News:

And we're back!

Main Menu

The 2022 Economic Crisis Megathread

Started by Tamas, May 25, 2022, 05:15:04 AM

Previous topic - Next topic

crazy canuck

Given the development of the law in Canada - including some recent significant SCC cases, wage increases contained within collective agreements effectively cannot be decreased.  But employees excluded from the bargaining unit are fair game.  I think what we are going to see is more employees who had previously been excluded, wanting to become part of a bargaining unit.  The trick is going to be which one will best suit their needs.
I want you to panic

https://www.theguardian.com/science/video/2019/jan/25/i-want-you-to-panic-16-year-old-greta-thunberg-issues-climate-warning-at-davos-video

"Woke" is now almost exclusively used by those who seek to deride it, those who chafe at the activism from which it sprang. Opponents to the idea are seeking to render it toxic. They use it to stand in for change itself, for evolution, for an accurate assessment of history and society that makes them uncomfortable and deflates their hagiographic view of American history.

Zanza

Quote from: Sheilbh on August 05, 2022, 12:12:39 PMI'm not sure I can think of a better way of undermining energy transition than making the politics of it that it'll make you poorer. Especially if there's no measures taken to make it seem fair so the hit isn't distributed unfairly.

I think that approach ends up making the gilets jaunes look like the Rotary Club.
No idea about the UK or so, but here measures are taken to help out the poorer segment of society. Let's see if it will be sufficient. 

But most energy here is used not by consumers, but by companies. Higher energy prices is a powerful catalyst towards actually reducing energy usage or transforming processes so that they  can e.g. run on green electricity instead of oil or gas.

Zanza

Quote from: Jacob on August 05, 2022, 12:13:34 PM
Quote from: Zanza on August 05, 2022, 12:04:54 PMIn the Eurozone at least a lot of inflation is from external shocks, mainly the war and related sanctions, also supply chain to China.

Especially on energy, inflation should not just be compensated, as the higher price serves as a means to achieve the policy goal of reducing fossil fuel consumption.

Yeah, I'm no economist but I think the inflation is being driven primarily by worldwide events impacting production and the supply chain -  war, sanctions, China covid zero policies, energy price increases.

Personally - though it's inconvenient for me as a hiring manager - I think it is very reasonable for working people to push for increased salaries.

Also, I think that given the demographics of the West - more workers retiring compared to new folks entering the workforce - we are entering (already in) an era where talent acquisition is going to remain an issue and workers have negotiation power. "Don't ask for wage increases because of inflation, be a team player for the sake of the economy" is just not going to cut it as an argument IMO.
Sure, I am always for people asking what I consider their fair share. Wealth inequality is maybe the biggest societal issue in the West. And collective or individual action to shift the income scales a bit more again to working people is necessary and welcome. Workers should always ask for wages to grow at least at the level of inflation.

DGuller

I'm no economist either, but I think the inflation kicking is mainly caused by the most boring explanation:  we've printed too much money.  You can't have near-zero interest rates as a new normal for 15 years without it causing an inflation at some point.  Supply shocks could've been the catalyst, or the Covid payments to people who actually spend money, but sooner or later it was bound to result in inflation.  At some point the people holding the financial instruments that were inflating in value were going to cash in and try to chase goods and services with that money.

Iormlund

Quote from: Habbaku on August 05, 2022, 10:14:20 AMIs there a country in the world whose public policy is to have declining real incomes?

Perhaps not officially, but as a result of the Euro debacle we (the PIIGS) effectively tried the declining real incomes route.

It went as well as you could imagine, with unemployment reaching ludicrous levels (and highly qualified people like my brother or myself emigrating in droves). In the end the ECB had to intervene and threaten to set currency printing on Max.

Unemployment recovered but income didn't go up.

Then the pandemic hit. It's been an interesting couple decades here in Club Med ...

Sheilbh

Quote from: Zanza on August 05, 2022, 01:02:32 PMNo idea about the UK or so, but here measures are taken to help out the poorer segment of society. Let's see if it will be sufficient. 
Yeah - but I think we've done the low-hanging fruit so far around the grid and energy networks that don't have as much direct impact on consumers lives. I think when we're getting into heating, housing, cooking, driving it's more contentious and a lot needs to be done to ensure that it's fair - which was the problem with Macron's policy on fuel, it's not that it was a high tax or that it was actually that unfair but perceived as unfair because there were distributional issues.

QuoteBut most energy here is used not by consumers, but by companies. Higher energy prices is a powerful catalyst towards actually reducing energy usage or transforming processes so that they  can e.g. run on green electricity instead of oil or gas.
I think it's probably 50/50 here. Domestic use is roughly a third; industrial and commercial is basically a third; transport is basically a third (which I assume is probably evenly split between individuals and company level).

I agree you need the price signal. But I'm not sure it's that essential because practically Europe doesn't have much energy anyway - we might be able to frack a little, or get a little more oil from Norway. Here I think the inflation and net zero ambitions point in the same direction, I think they might do in China as well - I'm less sure for countries like the US, Mexico, Canada etc where they have resources.
Let's bomb Russia!

Tamas

Quote from: DGuller on August 05, 2022, 01:07:56 PMI'm no economist either, but I think the inflation kicking is mainly caused by the most boring explanation:  we've printed too much money.  You can't have near-zero interest rates as a new normal for 15 years without it causing an inflation at some point.  Supply shocks could've been the catalyst, or the Covid payments to people who actually spend money, but sooner or later it was bound to result in inflation.  At some point the people holding the financial instruments that were inflating in value were going to cash in and try to chase goods and services with that money.

Agreed. Maybe without pandemic and a war it would have gone fine for another 15 years, but it was bound to spill out.

Iormlund

#127
We're installing solar panels to mitigate the impact of energy costs. We have over a hundred welding robots, plus a gas-powered painting oven. So you can imagine what impact energy costs have had. And that was on top of steel prices skyrocketing.

There's not that much we can do otherwise.
Setting the AC temps higher is hazardous when you have hundreds of people doing strenuous tasks in the middle of a heatwave. The cooling towers can barely cope as it is (yay climate change).

That's on the business end.


For workers this is equally devastating. While public transport or remote work is an option for service workers, many people have to commute to industrial centers surrounding the cities. These need cars. Higher electricity and gas prices mean lower disposable income. For someone making 900 to 1500 €, a hundred more euros spent every month on electricity and gas is a fucking crapload of money. What are they going to do to save? Not go to work? Nah, they'll simply cut spending elsewhere. Thus recession.

Zanza

Quote from: Sheilbh on August 05, 2022, 01:11:42 PMI think it's probably 50/50 here. Domestic use is roughly a third; industrial and commercial is basically a third; transport is basically a third (which I assume is probably evenly split between individuals and company level).

I agree you need the price signal. But I'm not sure it's that essential because practically Europe doesn't have much energy anyway - we might be able to frack a little, or get a little more oil from Norway. Here I think the inflation and net zero ambitions point in the same direction, I think they might do in China as well - I'm less sure for countries like the US, Mexico, Canada etc where they have resources.
Just read that German gas consumption has already been lowered by about 17% compared to last year, most of it by industry, not by private heating consumption. Anecdotal: The company I work for needs as much gas as a decent sized city for its industrial processes, but they think they can reduce that by 50% until end of this year.

celedhring

Non-household gas consumption is down 20% year-on-year in Spain. In the end, high prices (and a likely recession) are going to naturally depress consumption.

Sheilbh

Incidentally on the BofE's projections - BBC Newsnight Economics Editor noted how strikingly more pessimistic they are:


In part this is possibly because they're more up-to-date and can take account of recent data on energy and partly assuming no fiscal response and the energy cap is raised as it normally is by the regulator which will double bills in October. But part of it seems to be that their central assumption includes energy prices staying at their current (high) levels for 6 months which it seems the other bodies don't have as an assumption. I think they're probably right that energy is likely to stay expensive for a long while - but doesn't that get to Zanza's point of, at some point, prices at that level impacting demand?

As I say it might just be more up to date but it is a really interesting/very wide divergence at this point.
Let's bomb Russia!

Sheilbh

So Japan and South Korean LNG purchasers (the largest in the world) have very publically announced they need more gas for winter. I suspect it's just hedging - but that's going to make the global LNG market more expensive and more competitive for Europeans who purchase less and have, from my understanding, less history with the sellers, because Europe used more pipelie gas but also didn't like the long-term contracts that were popular with LNG suppliers.

It's another factor in what, I think, is going to be a really challenging winter.
Let's bomb Russia!

HVC

House prices are falling here and the usual people are panicking. Still higher then precovid.
Being lazy is bad; unless you still get what you want, then it's called "patience".
Hubris must be punished. Severely.

crazy canuck

Quote from: HVC on August 08, 2022, 07:33:09 PMHouse prices are falling here and the usual people are panicking. Still higher then precovid.

I don't think it is the usual suspects actually - it is more the millennials who finally scraped together the down payment and bought in the last few years, hoping against hope that mortgage rates would stay at historic lows.

Those are the folks really getting squeezed.  If they cannot afford the increased payments, they will have to sell into a declining market.  Not a very comfortable position to be in.

It would great if prices stabilized so that increasing incomes could make owning property more affordable - but there is a lot of regulatory work needed to achieve that with Canada's population (and especially in the cities) continuing to climb beyond foreseeable supply.
I want you to panic

https://www.theguardian.com/science/video/2019/jan/25/i-want-you-to-panic-16-year-old-greta-thunberg-issues-climate-warning-at-davos-video

"Woke" is now almost exclusively used by those who seek to deride it, those who chafe at the activism from which it sprang. Opponents to the idea are seeking to render it toxic. They use it to stand in for change itself, for evolution, for an accurate assessment of history and society that makes them uncomfortable and deflates their hagiographic view of American history.

Jacob

Yeah, the people I have sympathy for are the folks who stretched themselves close to breaking to get into the market right before it declined.

Losing X% off the peak valuation of our house doesn't matter to me. Having to make bigger mortgage payments (or extending the time to when we'll be mortgage free) kind of sucks, for sure, but it's manageable.