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Category Archives: Economy

The Post-Capitalist Hit of the Summer

On August 12, something extraordinary happened. The news broke that, in the first seven months of 2020, the United Kingdom’s economy had suffered its largest contraction ever (a drop in national income exceeding 20%). The London Stock Exchange reacted with a rise in the FTSE 100 by more than 2%. On the same day, when the United States was beginning to resemble a failed state, not merely a troubled economy, the S&P 500 hit a record high.

To be sure, financial markets have long rewarded misery-enhancing outcomes. Bad news for a firm’s workers – planned layoffs, for example – is often good news for its shareholders. But when the bad news engulfed most workers simultaneously, equity markets always fell, owing to the reasonable expectation that, as the population tightened its belt, all income, and thus average profits and dividends, would be squeezed. The logic of capitalism was not pretty, but it was comprehensible.

https://www.project-syndicate.org/commentary/covid19-and-postcapitalist-economy-by-yanis-varoufakis-2020-08

 
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Posted by on August 31, 2020 in Economy

 

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Un accordo storico e una sfida per l’Europa

Comunque la si pensi il 21 luglio il Consiglio europeo ha raggiunto un accordo di portata storica, perché per la prima volta l’Unione europea ha deciso di indebitarsi in modo consistente per finanziare dei trasferimenti tra i suoi stati membri. Una decisione simile era impensabile fino a pochi mesi fa. I 27 capi di stato e di governo dell’Unione hanno dato il via libera al cosiddetto recovery fund, un pacchetto di aiuti (390 miliardi per i sussidi, 360 miliardi per i prestiti) da destinare alla ripresa delle economie europee più colpite dalla pandemia di covid-19. Questi soldi si aggiungono al programma Sure (cento miliardi per finanziare misure di cassa integrazione), ai prestiti alle aziende della Banca europea degli investimenti (duecento miliardi) e alla linea di credito per il settore sanitario del Meccanismo europeo di stabilità (240 miliardi), senza contare gli oltre mille miliardi di euro che la Banca centrale europea (Bce) intende usare per comprare titoli di stato attraverso il Pandemic emergency purchase programm (Pepp).

https://www.internazionale.it/opinione/alessandro-lubello/2020/07/21/accordo-recovery-fund-europa-italia

 
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Posted by on July 22, 2020 in Economy, European Union

 

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Priorities for the COVID-19 Economy

Although it seems like ancient history, it hasn’t been that long since economies around the world began to close down in response to the COVID-19 pandemic. Early in the crisis, most people anticipated a quick V-shaped recovery, on the assumption that the economy merely needed a short timeout. After two months of tender loving care and heaps of money, it would pick up where it left off.

It was an appealing idea. But now it is July, and a V-shaped recovery is probably a fantasy. The post-pandemic economy is likely to be anemic, not just in countries that have failed to manage the pandemic (namely, the United States), but even in those that have acquitted themselves well. The International Monetary Fund projects that by the end of 2021, the global economy will be barely larger than it was at the end of 2019, and that the US and European economies will still be about 4% smaller.

https://www.project-syndicate.org/commentary/covid-2020-recession-how-to-respond-by-joseph-e-stiglitz-2020-06

 
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Posted by on July 15, 2020 in Economy

 

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Priorities for the COVID-19 Economy

Although it seems like ancient history, it hasn’t been that long since economies around the world began to close down in response to the COVID-19 pandemic. Early in the crisis, most people anticipated a quick V-shaped recovery, on the assumption that the economy merely needed a short timeout. After two months of tender loving care and heaps of money, it would pick up where it left off.

It was an appealing idea. But now it is July, and a V-shaped recovery is probably a fantasy. The post-pandemic economy is likely to be anemic, not just in countries that have failed to manage the pandemic (namely, the United States), but even in those that have acquitted themselves well. The International Monetary Fund projects that by the end of 2021, the global economy will be barely larger than it was at the end of 2019, and that the US and European economies will still be about 4% smaller.

https://www.project-syndicate.org/commentary/covid-2020-recession-how-to-respond-by-joseph-e-stiglitz-2020-06

 
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Posted by on July 7, 2020 in Economy

 

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Which Economic Stimulus Works?

Governments around the world are responding forcefully to the COVID-19 crisis with a combined fiscal and monetary response that has already reached 10% of global GDP. Yet according to the latest global assessment from the United Nations Department of Economic and Social Affairs, these stimulus measures may not boost consumption and investment by as much as policymakers are hoping.

The problem is that a significant portion of the money is being funneled directly into capital buffers, leading to an increase in precautionary balances. The situation is akin to the “liquidity trap” that so worried John Maynard Keynes during the Great Depression.

Today’s stimulus measures have understandably been rolled out in haste – almost in panic – to contain the economic fallout from the pandemic. And while this fire-hose approach was neither targeted nor precise, many commentators would argue that it was the only option at the time. Without a massive injection of emergency liquidity, there probably would have been widespread bankruptcies, losses of organizational capital, and an even steeper path to recovery.

https://www.project-syndicate.org/commentary/stimulus-policies-must-benefit-real-economy-not-financial-speculation-by-joseph-e-stiglitz-and-hamid-rashid-2020-06

 
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Posted by on June 22, 2020 in Economy

 

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Countries should seize the moment to flatten the climate curve

FOLLOWING THE pandemic is like watching the climate crisis with your finger jammed on the fast-forward button. Neither the virus nor greenhouse gases care much for borders, making both scourges global. Both put the poor and vulnerable at greater risk than wealthy elites and demand government action on a scale hardly ever seen in peacetime. And with China’s leadership focused only on its own advantage and America’s as scornful of the World Health Organisation as it is of the Paris climate agreement, neither calamity is getting the co-ordinated international response it deserves.

The two crises do not just resemble each other. They interact. Shutting down swathes of the economy has led to huge cuts in greenhouse-gas emissions. In the first week of April, daily emissions worldwide were 17% below what they were last year. The International Energy Agency expects global industrial greenhouse-gas emissions to be about 8% lower in 2020 than they were in 2019, the largest annual drop since the second world war.

https://www.economist.com/leaders/2020/05/21/countries-should-seize-the-moment-to-flatten-the-climate-curve

 
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Posted by on June 5, 2020 in Economy

 

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Messages from “Fiscal Space”

Among the many inequalities revealed by the COVID-19 pandemic, one of the most striking is the dramatic divergence in governments’ fiscal responses. Economic activity has collapsed worldwide as a result of lockdown measures to contain the coronavirus. But while some developed countries have been able to deploy fiscal stimulus on an unprecedented scale, most have not.

Since March, the US government has announced additional spending amounting to over 14% of GDP. In Japan, the figure is over 21%, compared to nearly 10% in Australia and around 8.4% in Canada. In Europe, lack of agreement on a strong joint stimulus effort has led to more varied responses, from additional spending ranging from 1.4% of GDP in Italy and 1.6% in Spain to 9% in Austria, with Germany and France in the middle, at 4.9% and 5%, respectively. Rigid EU budget rules continue to limit government spending in precisely those countries that need fiscal stimulus the most.

https://www.project-syndicate.org/commentary/global-inequality-in-fiscal-capacity-by-jayati-ghosh-2020-05

 
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Posted by on May 15, 2020 in Economy

 

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The Normal Economy Is Never Coming Back

As the coronavirus lockdown began, the first impulse was to search for historical analogies—1914, 1929, 1941? As the weeks have ground on, what has come ever more to the fore is the historical novelty of the shock that we are living through. The economy is currently in something akin to free fall. If it were to continue to contract at its current pace, 12 months from now GDP would be one-third lower than at the beginning of 2020. That is a rate of shrinkage four times faster than during the Great Depression of the 1930s. There has never been a crash landing like this before. There is something new under the sun. And it is horrifying.

As recently as five weeks ago, at the beginning of March, U.S. unemployment was at record lows. By the end of March, it had surged to somewhere around 13 percent. That is the highest number recorded since World War II. We don’t know the precise figure because our system of unemployment registration was not built to track an increase at this speed. On successive Thursdays, the number of those making initial filings for unemployment insurance has surged first to 3.3 million, then 6.6 million, and now by another 6.6 million. At the current rate, as the economist Justin Wolfers pointed out in the New York Times, U.S. unemployment is rising at nearly 0.5 percent per day. It is no longer unimaginable that the overall unemployment rate could reach 30 percent by the summer.

https://foreignpolicy.com/2020/04/09/unemployment-coronavirus-pandemic-normal-economy-is-never-coming-back/

 
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Posted by on April 23, 2020 in Economy

 

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The coronavirus crisis shows we need an entirely new economic system

“We will do whatever it takes,” says the Chancellor. Unfortunately, Rishi Sunak does not have what it’s going to take – or at least, not yet. Because the Covid-19 crisis is going to collapse growth – both here and across the globe – in an entirely different way from anything we’ve experienced.

And what Sunak is going to need is an anti-capitalist imagination. In response to this crisis the government has to do nothing less than take command of the economy. But it doesn’t know how to. It’s not just a question of lacking education and experience in crisis management; it’s a question of ideology.

Let’s summarise the measures taken by the Treasury and the Bank of England so far. In the Budget (11 March), Sunak pledged £12bn to tackle the “temporary disruption” of the virus, mainly using cuts to business rates, cash grants to small firms and a £2bn scheme to provide better access to sick pay. At the same time, the Bank slashed interest rates to 0.25 per cent (from 0.75 per cent) and authorised commercial banks to use £190bn of money they had been forced to hold as reserves for lending to businesses.

https://www.newstatesman.com/politics/economy/2020/03/coronavirus-crisis-economic-collapse-capitalism

 
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Posted by on March 18, 2020 in Economy

 

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The COVID-19 Debt Deluge

Pandemics like COVID-19, alarming and destructive as they are, can serve a useful purpose if they remind everyone of the critical importance of public health. When a contagious disease strikes, even a society’s most protected elites must worry about the health of neglected populations. Those who have advocated privatization and cost-cutting measures that deny health care to the most vulnerable now know that they did so at their own peril. A society’s overall health depends on the health of its poorest people.

More immediately, though, the COVID-19 crisis could have many severe economic effects, possibly pushing the global economy into recession. Supply chains are being disrupted, factories are being closed, entire regions are being locked down, and a growing number of workers are struggling to secure their livelihoods. These developments will all lead to mounting economic losses. A world economy already suffering from insufficient demand – owing to rising wealth and income inequality – is now vulnerable to a massive supply-side shock.

https://www.project-syndicate.org/commentary/coronavirus-debt-crisis-by-jayati-ghosh-2020-03

 
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Posted by on March 17, 2020 in Economy

 

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