink at the problem.
The message may have been intended to reassure investors, calm market jitters, and stop the sell-off of sovereign bonds and bank shares

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Welcome to Dystopia: My Life Under Lockdown in Spain

14 days ago

Most importantly, we have our health (touch wood) and each other.
By Nick Corbishley, for WOLF STREET:
The whole of Spain, like the whole of Italy, and the whole of France, is closed for business (and just about everything else) as the government tries to bring Covid-19 under some semblance of control and keep the virus from overwhelming the healthcare system. The number of cases of the virus in Spain has reached 11,000, having shot up by over 2,000 in the past 24-hour phase (though these figures reportedly have a three or four-day lag). There has been a total of 491 fatalities.
We are now on day 3 of the lockdown and for the next eleven days (and probably some time after that), almost every type of commercial and public venue, including bars and restaurants, schools and

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Mall Giant Intu Warns of Bankruptcy: First, the Meltdown of Brick & Mortar Retail, Now COVID-19

17 days ago

Local governments end up buying dying malls to keep them from becoming dead zones.
By Nick Corbishley, for WOLF STREET:
Intu Properties which owns dozens of malls in the UK, including nine of the 20 biggest, as well as a handful in Spain, warned this week that it is on the brink of bankruptcy after declaring losses of £2 billion for 2019 and a debt of £4.5 billion. Its portfolio of properties is still valued on its books at £6.6 billion, down 33% from December 2017. Its shares are now worth just four pennies a piece. Two and a half years ago, before many of its high-profile tenants began dropping like flies, the company was worth more than £2 billion; today it’s worth just £55 million.
Like-for-like net rental income was also down by 9% in 2019, to £401 million, due in large part to

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First Enron of 2020: Muddy Waters’ Short-Target NMC Health Just “Discovered” $2.7 Billion Undisclosed Debt

20 days ago

Oops, the rot runs even deeper than Muddy Waters could have imagined.
By Nick Corbishley, for WOLF STREET:
This wildly turbulent year just produced its first Enron-like scandal. At the rotten heart of it is NMC Health, a FTSE 100 company that has health-care operations in 19 countries and is based in the United Arab Emirates. Last Thursday, the company’s shares were suspended after an internal review uncovered a morass of dodgy accounting and fiduciary shenanigans. Now it was revealed that those shenanigans had helped to conceal at least $2.7 billion of undisclosed debt.
The discovery more than doubles the size of NMC’s debt mountain to around $5 billion, up from around $2.1 billion last June. The proceeds from much of that debt were used for “unauthorized purposes,” the company now

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European Bank Stocks Collapse to March 2009 & 1988 Levels

22 days ago

Just how much lower can they go? To Zero. And the ECB’s negative interest rates are driving them closer to it.
By Nick Corbishley, for WOLF STREET:
Over the past three weeks, stocks in Europe have plunged by 22.5%, their worst decline since the collapse of Lehman Brothers. The sell-off has been across the board but the worst of it has been reserved for the banking sector, whose shares have been relentlessly crushed and re-crushed for 13 years.
On Monday, the Stoxx 600 Banks index, which covers major European banks, plunged 13%. Today, after a knee-jerk bounce-back that then fizzled, the index closed essentially flat, back where it had been in March 2009. It has collapsed in a nearly straight line by 32% since February 17, when this latest Coronavirus-triggered sell-off began, and by

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Tourism is 10% of GDP in France, 13% in Italy, 15% in Spain. And Now it’s in Free Fall

25 days ago

“If the situation of generalized panic continues, thousands of businesses, especially small ones, will first enter a liquidity crisis, then close their doors.”
By Nick Corbishley, for WOLF STREET:
This is all happening just weeks before high season is about to get under way. But with millions and millions of tourists voting with their feet by staying at home, one of Europe’s most important and (until four weeks ago) fastest growing industries is taking a hammering.
The world right now is full of places that should be teeming with people but are not, including many iconic tourist landmarks and attractions. In Italy, home to Europe’s third biggest tourism industry, large parts of the country are on lock down after being hit by the biggest outbreak of the COVID-19 outside of Asia. Many

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Muddy Waters’ Short-Target NMC Health, a FTSE 100 Company, Admits Doctoring Accounts on Massive Scale. Shares Suspended

February 29, 2020

“Even more damning than our initial report”: Carson Block of Muddy Waters.
By Nick Corbishley, for WOLF STREET:
The shares of NMC Health, a component of the London Stock Exchange’s FTSE-100 Index, were suspended on Thursday after an internal review revealed a morass of fraudulent accounting and fiduciary shenanigans. The CEO of NMC Health — which has health-care operations in 19 countries and is based in the UAE — was fired and its CFO placed on extended sick leave. The UK’s Financial Conduct Authority is investigating.
At the heart of the scandal is an arrangement that apparently enabled other companies controlled by NMC’s founder, the Indian-born billionaire Bavaguthu Raghuram Shetty, and two Emirati shareholders, Khaleefa Al Muhairi and Saeed al-Qebaisi, to raise £260 million in

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Epic Construction Downturn Grips Australia

February 27, 2020

The bushfires were just the latest problem: The slump started well before them and also affects states unaffected by them.
By Nick Corbishley, for WOLF STREET:
Construction activity in Australia slumped by 3% quarter on quarter in the fourth quarter of 2019, the Australian Bureau of Statistics (ABS) reported this week. Compared to the same quarter of 2018, construction activity fell 7.4%. It was “a weak end to what was a weak year for the construction sector,” said Westpac senior economist Andrew Hanlan. The sector, which accounts for 13% of Australia’s GDP, has been in cyclical decline since mid-2018, as the Australia’s housing bubble began to deflate and feed through into the construction industry.
The residential building segment has borne the brunt of the pain, with a 4.6% drop

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Hong Kong’s Real Estate – Housing, Office & Retail Properties – Face “Tsunami-Like Shocks”

February 24, 2020

At first the protests and now the coronavirus collide with the World’s Most Expensive Property Market.
By Nick Corbishley, for WOLF STREET:
The world’s most expensive housing market in terms of affordability for a median-income household is in Hong Kong, which also happens to boast the highest ratio of financial assets to GDP on the planet. That market is under huge strain as it reels from months of virtually non-stop political protest, the ongoing trade war between its two largest trading partners, China, and the U.S., and now the recent arrival of the novel coronavirus.
Values of Class A office buildings in the city fell last year by 7%. It was the first fall since 2008, according to the commercial real estate services firm JLL. Prices of offices as a whole finished the year at

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HSBC Announces Mass Job Cuts, Huge Write-Down, Asset Sales, Halt of Share Buybacks. Warns of Coronavirus Impact on Credit Losses & Revenues in China & Hong Kong

February 19, 2020

These days, markets forgive and forget anything except the suspension of share buybacks.
By Nick Corbishley, for WOLF STREET:
Global banking behemoth HSBC’s net profit slumped 53% in 2019, to $5.97 billion, after the lender announced a $7.3 billion write-off to reflect weakened conditions in global banking and markets, and European commercial banking. Its shares dropped 6% in London and are now down 25% from a peak in January 2018.
Many of the bank’s problems originated in Europe, where the ECB’s negative-interest-rate policy is decimating even large Eurozone banks’ ability to turn a profit. HSBC’s write-down in the 4th quarter resulted in a pre-tax loss of $4.65 billion in the bank’s European business. In the U.S., where lower interest rates also took a toll on the group’s

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Ex-CEO of Pemex Arrested for “Looting Mexico”

February 15, 2020

Now attention is switching to former President of Mexico Peña Nieto.
By Nick Corbishley, for WOLF STREET:
Emilio Lozoya, former CEO of state oil company Pemex who went on the run last May after being accused of serious financial irregularities during his tenure, was arrested in an upscale suburb of the Southern Spanish port city of Malaga on Wednesday. Lozoya is accused of taking part in an elaborate scheme designed to systematically “plunder” Mexico’s finances, according to the country’s Attorney General Alejandro Gertz Manero.
Lozoya is under investigation for his alleged involvement in Pemex’s repurchase, for the obscenely inflated sum of $665 million, of two fertilizer plants that the oil company had sold to private investors many years earlier. One of the plants hadn’t been

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Coronavirus Fears Sink World’s Biggest Mobile Trade Fair After US & Global Tech Giants Pull Out

February 12, 2020

With Facebook, Intel, Cisco, Sprint, Amazon, Nvidia, LG, Sony, Rakuten, Ericsson, Nokia, etc. out, the gig was up. Other big conferences in trouble too. Tourism industry is reeling.
By Nick Corbishley, for WOLF STREET:
The novel coronavirus, now named COVID-19, claimed a fresh victim outside China: the world’s biggest mobile trade fair, the Mobile World Congress (MWC). Contagion fears led a roster of tech and telecom companies, many of them non-Chinese, to announce they will be steering clear of the event, scheduled to take place in Barcelona on Feb 24-27. After dozens had pulled out, the event was canceled this evening.
The MWC has been an annual event in Barcelona since 2006, a key showcase for global tech giants and telcos. It attracted 110,000 people from almost 200 countries

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WeWork Debris Hits Bystanders: Two More Real-Estate Mutual Funds “Gated,” This Time in Ireland. Fitch Warns of Contagion

February 7, 2020

“We regard liquidity mismatches as a major structural flaw.”
By Nick Corbishley, for WOLF STREET:
Two Irish commercial real-estate mutual funds, with a combined value of around €1.4 billion, have blocked redemptions after sustaining heavy outflows, leaving thousands of investors twisting in the wind. This has stoked fears that the liquidity issues that have dogged the UK’s mutual fund industry over the past year, beginning with the high profile gating of the £3.7 billion Woodford Equity Income fund (WEI), have now spread to another European economy. According to U.S. ratings agency, Fitch, contagion is now a very real danger.
Both of the gated funds were “open ended,” meaning they offered investors daily liquidity. When large numbers of investors began taking advantage of this

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Why Has UK Auto Manufacturing Collapsed 24% in Three Years?

February 3, 2020

81% of the vehicles are exported; they can be built anywhere. Honda is leaving. Nissan may be too. Vauxhall may be shuttered. Jaguar Land Rover offshored some production. But EV production soared.
By Nick Corbishley, for WOLF STREET:
Auto production in the UK slumped by 14.2% in 2019 to 1.3 million units, the lowest since 2010 when the industry was grappling with the fallout of the Global Financial Crisis. Five years ago, UK car production was growing and on target to hit 2 million units a year by 2020, beating the record set in 1972. Instead, it has slumped for the past three years in a row, in total by 24% since 2016, according to the industry group, the Society of Motor Manufacturers and Traders (SMMT):

How important is auto manufacturing in the UK’s total manufacturing sector?

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Global Slowdown, Internal Issues Hit Mexico: GDP Drops for First Time Since 2009

January 31, 2020

President AMLO put it this way: “There may be no growth but there’s development and well-being, which are different.”
By Nick Corbishley, for WOLF STREET:
For Mexico’s economy, 2019 was not a good year. The country entered a mild technical recession in the first half and by the end of the year had registered its first annual decline in GDP since 2009. According to a preliminary estimate published by Mexico’s statistical institute INEGI, “real” GDP (adjusted for inflation) for the year 2019 declined -0.1%:

In the fourth quarter, “real” GDP declined 0.3% compared to the same quarter a year earlier, making it the third quarter in a row of year-over-year declines:

The biggest drop was in the secondary sector — manufacturing, mining and construction — which contracted by 1.8% in 2019,

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Gift Turns into Kafkaesque Ordeal: How My Two WOLF STREET Beer Mugs “Were Disappeared” in Spanish Customs

January 26, 2020

Many people report similar nightmares trying and failing to get their packages from non-EU countries out of Spanish customs.
By Nick Corbishley, for WOLF STREET:
In October last year, Wolf Richter, the publisher of this site, decided to send me two of his beautiful WOLF STREET beer mugs, emblazoned with a bedraggled Wolf howling the timeless pearl of wisdom, “Nothing goes to heck in a straight line.” Meant as a gift in recognition of my years of writing for WOLF STREET, the two mugs were dispatched in early October. They were supposed to arrive at my Barcelona apartment within 7-10 days. But they didn’t. Instead, I received a text message to my mobile phone from Spain’s postal service, Correos, informing me that Customs had withheld the package, as import duties had not been paid on

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What to Do with Malls? Teetering UK Mall Giant Intu Asks Investors for £1 Billion. Shares Drop to Near-Nothing

January 21, 2020

Brick & Mortar melts down on mall owners. So “repurpose” malls into housing?
By Nick Corbishley, for WOLF STREET:
After a weekend of fevered speculation, struggling UK mall owner Intu Properties confirmed on Monday that it plans to raise £1 billion of fresh capital to buttress its shaky finances. The company’s shares reacted in time-honored fashion, plunging 8% to a historic low of 21 pence before ending the day down just 1%. Intu’s share price is now 80% lower than it was a year ago and 95% lower than five years ago, leaving the group valued at just £306 million.
Intu owns dozens of malls in the UK, including nine of the 20 biggest ones, and a handful in Spain. It describes itself as a commercial real estate company that is “in the business of helping customers and brands flourish,

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US Auto Imports from Mexico Hit Record, but Mexico’s Global Auto Exports Fall for First Time since 2009

January 11, 2020

GM shifts even more production to Mexico (even as its US sales fall). But Ford’s imports from Mexico plunge. FCA’s, Audi’s, Nissan’s down too.
By Nick Corbishley, for WOLF STREET:
Hit by the global swoon in auto sales, Mexico’s exports of cars and trucks to the rest of the world fell by 3.4%, to 3.3 million units in 2019, the first annual decline since 2009. Exports to Europe plunged.
The U.S. imports eight out of 10 cars and trucks that are assembled in Mexico. Over the first nine months of 2019, auto imports from Mexico grew at 8% year-over-year. But in Q4, imports suddenly plunged 11%, according to data from the Mexican automotive industry association AMIA (released by the National Institute of Statistics and Geography INEGI). In December alone, auto imports tumbled 16.7%. The

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More ECB Bond Holdings Get in Trouble: Infrastructure Giant Atlantia, Infamous for Collapsed Genoa Bridge, Could Lose its Core Business

January 4, 2020

Amid a slew of problems.
By Nick Corbishley, for WOLF STREET:
Italy could be on the verge of approving rules that would make it much easier and cheaper to revoke highway concessions. And that could be very bad news for Autostrade per l’Italia (ASPI), the private toll road operator that controls more than half of Italy’s aging toll roads and which is blamed for the collapse of the Morandi Bridge in Genoa in 2018 that resulted in 43 fatalities and left 600 people homeless. The regulatory uncertainty sent shares of ASPI’s parent company, Atlantia, down 10% to eleven-month lows this week.
Majority controlled by the Benetton family’s holding company Edizione, Atlantia is currently facing a criminal inquiry for potential negligence in the Morandi Bridge collapse. Atlantia happens to own

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Young People Still Crushed by Housing Bust, Banking & Economic Crisis: Bank of Spain

December 22, 2019

The contrast with retirees could not be starker.
By Nick Corbishley, for WOLF STREET:
Over the past five years, Spain’s economy has grown at a faster rate than almost any other in the Eurozone. But not everyone has benefited. And a new report by the Bank of Spain confirms, no one has paid as heavy a price as the generation that came of age in the years immediately before and after the collapse of Spain’s insane housing bubble and the banking crisis that followed.
The Bank of Spain’s triennial Family Financial Survey, based on data through 2017, shows that heads of households under the age of 35 saw their median gross income (income before taxes and contributions) plunge by 18% from 2010 to 2017 — more than any other age group. Median gross income of all age groups combined in 2017

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REITs Pull Back from Housing Market in Spain as Rental Boom Runs Out of Gas

December 13, 2019

“Many families, scratching a living on badly-paid zero-security jobs, just cannot pay the sort of rents many landlords, especially the big funds, have been asking for.”
By Nick Corbishley, for WOLF STREET:
By buying up large numbers of rental properties in Spain starting in 2014, publicly traded Real Estate Investment Trusts (REITs) — or Socimis, as they’re called in Spain — played a leading role in the country’s multi-year rental boom. They’ve also helped to lure foreign investors, particularly from Latin America, into Spain’s real estate market. But according to a new report by Armanext, an advisor for the design, structuring and incorporation of REITs in Spain, the nascent market is already beginning to show signs of fatigue.
With just two weeks left to close out the year,

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PayPal, Western Union Named & Shamed for Overcharging the Most on Money Transfers to Mexico

December 11, 2019

Remittances to Mexico is a $36-billion-a-year business.
By Nick Corbishley, for WOLF STREET:
Remittances from workers of Mexican descent based mostly in the US, but also in other countries, are a lifeline for Mexico’s economy, accounting for almost 3% of GDP. Millions of people depend on relatives working in the U.S. In some Mexican states, they can represent as much as 10% of total revenues. Most of that money gets spent very quickly in the Mexican economy, often on rents or building costs.
This year, Mexico is on target to receive about $36 billion in remittances, an increase of around 7% on the previous record high of $33.4 billion in 2018. To put that figure into perspective, it’s more than the $29.3 billion in revenues that state-owned oil company, Pemex, obtained from its

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US Whacks at Wage-Repression Model in Mexico, Demands Inspections, Industry Has a Cow

December 5, 2019

NAFTA 2.0 gets complicated for US & global manufacturers, particularly automakers.
By Nick Corbishley, for WOLF STREET:
This week, an 11th-hour demand from Democrat members of the U.S. Congress concerning the U.S.-Mexico-Canada Agreement (USMCA), the trade agreement to replace NAFTA, has put Mexico’s government and global manufacturers in a tight spot. The U.S. lawmakers are calling for a program of inspections to enforce the beefed up labor standards included in the new deal, along with meaningful penalties for companies that don’t comply — including the imposition of tariffs on the goods they manufacture.
The proposed trade agreement, unlike NAFTA, includes protections for workers in all three North American countries as well as a stipulation that 40% of the cars assembled in the

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Another UK Mutual Fund Leaves Investors Twisting in the Wind

December 4, 2019

Another “run on the fund.” More investors can’t get their money out but contemplate big losses.
By Nick Corbishley, for WOLF STREET:
In what is beginning to look like a trend, another British open-ended fund slammed its doors on investors today. After a surge of redemptions, M&G Investments, the fund management arm of UK insurance giant Prudential, decided to halt dealings in its direct property fund, which has more than £2.5 billion ($3.2 billion) in assets under management, as well as its feeder fund.
In July, M&G had already suspended redemptions at one of its property funds, with assets of just over £650 million, which intensified the pace of redepemptions from its other property funds. Today, the company extended the suspension to cover all of its funds.
The company said that

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