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Blog Post - views-on-the-economy-and-the-world

Why Might Americans Vote the Extremist Party?

| Oct. 30, 2022

 Americans will go to the polls November 8.  It appears probable that they will give the Republican party majority control of the House of Representatives, and possibly the Senate as well.  The same for Secretaries of State and other statewide offices.  The consequences could be enormous. Especially worrying is the future of US electoral democracy, if the result is further distortions of voter eligibility rules, congressional redistricting, the electoral college, and other structural features.  How could such an outcome of the mid-term elections be explained, seeing as how the Republican party is now dominated by its extremist MAGA faction?

Blog Post - Views on the Economy and the World

The Dollar Dazzles Once More

| Sep. 24, 2022

The dollar is sky-high.  Since May 2021, it has risen 19% against Europe’s euro, even reaching 1-to-1 parity in recent weeks. The dollar has appreciated 20% against Britain’s pound.  And it is up 28% against Japan’s yen, provoking the Bank of Japan to sell dollars on September 22, essentially the first foreign exchange intervention by a G-7 country since 2011 and the first in the direction of supporting a currency’s value against the dollar since the euro in 2000.

Blog Post - Views on the Economy and the World

Global Recession is Not Inevitable

| Aug. 28, 2022

Project Syndicate asked, “Is a Global Recession Inevitable?”   Steven Roach says, “yes”;  Anne Krueger says, “Depends…Certainly not inevitable”; & Jim O’Neill says, “Quite possible.”

My answer to the question, Is a global recession inevitable:

No. A global recession is entirely “evitable.”

True, the odds of a downturn are high in Europe, hard-hit by the need to manage winter without Russian natural gas; China, where Covid shutdowns already turned growth negative last quarter; and Emerging Market and Developing Economies, many of which have debt troubles.

Blog Post - Views on the Economy and the World

Why Commodity Prices May Have Peaked

| Aug. 26, 2022

Among the most salient of economic developments in the last two years have been big movements in the prices of oil, minerals, and agricultural commodities.  It was hard to miss the big rise in commodity prices.  The Brent oil price increased from a low $20 a barrel in April 2020, during the first Covid-19 wave, to a peak of $122, in March 2022, after Russia invaded Ukraine.  But it was not just oil. The price of copper doubled over this period.  Wheat more than doubled. And so on. Global indices of commodity prices almost tripled from April 2020 to March 2022.

Blog Post - Views on the Economy and the World

The July 28 Announcement of Q2 GDP Will Not Mean Recession

| July 21, 2022

On July 28, the US Bureau of Economic Analysis will release its advance estimate of economic growth, as measured by GDP, in the just-completed second quarter of the year.  The announcement is attracting more than the usual eager anticipation.  The reason is that many observers predict that the Q2 GDP number will be negative and that this will officially confirm widespread beliefs that the economy went into recession in the first half of 2022, figuring that growth in national output is already determined to have been negative in the 1st quarter of the year. After all, isn’t a recession defined as two consecutive quarters of negative growth?

Blog Post - Views on the Economy and the World

A Resilience Case for International Trade

| July 03, 2022

Some new problems have afflicted the economy in the last year.  Two examples come from the US:  blockages in supply chain logistics and a critical shortage in infant milk formula. One problem applies to the EU even more than to the US: energy scarcity due to sanctions against Russian fossil fuel exports.  And one applies almost everywhere: inflation.

Blog Post - Views on the Economy and the World

Surprisingly Strong Sanctions

| Mar. 23, 2022

The surprising strength of economic sanctions deployed multilaterally against Russia this month has been exceeded only by the surprising strength of the heroic Ukrainian resistance to the invasion of their territory.  True, it is hard to imagine sanctions bringing the Russian economy to its knees faster than Russian troops are able to complete the hundred-mile advance to Kyiv from the border.  But sanctions have gone macroeconomic.  Ultimately, the Russian economy will suffer severely and lastingly.

Blog Post - Views on the Economy and the World

Vaccination Mandates Are Not Government Over-reach

| Jan. 28, 2022

The US Supreme Court on January 13 blocked President Joe Biden’s attempt to mandate that businesses must require their employees to be vaccinated against the coronavirus or else wear masks and be tested regularly.  This “emergency standard” was to have been applied by the federal Occupational Safety and Health Administration, carrying out its responsibility under long-standing legislation to protect workers facing serious danger in the workplace.

Blog Post - Views on the Economy and the World

History Advises Biden to Match Signals with Actions in Ukraine

Dec. 24, 2021

As Russian troops mass along the border with Ukraine, the White House has been calibrating its response. President Joe Biden has warned that in the event of an invasion, the US and allies would make Russian President Vladimir Putin pay a heavy price. Likely measures would particularly include economic sanctions such as a cut-off from the SWIFT payments system and turning off the new Nord Stream 2 pipeline.  Good. It is possible that such threats will deter Putin.