Economist Michael Hudson analyzes the collapse of Silicon Valley Bank, Silvergate, and Signature Bank, explaining the similarities to the 2008 financial crash. He also addresses the US government bailout (which it isn’t calling a bailout), the role of the Federal Reserve and Treasury, the factor of cryptocurrency, and the danger of derivatives.
High levels of global debt are likely to turn what could be a controllable shift from expansion to contraction into a blowout of unfulfilled expectations and obligations, leading to widespread suffering.
An enormous debt bomb threatens the U.S. federal government and the nation’s financial system unless warring politicians can agree on a plan to defuse it. However, there are even bigger debt bombs ticking away beneath us all, of which fewer people are aware. It may be impossible to disarm all of them, but action is required to minimize the casualties.
Let’s start by focusing on the immediate U.S. debt threat, then widen our view to take in longer-term and more serious liabilities that have the potential to bring down the entire global industrial economy.
The world is sliding into a recession due to multiple overlapping crises, the head of the WTO said on Tuesday.
Speaking at the opening of the WTO’s annual public forum in Geneva, Ngozi Okonjo-Iweala noted that the World Bank and the International Monetary Fund (IMF) have both downgraded their global growth forecasts, and that trade indicators are “not looking too good.”
Colliding crises such as surging food prices, the soaring cost of living, and the energy crunch, first triggered by the Covid-19 pandemic and then aggravated by the Russia-Ukraine conflict, have created the conditions for a global recession.
Economists distinguish between two kinds of inflation: “demand-pull” and “cost-push”. Demand-pull inflation is said to occur when there is excess demand in a situation where supply cannot be augmented, because full capacity output has been reached in one or more crucial sectors. War-time inflation is a classic example. In India during the pre-neoliberal, dirigiste period, inflation was often the result of insufficient foodgrain output relative to demand, arising from a poor harvest.
Cost-push inflation on the other hand occurs when supplies can be augmented, as the economy is nowhere near full capacity in key sectors, but one of the classes tries to raise its share of output, by demanding a higher price for the input it provides, while other classes are unwilling to lower their shares, giving rise to a tug-of-war, which manifests itself through inflation.
European countries, as well as the United States, continue to be imperiled by an economic crisis following the imposition of sanctions on Russia. The policy has backfired spectacularly and has had worse economic ramifications on those levying the sanctions, than those being sanctioned. In this week’s episode, Lowkey speaks to respected U.S. economist Dr. Richard Wolff, discussing the links between the war in Ukraine, inflation, and the class war at home.
Before exploring the people’s definition of inflation, Dr. Wolff contextualizes the economic crisis currently unfolding across the West.
You can see that measuring life expectancy at birth is not a perfect guide to how long humans did live in pre-capitalist societies. Nevertheless, there is no doubt that life expectancy on average rose sharply once science came to bear on hygiene, sewage, knowledge of the human body, better nutrition etc. Of course, there were sharp inequalities in life expectancy in class societies between rich and poor.
In the second part of an interview with Peoples Dispatch, Ahilan Kadirgamar, senior lecturer at the University of Jaffna, details the economic crisis that has engulfed Sri Lanka. He explains why shortages of essentials have continued over the months, and the inability of the government to tackle it.
He also talks about how Sri Lanka has already begun to adopt IMF policies before even signing an agreement and how this is affecting the country. He lists out the steps that need to be taken urgently to protect livelihoods and ensure the future of the next generation.
Watch the first part of the interview on the political crisis here:
This story was updated April 28, 2022 to correct conversion of US dollar to Indian rupees.
The novel coronavirus disease (COVID-19) pandemic was pushed off global front pages last fortnight by food inflation. Food prices have leaped 75 per cent since mid-2020, the Food and Agriculture Organization (FAO) assessed.
In India, rural consumer food price has doubled in the year through March 2022, according to the All India Consumer Price Index (CPI) by the National Statistical Office (released April 12). At 13 per cent, the country’s annual wholesale inflation was at the highest in a decade. Food and fuel prices played a major role.
The World Economic Forum (WEF) warns: The effects of the Covid-19 pandemic may take years to reign in. The WEF has also sheds light on major concerns regarding the future from the globe’s economic elite.
“Covid-19 and its economic and societal consequences continue to pose a critical threat to the world. Vaccine inequality and a resultant uneven economic recovery risk compounding social fractures and geopolitical tensions,” said the new Global Risks Report released by the WEF on Tuesday states.
The report is based on opinions of nearly 1,000 global risk experts and leaders from business, civil services, government, academic, and other spheres.