Discover and read the best of Twitter Threads about #depression2020

Most recents (5)

I guess now is a good time to remind ourselves, why further debt and monetary stimulus is a bad idea.

I understand the desperation, but the fact is that the #economy is not something you can manage from above. Thread.

Let's start with a familiar chart. 1/14
I've been doing empirical research on economic growth for 18 years, and the above is the strangest thing I've ever seen.

There's absolutely no reason, why the productivity should fall, globally, in an expansion. It's an aberration. 2/
Some Post-Keynesians have made up different imaginative explanations, as they often do, but the fact is that, e.g., not wages nor the commodity cycle drive productivity.

Productivity grows through profitable investments, which drive wage growth. Investments... 3/
Read 14 tweets
A lot of fuzz about the potential recovery of #China.

But, is her #economy really going to recover? A thread.

Sometimes, one picture says more than the thousand words. IMHO, this is one of those. πŸ‘‡ 1/8
#depression2020 #recession2020 #coronavirus
Thus, China responded to the economic shock caused by the #COVID19 and 'draconian' lock-downs with 'draconian' stimulus, setting the stage for other nations to follow.

The only word to describe this is: Desperation.

Remember. πŸ‘‡ 2/
The small decline in the share of non-financial sector debt to GDP will explode in Q1 and Q2 2020.

And, the shadow banking sector has grown to a "beast". πŸ‘‡

Chinese economy is massively leveraged. 3/
Read 9 tweets
A thread, why the breakup of the #Eurozone is a near certainty.

The unfortunate fact is that the EZ has been an ill-conceived political project from the beginning.

And that's why it will fail. 1/21
@CNBCJulianna @iainmartin1 @GnSEconomics…
The key questions, the EZ now faces, are:

1) Will the ECB be able to provide support for sovereign bond markets through QE?
2) Will national authorities accept the terms associated with possible bailout loans?
3) Will national political leaders continue to support the euro?
The decision of Germany's Constitutional Court (CC) basically crushed all hopes of debt monetization and 'helicopter drops' of money in the EZ.

But, it did do more than that. In its statement, the CC ruled that: 3/…
Read 24 tweets
I think it would be a good time to remind everyone, where economic prosperity of nations arise.

So, a (long) thread to economic success, for nations.

I guess the easiest way to start this, is to describe what does NOT work.

First lesson is depicted here. πŸ‘‡ 1/21
What the experience of Japan, with her handling of the early 1990's financial crisis, taught us, is that you NEVER EVER enact a national bailout of banks and corporations.

It's the surest way to prolonged economic malaise.

Japan "fixed" this, with massive increase in debt. 2/
What we need to understand is that productivity growth is everything that matters, economically.

In simplified terms, it's a process that increases the productivity of a human worker thus increasing his wage and making products cheaper.

This is driven by technological... 3/
Read 21 tweets
Many seem to be unwilling or unable to grasp the dire economic consequences of the #COVID19 pandemic.

In this thread I try, based on the evolution of our thinking, to explain, why we are heading to a deep and prolonged depression.

First, an intro and a reminder. πŸ‘‡1/17
The situation in the world #economy would not be so alarming without this. πŸ‘‡

We have lived in unprecedented economic expansion with stagnated productivity growth!

I cannot stress enough, how strange and troubling this is. 2/
We analyzed its implications thoroughly in the March 2019 issue of our Q-Review.

"Because zombie companies can fail at any time, ..., they create a huge risk for both private investors and the global asset markets." 3/…
Read 17 tweets

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