Why is America playing war games with China?

philmullan Changing world order, Politics, Rivalries

Aukus, the new security partnership between the US, Britain and Australia, is being widely viewed as a ‘paradigm shift in strategy and policy’ for the Asia-Pacific region.

The pact’s significance goes well beyond sharing various advanced military technologies, including nuclear-powered attack submarines. It amplifies three existing trends in international relations that have been building up for over a decade.

First, it continues America’s targeting of China. Second, it intensifies the militarising of America’s strategy towards China. And third, it accelerates the unravelling of friendly relations between Western nations. These three trends together threaten geopolitical stability and peace.

Read the full article here.

Shutdown: the end of an economic era?

philmullan capitalism, Covid-19, Debt, Green agenda, Politics

Particular crises rarely change everything by themselves, but they can amplify what was already underway. This is how economic historian Adam Tooze approaches the Covid crisis in Shutdown: How Covid Shook the World’s Economy. He presents it as an event that brought pre-existing trends to the surface.

Shutdown is one of the first extended economic histories of the pandemic. It covers a single year, from Chinese president Xi Jinping’s public acknowledgment of the outbreak of a novel coronavirus in January 2020 to US president Joe Biden’s inauguration exactly 12 months later. The bulk of Shutdown is a comprehensive month-by-month commentary on the progression of the pandemic, the varied government responses to it and the economic, financial and political fallout.

Read the full review here of Adam Tooze’s new book Shutdown: How Covid Shook the World’s Economy.

Inflation: another symptom of the zombie economy

philmullan Covid-19, Economic policy, Inflation, Zombie economy

In both the UK and the US, the monthly inflation figures released this week came in well above the forecasts. These announcements have added to fears from many economists that we could be seeing a return to inflation rates not seen for 40 years.

Led by Jay Powell, chair of the US Federal Reserve, most central bankers believe that the current high levels of inflation are ‘transitory’, and will fade away once the lockdowns have been fully lifted. Meanwhile, critics say any delay in monetary tightening will simply force the central banks to slam on the policy brakes harder at a later point, resulting in even greater economic disorder and perhaps an even harsher recession.

So who is right? The inflation hawks or the apparently dovish central bankers?

Read the full article here.

The G7 is not all it’s cracked up to be

philmullan Changing world order, Politics, Rivalries

UK chancellor Rishi Sunak has hailed the Group of Seven (G7) finance ministers’ cross-border tax proposals as ‘truly historic’ and ‘seismic’. These proposals, which would establish a minimum global corporate tax, are to be targeted at multinational companies.

You can understand why Sunak was making noise about this. For years the largest international corporations, including the iconic Big Tech firms, have been adept at minimising their global tax bills. Making them stump up more lucre allows the UK government to pose as a global leader, and to give substance to its ill-defined ‘Global Britain’ slogan. No doubt there will be more of this from Boris Johnson this weekend, given it is Britain’s turn to host the G7.

Leaving aside the hyperbole from British ministers, what might the G7 tax agreement tell us about the state of international relations? In particular, does it represent the historic revival of ‘multilateral co-operation’, as many commentators have claimed? No, not really, is the short answer. Read the full article here.

A post-Covid boom? Not so fast

philmullan Covid-19, Economic policy, State intervention, The longest depression

Some pundits are getting a little carried away by the signs of a rapid economic bounce-back. The uniqueness of the past year has distorted the data, creating a misleading impression of our economic prospects. We would be well advised to be more sceptical than usual about the economic stories being told.

The biggest worry is that politicians will overinterpret the contemporary statistical fog in a way that allows them to evade the deeper, more substantial economic issues they should be addressing. We have been complacent for too long about the state of the Western economies. If we get too excited about high growth rates and other anomalous data, we are much more likely to waste the opportunity for real change thrown up by this crisis.

Read the full article here.