20-05-20 07:59:00, The Jomsviking Novels Als je apparaat niet snel begint met afspelen, kun je het misschien opnieuw starten. 8:59 Hierna Autoplay is onderbroken Je bent uitgelogd…
In a recent presentation of his book, Laid Low, which examines the International Monetary Fund’s role in the eurozone crisis, author and journalist Paul Blustein disclosed a memo dated May 4, 2010, from the IMF’s then head of research Olivier Blanchard, to Poul Thomsen, who headed the Greek mission at the time.
In his missive, Blanchard warned that the cumulative fiscal adjustment of 16 percentage points being demanded of Greece in such a short period of time and with such a high level of frontloading had never been achieved before.
— Trineesh Biswas (@TrineeshB) January 31, 2017
According to Blanchard, not only was the task unprecedented, but Greece was being asked to achieve the impossible in unfavourable external circumstances, when everyone was barely recovering from the 2008 global financial crisis and without any other policy levers (low interest rates or exchange rate adjustment).
Blanchard foresaw what became a reality only about a year later: Even with “perfect policy implementation” the programme will be thrown off track rather quickly and the recession will be deeper and longer than expected, he warned.
Blanchard’s scepticism and warnings were ignored. Instead, political limitations took hold of the decision-making process and domestic-focussed calculations pushed Greece into trying to achieve the impossible.
This week, the former IMF chief economist admitted on Twitter that although he was not the one that leaked the memo he was not unhappy that the truth has been revealed because “it is seven years and still there is no clear/realistic plan” for Greece.
I did not leak, but am not too unhappy that it did leak :). 7 years already, and still no clear/realistic plan. https://t.co/8mCzO3TYvL
— Olivier Blanchard (@ojblanchard1) February 14, 2017
Athens is currently under pressure to adopt another 2 percent of GDP in new fiscal measures, which relate to the tax-free threshold and pension spending. Since 2010, Greece has adopted revenue-raising measures and spending cuts that are equivalent to more than a third of its economy and more than double what Blanchard had described as unprecedented almost seven years ago.
If the U.S. economy is “booming” and very bright days are ahead, then why are many large U.S. corporations laying off thousands of workers? Layoffs are starting to come fast and furious now, and this is happening even though the coming recession has not even officially started yet. Of course many are convinced that we are actually in a recession at this moment. In fact, according to John Williams of shadowstats.com if the government was actually using honest numbers they would show that we have been in a recession for quite some time. But the narrative that the mainstream media keeps feeding us is that the U.S. economy is “doing well” and that the outlook for the future is positive. Well, if that is true then why are big companies laying off so many workers right now?
Let’s start by talking about Ford Motor Company. On Monday, they announced that they will be laying off approximately 7,000 workers…
Ford Motor said Monday that it is laying off about 7,000 managers and other salaried employees, about 10% of its white-collar workforce across the globe, as part of a restructuring plan designed to save the No. 2 automaker $600 million annually.
The cuts, some of which were previously announced by the company, will be completed by August, Ford CEO Jim Hackett said in an email to employees Monday.
If the U.S. economy was about to take off like a rocket, this move doesn’t make any sense at all.
But if we are headed into a recession, this move makes perfect sense.
Another large firm that is laying off thousands of workers is Nestle…
Nestle SA’s U.S. unit will dismiss about 4,000 workers as it stops delivering frozen pizza and ice cream directly to stores and transitions to a warehouse model that’s becoming an industry standard for Big Food companies looking to trim costs.
And we also recently learned that 3M is planning to get rid of about 2,000 workers…
3M plans to cut 2,000 globally as part of a restructuring due to a slower-than-expected 2019.
As you know by now, the Federal Reserve raised interest rates again this week, its eighth increase since the rate hike cycle began in 2015.
In his post-announcement press conference, Jerome Powell cited a strong economy, low unemployment, solid growth, etc. He said that “It’s a particularly bright moment” for the economy.
Barring significant developments, the Fed may raise rates again in December and perhaps three times next year.
Meanwhile, the Commerce Department announced that second quarter U.S. GDP expanded at a 4.2% annualized rate, confirming the earlier estimate.
On the surface it might look everything is great, that it is a particularly bright moment for the economy. But if you take a hard look behind the numbers, a different picture emerges.
A lot of the cheerleaders say Trump’s programs of tax cuts and deregulation will produce persistent trend growth of 3–4% or higher.
Such growth would break decisively with the weak growth of the Obama years. It would also make the U.S. debt burden, currently at 105% of GDP, more sustainable if GDP were to grow faster than the national debt.
There’s one problem with the happy talk about 3–4% growth. We’ve seen it all before.
In 2009, almost every economic forecaster and commentator was talking about “green shoots.”
In 2010, then-Secretary of the Treasury Tim Geithner forecast the “recovery summer.”
In 2017, the global monetary elites were praising the arrival (at last) of “synchronized global growth.”
None of this wishful thinking panned out. The green shoots turned brown, the recovery summer never came and the synchronized global growth was over almost as soon as it began.
Any signs of trend growth have been strictly temporary (basically moving growth from one quarter to another through inventory and accounting quirks) and are quickly followed by weaker growth. In the first quarter of 2015, growth was 3.2%, but by the fourth quarter that year growth had fallen to a near-recession level of 0.5%.
In the third quarter of 2016 growth was 2.8%,