You argue, quite correctly, that the collective central bank anti-inflation pivot is brimming with significant risk, like the potential for some kind of unnecessary global recession.
Such a possible outcome again raises the issue of whether capitalism, as it has evolved, has now managed to transcend the traditional central bank thwarting mechanisms you mentioned in your last essay (wage policy, fiscal policy, industrial policy, welfare state, accommodative banking, lender of last resort) leaving nothing left but revolution, war and economic crises of various sorts as the only viable "stabilizers" for creating the appropriate long-run conditions for political and economic tranquility. And this type of outcome is one scary possibility that seems to look more probable based on our present trajectory.
Maybe we are all being naive in hoping, as you stated in your last essay "... that things will continue as they have since 2008, in an ongoing conservative rearguard action, based on a series of makeshifts and half-measures."
The regular BIS meetings are the place for informal information sharing (having participated in them in 2015-2016 I can say it works quite well). Plus central banks do have global inputs in their models. I think the real problem is the perception by the Fed that the US is essentially a closed economy (the 2015 pivot was an exception). Also the Fed clearly sees the nexus of inflation in a too tight labor market, and they will need to see that move before they ease back (no signs of that yet). There is also a view (see Goldman research for example) that any recession will be mild given strength of private sector balance sheets. So despite the soft-landing rhetoric, my read is the leadership at the Fed has already accepted the necessity of a recession, betting it will be mild and short.
US actions impact the rest of the world as in several ways is the "biggest customer" to many countries... if demand slows down in the US the impact is everywhere else. Then there is the Russia (unrecoverable short term) economy black hole. Matthew Klein wrote about it recently as Chartbook did. By size it is a small economy, smaller than Italy or California. But is a commodity and energy supplier. Yet Russia has cut the umbilical cord with Europe without really having an East alternative.
I happened to partially listen and then read recent RUCB media conference, when they announced cutting discount rate to 7%; even their "institutional press" there is quite concerned. The economy is slowing down of course. CB is doing, competently, what it can with tools at its disposal. But in order to save the ruble several interventions put in place will have a massive shock effect down the road.
For example, the program offering 20% on a 3-month certificates (yes you heard it right) from end of March and revolving, but lately we see some banks offering up to 30%; of course, first and immediate step was to charge penalties and/or block foreign holdings. At the same time, mortgages offered at low interest rates, a journalist asked about the concern of 0% interest for some limited period and then an APR way below discount rate and zero down; all this to keep somehow functioning an economy that has significantly affected Moscow and St Petersburg.
When this war ends, Russia will be required to pay reparations to Ukraine too.
That put two political options on the table:
1. Putin & C out, either in a soft or hard way. That will mean a westernization of West Russia with China, de facto already doing it, taking the Eastern part as its sphere of influence; but can China really afford to execute that policy long term? With all internal economic issues? And after all investments in EM are not paying off as expected? And then what will happen to all authoritarian countries that survive really under Putin protectorate? All to China?
2. Putin stays, and I do not see anything good out of that not for Russia not for the rest of the world.
And if you fail at this basic thing, what about the others?
And if you have read the communiques from the Samarkand from the SCO meeting, you would have seen how much the trade between Russia and China and Russia and India is going to grow.
Power of Siberia II has been approved to go through Mongolia and will be built, and will carry 50 bil cubic meters of NG (NS2 is 55). And the American installed President of Pakistan was growling on his knees to Putin to build a gas pipeline to Pakistan.
Russia and its leadership has always been a reactive country and "Putin's war" as Mr. Tooze put it, is in fact a US creation. If Mr. Tooze would be as diligent in informing himself about the evolution of relations btw Russia and US after 1991 as he does with his economic analyses, he would likely reach different conclusions. But then he would go against the approved narrative and he's not the man to do that.
“The choice that we faced in Ukraine — and I'm using the past tense there intentionally — was whether Russia exercised a veto over NATO involvement in Ukraine on the negotiating table or on the battlefield,” said George Beebe, a former director of Russia analysis at the CIA and special adviser on Russia to former Vice President Dick Cheney. “And we elected to make sure that the veto was exercised on the battlefield, hoping that either Putin would stay his hand or that the military operation would fail.”
Putin's war is Putin decision to erase another country and his citizens as his chilling February speech clearly stated; and if he were to succeed with Ukraine in that speech is clear who was coming next. He succeeded in his actions in the past with other countries. This time not so much.
Your reasoning would be like saying that it was Churchill' fault that Hitler decided to go to war. NATO is an irrelevant factor, just a useful narrative.
Like any other dictator, Putin fell into a trap; what Macchiavelli called over time the missing of "realta' effettuale", factual reality. Because a dictator over time gets separated from reality (filtered by his adulators as Macchiavelli calls them) and becomes unable to understand what strengths and weaknesses has.
SO you are not going to believe the statements of US officials that worked assiduously for this outcome, eh? Cognitive dissonance a bit ?
Just a very brief history:
in 1991 Russia, Belarus and Ukraine dissolved USSR (didn't ask the other republics) and swore neutrality and good friendship between their countries. The new Ukrainian constitution declared Ukraine neutral.
Early 2000s was known for one or two mild color revolutions in Ukraine but the big one was 2014 when a coup removed the elected president and turned the country to an anti Russian, ultra nationalist grouping. US sank 5 billion dollars in the success of this coup, which was supposed to bring Ukraine in NATO, as declared by Bush in 2008.
What is the goal of NATO expansion? Pushing against Russia. And all this aggressivity is masked by the cries that Russia is revanchist and aggressive, way, way before 2014.
After the 2014 coup, the Russian minority was put on notice and slowly and surely their rights curtailed. The Venice convention assessment declared that Ukrainian language legislation is discriminatory. Anti- EU standards.
Since 2014 Ukraine has tried only by force of arms to bring back under its control the separatists from Donbas and refused to implement the negotiated (and UN approved) Minsk II agreement, using it only as a paravane to arm and build a strong military.
In 2019, Ukraine changed their constitution from neutrality to aspiring to join NATO, which spells out in a formal way their desire to oppose and be the enemy of Russia.
In March 2021, Ukraine passed legislation demanding from the government to retake control of all Ukrainian territory (including Crimea; btw, why Kosovars are to be protected and supported in their desire to get from under the Serbian yoke, and Russians in Crimea have to accept the Ukrainian oppression and rabid nationalism?) by all means possible, including military means.
Starting April 2021, Ukraine has amassed its military on its eastern border with Donbas. Russia reciprocated. Things didn't really settle down with the meeting between Biden and Putin, and at the beginning of February 2022, Ukrainians started to bomb/shell in a massive way the Donbas area controlled by the separatists. Military people all over the world consider such an action a preliminary activity before a military attack. OECD confirmed the Ukrainian shelling on Donbas starting to the beginning of February 2022.
The two self declared republics then sought the Russian support and protection and Russia recognized them in February 22. EU and US immediately sanctioned Russia. Russia invaded Ukraine on February 24, 2022.
Thus, you are entitled to your opinions, but do not pretend that your opinions are based on real facts and that the chain of causality goes according to your fairy tales and not by a very clear string of actions taken by Ukraine and its main sponsor, the US.
Your points are cut and paste from Kremlin adducted reasons. Which just transpose cause and effect and they are indeed disinformation masters. Militarization of Donbas and attacks on civilians were done by the separatists groups first (all but one of their leaders executed by Russia once not useful anymore) to which Ukraine military forces reacted; those pesky Jew Nazis..right? It's pointless to argue i guess. If this is your view of events I hope one day you have the force to accept reality (see Macchiavelli before). Если вместо этого это ваша работа, начните искать другую, где вам не придется продавать свою душу. Удачи!
The timeline that I have described it is easily verifiable online from multiple sources, all from the west. The way you react, it is highly to be expected that if all that evidence would be tossed in your face, you would still be denying it. It is you who doesn't accept reality as it is, but embrace a twisted narrative. A narrative that gets twisted all the time, with a past that is very fluid and is redrawn to serve the interests of the present.
Donbass separatists Russia baked attacks on Ukrainian forces (outside Donbass). See events in 2015 (while Minks agreement was drafted and not respected by separatists)
Regarding expanding East for gas and oil, sure there has been an increase of exports that way. But Samarkand negotiations will have effect long way out. Gazprom press media
Which is fine but you can't ignore the principle measures of GDP. For me the key measure is per capita. Burgers are one thing bit what does a modern car cost in Russia compared to say the UK? Okay, not a great comparison at the moment seeing that such a car is not available at any price.
You really believe that modern cars are not available in Russia? You think South Korean made cars are not available in Russia? Or maybe Japanese cars? Or even Chinese or Russian made cars, in new modern factories? You think Russians cannot make cars? If they can make nuclear submarines, satellites, top of the line fighter jets, best anti missiles systems, as well as passenger airplanes, they cannot make decent civilian cars? I know that if one can avoid, one doesn't buy an American brand car...
This retired American, living as a widow with two young children in Russia, seems to be getting by just fine, which would have been impossible for him in the good old US of A. https://halfreeman.wordpress.com/
I understood that due to western sanctions there was a dearth of the components necessary to manufacture a modern car in Russia (or anything high tech for that matter), hence the reports of cars coming off production lines witg specifications that would be illegal in Europe. What % of average salary would it take to purchase one of the modern cars that you claim are available (new rather than second hand). I'd suggest that would be a better comparison of living standards than a Big Mac.
Shelter makes up a large part of the cpi. Raising interest rates slows building and buying homes dramatically. This puts more upward pressure on rents. Makes inflation worse. House prices may come down but if they aren’t being built they can’t provide shelter.
One question I have: what financial or monetary policy would replace the missing Russian oil, gas, coal, fertilizer, and foodstuff? OPEC has no incentive to increase production, given the coming G7 "cap" on Russian oil and gas, since that is a potential rehearsal for what is in store for them. They are already making it up like bandits. Just look at the incriminations hurled at Norway by Europeans.
The world outside Europe and US is watching very attentively. And there is a longer and longer line up of countries wanting to apply to join the SCO gang of autocrats.... Funny that.
You argue, quite correctly, that the collective central bank anti-inflation pivot is brimming with significant risk, like the potential for some kind of unnecessary global recession.
Such a possible outcome again raises the issue of whether capitalism, as it has evolved, has now managed to transcend the traditional central bank thwarting mechanisms you mentioned in your last essay (wage policy, fiscal policy, industrial policy, welfare state, accommodative banking, lender of last resort) leaving nothing left but revolution, war and economic crises of various sorts as the only viable "stabilizers" for creating the appropriate long-run conditions for political and economic tranquility. And this type of outcome is one scary possibility that seems to look more probable based on our present trajectory.
Maybe we are all being naive in hoping, as you stated in your last essay "... that things will continue as they have since 2008, in an ongoing conservative rearguard action, based on a series of makeshifts and half-measures."
The regular BIS meetings are the place for informal information sharing (having participated in them in 2015-2016 I can say it works quite well). Plus central banks do have global inputs in their models. I think the real problem is the perception by the Fed that the US is essentially a closed economy (the 2015 pivot was an exception). Also the Fed clearly sees the nexus of inflation in a too tight labor market, and they will need to see that move before they ease back (no signs of that yet). There is also a view (see Goldman research for example) that any recession will be mild given strength of private sector balance sheets. So despite the soft-landing rhetoric, my read is the leadership at the Fed has already accepted the necessity of a recession, betting it will be mild and short.
US actions impact the rest of the world as in several ways is the "biggest customer" to many countries... if demand slows down in the US the impact is everywhere else. Then there is the Russia (unrecoverable short term) economy black hole. Matthew Klein wrote about it recently as Chartbook did. By size it is a small economy, smaller than Italy or California. But is a commodity and energy supplier. Yet Russia has cut the umbilical cord with Europe without really having an East alternative.
I happened to partially listen and then read recent RUCB media conference, when they announced cutting discount rate to 7%; even their "institutional press" there is quite concerned. The economy is slowing down of course. CB is doing, competently, what it can with tools at its disposal. But in order to save the ruble several interventions put in place will have a massive shock effect down the road.
For example, the program offering 20% on a 3-month certificates (yes you heard it right) from end of March and revolving, but lately we see some banks offering up to 30%; of course, first and immediate step was to charge penalties and/or block foreign holdings. At the same time, mortgages offered at low interest rates, a journalist asked about the concern of 0% interest for some limited period and then an APR way below discount rate and zero down; all this to keep somehow functioning an economy that has significantly affected Moscow and St Petersburg.
When this war ends, Russia will be required to pay reparations to Ukraine too.
That put two political options on the table:
1. Putin & C out, either in a soft or hard way. That will mean a westernization of West Russia with China, de facto already doing it, taking the Eastern part as its sphere of influence; but can China really afford to execute that policy long term? With all internal economic issues? And after all investments in EM are not paying off as expected? And then what will happen to all authoritarian countries that survive really under Putin protectorate? All to China?
2. Putin stays, and I do not see anything good out of that not for Russia not for the rest of the world.
I am not sure where you are getting the information, but Russia is the sixth biggest economy in the world: https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
And if you fail at this basic thing, what about the others?
And if you have read the communiques from the Samarkand from the SCO meeting, you would have seen how much the trade between Russia and China and Russia and India is going to grow.
Power of Siberia II has been approved to go through Mongolia and will be built, and will carry 50 bil cubic meters of NG (NS2 is 55). And the American installed President of Pakistan was growling on his knees to Putin to build a gas pipeline to Pakistan.
Russia and its leadership has always been a reactive country and "Putin's war" as Mr. Tooze put it, is in fact a US creation. If Mr. Tooze would be as diligent in informing himself about the evolution of relations btw Russia and US after 1991 as he does with his economic analyses, he would likely reach different conclusions. But then he would go against the approved narrative and he's not the man to do that.
https://www.msnbc.com/opinion/msnbc-opinion/russia-s-ukraine-invasion-may-have-been-preventable-n1290831
“The choice that we faced in Ukraine — and I'm using the past tense there intentionally — was whether Russia exercised a veto over NATO involvement in Ukraine on the negotiating table or on the battlefield,” said George Beebe, a former director of Russia analysis at the CIA and special adviser on Russia to former Vice President Dick Cheney. “And we elected to make sure that the veto was exercised on the battlefield, hoping that either Putin would stay his hand or that the military operation would fail.”
According to World Bank https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?most_recent_value_desc=true
Putin's war is Putin decision to erase another country and his citizens as his chilling February speech clearly stated; and if he were to succeed with Ukraine in that speech is clear who was coming next. He succeeded in his actions in the past with other countries. This time not so much.
Your reasoning would be like saying that it was Churchill' fault that Hitler decided to go to war. NATO is an irrelevant factor, just a useful narrative.
Like any other dictator, Putin fell into a trap; what Macchiavelli called over time the missing of "realta' effettuale", factual reality. Because a dictator over time gets separated from reality (filtered by his adulators as Macchiavelli calls them) and becomes unable to understand what strengths and weaknesses has.
SO you are not going to believe the statements of US officials that worked assiduously for this outcome, eh? Cognitive dissonance a bit ?
Just a very brief history:
in 1991 Russia, Belarus and Ukraine dissolved USSR (didn't ask the other republics) and swore neutrality and good friendship between their countries. The new Ukrainian constitution declared Ukraine neutral.
Early 2000s was known for one or two mild color revolutions in Ukraine but the big one was 2014 when a coup removed the elected president and turned the country to an anti Russian, ultra nationalist grouping. US sank 5 billion dollars in the success of this coup, which was supposed to bring Ukraine in NATO, as declared by Bush in 2008.
What is the goal of NATO expansion? Pushing against Russia. And all this aggressivity is masked by the cries that Russia is revanchist and aggressive, way, way before 2014.
After the 2014 coup, the Russian minority was put on notice and slowly and surely their rights curtailed. The Venice convention assessment declared that Ukrainian language legislation is discriminatory. Anti- EU standards.
Since 2014 Ukraine has tried only by force of arms to bring back under its control the separatists from Donbas and refused to implement the negotiated (and UN approved) Minsk II agreement, using it only as a paravane to arm and build a strong military.
In 2019, Ukraine changed their constitution from neutrality to aspiring to join NATO, which spells out in a formal way their desire to oppose and be the enemy of Russia.
In March 2021, Ukraine passed legislation demanding from the government to retake control of all Ukrainian territory (including Crimea; btw, why Kosovars are to be protected and supported in their desire to get from under the Serbian yoke, and Russians in Crimea have to accept the Ukrainian oppression and rabid nationalism?) by all means possible, including military means.
Starting April 2021, Ukraine has amassed its military on its eastern border with Donbas. Russia reciprocated. Things didn't really settle down with the meeting between Biden and Putin, and at the beginning of February 2022, Ukrainians started to bomb/shell in a massive way the Donbas area controlled by the separatists. Military people all over the world consider such an action a preliminary activity before a military attack. OECD confirmed the Ukrainian shelling on Donbas starting to the beginning of February 2022.
The two self declared republics then sought the Russian support and protection and Russia recognized them in February 22. EU and US immediately sanctioned Russia. Russia invaded Ukraine on February 24, 2022.
Thus, you are entitled to your opinions, but do not pretend that your opinions are based on real facts and that the chain of causality goes according to your fairy tales and not by a very clear string of actions taken by Ukraine and its main sponsor, the US.
Your points are cut and paste from Kremlin adducted reasons. Which just transpose cause and effect and they are indeed disinformation masters. Militarization of Donbas and attacks on civilians were done by the separatists groups first (all but one of their leaders executed by Russia once not useful anymore) to which Ukraine military forces reacted; those pesky Jew Nazis..right? It's pointless to argue i guess. If this is your view of events I hope one day you have the force to accept reality (see Macchiavelli before). Если вместо этого это ваша работа, начните искать другую, где вам не придется продавать свою душу. Удачи!
The timeline that I have described it is easily verifiable online from multiple sources, all from the west. The way you react, it is highly to be expected that if all that evidence would be tossed in your face, you would still be denying it. It is you who doesn't accept reality as it is, but embrace a twisted narrative. A narrative that gets twisted all the time, with a past that is very fluid and is redrawn to serve the interests of the present.
Briefly a series of links.
Historical developments in Crimea https://carnegieendowment.org/2014/03/13/russia-s-real-aims-in-crimea-pub-54914
Donbass separatists Russia baked attacks on Ukrainian forces (outside Donbass). See events in 2015 (while Minks agreement was drafted and not respected by separatists)
https://understandingwar.org/publications?type%5B0%5D=map&tid%5B0%5D=300&field_lastname_value=&sort_by=created&sort_order=DESC&page=1
Also
https://www.cfr.org/global-conflict-tracker/conflict/conflict-ukraine
Regarding expanding East for gas and oil, sure there has been an increase of exports that way. But Samarkand negotiations will have effect long way out. Gazprom press media
https://www.gazprom.ru/press/news/2022/september/article556556/
emphasizes that there is not a natural gas storage facility back East; they never built any. It is not exactly a 6 months solution...
... and RUCB Nabiullina already warned about this several times this is her last media conference. https://cbr.ru/press/event/?id=12933
Purchasing power parity is not a commonly used measure of GDP. Simple GDP or GDP per capita are the regular measures.
Even the Economist accepts that the nominal GDP in USD is not an adequate measure for comparison. This is why they came with the Big Mac Index.
Which is fine but you can't ignore the principle measures of GDP. For me the key measure is per capita. Burgers are one thing bit what does a modern car cost in Russia compared to say the UK? Okay, not a great comparison at the moment seeing that such a car is not available at any price.
You really believe that modern cars are not available in Russia? You think South Korean made cars are not available in Russia? Or maybe Japanese cars? Or even Chinese or Russian made cars, in new modern factories? You think Russians cannot make cars? If they can make nuclear submarines, satellites, top of the line fighter jets, best anti missiles systems, as well as passenger airplanes, they cannot make decent civilian cars? I know that if one can avoid, one doesn't buy an American brand car...
This retired American, living as a widow with two young children in Russia, seems to be getting by just fine, which would have been impossible for him in the good old US of A. https://halfreeman.wordpress.com/
I understood that due to western sanctions there was a dearth of the components necessary to manufacture a modern car in Russia (or anything high tech for that matter), hence the reports of cars coming off production lines witg specifications that would be illegal in Europe. What % of average salary would it take to purchase one of the modern cars that you claim are available (new rather than second hand). I'd suggest that would be a better comparison of living standards than a Big Mac.
quite good in its context--really good--thanks
Shelter makes up a large part of the cpi. Raising interest rates slows building and buying homes dramatically. This puts more upward pressure on rents. Makes inflation worse. House prices may come down but if they aren’t being built they can’t provide shelter.
One question I have: what financial or monetary policy would replace the missing Russian oil, gas, coal, fertilizer, and foodstuff? OPEC has no incentive to increase production, given the coming G7 "cap" on Russian oil and gas, since that is a potential rehearsal for what is in store for them. They are already making it up like bandits. Just look at the incriminations hurled at Norway by Europeans.
The world outside Europe and US is watching very attentively. And there is a longer and longer line up of countries wanting to apply to join the SCO gang of autocrats.... Funny that.
America and the rule of law (internal and international), what a joke. https://www.laphamsquarterly.org/rule-law/due-process
...And coincidentally a very good novel, Little Fires Everywhere by Celeste Ng