Oldal kiválasztása


Egy újabb cikket szeretnék veletek megosztani, aminek témája a mostani és a 2008-as válság összehasonlítása. Amellett, hogy érdekes, alkalmat ad a szókincs fejlesztésére.

Without a laboratory at hand, economists have to draw lessons from past experience. It is tempting to  (adja magát, arra csábít, hogy) compare two crises: the current one generated by the novel coronavirus disease (COVID-19), and the “Global Financial Crisis” (GFC). Some major economic similarities and differences as of end-April 2020 are summarized hereafter, while many aspects go beyond this analysis, whether psychological, political, social, or basically…human

Three major economic similarities: a hasonlóságok

#1. Uncertainty: Both crises share uncertainty as a key factor once they emerged (felbukkan) in one of the two leading economies (the United States in 2008 and China end of 2019) and spread globally.

To put it simply and following Frank Knight (1921), “uncertainty” can be defined as a non-quantifiable risk. It is a risk that cannot easily be traced (nyomon követni) so that its probability of occurrence and its impact can hardly be predicted. This applies both to the new non-visible coronavirus and to the ‘‘subprime’’ virus.

In a nutshell, (dióhéjban) subprime loans were granted (másodrendű hiteleket adtak)to Americans with “Neither Income Nor Jobs & Assets” (NINJA) until 2007. The latter toxic risk was hidden and transferred via apparently sound securitized assets and financial vehicles so that nobody knew where and how significant the risk was. The result was a freezing of international financial relationships and a spike in uncertainty, including on the economic policies to tackle (elbánik, kezel)this unprecedented situation.

The COVID-19 crisis freezes a large chunk of merchant activities in half of the world.

#2. Collapse: The initial drops in (kezdeti esés)the stock exchanges of major countries (up to one-fourth of their valuation) have been analogous between both crises. And both global recessions have been successively qualified as the largest since the Great Depression.

As regards “year on year” forecasts, the IMF assumed lockdowns of about two months followed by a relatively quick recovery. The observed growth in 2009 was not as bad especially for China and India because these countries were hit later.

Yet, end-April 2020, the de-locking process appears more progressive and delayed by observed or potential relapses so that the outcome will likely be worse, (valószínűleg rosszabb lesz a végeredmény) As a result of the depth of the global recession and the free fall in oil prices, negative inflation is expected soon, which should not trigger deflationist expectations if policies react appropriately.

#3. Reactions: To limit such shocks,monetary and fiscal policies have in both cases provided massive support.

The spillover effects (továbbgyűrűző hatás) of the GFC were related to what were later called “Global Systemic Important Banks” (G-SIB) with contagion (ragály, továbbterjedés) across borders. Similarly, the COVID-19 crisis has revealed the dependence of mature economies on some inputs produced only (or mainly) in other countries; this is perceived as jeopardizing their sovereignty.(veszélyezteti a szuverenitásukat)In both cases, there is a major comeback of the roles of the public authorities, the scope of regal (sovereign) powers, and the call for better regulations.

Especially in Europe, the three famous words pronounced in July 2012 by the (former) ECB President, Mario Draghi, “Whatever It Takes” have recently been repeated. They were also adapted to local conditions and the type of policies (“Whatever it Costs”). Such a formula used to preserve euro area integrity contributes to reassuring financial markets only when perceived as credible(hitelesnek ítél).

Four main differences resulting in a shift from the “Economic War” to the ‘‘War Economy”

A különbségek


#1. Process: The current exogeneous (kivülről jövő) sanitary shock has affected, first, the real sector and the supply of production, then the demand side. In 2007-08 the endogenous(belülről jövő) financial shock affected the demand side first, and then morphed into the Great Recession of 2009.

The COVID-19 crisis has spread quickly all over the world given highly integrated supply chains and the physical contagion of the virus. This supply-shock then has affected the financial sector and the demand side (tourism, trade, etc.). As a producer’s constraint (korlátozás, kényszer) restrains the consumer,(visszatart, akadályoz) a demand shock emerges everywhere, worsened by psychological contagion.

The 2020 lockdown (self-quarantine at home) is identified with an “medically-induced coma,” voluntary and temporary, imposed on the economy so as to limit contagion (“flatten the curve’’). In order to minimize bankruptcies of firms and the loss of productive capital, including workers’ skills, it needs to be accompanied by medicines. In Europe more than in the United States, part-time work or technical unemployment subsidized by the governments are thus favored over firing massive numbers of employees. In addition, especially in Europe, public guarantees are provided to help banks provide the necessary loans to firms so as to survive the temporary coma.

By contrast, in 2008 the initial financial shock resulted in a burst of the housing bubble (az ingatlanbuborék kippukkanása) in the United States and, hence, of demand via wealth effects. Both then affected the US activity and international financial markets, leading progressively to a global recession. In order to avoid a “sudden death” of the economy, all actions were aimed at reviving finance ( minden intézkedés célja a pénzügyek újraélesztése) to help the economy get out of its increasing lethargy.

In 2008, insufficiently capitalized banks were part of the problem. Financial institutions shall now be part of the solution. This is possible thanks to a better regulated financial system, despite earlier signs of reform fatigue (kifáradás) and attempts to unwind regulatory progress in the recent years. 

#2. Speed and shape: A sharper but shorter “V-shaped” shock would allow real GDP to return close to its previous trend in contrast with the “U-shaped” impact of the GFC.

Everything accelerates (felgyorsul): the virus spread and the authorities’ reactions. This remains true even if current trials and errors are criticized, both for health protection and economic policies, given the size of the damage. By contrast, the GFC was brewing (forrt, forrongott) before 2008 and the economic rebound was partly delayed to 2010, at least two years later. In addition, the subsequent recovery was very progressive because of persistent scars.(tartós sebhelyek)

Yet, in addition to a slower rebound than hoped (looking like the shape of a Nike-“swoosh”), activity may not go back to 100 percent for some time, if only because of less tourism and transport. Moreover, lower investment for too long may affect not only the steepness of the rebound, but also the new trend of potential growth at least in the short-to-medium run.

#3. Policies: In 2020, public authorities, facing a deeper shock, seemed to have less reaction margins.

This would apply to fiscal policies, given high outstanding ratios of public debt over GDP, in most mature economies as well as in China. Yet the size and the speed of reactions have been without precedent,

Some quarters argue that they should adopt “helicopter money.” In fact, whether in the United States or in Europe, central banks are de facto “monetary financing” public debt. They do so by boosting quantitative easing, via huge purchases, provided they later maintain their higher balance sheets. Thus, both their announcements and purchases prevent interest rates from rising.

This approach is easier to implement and to “sell” to some politicians than attempts to provide “helicopter money.” The latter would require central banks to reach non-financial agents directly beyond their targeted loans at lower rates via the banking sector. Banks through their commercial activities and government via taxes and subsidies have an easier access to, and better assessment of non-financial agents. Moreover, central banks’ refinancing is time-limited; and the asset purchases can be stopped and liquidity can be absorbed by selling assets back to the market (or remunerating better reserves). This would apply if reflationary risks were to jeopardize price stability over the medium run.

#4. Multilateralism: Aggregating the simultaneous reactions of major countries falls short of authentic international or regional coordination, especially between governments.

While there are many current illustrations of international coordination between central banks, this is less so between governments at the global and European levels. This is a major and worrying contrast with the follow-up of the GFC. The momentum (lendület) and even the spirit of global leadership seem now to have faded.(elhalványul)

Most countries are in the same boat, now as in 2009 when the Group of Twenty (G20)—including international organizations—took the lead (átvette a vezetést). Unfortunately, since then attacks on multilateralism have had lasting damaging effects.

To sum up, there are more differences than similarities in comparing these two crises. Others may still emerge as time goes. History doesn’t repeat itself; it stutters. And, of course, what will matter afterwards is to really draw the appropriate lessons ( levonni a megfelelő tanulságot) to revisit our development models and better prevent and/or limit future crises.

rebound: visszapattan, visszaugrik

relapse: visszaesik, visszaesés

spillover effect: továbbgyűrűző hatás

exogeneous: exogén, kiívülről jövő

stutter: hebeg-habog

revisit: újra átgondol, újra megvizsgál