[He is right in his conclusion but in a sense his perspective is moot, as the financial system will inevitably continue to expand in creative ways as it attempts to compensate for ever-worsening energy and resource-constraints until it fails entirely. There’s no putting this genie back in the bottle.]
“The calm before the storm that pervades current fiscal behaviour is more suspect by virtue of the fact that central banks have embarked on an orgy of money printing that exceeds even the wanton excesses of governments. There are just no spending limits any more, anywhere, it seems.
“The coronavirus has blinded us to the huge debt obligations we will meet in an era of recovering interest rates. It is but small consolation to know that we are all in this together – up our necks. We are about to learn what a reality check really means.”
“US Republican Senator Tom Cotton, who is on Beijing’s sanctions list, has joined the public debate among industry groups and think tanks in advocating US government support for the country’s semiconductor manufacturing industry as part of a broader effort to win the tech war with China.
“Cotton published a report last week, entitled Beat China, noting that American chip making ability has weakened over past decades…”
“China’s foreign minister has urged Washington to lift sanctions and to stop interfering in the country’s internal affairs and suppressing its tech sector, in his first major speech on US-China relations since Joe Biden’s inauguration.
“Wang Yi called on Washington to “abandon irrational suppression of China’s technological progress” at a US-China forum in Beijing on Monday.”
https://www.ft.com/content/bbdcf8b3-422a-4235-9767-035206c92191
“Ports feel the chill as trade re-routes around Brexit Britain:
“In just seven weeks, [Holyhead’s] freight volumes have plunged by 50%. The port’s owner, Stena Line, part of the shipping line owned by the Swedish Olsson family, is warning that the slump could be permanent.”
“An explosion in the number of [UK] people “living in destitution” is piling pressure on Rishi Sunak not to abandon help schemes in next month’s Budget.
“The total leapt from 197,400 to 421,500 households in 2020 – a rise of more than 200,000 in a single year – amid the devastating slump triggered by the Covid-19 pandemic, research has found.”
https://www.independent.co.uk/news/uk/politics/unemployed-destitution-uk-budget-sunak-b1805292.html
“Currency crisis leaves Lebanese cupboards bare:
“Hunger threatens to reignite unrest as dollar peg slips and inflation soars in heavily import-dependent country… Lebanon’s financial crisis of more than a year, exacerbated by the coronavirus pandemic, has left the economy ravaged by hyperinflation, job losses and soaring poverty.”
https://www.ft.com/content/69e1e040-d8d7-494e-9a90-6f02f68f0bf7
“The Syrian pound sank to a new record low on Sunday with a scramble for dollars in a country hit by sanctions and facing a severe foreign currency crunch, dealers and bankers said…
“Traders said it cost as much as 3,450 Syrian pounds to buy 1 dollar on the street on Sunday, more than 18% lower than the end of last month.”
“Displaced Yemenis eke out miserable living by scavenging: Years of war and blockade have plunged the Arab country into what the United Nations calls the world’s biggest humanitarian crisis.
“A staggering 80 percent of the country’s population, or over 24 million people, require some form of humanitarian assistance and protection, including more than 12 million children, according to data released by the United Nations.”
http://www.xinhuanet.com/english/2021-02/21/c_139755435.htm
“Sudan’s central bank sharply devalued the currency on Sunday, announcing a new regime to “unify” official and black-market exchange rates in an effort to overcome a crippling economic crisis and access debt relief.
“The change is a key reform demanded by foreign donors and the International Monetary Fund (IMF), but was delayed for months as shortages of basic goods and rapid inflation complicated a fragile political transition.”
https://www.reuters.com/article/uk-sudan-economy-idUSKBN2AL0B7
“Violence engulfs South Sudan as UN warns of looming famine:
“Ten years after independence, staggering levels of violence have engulfed more than three-quarters of South Sudan, while hunger looms over 60 per cent of the country’s population, UN agencies warn.”
https://www.rcinet.ca/en/2021/02/20/violence-engulfs-south-sudan-as-un-warns-of-looming-famine/
“Mass street protests are back in Algeria and the government is nervous.
“The authorities anticipate that the demonstrations that shook the nation from February 2019 will return to Algiers and for the last few weeks the capital has been on edge. A palpable police presence hangs around the city centre. Transport vans, water cannons and armoured trucks have been camping out.”
https://www.bbc.co.uk/news/world-africa-56128140
“Two men have been shot dead in Libreville during curfew violations and protests against coronavirus restrictions, police in Gabon said on Friday.
“The two were shot late on Thursday as the country was hit by violent demonstrations in poor neighbourhoods against a stepped-up curfew and a ban on leaving or entering the capital.”
https://www.aljazeera.com/news/2021/2/19/two-men-killed-during-covid-protests-in-gabon
“Starvation Looms in Nigeria, Feedmills Chief Warns:
“The Chairman and Chief Executive Officer of F.A Feedmills and Farms, Ijebu-Ode, Ogun State, Chief Fatai Adebayo Soewu, has warned of looming starvation, as he considers federal and state governments’ investment in the agricultural sector grossly inadequate.”
https://www.thisdaylive.com/index.php/2021/02/21/starvation-looms-in-nigeria-feedmills-chief-warns/
“Piracy surges in Gulf of Guinea as falling oil prices rock lawless Niger Delta: Vessels passing through the Gulf of Guinea, a vast stretch of water from Senegal to Angola, are suffering increasingly violent attacks by gangs who operate with near “impunity” in its poorly-policed waters.
“[gangs] are now ranging out hundreds of miles to sea and taking entire crews hostage for weeks at a time, forcing shipping firms to pay up hefty ransoms.”
“‘Green bubble’ warnings grow as money pours into renewable stocks:
““I think we’re 100 per cent in a green bubble,” said Gordon Johnson, chief executive of GLJ Research. “Pretty much every solar company I cover, their numbers got worse and the stock, like, tripled . . . This is not normal.””
https://www.ft.com/content/0a3d0af8-7092-44c3-9c98-a513a22629be
“Bubble Warnings Go Unheeded as Everyone Is a Buyer in Stocks: The American love affair with stocks is deepening as everyone from frenetic day-traders to staid institutions dive further into the market…
“Up 75% from March, the S&P 500’s gain dwarfs all previous bull markets at this stage of the cycle since the 1930s.”
“Signs that inflation is making a comeback are unsettling big investors… inflation forecasts are now rising following massive increases in government spending and the torrent of liquidity unleashed by central banks in response to the coronavirus pandemic…
“…recent increases in energy and food prices have driven up inflation expectations among consumers.”
https://www.ft.com/content/afc414f9-c6a1-4f37-afab-276d98973a09
“It’s time for central banks to prepare financial markets to regain more influence over longer-term interest rates, breaking the move toward fiscal dominance and alleviating the threat of another economic collapse. Major central banks should envisage shifting gear… and starting monetary normalisation for when the Covid crisis is over.”
[Good luck with that! We didn’t manage monetary normalisation in the 12 years following the global financial crisis (quite the reverse, in fact), so how on earth are we going to manage it now?!]
You can read the previous ‘Climate’ thread here. I’ll be back on Monday with an ‘Economic’ thread.
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RE: https://www.scmp.com/comment/opinion/article/3122429/worlds-free-spending-money-printing-spree-will-cost-us-dearly-end
While the conclusion is true, I find it a little hypocritical that under the Republican administration this issue was never mentioned, even when Trump gave the rich a trillion dollars. Under the Democratic administration, its all the rage to talk about excess spending.
Louis, I tend to agree. To be fair, there were plenty of hawkish articles written about the risks of government borrowing and central bank interventions throughout the Trump presidency but the cries of “Who will pay for it?” are certainly louder now.
The article at least mentions MMT, though disparages it. The “Who will pay for it?” is the perennial cry of austerians. They never say that for tax cuts, corporate welfare or defense spending. Only for aid and social programs for the great unwashed.
David, I agree. As for MMT, we are arguably already seeing it in Japan and the UK and probably elsewhere, and I think it is inevitable that the financial system continues to expand in weird and creative ways as it attempts to compensate for ever-worsening energy and resource-constraints until it collapses under the weight of its own contradictions and dishonesties.
Alas, I do not see the inequality improving but we need social firebrands to play their part nonetheless!