The media, multilateral institutions, governments of various countries and the most important companies in the world obviously have a degree of responsibility when disseminating the content of their communications, news, or resolutions through the channels of which they have for such effects; even more so when it comes to issues that can affect the well-being of millions of human beings.
The arguments related to the possible emergence of a global economic recession that could become a global economic depression have been treated with great prudence and reserve by directly involved organizations, governments and companies. However, there are reasons to think that the way in which these entities are handling and disseminating the issue is not only inappropriate but also harmful. The entities with the greatest communicational power in the world in topics related to the macro-economy and the global economy, in an excessive zeal to avoid becoming a propagator of false alarms, refuse to explicitly recognize the very high possibilities that the economy global recession, and, in this way, prevent the discussion about the mechanisms that would protect us from it or, in the worst case, minimize the magnitude of the damage it causes.
Go to: Misinformation and the Currency of Democratic Citizenship - James H. Kuklinski; Paul J. Quirk; Jennifer Jerit; David Schwieder; Robert F. Rich - The Journal of Politics, Vol. 62, No. 3. (Aug., 2000), pp. 790-816
Multilateral organizations, risk rating companies and economic research departments of the most important companies in the world, to point out some of the entities that handle the issue with the seriousness that deserves the case, have all the tools to study these phenomena with the breadth and depth that is required, but, its opinions and pronouncements are reactive, not proactive; and it cannot be otherwise since many important decisions are made by the most influential global economic agents based on the content of these reports. This fact, typical of the current process of global communication and dissemination of content, added to the already known political interests of several national governments to prevent some relevant issues from spreading massively at certain times; It will result in the vast majority of people who need to be informed of the arrival of the global recession months after the abnormality is part of our daily lives.
The projections of economic growth of the most important multilateral organizations do not reflect the effects of the commercial war because they will materialize in the long term. These are limited to forecasting slight decelerations in global growth rates but, on the other hand, their officials, in the face of obvious press pressure, declare, for example, that the trade war will only contract global trade by two percent . It is impossible that two phenomena that are antagonistic by nature occur simultaneously in the global economy. To affirm that global economic growth can occur in the midst of a contraction of global trade is to ignore the existence of the global economy, is to propose that national economies have an inherent capacity for economic growth behind the back of the rest of the world; it is the principle of economic isolationism in its crudest and purest form; It is mere disclosure of principles, it is not disclosure of realities.
On the other hand, another official from another multilateral agency, also harassed by the press, calls on investors to execute more investment projects because, otherwise, the growth projections set by the institution they represent cannot be maintained. . Is there a sign of panic and confusion clearer and sharper than this?
If this is not enough, we also have a very prestigious multilateral organization but with little popularity, that is, it is not very requested by the media that explicitly recognizes that there will be a contraction of the global product by 2%, but that, at at the same time, it shows China with a high rate of economic growth; In fact, he says, there will be only a few countries with economic contraction, countries that have little weight in the global product. The truth is that the global economic recession will begin with the Chinese economic recession. If China does not fall into crisis, the world will not fall into crisis.
Obviously, the confusion that seems to reign in the sources of information linked to the commercial war and a possible global recession is transmitted to the media. The word "recession" is not used by almost any informational means; instead it is replaced by the word "economic deceleration," which has a radically different meaning. In any case, together with the inappropriate use of terms, the writing of the articles and the content of the audiovisual materials emphasize the idea that the commercial war will only slow down global economic growth without causing any consequences on the US economy. In particular, those materials that cite "several news agencies" as a source show a very high level of inconsistency in their content.
On the other hand, we believe that the current situation and the perspectives before the global economy require that the risk rating companies and economic research departments of the largest global corporations have greater communicational activity. The global economic agents , more than the National States, are the ones who make the most important decisions in this matter and need, therefore, a coherent and clear signal system that allows them to carry out right actions to be able to solve in the best way the inconveniences the future holds; Misinformation and confusion not only bankrupt many companies, it also destabilizes economies, large and small. Competent agencies need to issue forecasts of consistent and credible global economic growth prospects.
At this time, a reasonably accurate global economic growth forecast based on terms of probability of occurrence would be as follows:
- Forecast until the end of 2020, that is, without considering the US electoral process
- Global economic recession: 40%
- Global economic deceleration: 60%
- Global economic depression: 0%
- Negative effects on the US economy: 0%
- Forecast after 2020, that is, considering the outcome of the US electoral process
- With republican triumph
- Global economic recession: 50%
- Global economic deceleration: 20%
- Global economic depression: 30%
- Negative effects on the US economy
- In terms of prices: 80% chance of events occurring in 2023
- In terms of product: 30% chance of events occurring in 2027
- With democratic triumph
- Global economic recession: 40%
- Global economic deceleration: 40%
- Global economic depression: 20%
- Negative effects on the US economy
- In terms of prices: 60% chance of events occurring in 2023
- In terms of product: 20% chance of events occurring in 2027
As we can see, the process of correcting the US trade deficit will have serious consequences on the global economy and could even have negative effects on the US economy itself.
But, if the tariff increase measures are being applied by the Trump Administration since 2017, why should we wait until 2020 or 2021 to confirm that they will generate a global economic recession?
Here we have proposed that the transmission channel of a possible global economic recession is the Chinese economy; what happens in it will determine whether or not the world enters recession. At this time, the Chinese domestic product depends fundamentally on the investment component; that is the axis of the spectacular growth of the Chinese economy since the behavior of this variable is subordinated to the behavior of consumption and public spending. However, this volume of investment is not autonomous but depends on the ability of the Chinese economy to sell its products in the United States.
 |
| China Investment March 2019 |
Indeed, the commercial war discourages the execution of investment projects in Chinese territory through the decrease in the number of projects initiated in that country since 2017. We believe that in the year 2020 or 2021 the current investment projects will be completed or those investment projects that have become unfeasible due to the appearance of the commercial war will have been paralyzed. That is, the budgetary size and the amount of new investment projects will be, in those years, infinitely less than the volume that the economy of that country usually manages; This means a contraction of the investment in execution that will negatively impact government consumption and expenditure to translate into a contraction of the Chinese product for several quarters in a row so that the economic recession appears in that country.
 |
| Is China investing too much in infrastructure? |
The Chinese economic recession would be becoming a global economic recession, not so much because of the decrease in the purchase orders of the Asian country to its trading partners in the rest of the world, but, fundamentally, to the abrupt stoppage of investment projects that also they run in these countries before the emergence of the economic recession in the Asian country.
All these investment projects seem to be leveraged by global financial entities, so a global financial crisis could be the springboard that leads to the planet from a global recession to a global depression.
We believe that there is still time to study the problem with the necessary rigor and devise mechanisms that mitigate the unpleasant consequences of such eventualities. But, in any case, the milestones of this phenomenon are already being addressed in these pages for consideration at the time of further investigation.
No comments:
Post a Comment