Pubblicato in: Sistemi Economici, Stati Uniti

USA. Molti analisti prevedrebbero un crash. – Bloomberg.

Giuseppe Sandro Mela.

2020-07-03.

Statua della Libertà

Come più volte abbiamo avuto modo di ripetere, siamo alieni dai facili ottimismi così come dai catastrofismi, corrente di pensiero cui appartiene questo ultimo editoriale di Bloomberg.

«The world is having serious doubts about the once widely accepted presumption of American exceptionalism»

«The era of the U.S. dollar’s “exorbitant privilege” as the world’s primary reserve currency is coming to an end»

«For almost 60 years, the world complained but did nothing about it. Those days are over.»

«The balance is shifting, and a crash in the dollar could well be in the offing.»

«The seeds of this problem were sown by a profound shortfall in domestic U.S. savings that was glaringly apparent before the pandemic»

«In the first quarter of 2020, net national saving, which includes depreciation-adjusted saving of households, businesses and the government sector, fell to 1.4% of national income»

«In order to attract foreign capital, the U.S. has run a deficit in its current account — which is the broadest measure of trade because it includes investment — every year since 1982»

«Covid-19, and the economic crisis it has triggered, is stretching this tension between saving and the current-account to the breaking point. The culprit: exploding government budget deficits»

«According to the bi-partisan Congressional Budget Office, the federal budget deficit is likely to soar to a peacetime record of 17.9% of gross domestic product in 2020 before hopefully receding to 9.8% in 2021.»

«Compared with the situation during the global financial crisis, when domestic saving was a net negative for the first time on record, averaging -1.8% of national income from the third quarter of 2008 to the second quarter of 2010, a much sharper drop into negative territory is now likely, possibly plunging into the unheard of -5% to -10% zone»

«For the moment, the greenback is strong, benefiting from typical safe-haven demand long evident during periods of crisis. Against a broad cross-section of U.S. trading partners, the dollar was up almost 7% over the January to April period in inflation-adjusted, trade-weighted terms to a level that stands fully 33% above its July 2011 low»

«The coming collapse in the dollar will have three key implication»

«It will be inflationary»

«Moreover, to the extent a weaker dollar is symptomatic of an exploding current-account deficit, look for a sharp widening of America’s trade deficit»

«Finally, in the face of Washington’s poorly timed wish for financial decoupling from China, who will fund the saving deficit of a nation that has finally lost its exorbitant privilege?»

* * * * * * * * * * *

Dal nostro sommesso punto di vista concordiamo con il fatto che al momento vi siano problemi di ardua soluzione ed una crisi che ridimensionerebbe molte ambizioni, ma di lì ad un crash del dollaro ce ne corre.

*


A Crash in the Dollar Is Coming.

The world is having serious doubts about the once widely accepted presumption of American exceptionalism.

The era of the U.S. dollar’s “exorbitant privilege” as the world’s primary reserve currency is coming to an end. Then French Finance Minister Valery Giscard d’Estaing coined that phrase in the 1960s largely out of frustration, bemoaning a U.S. that drew freely on the rest of the world to support its over-extended standard of living. For almost 60 years, the world complained but did nothing about it. Those days are over.

Already stressed by the impact of the Covid-19 pandemic, U.S. living standards are about to be squeezed as never before. At the same time, the world is having serious doubts about the once widely accepted presumption of American exceptionalism. Currencies set the equilibrium between these two forces — domestic economic fundamentals and foreign perceptions of a nation’s strength or weakness. The balance is shifting, and a crash in the dollar could well be in the offing.

The seeds of this problem were sown by a profound shortfall in domestic U.S. savings that was glaringly apparent before the pandemic. In the first quarter of 2020, net national saving, which includes depreciation-adjusted saving of households, businesses and the government sector, fell to 1.4% of national income. This was the lowest reading since late 2011 and one-fifth the average of 7% from 1960 to 2005.

Lacking in domestic saving, and wanting to invest and grow, the U.S. has taken great advantage of the dollar’s role as the world’s primary reserve currency and drawn heavily on surplus savings from abroad to square the circle. But not without a price. In order to attract foreign capital, the U.S. has run a deficit in its current account — which is the broadest measure of trade because it includes investment — every year since 1982.

Covid-19, and the economic crisis it has triggered, is stretching this tension between saving and the current-account to the breaking point. The culprit: exploding government budget deficits. According to the bi-partisan Congressional Budget Office, the federal budget deficit is likely to soar to a peacetime record of 17.9% of gross domestic product in 2020 before hopefully receding to 9.8% in 2021.

A significant portion of the fiscal support has initially been saved by fear-driven, unemployed U.S. workers. That tends to ameliorate some of the immediate pressures on overall national saving. However, monthly Treasury Department data show that the crisis-related expansion of the federal deficit has far outstripped the fear-driven surge in personal saving, with the April deficit 5.7 times the shortfall in the first quarter, or fully 50% larger than the April increment of personal saving.   

In other words, intense downward pressure is now building on already sharply depressed domestic saving. Compared with the situation during the global financial crisis, when domestic saving was a net negative for the first time on record, averaging -1.8% of national income from the third quarter of 2008 to the second quarter of 2010, a much sharper drop into negative territory is now likely, possibly plunging into the unheard of -5% to -10% zone.             

And that is where the dollar will come into play. For the moment, the greenback is strong, benefiting from typical safe-haven demand long evident during periods of crisis. Against a broad cross-section of U.S. trading partners, the dollar was up almost 7% over the January to April period in inflation-adjusted, trade-weighted terms to a level that stands fully 33% above its July 2011 low, Bank for International Settlements data show. (Preliminary data hint at a fractional slippage in early June.)

But the coming collapse in saving points to a sharp widening of the current-account deficit, likely taking it well beyond the prior record of -6.3% of GDP that it reached in late 2005. Reserve currency or not, the dollar will not be spared under these circumstances. The key question is what will spark the decline?

Look no further than the Trump administration. Protectionist trade policies, withdrawal from the architectural pillars of globalization such as the Paris Agreement on Climate, Trans-Pacific Partnership, World Health Organization and traditional Atlantic alliances, gross mismanagement of Covid-19 response, together with wrenching social turmoil not seen since the late 1960s, are all painfully visible manifestations of America’s sharply diminished global leadership. 

As the economic crisis starts to stabilize, hopefully later this year or in early 2021, that realization should hit home just as domestic saving plunges. The dollar could easily test its July 2011 lows, weakening by as much as 35% in broad trade-weighted, inflation-adjusted terms.

The coming collapse in the dollar will have three key implications:  It will be inflationary — a welcome short-term buffer against deflation but, in conjunction with what is likely to be a weak post-Covid economic recovery, yet another reason to worry about an onset of stagflation — the tough combination of weak economic growth and rising inflation that wreaks havoc on financial markets.

Moreover, to the extent a weaker dollar is symptomatic of an exploding current-account deficit, look for a sharp widening of America’s trade deficit.   Protectionist pressures on the largest piece of the country’s multilateral shortfall with 102 nations – namely the Chinese bilateral imbalance — will backfire and divert trade to other, higher-cost, producers,  effectively taxing beleaguered U.S. consumers.

Finally, in the face of Washington’s poorly timed wish for financial decoupling from China, who will fund the saving deficit of a nation that has finally lost its exorbitant privilege? And what terms — namely interest rates — will that funding now require?

Like Covid-19 and racial turmoil, the fall of the almighty dollar will cast global economic leadership of a saving-short U.S. economy in a very harsh light. Exorbitant privilege needs to be earned, not taken for granted.

Pubblicato in: Devoluzione socialismo, Sistemi Economici

Merkel. Parole inusitatamente dure.

Giuseppe Sandro Mela.

2020-06-26.

Merkel 999

Frau Merkel solitamente utilizza un fraseggio cauto e morigerato, abbastanza diplomatico.

Questa volta invece si è concessa parole davvero molto dure.

«German Chancellor Angela Merkel warned her fellow leaders that the European Union is facing its deepest recession since World War II and that will lead to very, very difficult times indeed»

«She wondered whether people have understood exactly what this means and cautioned that the EU has every interest in having a recovery plan in place by the end of the summer ahead of events like the U.S. election in the fall»

* * * * * * *

Europa. Aprile. Commerci Internazionali. Intra-EA -32.2% anno su anno.

Germania. Giugno. Cupe previsioni. Indice ZEW -83.1%.

Germania. Merkel. Una personalità sdoppiata. Si scaglia contro la Cina e poi la supplica.

Germania. Aprile. Export. Verso Eurozone -36.7%, verso UK -42.1%.

Germania. Q1. Turnover del Settore Servizi. – Destatis.

Eurozona. Produzione Industriale. -28% anno su anno, -17.1% mese

Germania. Aprile. Produzione Industriale -25.3% YoY, -17.9% MoM.

Germania. Industria chiede sussidi per le auto a combustione.

* * * * * * *

I macrodati del secondo trimestre per Europa e Germania dovrebbero essere anche ben peggiori.

Ma la severità della crisi risiede nella struttura e nella componente ideologica del sistema politico europeo. Infatti gli Stati Uniti hanno iniziali segni di buona ripresa, così come la Cina. E le imprese europee stanno fuggendo in Cina.

Si concorda pienamente con Frau Merkel: ci si aspetti un periodo oltremodo difficile.

*


Merkel Tells Leaders EU Facing Very, Very Difficult Times.

German Chancellor Angela Merkel warned her fellow leaders that the European Union is facing its deepest recession since World War II and that will lead to very, very difficult times indeed, according to officials familiar with her comments.

She wondered whether people have understood exactly what this means and cautioned that the EU has every interest in having a recovery plan in place by the end of the summer ahead of events like the U.S. election in the fall, one of the officials said.

She said that the leaders need to meet in person as soon as possible.

Pubblicato in: Medicina e Biologia, Sistemi Economici, Stati Uniti

USA. Odontoiatri. Fedeli indicatori della crisi. Il 77% ha ripreso il lavoro.

Giuseppe Sandro Mela.

2020-06-21.

Dentista 013

«We’re not really recovered until all the dentists are back to work»

«Dentist offices tend to be stable businesses that stick around for decades, unlike restaurants that open and close frequently.»

«Dentists earn a healthy salary — a median of $159,000 — and offer services with no clear substitute. If you need your teeth cleaned or a cavity filled, the dentist is the only option.»

«This makes them, in the eyes of some economists, the perfect barometer for gauging the country’s recovery from the shock of the pandemic»

«The dental industry has weathered an exaggerated version of the pandemic’s economic impact, experiencing both a steeper decline and a faster recovery than other sectors»

«Half of all dental workers lost their jobs in March and April as states closed businesses to slow the virus’s spread»

«The industry accounted for a staggering 35 percent of all health care jobs lost in those months, even though its workers make up just 6 percent of the industry, according to analysis of federal data by the nonprofit Altarum Institute.»

«The dental industry halted much of its work on March 16, when the Centers for Disease Control and Prevention and the American Dental Association issued joint guidance against elective care»

«By mid-April, 45 percent of dentists had laid off their entire staffs …. Only 13 percent remained fully open, with the remaining offices keeping a skeleton staff»

«Patient visits fell to 7 percent of normal rates.»

«By early May, 33 percent of dental offices had hired their full staffs back. The number rose to 58 percent by mid-May and, most recently, hit 77 percent the first week of June.»

«The dental industry gained a quarter-million jobs in May, accounting for a full 10 percent of the net jobs added across the American economy.»

«An estimated 37 percent of dental offices received funding through the Paycheck Protection Program, meant to help small businesses keep workers on payroll»

«Even after last month’s job gains, the dental industry still has 289,000 fewer workers than it did before the pandemic»

* * * * * * *

Era talmente ricco da potersi permettere la dentiera.

Il volume di affari dei tecnici odontoiatri e dei dentisti in rapporto alla popolazione costituisce un indice indiretto ma efficace sul reale livello di ricchezza di una nazione.

Tranne casi rari, i vari servizi sanitari non coprono le spese odontoiatriche, ma la sola gestione di uno studio richiede spese non indifferenti, che alla fine si riversano sui pazienti. Né ci si può dimenticare del socio di maggioranza: per il fisco un dentista lavorerebbe trentasei ore al giorno a costi nulli e con onorari da capogiro.

La crisi da coronavirus ha associato la necessità del lockdown a quella economica: sarebbe impossibile andare dal dentista tenendo la mascherina e senza disporre del liquido necessario.

Se all’inizio della pandemia gli odontoiatri hanno subito un severissimo calo del giro lavorativo, la ripresa è stata altrettanto rapida, ed alla prima settimana di giugno il 77% degli studi odontoiatrici aveva già ripreso il lavoro.

Questa ripresa ha comportato la generazione di 250,000 posti di lavoro: ne mancano ancora 289,000 per tornare alla norma, ma la via sembrerebbe essere stata delineata, anche se non tutto gli studi hanno ripreso l’usuale giro di clientela. Sono dati che darebbero ben da sperare.

*


The New York Times. How’s the Economy Doing? Watch the Dentists.

A crucial indicator of whether Americans feel safe returning to normal activities.

If not for coronavirus, you’d expect your local dentist office to be doing just fine.

Dentist offices tend to be stable businesses that stick around for decades, unlike restaurants that open and close frequently. Dentists earn a healthy salary — a median of $159,000 — and offer services with no clear substitute. If you need your teeth cleaned or a cavity filled, the dentist is the only option.

This makes them, in the eyes of some economists, the perfect barometer for gauging the country’s recovery from the shock of the pandemic.

“If you look at your typical dentist office, nothing went wrong with their business model,” said Betsey Stevenson, an economics professor at the University of Michigan. “It’s just coronavirus that happened.”

The dental industry has weathered an exaggerated version of the pandemic’s economic impact, experiencing both a steeper decline and a faster recovery than other sectors. Half of all dental workers lost their jobs in March and April as states closed businesses to slow the virus’s spread. The industry accounted for a staggering 35 percent of all health care jobs lost in those months, even though its workers make up just 6 percent of the industry, according to analysis of federal data by the nonprofit Altarum Institute.

How long it takes those jobs to come back entirely will be a crucial indicator of whether Americans feel safe returning to normal activities, and if they have the economic means to do so.

“I’m obsessed with dentists because, if the only thing we’re doing is putting the economy on pause, and then going back to normal, all of them should be coming back,” Ms. Stevenson said. “We’re not really recovered until all the dentists are back to work.”

The dental industry halted much of its work on March 16, when the Centers for Disease Control and Prevention and the American Dental Association issued joint guidance against elective care. Some dentists say they closed even earlier as protective equipment became in short supply.

By mid-April, 45 percent of dentists had laid off their entire staffs, according to data collected by the dental association. Only 13 percent remained fully open, with the remaining offices keeping a skeleton staff. Patient visits fell to 7 percent of normal rates.

Marko Vujicic, the chief economist at the dental association, expected a slow return of workers into dentist offices. But regular surveys, sent out to 12,000 dental practices every two weeks, showed a relatively fast recovery.

“My initial predictions were we’d have an elevator ride down and an escalator ride up,” he said. “But we’re actually seeing a pretty sharp acceleration of the jobs coming back.”

By early May, 33 percent of dental offices had hired their full staffs back. The number rose to 58 percent by mid-May and, most recently, hit 77 percent the first week of June.

New federal data released last week tells a similar story. The dental industry gained a quarter-million jobs in May, accounting for a full 10 percent of the net jobs added across the American economy.

Federal stimulus programs may have played a key role in bringing dentists back to work. An estimated 37 percent of dental offices received funding through the Paycheck Protection Program, meant to help small businesses keep workers on payroll. Dentist practices that participated in the program were more likely to remain open than those that didn’t.

As dentists head back to work, it’s unclear whether patients will follow. While most states have given dentist offices the go-ahead to reopen, patient volumes remain half of what they were before the pandemic.

That suggests it isn’t just stay-at-home orders that have caused patients to cancel appointments. Some may have lost the dental insurance they used to get at work. Others may fear contracting the virus; they may feel safer putting off preventive care that has already waited months. Or they may question the value of regular cleanings altogether.

Dentists understand why coming into their offices — even with the extra protective equipment they’ve invested in — may not be an appealing proposition.

“You have to have someone right in your face,” said Jason Bastida, who practices primarily in Elmhurst, a neighborhood in Queens that was hard hit by coronavirus. “I get to wear an N95 mask, but you have to make yourself vulnerable by taking your mask off.”

He returned to work last week and has about a quarter of his regular patient volume. He graduated from dental school in 2017, and worries about how he’ll pay off his $330,000 in outstanding student debt if his caseload doesn’t pick up soon.

Even after last month’s job gains, the dental industry still has 289,000 fewer workers than it did before the pandemic. That suggests to Ms. Stevenson, the economist, that the industry — and the rest of the American economy — is far from recovered.

“The fact that dentistry employment is down 30 percent tells us that there is income loss, and there is fear,” she said. “We might not see employment in a retail store get back to the levels it had last year. But we should see dental employment get all the way back to where it was.”

Employment in the dental industry — and the rest of the economy — is likely to remain constrained by other areas of the economy that don’t reopen as quickly. This is especially true for day cares and schools, many of which will not reopen full time in the fall.

Abi Adeyeye, a 31-year-old pediatric dentist in Plano, Tex., was among those who returned to work in May. Over the past five weeks, she has been excited to see patient volume rebound to pre-coronavirus levels.

“Before coronavirus, I had a cancellation rate around 30 percent,” she said. “Now nobody cancels. It seems like people are wanting to get out of the house and need something to do.”

Even with a full patient schedule, her office is not at full employment. She used to have six dental assistants, but only four have come back to work. One was pregnant, and one couldn’t secure child care.

The work of dentistry, at the same time, has only become more challenging. Dr. Adeyeye now wears an N95 respirator mask, a surgical mask, a face shield and a surgical cap.

“The first two weeks I had these massive migraines,” she said. “Not only am I hot, I also can’t breathe.” She’s slowly adjusting to the new dentistry: “My headaches have gone down to once a week.”

Pubblicato in: Commercio, Devoluzione socialismo, Sistemi Economici

Crisi Economica. Gran quota dei disoccupati potrebbe restarlo per lungo tempo.

Giuseppe Sandro Mela.

2020-06-20.

Giulio Romano. Mantova. Palazzo Te. Caduta dei Giganti. 002 Particolare

«One third of U.S. job losses at risk of turning permanent»


Il problema è purtroppo molto semplice da enunciarsi ed altrettanto difficile da risolversi.

A livello mondiale la pandemia da coronavirus ha generato la necessità di stretti lockdown, da cui blocco delle attività e licenziamenti. Quando anche una ripresa inizi a far sentire i propri benefici effetti, molto verosimilmente potrebbe essere mutata la struttura organizzativa sia della produzione sia dei servizi, inducendo una mutazione delle tipologie di lavoro offerto. Molti degli attuali disoccupati potrebbero correre il serio rischio di non riuscire più ad integrasi nel nuovo mondo del lavoro. Problema questo che sembrerebbe prospettarsi con severità crescente al crescere dell’età del disoccupato.

* * * * * * *

«the heart of the dilemma facing the world economy as it gradually emerges from the virus-enforced lockdown and unprecedented recession»

«How many of the millions of lost jobs are gone for good?»

«The hope is the waves of stimulus doled out by governments and central banks should eventually buoy economies and spark a revival in hiring. Furloughed or redundant workers would then return to their employers»

«The risk though is that the pandemic is inflicting a “reallocation shock” in which firms and even entire sectors suffer lasting damage …. That would force workers to retrain or relocate, both of which are hard»

«There will be well into the millions of people who don’t get to go back to their old job, …. In fact, there may not be a job in that industry for them for some time. [Powell]»

«Unfortunately, new research by Bloomberg Economics reckons 30% of U.S. job losses from February to May are the result of a reallocation shock»

«the labor market will initially recover swiftly, but then level off with millions still unemployed.»

«Workers in the hospitality industry are among the most at risk, alongside retail, leisure, education and health»

«Research published in May by the Becker Friedman Institute at the University of Chicago estimated 42% of recent layoffs in the U.S. will be permanent.»

«It found that about 50% of U.S. job losses come from the combination of lockdown and weak demand, 30% from the reallocation shock, and 20% from high unemployment benefits encouraging workers to stay home»

«A major worry is that as temporary job losses become permanent, skills are lost and higher unemployment becomes entrenched — a concept economists refer to as hysteresis»

«The pandemic has exposed the fault lines that already existed for working people and the economy»

* * * * * * * * * * *

Ancora una volta purtroppo, la crisi da coronavirus ha slatentizzato le contraddizioni interne dei sistemi economici occidentali, solo che lo ha fatto in modo repentino e brutale.

In un sistema economico ‘sano’, dovrebbe esserci un equilibrio tra produzione e servizi. Questi, che per definizioni avrebbero dovuto essere da supporto e coordinamento della produzione, sono diventati un’enclave a sé stante. Ma senza una efficiente produzione i servizi diventano improvvisamente inutili, e quelli che vivevano per sé stessi sono destinati alla estinzione. In tempi di crisi i servizi voluttuari sono i primi a scomparire.

Similmente, la finanza dovrebbe essere di aiuto e sostegno alla produzione, in un delicato equilibrio. Ma negli ultimi decenni è diventata un fenomeno a sé stante, che assomiglia sempre più ad un colossale gioco del monopoli. Ma la finanza scorrelata dalla produzione alla fine finisce con una bolla.

Da ultimo, ma non certo per ultimo, si vorrebbe rimarcare una frase.

«20% from high unemployment benefits encouraging workers to stay home».

La natura degli esseri umani dovrebbe sempre essere tenuta in considerazione, così come le loro debolezze.

Se è corretto che la Collettività si faccia carico di quanti abbiano perso il lavoro, altrettanto corretto sarebbe limitare questo intervento sia nel suo ammontare sia nella sua durata. Per esempio, in molte nazioni il sussidio di disoccupazione copre il 70% circa dello stipendio prima percepito, beneficio che si perde alla seconda volta che si rifiutasse una dignitosa offerta di lavoro.

*


Bloomberg. Millions of Job Losses Are at Risk of Becoming Permanent.

– One third of U.S. job losses at risk of turning permanent

– Bloomberg Economics sees huge reallocation hit to labor market

*

Twenty-year-old William Lovely used to work at Jason’s Deli in Virginia Beach, delivering catering orders to surrounding businesses. Now, thanks to the coronavirus, he’s struggling to pay his bills.

Laid off in March, he’s gone from regular hours and pay to gigging for UberEats or Instacart, earning up to $100 on some days but often coming home with almost nothing. While the restaurant is trying to slowly reopen, Lovely reckons the best he can hope for is a part-time position, requiring him to keep his second job if he’s going to meet his expenses.

“My job stopped, but the bills don’t,” he said.

Lovely’s experience goes to the heart of the dilemma facing the world economy as it gradually emerges from the virus-enforced lockdown and unprecedented recession: How many of the millions of lost jobs are gone for good?

The hope is the waves of stimulus doled out by governments and central banks should eventually buoy economies and spark a revival in hiring. Furloughed or redundant workers would then return to their employers.

The risk though is that the pandemic is inflicting a “reallocation shock” in which firms and even entire sectors suffer lasting damage. Lost jobs don’t come back and unemployment stays elevated. That would force workers to retrain or relocate, both of which are hard, and governments to do more than just try to spend their way out of trouble.

It was a theme hit upon last week by Federal Reserve Chairman Jerome Powell as U.S. central bankers forecast leaving interest rates near zero until 2022 in part because of a surge in unemployment to the highest level since the Great Depression.

There will be “well into the millions of people who don’t get to go back to their old job,” said Powell, who will testify to Congress on the economic outlook this week. “In fact, there may not be a job in that industry for them for some time.”

Unfortunately, new research by Bloomberg Economics reckons 30% of U.S. job losses from February to May are the result of a reallocation shock. The analysis — based on the relationship between hiring, firing, openings and unemployment — suggests the labor market will initially recover swiftly, but then level off with millions still unemployed.

Workers in the hospitality industry — like Lovely’s — are among the most at risk, alongside retail, leisure, education and health. In many cases, the pandemic will increase the challenge for bricks and mortar companies facing off against e-commerce platforms such as Amazon.com. Inc, accelerating the pre-crisis trend.

Financial markets are already pricing in the risk, according to the Bloomberg economists. Equity market returns across different sectors and for companies of varying sizes suggests investors are betting on a shift in profits between firms similar to that witnessed after the global financial crisis of 2008. Lost profits spells lost jobs.

Other studies carry similar warnings. Research published in May by the Becker Friedman Institute at the University of Chicago estimated 42% of recent layoffs in the U.S. will be permanent.

“There’s a massive reallocation shock,” said Nicholas Bloom, professor of economics at Stanford University and one of the authors of the study. The recession “hits different sectors differently. Some benefit and some fall.”

The phenomenon puts governments under pressure to craft policies which help viable firms to survive and workers navigate to different jobs, but which ideally don’t prop up companies that are no longer sustainable and just drain resources.

The Peterson Institute for International Economics said in a study last week that the unique shock of the virus means governments may need to do more to preserve businesses and protect workers than they would in a normal recession.

They recommend wage subsidies to create incentives to resume production, and continued credit guarantees for new loans.

The Bloomberg Economics research highlights the challenge. It found that about 50% of U.S. job losses come from the combination of lockdown and weak demand, 30% from the reallocation shock, and 20% from high unemployment benefits encouraging workers to stay home. Different reasons for job losses call for different, and sometime conflicting, policy responses.

A major worry is that as temporary job losses become permanent, skills are lost and higher unemployment becomes entrenched — a concept economists refer to as hysteresis.

Amid that backdrop, labor market experts says measures shouldn’t stop at improving safety nets, but must also ensure people have the right skills. The Organization for Economic Cooperation and Development last week called for public investment in training for those laid off.

Part of that is about getting workers ready for the next phase of the technology revolution and any upheaval that comes with it.

That process could now accelerate as companies from manufacturers to retailers adapt to a post-virus world, cutting off even more people from secure work.

The potential for structural shifts has also given rise to ideas that might have once seemed non-starters — from job guarantees to universal income.

In the U.S., an employer-of-last-resort idea won support among some Democrats earlier in the primary election cycle. Economists who’ve worked on versions of the plan, including Darrick Hamilton at the University of Ohio, sought to revive it during the coronavirus slump, citing the example of federal employment programs during the New Deal in the 1930s.

“The pandemic has exposed the fault lines that already existed for working people and the economy,” said Sharan Burrow, General Secretary of the International Trade Union Confederation. “The ‘new normal’ requires a new social contract between governments and their citizens with the backing of the international community.”

Pubblicato in: Economia e Produzione Industriale, Sistemi Economici, Stati Uniti

USA. Richieste disoccupazione iniziale 1.508 mln, continua 20.544 mln.

Giuseppe Sandro Mela.

2020-06-18.

2020-06-18__USA 001

A maggio il numero di buste paga del settore non agricolo era aumentato di 2.509 milioni, contro una contrazione ad aprile di -20.5 milioni.

«L’indice Nonfarm Payrolls (salariati del settore non agricolo) misura la variazione nel numero di salariati nel corso dell’ultimo mese per tutte le attività non agricole. Il totale dei salariati del settore non agricolo rappresenta circa l’80% dei lavoratori che producono il Prodotto Interno Lordo negli Stati Uniti.»

Sempre a maggio, lo ISM Manufacturing Employment era salito dal pregresso valore mensile di 27.5 agli attuali 32.1.

«The Institute of Supply Management (ISM) Manufacturing Purchasing Managers Index (PMI) Report on Business is based on data compiled from monthly replies to questions asked of purchasing and supply executives in over 400 industrial companies. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers Inventories, Employment, and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction and the negative economic direction and the diffusion index. Responses are raw data and are never changed»

*

Il numero delle richieste iniziali di sussidi di disoccupazione è sceso a 1.508 milioni, contro un valore pregresso di 1.566 milioni. Il dato è in continua discesa dalla rilevazione del 2 aprile, che indicava 6.648 milioni di nuove richieste.

Il numero attuale di richieste di disoccupazione continua è 20.544 milioni, contro il picco massimo di 25.043 miliono registrato il 25 maggio.

A maggio il tasso di disoccupazione era 13.3%, contro il precedente di 14.7%, essendo il valore previsto dagli economisti 19.7%.

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Usa. Disoccupazione.

Usa. Maggio. Vendite al Dettaglio. +14.7% mese su mese.

USA. Disoccupazione. +Pua Program 29.5 mln, continua 20.9 mln, iniziale 1.542 mln.

USA. Maggio. Occupati salgono di 2.5 milioni. Disoccupati scesi al 13.3%.

USA. Disoccupazione Continua 21.052 mln, Richieste Iniziali 2.123 mln.

Pubblicato in: Banche Centrali, Geopolitica Mondiale, Sistemi Economici

Crisi. Quella vera arriverà a settembre, con o senza Covid-19.

Giuseppe Sandro Mela.

2020-06-18.

bomba_atomica_

La situazione economica europea ed Italiana sono particolarmente gravi.

L’epidemia da coronavirus ha solo slatentizzato i problemi in essere: debiti pubblici non sostenibili e strutture politiche e sociali obsolete. La pandemia ha solo funzionato da trigger.

A fine estate ci si aspetti un franamento del sistema.

Inter alias, il gettito fiscale franerà drasticamente. Ci si pensi bene a cosa questo vuol dire. Chi mai farà credito a quanti stiano per fallire?

* * * * * * *

Governo. Gettata la maschera. ‘I fondi Ue non sono mai gratuiti’.

Eurozona. Produzione Industriale. -28% anno su anno, -17.1% mese su mese.

Mef. Primo quadrimestre. Gettito fiscale aprile -22.1%.

Italia. I dati della catastrofe economica. E siamo solo agli inizi.

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«La vera e propria crisi post-coronavirus inizierà a settembre, ed esploderà anche senza una nuova ondata di contagi»

«Fino ad oggi gli analisti hanno formulato funeste previsioni sul futuro dell’Italia e del mondo, partendo dall’ipotesi di una nuova ondata di contagi»

«Si pensi soltanto all’OCSE, secondo cui il PIL tricolore crollerà del 14% nello scenario peggiore»

«il settore finanziario non ha ben compreso la portata dello shock e delle sue implicazioni di lungo termine, soprattutto sull’economia reale. Per dirla con le sue stesse parole, la crisi finanziaria sarebbe scoppiata anche senza coronavirus»

«Già prima della pandemia, l’economia mondiale si era mostrata particolarmente vulnerabile sia al debito che alla leva finanziaria speculativa»

«si continua a negare l’evidenza di un modello finanziario ed economico che funziona solo con eccesso di leva, compressione dei redditi, ampio debito speculativo e pochi investimenti nell’economia reale, un modello che non è sostenibile»

«la forza di un’economia non dipende dalla quantità del debito che riesce a produrre, ma dalla sua qualità e dal modo in cui esso viene utilizzato per favorire un miglioramento dei redditi reali»

«I mercati si sono affidati in maniera evidente alle banche centrali e si sono sentiti così sicuri da compiere “eccessi speculativi destabilizzanti”»

«La liquidità però non è la soluzione a tutto»

«Essa potrebbe essere infinita ma non è detto che chi ne dispone la indirizzerà sempre verso chi ne ha bisogno se chi ne ha bisogno non è in grado di restituirla»

«Negli ultimi due mesi (e nonostante il ruolo della Federal Reserve) negli Stati Uniti sono fallite 1.600 aziende al giorno e il credito al consumo per consumatore è crollato»

«la vostra liquidità è molto maggiore di quella della Fed e in realtà non è la liquidità della Fed che sostiene il sistema ma la vostra»

«il credito speculativo è esploso consentendo l’emissione di circa 19 mila miliardi di dollari di obbligazioni da parte di emittenti che, con i loro ricavi, non riuscivano neppure a pagare gli interessi passivi sul debito emesso neanche in una fase di espansione dell’economia»

«Se ora molte di queste emissioni faranno default, non si potrà certo attribuire la colpa a un virus, ma piuttosto a un sistema totalmente fuori controllo»

«Difendere a oltranza un modello di crescita che non produce più ricchezza (se non per pochi) ma solo debiti (per molti) sarà probabilmente l’errore fatale»

* * * * * * *

Gli stati occidentali sono oberati da debiti pubblici e privati non sostenibili: il sistema è destinato ad implodere.

Questa enorme massa di liquidità deve essere bruciata in una qualche maniera: dal default ad una inflazione a tre zeri.

Lasciamo al Lettore il rappresentarsi cosa poi potrebbe succedere con un ritorno del Covid-19.

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La vera crisi esploderà dopo l’estate, a prescindere dal coronavirus.

La vera e propria crisi post-coronavirus inizierà a settembre, ed esploderà anche senza una nuova ondata di contagi. L’analisi.

Fino ad oggi gli analisti hanno formulato funeste previsioni sul futuro dell’Italia e del mondo, partendo dall’ipotesi di una nuova ondata di contagi.

Si pensi soltanto all’OCSE, secondo cui il PIL tricolore crollerà del 14% nello scenario peggiore.

In un articolo comparso su Milano Finanza, però, il portfolio manager di Lemanik Maurizio Novelli ha definito inutile ipotizzare le conseguenze di una seconda ondata di contagi (già in parte scontate) e ha preferito analizzare cosa potrebbe accadere in uno scenario COVID-free.

Crisi esploderà a settembre: l’analisi

Secondo l’esperto, il settore finanziario non ha ben compreso la portata dello shock e delle sue implicazioni di lungo termine, soprattutto sull’economia reale. Per dirla con le sue stesse parole, la crisi finanziaria sarebbe scoppiata anche senza coronavirus.

Già prima della pandemia, l’economia mondiale si era mostrata particolarmente vulnerabile sia al debito che alla leva finanziaria speculativa. Lo shock da COVID-19 ha soltanto messo in luce problemi già evidenti:

    “Se si continua ad insistere nell’attribuire a un virus, e cioè a un fattore esterno, il motivo della crisi che ci attende, si continua a negare l’evidenza di un modello finanziario ed economico che funziona solo con eccesso di leva, compressione dei redditi, ampio debito speculativo e pochi investimenti nell’economia reale, un modello che non è sostenibile,”

ha dichiarato Novelli, secondo cui la forza di un’economia non dipende dalla quantità del debito che riesce a produrre, ma dalla sua qualità e dal modo in cui esso viene utilizzato per favorire un miglioramento dei redditi reali.

Il vero problema, ha continuato, non è se la crisi arriverà, ma come le economie (e dunque il sistema) saranno in grado di reggere l’urto in tempi brevi. Tempistiche troppo ampie aumentano infatti rischi di implosione e instabilità di lungo termine.

Il ruolo delle banche centrali

I mercati si sono affidati in maniera evidente alle banche centrali e si sono sentiti così sicuri da compiere “eccessi speculativi destabilizzanti”. La liquidità però non è la soluzione a tutto. Essa potrebbe essere infinita ma non è detto che chi ne dispone la indirizzerà sempre verso chi ne ha bisogno se chi ne ha bisogno non è in grado di restituirla. “Chi di voi presterebbe soldi a chi è a rischio di fallire?”

Fondamentale in tal senso la propensione al rischio del sistema creditizio (banche, investitori ecc..) attualmente messa con le spalle al muro dall’emergenza. Se la liquidità generata dal Quantitative Easing della BCE non si trasformerà in credito, ha previsto l’esperto, il sistema dovrà fare i conti con un credit crunch.

    “La crisi non finisce dunque con la fine del lockdown ma inizia quando cominciano a manifestarsi gli eventi di credito (i fallimenti) e quindi comincia adesso. Gli eventi di credito infatti incidono sulla propensione al rischio di chi dovrebbe dare credito al sistema. In media le recessioni negli Stati Uniti durano circa 13 mesi, ma nel 2008 sono stati 18, e potrebbero essere 13/18 mesi lunghissimi per il potenziale squilibrio tra liquidità e solvibilità”.

Negli ultimi due mesi (e nonostante il ruolo della Federal Reserve) negli Stati Uniti sono fallite 1.600 aziende al giorno e il credito al consumo per consumatore è crollato. Per Novelli, che ha calcato sulla differenza fra liquidità e solvibilità, i default continueranno a salire nonostante i sussidi alla disoccupazione erogati, cosa che a sua volta potrebbe generare una crisi di solvibilità delle aziende.

Ma allora a cosa serve la liquidità delle banche centrali se non riesce a prevenire i fallimenti? Secondo il portfolio manager di Lemanik esisterebbe un meccanismo psicologico mirato a tenere i soldi nel sistema, facendo credere agli investitori che liquidità e solvibilità siano la stessa cosa.

    “Questo meccanismo psicologico induce a non vendere e in questo modo sono gli stessi investitori che, mantenendo la loro liquidità investita, sostengono un sistema che diversamente andrebbe in default in un colpo solo. In pratica la strategia consiste nel cercare di mantenere il più possibile tutti investiti, perché la vostra liquidità è molto maggiore di quella della Fed e in realtà non è la liquidità della Fed che sostiene il sistema ma la vostra”.

Sistema fuori controllo

Dal 2008 in poi le grandi banche centrali mondiali hanno reso i portfolio manager dei “meri cacciatori di rendimento” che hanno iniziato ad investire su asset a elevati yield, sicuri della protezioni degli istituti.

La propensione al rischio del sistema è aumentata e il credito speculativo è esploso:

    “consentendo l’emissione di circa 19 mila miliardi di dollari di obbligazioni da parte di emittenti che, con i loro ricavi, non riuscivano neppure a pagare gli interessi passivi sul debito emesso neanche in una fase di espansione dell’economia. Se ora molte di queste emissioni faranno default, non si potrà certo attribuire la colpa a un virus, ma piuttosto a un sistema totalmente fuori controllo.”

Le banche centrali hanno iniziato a comprare corporate bonds, High Yields e via dicendo per salvare il sistema, trascurando le conseguenze di lungo termine di queste azioni, ha dichiarato Novelli, che ha messo a paragone la crisi attuale con quella del 1929.

Al centro della sua analisi quello che ha definito come un modello basato sui profitti generati dall’eccesso di leva e da una finanza fuori controllo, un modello fallimentare che ha prodotto una nazionalizzazione del sistema a causa della speculazione, come nel ’29.

I mercati hanno dato per scontato un recupero facile, ma per Novelli non sarà così: la ripresa si rivelerà lenta, ma soprattutto deludente e non sarà sufficiente stampare nuova moneta per aggiustare le cose.

    “Difendere a oltranza un modello di crescita che non produce più ricchezza (se non per pochi) ma solo debiti (per molti) sarà probabilmente l’errore fatale”.

Pubblicato in: Cina, Sistemi Economici

Cina. Ripresa. Maggio. Produzione Industriale +4.4% YoY, Vendite Dettaglio -2.8%.

Giuseppe Sandro Mela.

2020-06-15.

2020-06-15__ Cina produzione Industriale 013

Il National Bureau of Statistics of China ha rilasciato i dati relativi alla

– Produzione Industriale annualizzata +4.4% e

– Vendite al Dettaglio annualizzate -2.8%.

2020-06-15__ Cina Vendite al dettaglio 014

* * * * * * *

I macrodati cinesi confermano una ripresa molto più consistente di quanto non si fosse potuto pensare.

Nonostante il lockdown, la produzione industriale ha ripreso a crescere anno su anno: ha ammortizzato le perdite subite durante il periodo di crisi pandemica. Le vendite al dettaglio sono risalite dal -20.5% di febbraio, al -15.8% di marzo, al -7.5% di aprile per arrivare al -2.8% del mese di maggio.

* * * * * * *

Cina. I grandi Atenei inglesi stanno trasferendosi in Cina.

Cina. Maggio. Export -3.3% anno su anno, Import -16.7%.

Cina mon amour. Maggio. Ford aumenta le vendite in Cina +32%.

Cina. Maxipetroliere in rada in attesa di scaricare. La ripresa corre veloce.

Cina. Maggio. Vendite automobili +11.7% anno su anno.

Cina mon amour. Maggio. Prada +10%.

Cina, ripresa della produzione con una domanda mondiale depressa.

Cina. Anche Volkswagen vi programma grandi investimenti.

Cina e Red Bull Gmbh. Un mercato impossibile da trascurare.

Commerci Mondiali. Marzo. -1.4% mese su mese. Bene Cina ed India.

China Express Air compra 100 aeromobili della Comac.

* * * * * * *

Questi dati dovrebbero indurre a ragionarci sopra.

La pandemia ed il lockdown  sono accaduti sia nei paesi occidentalizzati sia in Cina.

Ma mentre America e blocco europeo hanno macrodati da mettersi a piangere, la Cina si sta riprendendo molto velocemente.

La differenza consiste quindi nel come sia strutturata la gestione politica degli stati e l’organizzazione dei loro sistemi economici.

Constatiamo come in occidente il mondo politico e sociale si sia concentrato su problemi ideologici, vissuti con dimostrazioni di piazza di rara violenza e criminalizzazione delle forze dell’ordine chiamate a sedarle. Per non parlare poi dei vergognosi abbattimenti ed imbrattamenti di statue dei grandi del nostro passato da parte di persone insignificanti ma aggressive.

A nostro sommesso avviso, questo sembrerebbe essere un metodo non idoneo per affrontare la crisi economica.

Pubblicato in: India, Sistemi Economici

India. Consumi elettrici. Aprile -24%, maggio -14.3%.

Giuseppe Sandro Mela.

2020-06-06.

India 013

India. Aprile. Consumi elettrici -24%.

Arun. Centrale idroelettrica condivisa tra India e Nepal.

India. Modi. Una rivoluzione nella politica economica. ‘Self-reliant India’.

India. Tra cinque anni sorpasserà Germania e Regno Unito.

«Overall electricity generation fell 14.3% in May, a Reuters analysis of provisional government data showed, compared with a decline of 24% in April »

«Despite higher consumption by residential consumers, power use was lower as many industries and commercial establishments – which account for over half of India’s annual consumption – were shut or not operating at full capacity»

«Electricity generation from coal …. fell 22%, …. Coal’s contribution to overall electricity generation in May fell to 64.2%, compared with an average of over 70.7% last year»

«Thermal coal imports by India – the second-largest consumer, importer and producer of coal and third-largest greenhouse gas emitter – could fall as much as 18% in 2020 due to lower electricity demand»

* * * * * * *

L’India ha evidenziato l’epidemia da coronavirus alcuni mesi dopo la Cina e l’Europa, motivo per cui i dati macro disponibili sono ancora ragionevoli: il pil annuale è 4.2% (2020-05-29) ma la produzione industriale annualizzata di aprile era già scesa del -16.7%. A maggio le riserve valutarie erano salite a 490 miliardi Usd.

Allo stato attuale dei fatti, verosimilmente i macrodati del secondo trimestre saranno ulteriormente deteriorati.

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UPDATE 1-India’s electricity generation falls 14.3% in May.

India’s electricity generation in May fell at a slower pace than in April, as higher temperatures lead to greater demand for residential power and the government eased some lockdown restrictions to control the spread of the coronavirus.

Overall electricity generation fell 14.3% in May, a Reuters analysis of provisional government data showed, compared with a decline of 24% in April.

Despite higher consumption by residential consumers, power use was lower as many industries and commercial establishments – which account for over half of India’s annual consumption – were shut or not operating at full capacity.

Electricity generation from coal – India’s primary source of electricity – fell 22%, an analysis of daily load despatch data from POSOCO showed. Coal’s contribution to overall electricity generation in May fell to 64.2%, compared with an average of over 70.7% last year.

India’s electricity demand is likely to fall for the first time in at least four decades this fiscal year, analysts say, adding to the woes of coal-fired utilities, which were already hurting due to a prolonged industrial slowdown.

Thermal coal imports by India – the second-largest consumer, importer and producer of coal and third-largest greenhouse gas emitter – could fall as much as 18% in 2020 due to lower electricity demand, Anurag Sehgal, an analyst at Noble Resources said, a blow to miners in Indonesia and South Africa.

Menwhile, India’s solar power supply grew 12.7% and hydro-powered electricity supply rose 3.6%, while gas-fired power output was 13.8% higher, the data showed. However, wind-powered electricity supply fell 10.8%.

The share of fossil fuels in overall electricity generation in May was 70.71%, compared with 76% the previous year, an analysis of data from POSOCO showed.

Pubblicato in: Devoluzione socialismo, Economia e Produzione Industriale, Sistemi Economici

Nouriel Roubini. Una depressione epocale. Cigni neri e cigni bianchi.

Giuseppe Sandro Mela.

2020-04-18.

Cigni Bianchi e Cigni neri 001

Se Nassim Teleb, autore tra l’altro de Il Cigno Nero, evento altamente improbabile ed imprevisto, ma pur sempre possibile, aveva prognosticato un evento simile all’epidemia da coronavirus, il prof. Nouriel Roubini è stato il solo economista ad aver previsto con sicurezza ben documentata la crisi del 2008.

Il suo parere sull’attuale crisi economica dovrebbe essere ben ponderato.

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«Nouriel Roubini, Professor of Economics at New York University’s Stern School of Business and Chairman of Roubini Macro Associates, was Senior Economist for International Affairs in the White House’s Council of Economic Advisers during the Clinton Administration. He has worked for the International Monetary Fund, the US Federal Reserve, and the World Bank. His website is NourielRoubini.com

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«In my 2010 book, Crisis Economics, I defined financial crises not as the “black swan” events that Nassim Nicholas Taleb described in his eponymous bestseller, but as “white swans.” According to Taleb, black swans are events that emerge unpredictably, like a tornado, from a fat-tailed statistical distribution. But I argued that financial crises, at least, are more like hurricanes: they are the predictable result of built-up economic and financial vulnerabilities and policy mistakes» [Nouriel Roubini]

* * * * * * *

«With the COVID-19 pandemic still spiraling out of control, the best economic outcome that anyone can hope for is a recession deeper than that following the 2008 financial crisis»

«But given the flailing policy response so far, the chances of a far worse outcome are increasing by the day.»

«The shock to the global economy from COVID-19 has been both faster and more severe than the 2008 global financial crisis (GFC) and even the Great Depression»

«In those two previous episodes, stock markets collapsed by 50% or more, credit markets froze up, massive bankruptcies followed, unemployment rates soared above 10%, and GDP contracted at an annualized rate of 10% or more»

«In the current crisis, similarly dire macroeconomic and financial outcomes have materialized in three weeks»

«Now, markets are down 35%, credit markets have seized up, and credit spreads (like those for junk bonds) have spiked to 2008 levels»

«Even mainstream financial firms such as Goldman Sachs, JP Morgan and Morgan Stanley expect US GDP to fall by an annualized rate of 6% in the first quarter, and by 24% to 30% in the second …. the unemployment rate could skyrocket to above 20% (twice the peak level during the GFC)»

«it should now be clear that the COVID-19 crisis is something else entirely»

«Not even during the Great Depression and World War II did the bulk of economic activity literally shut down, as it has in China, the United States, and Europe today»

«Second, monetary policymakers – who have already done in less than a month what took them three years to do after the GFC – must continue to throw the kitchen sink of unconventional measures at the crisis. …. That means zero or negative interest rates; enhanced forward guidance; quantitative easing; and credit easing (the purchase of private assets) to backstop banks, non-banks, money market funds, and even large corporations (commercial paper and corporate bond facilities)»

«Third, governments need to deploy massive fiscal stimulus, including through “helicopter drops” of direct cash disbursements to households»

«Only central governments have balance sheets large and strong enough to prevent the private sector’s collapse»

«But these deficit-financed interventions must be fully monetized. If they are financed through standard government debt, interest rates would rise sharply, and the recovery would be smothered in its cradle»

«Unfortunately for the best-case scenario, the public-health response in advanced economies has fallen far short of what is needed to contain the pandemic, and the fiscal-policy package currently being debated is neither large nor rapid enough to create the conditions for a timely recovery»

«As such, the risk of a new Great Depression, worse than the original – a Greater Depression – is rising by the day. Unless the pandemic is stopped, economies and markets around the world will continue their free fall.»

«therapeutic interventions that many are counting on may turn out to be less effective than hoped. So, economies will contract again and markets will crash again»

«the possibility of outright violence and civil disorder»

«This trifecta of risks – uncontained pandemics, insufficient economic-policy arsenals, and geopolitical white swans – will be enough to tip the global economy into persistent depression and a runaway financial-market meltdown.»

* * * * * * *

Questa triplice serie di rischi – pandemie non contenute, arsenali di politica economica insufficienti e cigni bianchi geopolitici – sarà sufficiente a far precipitare l’economia globale in una persistente depressione e in un tracollo dei mercati finanziari. Quindi violenze e guerre civili.

*


A Greater Depression? (by Nouriel Roubini)

With the COVID-19 pandemic still spiraling out of control, the best economic outcome that anyone can hope for is a recession deeper than that following the 2008 financial crisis. But given the flailing policy response so far, the chances of a far worse outcome are increasing by the day.

NEW YORK – The shock to the global economy from COVID-19 has been both faster and more severe than the 2008 global financial crisis (GFC) and even the Great Depression. In those two previous episodes, stock markets collapsed by 50% or more, credit markets froze up, massive bankruptcies followed, unemployment rates soared above 10%, and GDP contracted at an annualized rate of 10% or more. But all of this took around three years to play out. In the current crisis, similarly dire macroeconomic and financial outcomes have materialized in three weeks.

Earlier this month, it took just 15 days for the US stock market to plummet into bear territory (a 20% decline from its peak) – the fastest such decline ever. Now, markets are down 35%, credit markets have seized up, and credit spreads (like those for junk bonds) have spiked to 2008 levels. Even mainstream financial firms such as Goldman Sachs, JP Morgan and Morgan Stanley expect US GDP to fall by an annualized rate of 6% in the first quarter, and by 24% to 30% in the second. US Treasury Secretary Steve Mnuchin has warned that the unemployment rate could skyrocket to above 20% (twice the peak level during the GFC).In other words, every component of aggregate demand – consumption, capital spending, exports – is in unprecedented free fall. While most self-serving commentator shave been anticipating a V-shaped downturn – with output falling sharply for one quarter and then rapidly recovering the next – it should now be clear that the COVID-19 crisis is something else entirely. The contraction that is now underway looks to be neither V- nor U- nor L-shaped (a sharp downturn followed by stagnation). Rather, it looks like an I: a vertical line representing financial markets and the real economy plummeting. Not even during the Great Depression and World War II did the bulk of economic activity literally shut down, as it has in China, the United States, and Europe today. The best-case scenario would be a downturn that is more severe than the GFC (in terms of reduced cumulative global output) but shorter-lived, allowing for a return to positive growth by the fourth quarter of this year. In that case, markets would start to recover when the light at the end of the tunnel appears. But the best-case scenario assumes several conditions. First, the US, Europe, and other heavily affected economies would need to roll out widespread COVID-19 testing, tracing, and treatment measures, enforced quarantines, and a full-scale lockdown of the type that China has implemented. And, because it could take 18 months for a vaccine to be developed and produced at scale, antivirals and other therapeutics will need to be deployed on a massive scale.

Second, monetary policymakers – who have already done in less than a month what took them three years to do after the GFC – must continue to throw the kitchen sink of unconventional measures at the crisis. That means zero or negative interest rates; enhanced forward guidance; quantitative easing; and credit easing (the purchase of private assets) to backstop banks, non-banks, money market funds, and even large corporations (commercial paper and corporate bond facilities). The US Federal Reserve has expanded its to address the in global markets, but we now need more facilities to encourage banks to lend to illiquid but still-solvent small and medium-size enterprises.

Third, governments need to deploy massive fiscal stimulus, including through “helicopter drops” of direct cash disbursements to households. Given the size of the economic shock, fiscal deficits in advanced economies will need to increase from 2-3% of GDP to around 10% or more. Only central governments have balance sheets large and strong enough to prevent the private sector’s collapse. But these deficit-financed interventions must be fully monetized. If they are financed through standard government debt, interest rates would rise sharply, and the recovery would be smothered in its cradle. Given the circumstances, interventions long proposed by leftists of the Modern Monetary Theory school, including helicopter drops, have become mainstream. Unfortunately for the best-case scenario, the public-health response in advanced economies has fallen far short of what is needed to contain the pandemic, and the fiscal-policy package currently being debated is neither large nor rapid enough to create the conditions for a timely recovery. As such, the risk of a new Great Depression, worse than the original – a Greater Depression – is rising by the day.Unless the pandemic is stopped, economies and markets around the world will continue their free fall. But even if the pandemic is more or less contained, overall growth still might not return by the end of 2020. After all, by then, another virus season is very likely to start with new mutations; therapeutic interventions that many are counting on may turn out to be less effective than hoped. So, economies will contract again and markets will crash again.Moreover, the fiscal response could hit a wall if the monetization of massive deficits starts to produce high inflation, especially if a series of virus-related negative supply shocks reduces potential growth. And many countries simply cannot undertake such borrowing in their own currency. Who will bail out governments, corporations, banks, and households in emerging markets?

In any case, even if the pandemic and the economic fallout were brought under control, the global economy could still be subject to a number of “” tail risks. With the US presidential election approaching, the COVID-19 crisis will give way to renewed conflicts between the West and at least four revisionist powers: China, Russia, Iran, and North Korea, all of which are already using asymmetric cyberwarfare to undermine the US from within. The inevitable cyber attacks on the US election process may lead to a contested final result, with charges of “rigging” and the possibility of outright violence and civil disorder. Similarly, as I have previously, markets are vastly underestimating the risk of a war between the US and Iran this year; the of Sino-American relations is accelerating as each side blames the other for the scale of the COVID-19 pandemic. The current crisis is likely to accelerate the ongoing balkanization and unraveling of the global economy in the months and years ahead. This trifecta of risks – uncontained pandemics, insufficient economic-policy arsenals, and geopolitical white swans – will be enough to tip the global economy into persistent depression and a runaway financial-market meltdown. After the 2008 crash, a forceful (though delayed) response pulled the global economy back from the abyss. We may not be so lucky this time.

Pubblicato in: Regno Unito, Sistemi Economici

Regno Unito. L’economia britannica calerà del 35% con 2 mln disoccupati.

Giuseppe Sandro Mela.

2020-04-17.

2020-04-16__OBR 001

«The Office for Budget Responsibility is the government’s independent forecaster, which gives its verdict on the outlook for growth and the public finances twice a year.

The forecasts are published to coincide with the chancellor’s two big set pieces of the year – the autumn budget and the spring statement – and takes into account the impact of any tax and spending measures announced in those statements.

The OBR also uses its public finances forecasts to judge the Treasury’s performance against the chancellor’s fiscal targets, stating whether or not it has a greater than 50% chance of hitting the targets under current policy.

It was established in 2010 by the then chancellor George Osborne with the aim of improving the credibility of the government’s official forecasts for growth. The forecasts were previously produced by the Treasury itself and often criticised for being unrealistic.

The OBR is led by three members of the budget responsibility committee, including chairman Robert Chote, a former director of the Institute for Fiscal Studies, with support from the OBR’s permanent staff of 27 civil servants.»

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L’Office for Budget Responsibility ha rilasciato il 14 aprile tre importanti studi sul sistema economico e finanziario del Regno Unito, configurando differenti scenari.

Coronavirus reference scenario: The OBR’s coronavirus analysis. 14th April 2020

OBR coronavirus reference scenario: Commentary. 14th April 2020

Coronavirus reference scenario: Charts & Tables. 14th April 2020

Ecco l’incipit.

«In addition to its impact on public health and families’ wellbeing, the spread of the coronavirus will substantially raise public sector net borrowing and debt, primarily because of the associated economic disruption. The Government’s policy response will also have substantial direct budgetary costs, but the measures are designed specifically to support individuals and businesses through this temporary shock and so they should help prevent greater economic and fiscal damage in the long term. The immediate cost of the Government’s actions may be high, but we can be confident that the cost of inaction would ultimately have been much higher.»

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«Britain’s economy could shrink by 35% this spring and unemployment soar by more than 2 million due to the coronavirus crisis, the government’s independent economics forecaster has warned.»

«Sounding the alarm that the immediate hit to living standards could be worse than the initial shock of the 2008 financial crisis, it said joblessness could hit 10% by the end of June and government borrowing this year would increase at the fastest pace since the second world war.»

«With business activity and social life effectively brought to a coordinated standstill in most of the wealthy world, the International Monetary Fund also warned on Tuesday of an economic slump unparalleled since the Great Depression of the 1930s.»

«The longer the period of economic disruption lasts, the more likely it is that the economy’s future potential output will be scarred»

«In a grim assessment that depends heavily on how long ministers decide to keep the lockdown measures in place, the OBR scenario assumed that tight controls would be maintained for three months, followed by a further three months when they are only partially lifted»

«there was a high degree of uncertainty, it said the hit to jobs and growth could be plausibly greater»

«According to the tax and spending watchdog, borrowing could rise to around £273bn, or 14% of GDP»

«Despite a decade of deep cuts to public services, the deficit remained at almost £50bn in the last financial year»

«People should know that there is hardship ahead and we won’t be able to protect every job or every business»

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Si potrebbe tentare di trarre alcune conclusioni.

– L’attuale crisi da coronavirus sarà molto peggio della Grande Depressione: più durerà peggio sarà.

– Al momento di una ripresa, sempre poi che ci sia, stati e popolazioni si troveranno oberati da debiti quasi impossibili da ripagare.

– Sarà semplicemente impossibile tutelare tutti i lavoratori e tutte le imprese.

*

UK economy could shrink by 35% with 2m job losses, warns OBR.

Unemployment could hit 10% by end of spring with public borrowing rising at fastest rate since WWII.

Britain’s economy could shrink by 35% this spring and unemployment soar by more than 2 million due to the coronavirus crisis, the government’s independent economics forecaster has warned.

In a stark assessment of the economic fallout from Covid-19 as lockdown measures bring the country to a standstill, the Office for Budget Responsibility said that gross domestic product (GDP) could plunge by more than a third in the second quarter of the year and by 13% for 2020 as a whole.

Sounding the alarm that the immediate hit to living standards could be worse than the initial shock of the 2008 financial crisis, it said joblessness could hit 10% by the end of June and government borrowing this year would increase at the fastest pace since the second world war.

The analysis comes as countries around the world attempt to devise exit strategies from lockdown conditions despite a rising global death toll. With business activity and social life effectively brought to a coordinated standstill in most of the wealthy world, the International Monetary Fund also warned on Tuesday of an economic slump unparalleled since the Great Depression of the 1930s.

In its half-yearly forecasts, the IMF said the “Great Lockdown” could cause global GDP to contract by around 3% this year. The Washington-based fund had forecast growth of 3.3% this year as recently as three months ago.

The OBR’s gloomy outlook for the UK was published after the foreign secretary, Dominic Raab, warned the UK could remain in lockdown for at least another month. The OBR said: “The longer the period of economic disruption lasts, the more likely it is that the economy’s future potential output will be scarred.”

In a grim assessment that depends heavily on how long ministers decide to keep the lockdown measures in place, the OBR scenario assumed that tight controls would be maintained for three months, followed by a further three months when they are only partially lifted.

The watchdog said it was not attempting to predict what ministers would ultimately decide. Warning there was a high degree of uncertainty, it said the hit to jobs and growth could be plausibly greater or smaller.

Offering a degree of optimism as the outlook worsens, the OBR said the economy could quickly snap back from the deepest crash in more than a century, with GDP recovering its pre-virus levels as quickly as the end of this year.

Outlining the escalating risks to Britain from the economic collapse, the OBR warned that public borrowing would almost quintuple this year as the government ramps up its emergency support package for struggling households and businesses.

According to the tax and spending watchdog, borrowing could rise to around £273bn, or 14% of GDP. Although this would rank as Britain’s biggest peacetime budget deficit, the OBR said the damage to jobs and growth would have been far greater without the emergency spending package.

The budget deficit would still be greater than the one inherited in 2010 by David Cameron’s coalition government after the financial crisis, which encouraged the former Tory prime minister to embark on an austerity drive in an attempt to balance the books. Despite a decade of deep cuts to public services, the deficit remained at almost £50bn in the last financial year.

Underlining the tough choices facing ministers over how best to end the lockdown, the OBR warned that each additional month of tight controls on economic and social activity would cost the exchequer as much as £45bn of additional borrowing.

As the economy crashes and public borrowing balloons, Britain’s national debt – the sum of every annual budget deficit – is expected to spiral to more than 100% of GDP this year and remain around 10% higher than was previously forecast by the end of the parliament in 2025.

Rishi Sunak, the chancellor, said it was clear the coronavirus pandemic would have a very significant impact on the UK economy, just as it would for other nations around the world.

“People should know that there is hardship ahead and we won’t be able to protect every job or every business,” he said.

Saying that the OBR forecasts were only a potential scenario, he said the report had confirmed government actions had protected jobs. “If we hadn’t done these thing it would mean that things were a lot worse.”