Wednesday, February 08, 2017

Another Global Recession?

North American stock markets are booming. The conventional wisdom is that -- economically -- happy days are here again. But Joseph Ingram isn't so optimistic. The election of Donald Trump and the rise of European authoritarians cast dark shadows:

Both Trump’s election and the June Brexit vote in Britain are fueling the growth of European populist movements. Combined with his skepticism as to the European Union’s desirability — a sentiment he apparently shares with Russian President Vladimir Putin — these movements constitute an existential threat to its existence, the break-up of which would surely result in the end of the liberal international order that we have known for the past seventy years.

The consequence would be a leap into an abyss of policy chaos, adversarial trade and geo-strategic relationships (including among former allies) and an instability that likely would produce a global recession — or worse. President Trump’s tiffs with the leaders of two of the U.S.’s closest allies — the Prime Minister of Australia and the President of Mexico — are a sign of things to come, as was this week’s meeting of European leaders in Malta.

Things do not bode well for the world economy:

To successfully counter these ominous trends will require economic policies that seek to promote the interests of the many rather than the few. Obscene gaps in income must be narrowed. The task of pressing governments to adopt such policies needs to be animated by a popular response — not one seen as elitist, nor driven by any particular political party or ideology. Nor should the response be inspired by failed neo-liberal or neo-Marxist policies of the past.

The concerns of organized labour, rural communities, small towns and the young will need to be addressed directly, thereby shifting the impact of public policy away from the asymmetric benefits it has been extending to the corporate sector and its elites. Governments also will need to consider limits on the application of new technologies that risk creating massive structural unemployment or destructive de-industrialization.

Trump's cabinet of billionaires makes it clear that what is needed will not be delivered. And his deregulation of Wall Street suggests that history will repeat itself:

It will be equally important to remind people that the deregulation of the financial and industrial sectors now advocated by President Trump’s government, and many of Europe’s populists, is what brought the U.S. economy double-digit unemployment, a housing crisis, a critically weakened financial system and the great recession of 2008.

The fools are in charge.

Image: takemygist


Toby said...

One source of confusion is that most of us have been persuaded that numbers like the Dow Jones Average and GDP are universal measurements of success. Of particular worry is that politicians hang on every word of their corporate advisors. Of course, when we stop to look at them, the Dow, GDP and other business measurements are very narrow and don't apply to a wide range of other things like environmental degradation, people left out of the health system or left behind by their education, the results of poor wages or massive unemployment, etc. When we look at the big picture there are many problems large and small but instead of addressing them we rejoice when the stock market rejoices and cry when the market cries.

Owen Gray said...

Your comment covers all the bases, Toby. I agree wholeheartedly.

The Mound of Sound said...

Ingram touches on the problems besetting the economy, Owen, but his prescription for resolving them is not inspiring. Yes, we "must do" this and that and it's all very grand but how to make that happen in a world of states to varying degrees shackled to political and regulatory capture. Surely new political movements unfettered to global capitalism at least sufficiently to invoke a genuinely progressive reformation are essential. You'll be waiting a long time if you expect a progressive renaissance within either the Democrats or our own Liberals. Even the NDP has abandoned organized labour.

Dana said...

I think you'll appreciate this historical perspective, Owen.

Owen Gray said...

And that's precisely the problem, Mound. The old sources which used to be the source of pushback have been infected -- to varying degrees -- by the same virus.

Owen Gray said...

Trump may not be suggesting a final solution, Dana. But the Munich Post story goes a long way in explaining Trump's animus toward the press. More worrisome is Bullock insight into political mountebanks:

In fact, Bullock had initially argued, it was likely he had believed in nothing and just used the Jew-hatred to advance his cause with the nitwit thug segment of the German people. Just as Trump appealed to his nitwit thug racist, anti-Semite followers. Hitler was a “mountebank,” Bullock exclaimed, a con man who played the Jewish card, using it to whip up rowdy enthusiasm and give the impression of a movement. This is the comparison I’d been seeking.

Both Trump and Hitler were [are] hollow men -- who appeal[ed] to their fellow citizens darker angels.

Anonymous said...

The writing is on the wall.

The big problem with financial collapse is that the rich become richer coming out of it.
Have we not had enough of this shit?


Owen Gray said...

Thanks for the link, TB. It's not hard to connect the dots. But people who refuse to learn from history are doomed to repeat it.