Inflation is suddenly back in the developed countries, a phenomenon many thought was something that belonged to the past. A year ago, most central bank governors assured that this was an expected and transitory phenomenon as the developed economies returned to growth after the Covid induced depression in 2020. Now it looks not to be that transitory. So has inflation come to stay?
Thorbjørn Waagstein, Economist, PhD, since 1999 working as international Development Consultant in Latin America, Africa and Asia.
To Russia’s demand for a stop for NATO’s eastward expansion, NATO General Secretary Jens Stoltenberg has answered that Russia has no say in which countries are becoming members of NATO, a viewpoint that has been repeated by the G7 countries, warning that there will be “massive consequences” for Russia if it intervenes in Ukraine. So Russia’s “red lines” have been rejected, well knowing that this may mean military conflict. What is contradictory is that by defending Ukraine’s right to NATO membership, NATO actually risks throwing Ukraine under the bus. So has NATO decided to sacrifice Ukraine? Or are the Russians bluffing and NATO calling the bluff?
An American researcher made headlines a couple of years ago as she claimed that a study of past experiences showed that non-violent regime-change movements only need to mobilise 3.5% of the population to be successful. That was taken as good news as regime-change can be achieved without need to resort to military force. But what if the majority of the population does not agree with the 3.5%? Is the outcome still democratic? The most recent case is Bolivia.
The economic crisis caused by the new corona virus has in the advanced economies been paid for in the same way as the 2007-2009 Great Financial Crisis: pumping money into the financial sector and increasing public expenditure. Result: more public debt to be paid back in the future, basically by common people. This cannot continue eternally. The next crisis has to be financed otherwise, shifting the burden to those who sit on the cash.
The recent drop in oil prices is generally referred to as a ‘Saudi-Russian price war’. This is a wrong description. Two things are happening. Firstly, as renewables are becoming cheaper and cheaper, oil is becoming increasingly irrelevant, and all countries with large oil deposits are scrambling to get as much as possible out of the ground before it is too late. Secondly, the OPEC+ oil cartel has failed, as outsiders – often called ‘free riders’ – have increased production so much that the cartel is no longer worth while. These two factors are the death knell for OPEC+ and high price oil – the good times for the oil industry will never come back. The fall in demand because of COVID-19 is not the cause, it is only the trigger.
The European and US handling of the new corona virus (COVID-19) epidemic has been dominated by the story that this epidemic is unstoppable. We can perhaps slow the course, but finally the same amount of people will be infected, it was said. This might also be the best, as then an important part of the population would then be immunised and we would thus avoid a later flaring up of the epidemic. It was even said that efforts to stop the epidemic would be unscientific, a result of politicians eager to be seen ‘doing something’. That would be the turf of the populists. This is absolute and complete nonsense.
The management of the Venezuelan economy has been surprisingly incompetent and disastrous, despite sitting on the world's biggest oil reserves. Sanctions and embargo against Venezuela have accelerated the decline, with inflation bordering on hyperinflation, a collapsing economy and mass migration. There is much to dislike in the Venezuelan Government and its policy, and by the way in the opposition, too. But sanctions and embargo is the wrong policy, causing further suffering for the Venezuelan people. Recognizing a self-proclaimed president and supporting a bogus uprising is converting it into a farce. It is old US policy to treat its foes like this. But what the EU is doing, supporting this, is very difficult to understand. Now the Europeans can no longer just blame the Venezuelan Government. They have decided to take on shared responsibility for the suffering of the Venezuelan people.
When Mauricio Macri won the Argentine Presidential elections in 2015, there was excitement in Washington, the European Union and, above all, among the Latin American right. They would finally get rid of the incompetent and populist government in Argentina. 'The technocrats to the rescue', wrote 'The Economist', and stated that Macri 'is choosing well-regarded technocrats to occupy the main economic positions'. Unfortunately, after making a heroic attempt to rescue the country, Macri lost the presidential elections in October 2019 and the same bad populist guys (and women) are returning. Or this is what the international mainstream media want us to believe. They are not only wrong, it is a flagrant distortion of the facts.