The Guardian summarises this morning an issue that was played out in a big way in yesterday's Sunday Times, saying:
A global recession could be set in motion by the conflict in the Middle East as the humanitarian crisis compounds the challenges facing an already precarious world economy, two of Wall Street's biggest names have warned.
The logic of Wall Street bankers is threefold.
First, the war in Gaza might spread and add to the stresses already being caused by the war in Ukraine.
Second, this might cause rearmament, and that is inflationary.
Third. war causes stress, and people do not spend when they are stressed, resulting in recession.
That's about as succinct as I can make their argument.
There are three responses.
First, war is not bad news primarily for economic reasons. That should not be the focus of concern.
Second, war has always been inflationary: deal with it because there is no way around it. Ask instead why rearmament is needed and instead focus on eliminating the causes of war.
Third, if people don't spend, work out how to put their savings to use within the economy by using them as the capital that is required for the public spending that is necessary for the purposes of a green transition. So do not leave them idle in bank accounts or moribund in stock exchange-style Ponzi schemes. I suggest how, here. Use them constructively instead, which only the government can.
I am not for a moment suggesting that there will be no consequences of what is now happening in Israel / Gaza, and I am not ignoring Ukraine either. But to passively accept that situation and suggest a) interest rates must rise because of war, when there is no way that raising rates will solve anything and b) that the government cannot use savings to good effect is utterly bizarre. However, that, it seems, is where the titans of banking are. No wonder we're in trouble.
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You expose the opportunism of modern banking so well.
Everything is an opportunity to today’s bankers. Threats? Not a problem as the government will bail us out whilst we get to keep our bonuses.
I’ll calm down now…
Has anyone figured out what demands are being made for the release of the hostages? Too much biased reporting, and too little detail being given.
Whatever the demands are, a ceasefire should be the priority followed by aid in the form of food, water medical supplies and fuel alongside negotiations for the release of captives and then negotiations for a permanent relatively peaceful settlement. This means equal rights for Palestinians probably in a sovereign Palestinian state based on 1947 borders.
This is how our leaders should be responding.
https://www.aljazeera.com/opinions/2023/11/6/the-icc-must-investigate-the-crime-of-genocide-in-gaza
Disaster capitalism?
I would hazard an ill educated guess that the true concern for present day global hedgefunds and international bankers is not any of those stated above but is simply to maintain control of their decades of easy profiteering off the postwar global property Ponzi scheme. It is overheating everywhere. So they are raising interest rates just high enough to cool the market down but not so high as to exacerbate a global land/property collapse.
Wasn’t the national debt set up by BoE as a way to respond to a war, by offering people a safe government backed investment at good interest rates at the v time. Remarkably popular. Avoided inflation that time. Perhaps BoEc should look back through its records…