“A period of low growth and high inflation for the World Bank.  » Editorial by Charles SANNAT - Insolentiae

“A period of low growth and high inflation for the World Bank. » Editorial by Charles SANNAT – Insolentiae

My dear impertinents, dear impertinents,

I do not get enough.

Yesterday I was talking to you about Janet Yellen, the current Secretary of the Treasury in the United States and who was before the president of the FED, the American central bank. Janet Yellen was forced, by the facts which are stubborn, to make a statement in which she apologized for her errors of assessment in particular on inflation which was anything but transitory, understand “temporary”.

When I announced a lasting period of strong inflation, you were hardly accused of being a monetary conspirator. I know they haven’t invented the monetary conspirator yet, but I’m pretty sure they will end up accusing some cryptocurrency holders, for example, of monetary conspirators.

And yet the inflation is there.

Well and truly present.

So yesterday it was the turn of the World Bank to realize that the sky had just fallen on its head.

No mea culpa but new forecasts, which comes to the same thing except that we forget in passing that the forecasts of these institutions are just as bad as each other.

It’s a bit as if the French weather services were only forecasting good weather.

Never rain.

You should never expect bad news.

So these institutions only make “good forecasts”, which is as stupid as making only bad ones.

Everyone knows that in the end, life is all about rain and shine. Clouds, sometimes heavy storms, and only after come the saving rays of sunshine.

The same goes for the economy.

But it is forbidden to say it because announcing bad news is sometimes triggering self-fulfilling phenomena.

Here is what the World Bank tells us. Source La Tribune here.

World Bank expects ‘prolonged period of low growth and high inflation’

“Consequences of the invasion of Ukraine by Russia and the damage caused by the Covid-19 pandemic, the Washington institution paints a bleak economic outlook. In a report released Tuesday, World Bank economists revise down their global growth forecast for 2022 and warn of the recession that threatens many countries.

The global economic outlook is bleak. The World Bank announced on Tuesday that it had cut its global growth forecast for this year by 1.2 percentage points, to 2.9%.

Inflation, zero growth and full employment: welcome to stagflation 2.0

The causes of this weak growth in economic activity are multiple. The latter is suffering from the war, recent confinements in China, tensions in supply chains and the risk of “stagflation”, a situation combining weak growth and strong inflation that the world has not known since the 1970s, according to World Bank President David Malpass.

“The risk of stagflation today is considerable,” he wrote in the introduction to the report. “Contained growth is likely to persist through the end of the decade due to weak investment across much of the world. »

“With inflation currently hovering at multi-decade highs in many countries and supply expected to grow slowly, there is a risk that inflation will stay higher for longer,” he added. “.

Weak growth until the end of the decade.

I dare not tell you that we are only in 2022 which, you will agree, is only the beginning of the decade! We still have 8 years to go!

Similarities and differences with the 70s

“In total, global growth is expected to decline by 2.7 percentage points over the period 2021-2024, i.e. more than twice the deceleration experienced between 1976 and 1979, he specifies. The World Bank report also recalls that the interest rate hikes decided at the end of the 1970s to curb inflation had been at the origin of the world recession of 1982 and of a series of financial crises in emerging and developing countries.

While the current situation has similarities to that of then, it also offers important differences, among them the strength of the US dollar and relatively weaker oil prices, as well as generally stronger balance sheets of major financial institutions.

As I write these lines, I am contemplating the price of a barrel of oil at more than 122 dollars per can of black gold, while the dollar is also on the rise, which for us Europeans means more oil more expensive in … euros!

But the World Bank finds that oil is not as expensive as it was in the 1970s! Of course, and my name is Gertrude!

A great program idea for the World Bank.

“To reduce the risks,” adds the World Bank, “the political and economic authorities must coordinate aid to Ukraine, counter the rise in the prices of hydrocarbons and food products, step up the relief of public debts, step up the fight against COVID-19 and accelerate the transition to a “low carbon” economy”, continues David Malpass. The director of the World Bank also urges avoiding trade restrictions, and at the same time recommends changing fiscal, monetary, climate and debt policies (…) “to address the inappropriate allocation of capital” and fight against inequality “.

Hahahahahahah Yaka Faucon tell huge carabistouilles!

Economic aid to Ukraine will have no effect on inflation or the global economy. If we want to help, we have to help make peace and lift the sanctions against Russia. If we don’t then the effects will persist. You may not do it, but you have to say what it involves.

We must also “counter the rise in hydrocarbons”… and how about the stars? Well by putting an embargo on Russian oil! Ha, am I stupid! Sure, it will work.

And you know what ? “We are going to amplify the relief of public debts”! Hahahahahahahaha, come on, I’m looking at you. Between the falls in tax revenues, the debts already accumulated, and the rise in rates, I think we are going to have a good laugh.

Besides, the great mamamouchi of the Central Bank has a competition level in mamamoucherie.

He recommends “at the same time modifying budgetary, monetary, climate and debt policies (…) “to remedy the inappropriate allocation of capital” and fight against inequalities”.

Hahahahahahaha…

Well yes, I would like everyone to be there, rich, beautiful and nice. Especially nice, because the bad guys, really, it’s not good, and the inequalities, it’s shit.

As you will have understood, the head of the World Bank informs you at the highest level and tells you…. nothing.

Absolutely nothing.

It is interstellar vacuum.

So I’ll tell you what’s going to happen.

Inflation will continue since the causes are still there. The war is here, the sanctions are there and the Chinese are not happy. The Covid is here and is coming back for the 7th wave or the 6th I don’t count anymore. Now we even have monkeypox in all the countries that don’t have monkeys but are members of NATO.

Oil will continue to rise.

Rates will continue to rise.

Debts will be harder and harder to pay.

The increasingly strong recession, because if we index the pensions of those who do not work, we refuse to increase the wages of those who work.

The deficits will therefore increase.

In the end, because we do anything, we will obtain a sublime monetary crisis which will be the culmination of twenty years of absurd economic policies.

A collapse is a process and it’s slow at first, long during its gestation phase, then it accelerates when we reach certain threshold effects, then it becomes irreversible.

We know the end. Less delays. So use this time to build or develop your resilience. It’s important my friends.

It is already too late, but all is not lost.

Prepare yourselves !

Charles SANNAT

“Insolentiae” means “impertinence” in Latin
To write to me charles@insolentiae.com
To write to my wife helene@insolentiae.com

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