Updated on 05/17/2022 07:19
“The Pioneer Briefing” – controversial, critical and humorous. Know what is discussed politically. Today: Measures against the coming recession.
Hello, dear readers,
this is the case of the chairman of the American Federal Reserve. The Council of Elders in Germany does. So did former Goldman Sachs boss Lloyd Blankfein this weekend. Everyone is warning of the coming recession, which Blankfein says is “very, very likely”.
The reasons for the collective gloom are obvious: European war, global inflation and partially still disrupted supply chains as a result of the corona pandemic.
Other apocalypses could easily be added, from the tangible effects of climate catastrophe to the food riot looming in Africa. But the exciting and therefore intellectually demanding question is how to prevent this perfect storm? What must happen so that the disaster does not occur?
How to Prevent Free Fall
Humanity does not rush to self-destruction on the platform that has been bent inside the earth, as in Friedrich Dürrenmatt’s dystopian story “The Tunnel”. four years, showing the speedometer. “A hundred and fifty. Has the craft ever rolled a hundred and fifty?” “A hundred and five at most,” replied the conductor of the train. “Exactly,” the young man declared. “Exactly. The speed is increasing. Now the knife reads one hundred fifty-eight. We are falling.”
Here are six lines of thought to avoid a free fall and do what is rarely done in contemporary politics, which is to think in the best of cases:
1. Make money more expensive
Inflation has its roots in an overly pruned money supply. The increase in the cost of money, ie the measured increase in interest rates, must therefore begin immediately in Europe. A return to tight monetary policy, now that the effects of the miraculous currency increase are being felt by everyone, may not beat inflation overnight, but it can have a dampening effect.
2. Long-term collective agreements and one-time payments
The parties to collective bargaining, ie employers and trade unions, can make a significant contribution to calming the price front in the months to come. With long-term collective agreements and one-off payments for lower collective bargaining groups, it is possible to prevent the wage-price spiral from starting.
3. Fight hunger
The sanctions regime imposed by NATO states on Moscow endangers global food security. The war between Russia and Ukraine is further disrupting already disrupted food flows. Russia was the world’s largest wheat exporter in 2021, with a total of around 33 million tonnes. The West should change its mind here – from fighting Putin hard to fighting hunger. The people of Africa and the global economy will thank those involved.
4. New security architecture
It would also be better for the world economy and world peace if NATO did not expand to Sweden, Finland and Ukraine and thus to its eastern and northern European flanks, but instead sought to discuss a new security architecture in Europe under Turkish moderation. Erdoğan – who refuses to accept the Western sanctions regime anyway – has offered his services as a mediator. Olaf Scholz also maintains the conversation with Putin, which earns him severe criticism at home and could be useful precisely in this situation.
5. Boost decarbonization
Instead of bowing to the Emir of Qatar to replace fossil fuels from Russia with fossil fuels from the Middle East, the state should now redouble its efforts to decarbonize the economy. New funding programs and a Marshall Plan to cut bureaucracy in Germany and Europe would thwart recessionary trends.
6. New free trade agreement
The threat of competition between the United States and China, which leads to the politicization of trade relations and can only destabilize an exporting nation like Germany, could be replaced by a new free trade agreement. The simultaneity of the war in Ukraine, the enlargement of NATO and the deliberate outbreak of conflict with China harbors a risk of explosion which could be mitigated on the western-Chinese front to mutual benefit.
There are reasons for the current discouragement of central bank governors and heads of government, but not good ones. With the spontaneous words of the 1970s, we would like to challenge the frightened of all countries: prosperity is possible, neighbor. Even the musicians of Bremen were smarter than the current generation of politicians. Their motto: We will find something better than death everywhere.
I wish you a good start to the day.
I greet you warmly,
His Gabor Steinart
The war in Ukraine did not lead to an increase in existential fear in German companies. Instead, the number of companies fearing for their own survival has declined since the start of the year. This is the result of a survey by the Ifo Institute in Munich published on Monday.