DW Giannis Papadimitriou
“Stagnant inflation” is the title of a commentary by the Frankfurter Allgemeine Zeitung (FAZ) that revives memories of the oil crisis of the 1970s and warns of an explosive mix of galloping inflation and rising unemployment in the eurozone: “Europe’s economic consequences burden the EU as well.
In economic theory the coexistence of high inflation and low economic growth is called ‘stagnant inflation’. It had emerged after the ‘oil shock’ of 1973, when the devaluation of money spread from the energy sector to the whole economy.
From the analysis of what happened then, important conclusions emerge for the treatment of stagnant inflation even today. The best way to fight inflation is to raise interest rates.
The problem with stagnant inflation is that higher interest rates burden an economy that is no longer growing anyway. The result is rising unemployment.
Fifty years ago, some countries resorted to devaluing money, hoping to support their economies. The result was inflation rates of 23% in Japan, 19% in Italy and 16% in the UK.
On the same subject, the Rheinische Post observes: “Because of the war in Ukraine, there is a risk that the economic recovery, which we have been looking forward to for months, will slow down or not even come. Stagnation or even a recession seems more likely. Possible stagnation, ie the combination of inflation and economic stagnation, would put the European Central Bank (ECB) in a dilemma: Should it raise interest rates or reheat growth? Both together can not be done… »
“Expropriate the oligarchs”
“Expropriate the oligarchs” is the headline of a comment by the economic watchdog Handelsblatt, which jokingly addresses Russian oligarchs’ call for the Kremlin to end the war in Ukraine: “This is the culmination of audacity. “Many of the Russian oligarchs behave as if they were not an integral part of the Putin regime or even as if they were its opponents,” the columnist notes. He continues: “Do they think that none of the politicians in the West know the flow of their money? That no one has seen the detailed and accurately substantiated investigations of the ‘Anti-Corruption Fund’ conducted by Alexei Navalny, who was sentenced to forced labor? In them, his courageous team of associates has proven, after a thorough investigation, who finances the prime minister’s multimillion-dollar villas, who controls the fake state media, who maintains the mistresses of Putin and Sergei Lavrov (who have also been sanctioned). with real estate, aircraft and cash “.
The Swiss Neue Zürcher Zeitung (NZZ) focuses on the synergy of Russian oligarchs with the Swiss bank Credit Suisse. According to him, “Credit Suisse has allegedly financed the purchase of private jets for Russian oligarchs, who were later sanctioned by the United States. “Once again, the bank failed in its attempt to downgrade the issue and cover related leaks.” The Zurich newspaper notes that the specific bank “allegedly asked a few days ago in a letter to investors to destroy advertising material for luxury mortgages. According to the Financial Times, the debtors of the initial loans for the purchase of luxury boats and private aircraft include Russian oligarchs “. Where did the mortgages finally go? Citing the Financial Times, the Swiss newspaper notes that “part of the risk was gradually transferred to hedge funds, within a portfolio of two billion dollars and apparently with an attractive interest rate of over 11%.”
Erdogan “Balances” in Ukraine
The role of Turkey in the Ukrainian crisis is mentioned in the General-Anzeiger newspaper in Bonn. Among other things, we read: “Already during the Second World War, Turkey insisted on its neutrality, in order to join the victorious forces shortly before the end of the war. Erdogan is doing something similar today. He says he does not want to lose either Russia or Ukraine, but the longer Russia’s war against Ukraine lasts, the harder it will be to strike a balance. Geography has endowed Turkey with an important place at the point where the Mediterranean and the Black Sea meet. Erdogan wants to get out of the dilemma by banning all warships from crossing the Turkish Bosphorus, while not taking part in sanctions against Russia. Can this strategy work for a while. “But at some point Turkey will have to explain to the West why the Russian air force is still using Turkish airspace as if nothing is happening.”
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