Economics and politics

Economics and politics (30)

Articles on economics from a political perspective.

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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?
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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…
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When the US increased the capacity for exporting Liquified Natural Gas (LNG) in 2019, Trump promised a new era where the Europeans would get “freedom gas” instead of the malign Russian gas. Now that Europe is in the middle of a gas crisis with soaring prices, what happened to the freedom gas? Short answer: it went to South-Eastern Asia where prices are better. The gas crisis is a result of EU’s love for spot-markets for energy rather than long term contracts. This implies that they sometimes get very cheap gas and sometimes very expensive gas. Just now, the EU is…
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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.
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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…
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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…
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