From David Goldman at Asia Times, June 17:
Twin strategic and economic crises prompt search for a way out of Ukraine trap
The Biden Administration faces a double disaster after its Ukraine miscalculation, namely a US recession and a second strategic humiliation in the space of a year.
The United States economy is almost certainly in recession, while oil prices drive inflation that has cut workers’ real pay by about 6% year on year.
Washington’s earlier boasts of driving Putin from power, destroying Russia’s capacity to make war and halving the size of the Russian economy look ridiculous in retrospect.
The world economy is reeling from supply shocks in energy and food provoked by Western sanctions on Russia. Monetary policy can reduce inflation only by forcing consumers to stop buying, which forces retailers to liquidate inventory at lower prices and crushes demand for raw materials – a cure that is worse than the disease.
Russia meanwhile earned a record EUR 93 billion from energy exports during the first 100 days of the war, a Finnish study concluded. China and India, which refused to join G-7 sanctions against Russia, reportedly are buying oil at a $30 to $40 per barrel discount, while American and European consumers are paying the full price.
Energy prices have become the main driver of G-7 inflation. Changes in the oil price lagged by one to four months explain 70% of the monthly change in the CPI, according to an Asia Times study. The sensitivity of the US Consumer Price Index to the oil price, moreover, was about twice as high during the February 2020 to May 2022 period than it had beenduring the preceding fifteen years, the study shows.
US GDP contracted at a 1.9% annual rate during the first quarter. The surprise drop in May retail sales that was reported June 15 by the Commerce Department and the 14.4% month-on-month fall in US housing starts reported June 16 point to a second quarter of contraction – that is, a recession according to the standard criterion. That spells catastrophe for the Democrats in next November’s election.
More dire than an American recession is the risk of a financial disaster among the weaker G-7 economies....
....MUCH MORE
Or, as someone wrote recently:
We Are Governed By Idiots and Psychopaths: Fertilizer Edition
I don't mean President Biden. He's a nasty, corrupt old perv with anger and cruelty issues but he's not the one running the show.
I'm talking about the people around him, the advisors from BlackRock and WestExec and the retreads from the Obama administration. They've had eight years since Nuland and Pyatt and the rest of the gang put together the Maidan coup in Ukraine, eight years to game out: "If Putin does this, we do that."
And all they've seemed to accomplish is wrecking the U.S. economy and absolutely destroying the economies of our European allies....
