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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: Broken_Clock who wrote (11905)	12/16/2023 12:58:00 AM
From: elmatador	1 Recommendation Recommended By E_K_S Read Replies (1) \| Respond to of 13831

'The war on inflation is over': Paul Krugman just declared victory on white-hot inflation — and says we won at 'very little cost.' But here's what he left out of the math Economist and Nobel Laureate Paul Krugman has declared victory over inflation. “The war on inflation is over,” he said in a recent tweet. “We won, at very little cost.” The tweet was accompanied by a chart, which sparked a backlash across social media platforms. But is his victory lap premature? Here’s what’s missing in Krugman’s calculations. Inflation measurements Krugman’s chart seems to indicate that “inflation” has dropped below 2% in September 2023. However, the issue lies in the way he measures inflation. His chart uses the Consumer Price Index but strips out food, energy, shelter and used cars. Critics argue that this measure is simply too narrow. “Ex food, energy, shelter and cars? What’s left, fax machines?” one reply to Krugman’s tweet read. The comment was apparently a dig at the professor’s infamous 1998 comment that the economic impact of the internet would be less than that of the fax machine. Other critics argued that Krugman’s measure didn’t reflect the real economy. The Consumer Price Index, or CPI, is what most people associate with headline inflation. This measure was 3.7% in September, higher than forecasts and much higher than Krugman’s chart. However, this isn’t the first time economists or even Fed officials have dissected inflation numbers this way. The Fed has mentioned its focus on core inflation — a measure that strips out energy and food from the CPI basket because these prices can be volatile and impacted by global supply chain issues. Some economists have also referenced supercore inflation — a measure which strips out food and energy but also housing costs since this data is lagging. What’s left is a measure that’s focused on domestic labor and services, such as hiring a plumber or getting a haircut. Fed chairman Jerome Powell once argued that supercore inflation “may be the most important category for understanding the future evolution of core inflation.” However, Krugman’s measure goes a step further and strips out used car prices too. Why he used this super-supercore measure is unclear. Nevertheless, it highlights a huge gap between how economists view the economy and how the average person experiences it. Inflation is an ongoing battle For average Americans, the war against surging prices is far from over. At 3.7%, headline inflation is still significantly higher than the Fed’s 2% target. Meanwhile, 35% of U.S. adults surveyed by CBS and YouGov in September said that the economy was “very bad,” while another 31% said it was “fairly bad.” Only 8% told researchers that economic conditions were “very good.” This could be linked to the fact that wages haven’t kept up with inflation. If the average worker feels like their purchasing power is slipping, the fact that the economy is officially growing and inflation is lower than last year doesn’t matter much. For most Americans, the battle against inflation isn’t over until they earn enough to support their families and survive.

To: Broken_Clock who wrote (11905)	12/16/2023 3:13:31 AM
From: elmatador	Read Replies (1) \| Respond to of 13831

As Russia won: G7 moves closer to seizing Russian assets for Ukraine US discussion paper argues confiscating some of Moscow’s $300bn ‘consistent with international law’ Seizing Russian assets could provide an alternative stream of funding for Kyiv, especially given the expected huge costs of postwar reconstruction progress 98% Laura Dubois in Brussels, James Politi in Washington and Lucy Fisher in London Western nations are actively exploring ways to seize Russian central bank assets to fund Ukraine as political disputes in the US and Europe threaten its flow of financial support. G7 officials have intensified talks in recent weeks on spending some of the roughly $300bn in immobilised Russian sovereign assets, a radical step that would open a new chapter in the west’s financial warfare against Moscow. The push comes as two crucial financial aid packages for Ukraine worth more than $100bn faltered this week, as Republicans in the US Congress and Viktor Orbán of EU member Hungary took a stand against funding Kyiv. Seizing Russian assets could provide an alternative stream of funding for Kyiv, especially given the expected huge costs of postwar reconstruction. But until now G7 governments have mostly balked at such a move, fearing that some foreign investors in dollar and euro assets would take flight. Although Washington has never publicly backed confiscation, the US has privately taken a more assertive stance in recent weeks, arguing in G7 committees that there is a route to seizing the assets “consistent with international law”. “G7 members and other specially affected states could seize Russian sovereign assets as a countermeasure to induce Russia to end its aggression,” said a US government discussion paper, seen by the Financial Times, which was circulated in G7 committees. The US Treasury declined to comment. A US official said Washington was engaged in active conversations on the use of Russian sovereign assets and believed there was a short timeline to make a decision. They suggested it could be discussed at a possible G7 leaders’ meeting to coincide with the second anniversary in February of Russia’s full invasion of Ukraine. EU proposals have so far stopped short of seizing the Russian assets themselves, instead aiming to skim off profits generated for financial institutions such as Euroclear, where €191bn in sovereign assets are held. But calls for tapping the assets themselves have grown louder as cracks have emerged in the political consensus on additional funding for Ukraine. Aid packages worth $60bn and €50bn in Washington and Brussels, respectively, failed to win approval this week. Lord David Cameron, the UK foreign secretary, has expressed confidence there is “a legal route” to confiscate the assets and has suggested the UK might act with the US if other G7 allies cannot be convinced. “Extraordinary times require extraordinary measures,” he told a UK parliamentary committee on Thursday, adding he was “pushing hard” for the proposal within the G7. He denied there would be a “chilling effect” on inward investment, insisting that those investors likely to feel perturbed would already “be pretty chilled by the fact we have frozen” the assets. The US official said the G7’s legal discussions reflected the importance of abiding by international law in responding to Russia’s invasion. The goal over the coming weeks would be to work through all the critical issues so the G7 could move together. European countries, particularly Germany, France and Belgium, have been reluctant to make such a move, citing legal concerns such as the protections that sovereign assets enjoy under international law. The bulk of the €300bn of Russia’s state assets are held in Europe. Even so, one western official said there were “definitely live conversations” within the G7 and a “growing consensus” in favour of using Russian sovereign assets for Ukraine. “It’s going back to the question of: is it just up to western citizens and treasuries to pay for the war, or should the Kremlin also be on the hook?” The US paper argued that Russia’s invasion of Ukraine meant the seizure of assets could be “pursued as a lawful countermeasure by those states that have been injured as specially affected by Russia’s violation of the international law”. “We need to find a way to get cash to Ukraine, in whatever form,” said one EU diplomat involved in the failed summit negotiations this week. “And more and more countries are pointing at the assets and wondering why they are still sitting there.” ft.com