Luis Garicano 🇪🇺🇺🇦 @lugaricano@respublicae.eu
Unofficial automated mirror. No copyright asserted. ∎ Economist. Back at LSE as a Professor at @LSEPublicPolicy Summer 2023. Non-resident Fellow @bruegel_org. Recovering MEP. Currently @ChicagoBooth.
Joined Apr 2022
RT @d_boeselager: I just returned from Kyiv 🇺🇦.
A thread of impressions and so what’s. 🧵👇🏽
RT @COdendahl: There was an old consensus that #petrol prices hardly affected demand.
New research, using novel micro data, comes to a very different conclusion. https://www.economist.com/finance-and-economics/2022/08/25/how-to-avoid-energy-rationing
RT @PhillipsPOBrien: Though this question has been obvious for years, it is now undeniable and singular. Americans, do you support the constitution and laws of the USA, or do you support Donald Trump? Can’t have both.
Sadly, if we do not significantly increase our financial support for Ukraine, it will be impossible for them to survive this war.
We must also eliminate our dependence on Russian oil and gas. If we don't, Putin will keep using it against us (and against Ukraine.)
END
Yet here is where we must be most worried (and uncertainty is greatest).
With energy prices skyrocketing, the politics of the Winter are atrocious.
Many in Europe are itching to throw Ukraine under the bus and accommodate Putin again.
Source: ICE
Hence the EU only approved €1 bn out of the 9bn promised.
This is a big problem for Ukraine, given its dire needs.
Above all political difficulties, it is essential that the West, particularly the EU, do its part to deliver on its financial and military assistance promises
Basically the EU was counting on provisioning just 9% of the 9bn from the External Action Guarantee (EAG) — which has €1 billion earmarked to this end — but the Commission demanded a 70% provisioning rate due to the higher risk of default.
Only one thing can stop the inevitable: Western support for Ukraine. With Western support, the Ukrainians can keep fighting.
Cruelly, it is Western ‘support’ that has kept Russia so well-funded.
Source: Tankers @RobinBrooksIIF ; Fossil Fuels: @CREACleanAir
Sadly, Europe has not been doing its part to help Ukraine. As I explained in Politico, while the EU only mobilized €6.1 billion to support Ukraine’s overall economic, social, financial and military resilience.
A new €9bn package has failed https://www.politico.eu/article/financial-assistance-west-eu-ukraine-russia-war/
In short, the Russian economy has proven more resilient than expected.
In a longer war, the differential in favor of Russia is likely to grow - the Russian commodity wealth is inmense, and Russia has the time to adjust to its isolation and shift from West towards East and South.
The @economist attributes this strength to
- Previous rounds of sanctions had left the Russian economy quite insulated.
- Stewardship is in the hands of competent technocrats.
- Most shamefully - the EU paid €86bn for fossil fules since the war started.
https://crea.shinyapps.io/russia_counter/
It is not just the strong Ruble, at levels last seen in 2018. Some data from the @economist:
- Industrial production down only 1.8% YoY.
- Inflation, at 10%, better than in much of Europe
- Activity recovering (below)
- Consumer spending stable YoY
- Unemployment stable
Meanwhile, as reported by the @Economist this week, Western sanctions have not had their desired effects on the Russian economy.
Russia's economy is proving unexpectedly resilient by most metrics.
https://www.economist.com/finance-and-economics/2022/08/23/why-the-russian-economy-keeps-beating-expectations
How is the deficit financed?
As long as the West does not provide sufficient support, by printing money.
Predictably, inflation is on the rise, having reached 22%.
Without massive Western support, the Ukrainian economy faces collapse. https://www.nytimes.com/2022/07/25/business/inflation-ukraine-war-prices.html
The Ukrainian economy is in a perilous state. GDP is projected to collapse by 45% in 2022.
With revenue collapsing and military spending skyrocketing, the government faces a monthly (!) budget deficit of $5bn out of $100bn GDP.
https://www.politico.eu/article/financial-assistance-west-eu-ukraine-russia-war/
Six months into this War, for all the good wishes of our leaders, the West is still "helping" Russia.
The economic prospects for Ukraine are dire, with:
i) Ukrainian state finances collapsing
ii) Russian economy resisting
iii) Europe facing a Winter of discontent
THREAD
RT @asymmetricinfo: Someone who did a couple of years of community college and worked during school to minimize their loan burden gave up a lot of fun, and is now going to pay higher taxes so that their classmate could have the full "college experience". That's ... not ideal.
RT @ramez: Noah Smith is spot on in this piece on student debt forgiveness. We're not fixing the real problem with education pricing, which is limited supply, subsidized demand, and loans for degrees that won't ever generate the income to pay them them off. https://noahpinion.substack.com/p/america-is-not-fixing-its-college
How many Congressional and White House staffers, and assorted think tankers in DC got a debt-relief cheque today?
Any one has an alternative explanation for this insane giveaway?
https://www.washingtonpost.com/education/2022/05/22/student-loan-borrowers/
¡Menos palabraría hueca y más cumplir con nuestras promesas con Ucrania señor @sanchezcastejon !
Debemos aumentar significativamente nuestro apoyo humanitario y militar-- la causa de Ucrania es la causa de la libertad y del orden internacional.
RT @elmundoes: "El último envío de material por parte de España fue el pasado mayo": la reprimenda de Ucrania a España https://www.elmundo.es/espana/2022/08/24/6305e93021efa0fc6f8b4588.html…
Unofficial automated mirror. No copyright asserted. ∎ Economist. Back at LSE as a Professor at @LSEPublicPolicy Summer 2023. Non-resident Fellow @bruegel_org. Recovering MEP. Currently @ChicagoBooth.
Joined Apr 2022
