Karen Newton, Business and Wealth Strategy - Deciphering The Economy

 When governments stop paying their workers, economies don’t just pause — they fracture. At the start of October 2025, the U.S. government entered another budget standoff, triggering a partial shutdown that left 1.4 million federal employees either furloughed or working without pay. The cause? Congress failed to agree on a spending package before the fiscal deadline. While the political headlines focused on partisan blame, the deeper question is far more structural: How does one of the world’s largest economies run out of money — again? Why the Money “Ran Out” In the U.S., federal agencies can’t spend without congressional approval. Each year, lawmakers must pass 12 appropriations bills that fund everything from border control to national parks. If they don’t, operations legally grind to a halt. This year, sharp divisions over defence spending, foreign aid, and deficit control led to a funding lapse. Without an approved budget or a temporary extension (known as a continuing reso...

 The optimism that surrounded last year’s general election is fading fast. Many of the business leaders who publicly backed Labour’s call for “change” are now grappling with the harsher reality of their decisions - rising costs, shrinking margins, and a fragile consumer base. According to the ONS (Office of National Statistics) , business insolvencies continue to climb, while new business formation has slowed sharply. Supermarkets are reporting profit margins as low as 3–4%, and even large service companies are cutting back investment to protect cash flow. The hope was that political stability would unlock growth. Instead, a disasterous fiscal policy, high borrowing costs, and wage inflation have combined to create a squeeze at every level of the economy.  For business owners, this translates to higher operating expenses.  For employees, it means fewer hours, frozen pay, and increasing job insecurity. With another budget on the horizon, few expect relief. The reality i...

 According to the latest figures from the UK Insolvency Service , more than 2,000 businesses went into insolvency last month — a clear indication that financial pressure is now spreading across multiple sectors. Rising business failures often precede rising unemployment, and together these indicators reinforce growing concerns that the UK could be entering a deeper recessionary phase. The chart below highlights how insolvencies have accelerated since mid-2023, reflecting the impact of higher interest rates, reduced consumer spending, and tightening credit conditions. Source: Insolvency Service, © Crown copyright. Contains public sector information licensed under the Open Government Licence v3.0. Data available from the UK Insolvency Service Rising Unemployment — The Next Phase of the Cycle When business closures rise, job losses are never far behind. Recent data from the Office for National Statistics (ONS) shows that unemployment has started to edge higher over the same perio...

 “Is the AI bubble about to burst?” That headline has dominated this past week’s financial news but what’s really behind it? While share prices are wobbling, the truth is that artificial intelligence itself isn’t going anywhere. The sell-off is about valuations, not the technology. What’s Happening After two years of explosive growth in AI-related stocks from chipmakers like NVIDIA to cloud giants like Microsoft and Google, investors are taking profits. Rising interest rates, slower earnings guidance, and concentrated gains have sparked talk of an “AI bubble.” But here’s the distinction: the market may correct, yet AI as an economic force is only beginning. Every model trained builds on the next; every sector is finding new ways to integrate automation, prediction, and analysis into its core. Market Impact Rotation, not rejection . Institutional funds are rotating out of overvalued tech into cheaper sectors such as energy and finance. High concentration. The “Magnificent...

 A series of unsettling loan disclosures and warnings have reignited fears that the financial system may not be as stable as it appears. Here’s what’s driving the concern, how markets are reacting, and why the story isn’t as simple as it seems. What’s Happening The trouble began when several regional U.S. banks reported unexpected loan losses and potential fraud-related write-offs: Zions Bancorporation reported a $50 million charge-off tied to fraudulent commercial loans. Western Alliance filed a lawsuit after a borrower allegedly misrepresented collateral, wiping 11% off its share price. Jefferies Financial Group disclosed losses linked to the bankrupt First Brands Group, claiming it too had been defrauded. Meanwhile, the IMF added fuel to the fire by warning that banks worldwide are exposed to roughly $4.5 trillion in the private-credit and hedge-fund sector — areas largely outside traditional banking regulation. JPMorgan’s Jamie Dimon described it bluntly: “...

 Over the weekend, the crypto markets experienced one of the largest liquidations in history — more than $19 billion in leveraged trades were wiped out in just 24 hours. The headlines called it a “historic crash,” and for many traders, it was exactly that. But for investors with a long-term strategy, it wasn’t a disaster — it was an opportunity. What Happened Over the Weekend The crypto market saw what analysts are calling the largest liquidation event in its history , with over $19 billion in leveraged positions forcibly closed. Bitcoin and Ethereum led the declines, falling by around 10–12%, while some smaller altcoins dropped by as much as 80%. But this wasn’t the result of a fundamental breakdown in blockchain technology or investor confidence — it was a trader-driven event . When markets move suddenly, leveraged traders who have borrowed funds are forced to sell to cover their positions. These forced sales create a chain reaction — each liquidation drives prices lower, trigg...

 Recent headlines claimed “$35 billion of bad loans at HSBC Hong Kong ”   but that figure isn’t supported by the data.  The truth is subtler yet far more telling.  Hong Kong’s property market slump is squeezing bank balance sheets, exposing credit fragilities and testing regulators’ ability to contain contagion. This commentary corrects the record, explores what’s really happening inside HSBC’s Hong Kong loan book, and maps the early-warning signs for investors, entrepreneurs, and policymakers watching Asia’s financial pulse. The Headlines vs The Facts While the headlines claim $35 billion of bad loans, the data doesn't form part of any official fillings.  What is verifiable though is: Hang Seng Bank (63% owned by HSBC) reported HK$25 billion (~US$3.2 billion) in impaired property loans — up 85% YoY . The entire Hong Kong banking system holds around US$25 billion in non-performing loans — a two-decade high. HSBC has US$32 billion in Hong Kong commercial re...