World May Have a Bigger Problem Than a Potential Recession

[Mike 03]

Source: Bloomberg

Excerpt:

The global economy is stuck in a rut that it won’t exit unless governments revolutionize policies and how they invest, rather than just hoping for a cyclical upswing, the OECD said.

The latest outlook and policy prescriptions from the Paris-based group mark a step beyond its repeated warnings about threats to growth from U.S.-China tensions, weak investment and trade flows. Those remain, but it also flags more systemic challenges from climate change, technology and the fact that the trade war is just part of a bigger shift in the global order.

For OECD Chief Economist Laurence Boone, the worry is that the world could continue to suffer in the decades to come if authorities offer short-term fiscal and monetary fixes as the only response.

“The biggest concern… is that the deterioration of the outlook continues unabated, reflecting unaddressed structural changes more than any cyclical shock,” Boone said. “It would be a policy mistake to consider these shifts as temporary factors that can be addressed with monetary and fiscal policy: they are structural.”

The pessimism about the deep seated problems in the global economy contrasts with more upbeat signals coming from financial markets, where investors are increasingly betting on an upswing next year depending on the latest twists in trade talks.

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On trade, the OECD said the risk of further escalation of tensions is a “serious concern.” More worrying, even if recent restrictions were reversed, uncertainties could linger. That would weigh on business investment growth in major advanced economies, which the OECD expects to slow to about 1.25% a year from close to 2% in 2018.

The entrenched trade and investment challenges mean governments must make deeper changes beyond simply rolling back tariffs of the last two years. This could mean updating global rules and reducing subsidies with harmful effects on trade, the OECD said.

More at link (including graphs): https://www.bloomberg.com/news/articles/2019-11-21/the-world-may-have-a-bigger-problem-than-a-potential-recession

EDIT to add a little more text.

[Farmer-Rick]

1. The last time an economy was this bad

Capitalism took over feudalism.

Feudalism was replaced because the world economy was crap, stalled out. The serfs kept running away.

It's time the workers ran away and let those filthy rich owners run their corporations without them. Most of the middle class and poor have stopped buying much. So the free for all of consumerism has stopped. Now it's time to take away their slave labor, serfs and workers.