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Monday, August 8, 2022

War makes us poorer

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We are at war. War makes us poorer. We don’t want to know. Public support to keep the economy going, bail out businesses, keep jobs secure and bail out the vulnerable is essential. But they carry a risk: that they cover our eyes, like a blindfold.

The crisis of the Covid-19 pandemic was different. The shutdown froze the economy and did little to harm it. The excellent economic policies – European and Spanish – helped to avoid the worst. Reinforced employment. And it contributed to the rebound effect from a historic slump in activity.

The war economy is a different kind of crisis. It destroys assets, disperses professional talent, undermines corporations. Sometimes, like when our Civil War (for worse) or World War II (for better), reconsiders plans, reorganizes institutions, deals new – different – ​​maps on the map of power, this usually causes recessionary moments. At other times, public investment, industrial bets, civilian effects of military technology are restarted: then peace breeds expansion and social prosperity.

This war crisis, inherited in part from the post-pandemic recovery, is fueled by the same currents as other wildfires. And like the Great Recession, it threatens to resemble the seven-headed snake. In 2008-2011, the housing bubble rotted financial assets; this corroded solvency of the banks; the financial crash required public bailouts; the national debts replaced the private ones, which thus turned into a national debt crisis, risk premiums, the threat of the euro breaking up. And these gave way to the nefarious policies of excessive austerity that caused austerity and precipitated a recession.

What is special about this dynamic is that it causes daily infections. Now the supply crisis (supply cuts, chain collapse, lack of raw materials and strategic products) restricts production; demand is growing; Inflation is running amok. And the beginning restrictive monetary policy (we will see fiscal policy) also threatens its recessive effect … Of course, this is in force simultaneously with the actual recovery. And apart from the expectations that European funds offer.

We live in bipolarity. Extension and Restriction. abundance and poverty. Let’s learn to explain it. And to ride on both poles. Accelerate and brake. Slurp and blow. Difficult subject. Describing it in detail requires sophistication. To approve it, complicity.

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Source elpais.com

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