Peter Thiel to disrupt America's democracy
Re-energized this election cycle, the tech entrepreneur joins other mega-donors apparently out to undercut the political system
From the diaries ...
Worthwhile read ...
Conservative Warns Lugar: Bolton Is a True Force of Darkness | by Dean Pajevic on May 9, 2005 |
Global Tentacles of Palantir Spread to EU | Apr. 24, 2021 |
Has Globalization Changed the Inflation Process? | BIS Working Papers - June 2019 |
The relationship central to most inflation models, between slack and inflation, seems to have weakened. Do we need a new framework? This paper uses three very different approaches - principal components, a Phillips curve model, and trend-cycle decomposition - to show that inflation models should more explicitly and comprehensively control for changes in the global economy and allow for key parameters to adjust over time. Global factors, such as global commodity prices, global slack, exchange rates, and producer price competition can all significantly affect inflation, even after controlling for the standard domestic variables. The role of these global factors has changed over the last decade, especially the relationship between global slack, commodity prices, and producer price dispersion with CPI inflation and the cyclical component of inflation. The role of different global and domestic factors varies across countries, but as the world has become more integrated through trade and supply chains, global factors should no longer play an ancillary role in models of inflation dynamics.
Unwinding globalization | Flossbach von Storch Research Institute - Sept. 28, 2021 |
We are living in a far less globalizing economy today. Since at least the Great Financial Crisis the pace of globalization has slowed down significantly or even reversed in some areas. Although the COVID-19 pandemic seems to some extent to have interrupted this development, chances for a new wave of globalization are meagre - with painful economic consequences.
Recent (de)globalization trends
The most recent phase of globalization between the early 1990s and 2007 brought an unprecedented rise in economic, social, and political interconnectedness between nations worldwide. The KOF Globalisation Index, in Figure 1, increased from 43 in 1990 to 58 in 2007, with comparable and significant improvements in all three dimensions, economic, social and political. However, since 2007, marking the beginning of the Great Financial Crisis, the process has experienced a structural break. Especially the economic dimension of globalization has disappointed. This phenomenon is particularly reflected in a falling share of world merchandize trade over global GDP (Fig. 2).
Economic implications of de-globalization
A wide array of economic models undeniably shows that free trade and broader economic integration between nations bring net economic gains. Reversing these trends implies slower economic growth - everywhere. The most hit would be smaller developing countries, especially when being economically dependent on a narrow range of income sources, lacking a broad industrial basis or natural resources. But also highly diversified and technologically leading economies would suffer from shrinking real demand elsewhere.
There are further unpleasant economic consequences to expect. Just as globalization was a driving force of the past slow price dynamics and through this of low inflation and declining interest rates, switching the process on the reverse gear could eventually lead to widespread price and interest rate increases.
Moreover, since deglobalization of trade often goes hand in hand with unwinding of financial ties, this could remarkably depress the borrower position of the USA - both in the private and public sector. Accordingly, attracting funds from abroad could become increasingly cumbersome. Furthermore, falling foreign demand for US debt could eventually undermine the US dollar's role as a reserve currency.
Deglobalization could also mean a backlash in the global climate action, which is more desired today than ever before.
Joe on Liz’s Poor Judgement Economic Policy
Biden says abandoned U.K. tax cut plan was a ’mistake’ amid ’worldwide inflation’ | CNBC |
President Joe Biden on Saturday called embattled British Prime Minister Liz Truss’ mini-budget tax cut plan a “mistake,” and said he is worried that other nations’ fiscal policies may hurt the U.S. amid “worldwide inflation.”
Ukraine War and a Strong US Economy
Working out well … for now … wait for the real effect of de-Globalization. MAGA
Biden said he was not concerned about the strength of the dollar — it set a new record against the British Pound in recent weeks — which benefits U.S. imports but makes the country’s exports more expensive to the rest of the world.
The president said the U.S. economy “is strong as hell.”
“I’m concerned about the rest of the world,” he added. “The problem is the lack of economic growth and sound policy in other countries.”
Said Biden: “It’s worldwide inflation, that’s consequential.”
Listened to Wellink, former head of the Dutch National Bank …
Long-term expectation will be very similar to the 1970s after the Oil Crisis with Saudi Arabia and Guif States. Was my conclusion many months ago …
High inflation and high interest rates, mortgages with pain for new home owners … for many years. Ended in a strong recession in the 1980s and brought the likes of Reagan and Thatcher. Late in the 80s the Asian economic crisis which let to a policy of Globalization. In America the financial crisis in mortgage banks. See Savings and Loans and the Keating Five.
See scandal and fraude BCCI.
Related data …
My earlier assessment ...
Will the EU-27 Survive the Biden Years?
[work in progress ... 🚸 ]