The head of the International Monetary Fund, Kristalina Georgieva, has warned that the global economy risks a return to the Great Depression. Speaking at the Peterson Institute of International Economics in Washington, she referred to IMF experts, who compare the current economic trends to the situation that existed at the close of the 1920s and culminated in the great market crash of 1929.
Georgieva pointed to inequality and financial sector instability as the main reasons for the growing threat to global economic stability.
The Great Depression was a severe worldwide economic recession that started with the stock market crash in the United States in October 1929, and continued until the late 1930s, peaking out between 1929 and 1933.
Apart from the US, the hard-hitting economic downturn also affected Canada, Britain, Germany and France, “and was felt in other countries too.”
Industry, construction, and agricultural production dropped double digits before the first signs of economic recovery appeared in 1939. All this was accompanied by major social upheavals, which played a significant role in precipitating WWII.
The debate about the root causes of the Great Depression continues to this very day. According to some economists, it was the general crisis of capitalism, related to insufficient state intervention and commodity overproduction. Other experts blame the crisis on too much money being in circulation due to excessive emission by central banks. Capital markets were literally showered with money, and dirt-cheap loans encouraged borrowing by businesses, which didn’t worry much about investment profitability. Stocks going through the roof dimmed the people’s view on the real situation on the market. Therefore, the crash was only a matter of time. What the proponents of different approaches agree on, however, is the negative role that financial speculators played in exacerbating the crisis, the inflation of the financial bubble, followed by the collapse of stock exchanges, all of which acted as a “fuse” in the already emerging economic crisis.
Nowadays, more and more international experts are concerned about the prospects of a new global crisis that could hit the world’s financial and economic system in the near future. Some believe that “the global economic crisis is a kind of “sleeping reality,” not yet clearly manifested in the economic activity itself.” Others believe that central banks and governments may “lose control of the situation in the world” already this year.
Macroeconomic and geopolitical factors are equally alarming. International trade is slowing, and it remains unclear how long the present “truce” in the ongoing trade war between the United States and China is going to hold. The WTO’s work is all but blocked by Washington, and the economies of most EU countries are caught between stagnation and recession. Finally, the Chinese economy is slowing down, which, in turn, is undermining the export capacity of many countries, and threatens to bring down prices on commodity markets.
In the financial sector, imbalances of the “unipolar model of globalization,” where capital keeps accruing to a narrow group of countries that issue global reserve currencies. In August 2019, experts with the Higher School of Economics in Moscow predicted that the global economic crisis “will happen sometime 18 months from now.” They pointed, among other things, to a drop in indices, as well as to the so-called “inverted yield curve” of the US government debt market, where yields on short-term bonds are higher than those on long-term bonds. Inflation in almost all of the world’s leading economies is below two percent, and interest rates either fluctuate around zero, or tend to decrease. Instability of the financial sector was mentioned among the primary threats also by the head of the IMF.
Kristalina Georgieva named inequality “between different groups of the population” as another factor that could provoke a crisis.
“This situation is mirrored across much of the OECD (Organization for Economic Cooperation and Development), where income and wealth inequality have reached, or are near, record highs,” Georgieva said, adding that “this troubling trend is reminiscent of the early part of the 20th century – when the twin forces of technology and integration led to the first gilded age, the roaring 20s, and, ultimately, financial disaster.”
According to a Credit Suisse Global Wealth report, released in October 2019, just one percent of “super-rich people,” and one to 10 percent – by the “poorest.”
The problem of inequality is something more and more politicians and economists around the world are worried by today. Speaking at the UN General Assembly, the organization’s secretary general, Antonio Guterres, called the growing public mistrust of public institutions one of the “four horsemen” threatening the world. And one of the reasons for this growing mistrust is that two-thirds of the world’s population lives in countries where the “income gap between rich and poor” is widening. “Ordinary people” are losing trust in the elite, Foreign Policy magazine agrees, and names other reasons for this, including “growing economic and social inequality” and “a lack of prospects for a brighter future.” The magazine believes that if unable to address this problem, the world’s high and mighty will face an “anti-elite rebellion.”
The question is whether the problem of inequality is more of a political nature, or whether it becoming a macroeconomic factor that determines the situation and prospects of the global economy. In an interview with Business FM, Alfa Bank chief economist Natalya Orlova said that “inequality is a concern for everyone, it really is the main economic problem the world is facing today.” Indeed, the unsolved problem of inequality can become a leading factor in a new phase of a global economic downturn. “The problems of inequality did not arise yesterday, so we do not know how long it will take to turn into a precursor of an economic crisis and an economic crisis itself,” Orlova added.
Proponents of this standpoint link the problem of inequality to the spread of populism with populist politicians coming to the fore in Europe and South and Central America. Many Asian leaders are also ranked by experts as populists. US President Donald Trump is often called the world’s number one populist who has been waging a trade war with the world’s second economy, China, for two years now. Together, these two countries account for at least 35 percent of the global GDP, and the financial and economic escalation between Washington and Beijing is already reflecting badly on the economic performance of most countries of the world. Thus, populist trends in world politics pose new threats for the economy, as they increase uncertainty.
The crisis of social trust, caused by the growth of inequality, negatively affects the mood in the business community as well. The overall psychological atmosphere and the opinion that millions of people have about the existing situation play a crucial role in the economy, as John Maynard Keynes said. When the mood in society is far from optimistic, this inevitably affects the “state of mind” of businessmen and financiers, and even a small push or a combination of several small “shocks” is enough for the economy to start going under, just like it happened in the early 1990s. According to Bob Moritz, chairman of the PwC international consulting company, chief executives around the world are showing record levels of pessimism that are much lower than what they did in 2018. This is not so much due to the new problems the global economy is facing today though. “What is new here is the scale and speed these problems are growing at.”
There are optimists, however, who are convinced that “there will be no Great Depression, of course,” although they admit that we still should brace up for a possible recession. There are no objective prerequisites for a global economic meltdown since the growth, especially in the stock markets over the past 20 years, is primarily associated with the advent of new technologies, which require “fewer production facilities” to ensure previous volumes of production. As for the problem of inequality, critics claim that it is being unnecessarily demonized by left-wing political forces around the world, who are playing on voter’s fears.
Meanwhile, the problem of inequality is more complicated than left-minded people tend to think. “There is reason to talk not just about some smoothing, but about a dramatic reduction in global inequality levels over the past few decades.” Moreover, the “level of inequality” directly depends on how it is measured. For example, inequality in terms of “consumption” is usually several times smaller than when measured in terms of “income.” Finally, “establishing a quantitative measure of inequality does not contain any direct normative and political implications.” Abject poverty is certainly a challenge for society, “but there is no challenge in increasing the Gini coefficient from 0.40 to 0.45.” The relationship between inequality and the dynamics of social conflicts is less obvious though. According to numerous studies, social conflicts are not so much caused by objective income gaps between the poor and the rich, as by the subjective perception of the situation by society the dynamics of “demand for redistribution” depend on.
Still, most economists worldwide are confident that economic growth directly affects inequality, which can be reduced with the help of redistribution mechanisms. This opinion is echoed by some international economic organizations, with UN experts arguing that technological progress not only stimulates economic growth “and creates new opportunities,” but also increases inequality due to the uneven “access to technology in different countries.”
Finally, we should also keep in mind the fact that present-day imbalances are accumulating in stock markets, just like they did in the late 1920s. Their uprush could lead to a short-term crisis by the end of this year, or in early-2021, for example, after the presidential election in the United States. Experts at the Higher School of Economics Market Research Center point to the so-called Juglar cycles, “the phenomenon of the average cyclic wave, followed by a crisis.”
“The year 2021 will mark 12 years since the crisis of 2008-2009. These 12 years are the middle wave and are the harbingers of a crisis. It is during this 12-year cycle that all financial bubbles are inflated in.” There is always hope, however, as most experts admit that modern economic science is still unable to predict the exact timing and depth of the next global crisis.
From our partner International Affairs
COVID-19 has exposed the fragility of our economies
The human dimensions of the COVID-19 pandemic reach far beyond the critical health response. All aspects of our future will be affected – economic, social and developmental. Our response must be urgent, coordinated and on a global scale, and should immediately deliver help to those most in need.
From workplaces, to enterprises, to national and global economies, getting this right is predicated on social dialogue between governments and those on the front line – the employers and workers. So that the 2020s don’t become a re-run of the 1930s.
ILO estimates are that as many as 25 million people could become unemployed, with a loss of workers’ income of as much as USD 3.4 trillion. However, it is already becoming clear that these numbers may underestimate the magnitude of the impact.
This pandemic has mercilessly exposed the deep faultlines in our labour markets. Enterprises of all sizes have already stopped operations, cut working hours and laid off staff. Many are teetering on the brink of collapse as shops and restaurants close, flights and hotel bookings are cancelled, and businesses shift to remote working. Often the first to lose their jobs are those whose employment was already precarious – sales clerks, waiters, kitchen staff, baggage handlers and cleaners.
In a world where only one in five people are eligible for unemployment benefits, layoffs spell catastrophe for millions of families. Because paid sick leave is not available to many carers and delivery workers – those we all now rely on – they are often under pressure to continue working even if they are ill. In the developing world, piece-rate workers, day labourers and informal traders may be similarly pressured by the need to put food on the table. We will all suffer because of this. It will not only increase the spread of the virus but in the longer-term dramatically amplify cycles of poverty and inequality.
We have a chance to save millions of jobs and enterprises, if governments act decisively to ensure business continuity, prevent layoffs and protect vulnerable workers. We should have no doubt that the decisions they take today will determine the health of our societies and economies for years to come.
Unprecedented, expansionary fiscal and monetary policies are essential to prevent the current headlong downturn from becoming a prolonged recession. We must make sure that people have enough money in their pockets to make it to the end of the week – and the next. This means ensuring that enterprises – the source of income for millions of workers – can remain afloat during the sharp downturn and so are positioned to restart as soon as conditions allow. In particular, tailored measures will be needed for the most vulnerable workers, including the self-employed, part-time workers and those in temporary employment, who may not qualify for unemployment or health insurance and who are harder to reach.
As governments try to flatten the upward curve of infection, we need special measures to protect the millions of health and care workers (most of them women) who risk their own health for us every day. Truckers and seafarers, who deliver medical equipment and other essentials, must be adequately protected. Teleworking offers new opportunities for workers to keep working, and employers to continue their businesses through the crisis. However, workers must be able to negotiate these arrangements so that they retain balance with other responsibilities, such as caring for children, the sick or the elderly, and of course themselves.
Many countries have already introduced unprecedented stimulus packages to protect their societies and economies and keep cash flowing to workers and businesses. To maximize the effectiveness of those measures it is essential for governments to work with employers’ organizations and trade unions to come up with practical solutions, which keep people safe and to protect jobs.
These measures include income support, wage subsidies and temporary layoff grants for those in more formal jobs, tax credits for the self-employed, and financial support for businesses.
But as well as strong domestic measures, decisive multilateral action must be a key stone of a global response to a global enemy. The G20’s virtual Extraordinary Summit on the COVID-19 response on 26 March was a welcome first step to get this coordinated response going.
In these most difficult of times, I recall a principle set out in the ILO’s Constitution: Poverty anywhere remains a threat to prosperity everywhere. It reminds us that, in years to come, the effectiveness of our response to this existential threat may be judged not just by the scale and speed of the cash injections, or whether the recovery curve is flat or steep, but by what we did for the most vulnerable among us. ILO
The reforms and the current situation of the State budget and accounts
As we have all realized, since the COVID-19 epidemics broke out the number of regulations enacted – especially by the Italian Presidency of the Council of Ministers – has literally sky-rocketed.
The starting date of the sequence of regulations is certain. It is, in fact, January 31, 2020 with the declaration of the state of emergency connected to the onset of diseases resulting from transmissible viral agents, pursuant to Article 7, paragraph 1, sub-paragraph c) of Legislative Decree No. 1 of 2018 (Civil Protection Code).
The Prime Minister’s Decrees, the many Guidelines, Directives and Ministerial Orders, as well as the many Orders of the Head of the Civil Protection Department and, finally, the many Regional and even Municipal Orders have added to the Emergency Ordinances and the many – probably too many – decree-laws to be quickly converted into laws after the Parliament’s vote, pursuant to the Constitution.
There has never been an exception to the eternal rule – mathematical, at first, and then legal – according to which the greater the number and complexity of rules, the greater the indecision and misunderstanding inherent in their implementation.
Even in such a severe and complex situation, the messy regulatory system created with the Emergency Ordinances and Decrees for the COVID-19 infection is, therefore, a source of ambiguity, indecisiveness and potential conflict between State apparata and Local Administrations.
This is the reason why, even in the State administration, the old maxim of medieval logic, simplex sigillum veri, should apply.
Hence which is the final criterion for solving the inevitable regulatory ambiguity? The criterion is Politics, seen as Alexander’s Sword cutting the Gordian Knot immediately.
This is, in fact, the real function of democratic representation, in a highly-regulated context, as is the case in every modern Western country.
Parliament is always the decision-maker, together with the Government and the Presidency of the Republic, responsible for both budget items and the hierarchy of rules, which should be as simple as possible, as already taught us by Beccaria.
Reverting – after this example – to the issue of Italy’s current Budget Law, what is it, in fact?
As is well-known, the Budget Law is the legislative instrument, provided for by Article 81 of the Constitution, which lays down how the Government – with a preliminary accounting document – communicates to Parliament the public expenditure and revenue forecast for the following year, pursuant to the laws in force.
At first, it should be noted that much of the expenditure is bound to be fully hypothetical – as happens also in private budgets – and cannot be completely organized by means of a single old or new rule. Finally, some budget items depend on cash flows and expenses which can never be fully predictable in the budget.
Again pursuant to Article 81 of the Constitution, unlike what currently happens for the Stability Law, the law for adopting the State Budget cannot introduce new taxes and new expenses.
The structure of the State Budget, namely the network of fixed items, must be only that one.
The reason is obvious but, given this asymmetry, it is difficult to put together the Budget Law and the Stability Law in a reasonable way.
It should be recalled that the Stability Law, also known as Finance Act or Budget Package, is the ordinary law proposed by the Government, which regulates the economic policy of the State (and also of civil society) for three years.
Well, but in three years, as they say in French, chosir son temps, c’est l’épargner.
In three years everything is done and everything can be destroyed or change, especially with the kind of international economy we are dealing with now.
The Stability Law has been so called, almost officially, since 2009 mainly as a result of the introduction of “fiscal federalism”, implemented with the constitutional reform of 2001, which requires that the activity of the “central” State is coordinated with the local one, which has autonomous and different assets – albeit not always – from the “central” State finance.
I believe that the famous “federalism” has been a long-standing illusion from which the sooner we wake up the better.
The distribution of revenue among the Regions – increasingly eager for money, especially after the reckless “Reform of Title V” of the Constitution, invented by the leftist governments in the belief they could take votes away from the Northern League Party – has been detrimental. It has made the Local Authorities increasingly powerful, and therefore large and very expensive, with an efficiency that, except for the Northern regions, which would have been efficient anyway, has plummeted throughout the rest of Italy.
Again as a result of the Treaty of Maastricht – a city previously unknown except for the French siege of 1673, in which D’Artagnan stood out – the Stability Law must comply with the requirements of economic and financial convergence between the EU countries, but also with the criteria regarding the rules of coordination between the local, regional and State levels of public finance of the various EU-27 Member States. Sicily will coordinate with the economy of Finland, all based on cellulose and mobile phones, while Piedmont, with its precious white truffles, will coordinate with the Tayloristic and low-cost factories of the Czech Republic.
Beyond a certain level, the economies are incomparable with one another and there is no single currency that can put them in communication.
If anything, we would need public accounting like the one that is implemented – even at European level – with the Power Purchasing Parity criteria.
For the first time, in the 2009 Stability Law, an additional instrument was added on welfare – which currently, in the European bureaucratic jargon, also means “Health” – in which there are regularly also rules on labour, social security and competitiveness, which have little to do with Welfare and is drafted according to a deadline of missions, multi-year programs and functions, which is very hard, if not impossible, to monetize.
Furthermore, pursuant to Law No. 234/2012, the Stability Law has also provided that, as from 2016, the Stability Law shall be a Consolidated Act together with the Budget Law.
This is anomalous, considering that the latter can regulate and create new taxes and duties, while the former cannot.
However, the Reform of the State Budget, implemented with Law No. 163/2016 adopted on July 28, 2016, was definitively approved with over 80% of votes in Parliament.
The Stability/Budget Law must be submitted by the Government to Parliament every year by October 15 and Parliament must adopt or amend it otherwise by December 31 of the same year. It is too short a lapse of time. Beyond the initial deadline, Article 81, paragraph 2, of the Constitution provides for the subsequent deadline of April 30 – a term which, however, shall be authorized by law.
The Stability Law shall mandatorily include: a) the net balance to be financed; b) the balance of the recourse to market instruments, i.e. the final amount of money in the annual or three-year cycle for which to resort to loans (and this is certainly a vulnus, because the speculative markets know in advance the amount that can be financed); c) the amount of the special budget funds – and this is another vulnus, since all the other countries know how much the Services, the Special Operations, the Off The Record actions, etc. will cost; d) the maximum amount for renewing the public employment contracts – another vulnus, because this allows to calculate the industrial policy and, therefore, the possible effects of the labour cost on public and private markets, with obvious advantages for the E.U. competitors; e) the appropriations for refinancing the capital expenditure already provided for by the laws in force, and hence also the three-year stop of subsequent capital expenditure; f) the long-term expenditure forecasts.
This is another vulnus since this allows to infer the sum available to a State for any E.U. military or foreign policy program, or for any other strategically important program.
Not to mention the reserves for mergers and acquisitions of strategically important companies within the European Union, or even outside it, but permitted by the other European partners.
A “mutualization” of the public budget which creates many dangers, but corresponds to the mental level of many E.U. accountants.
This structure of the Stability Law leads to a situation in which only two choices are possible. Either the so-called austerity policy, when it comes to restoring possible balance to public funds (but this is always decided by others). We may think that a cyclical austerity policy must also be able to spend more on certain budget items, but much less on the others, while here the amount that counts is only the final one, which automatically determines the market behaviour. The only thing that markets have in mind, like conscripts, is the purchase of our public debt instruments at the best price and with the best interest rate, often carrying out trading operations, as also happens to certain States that profit from the difference – often completely rhetorical – between their debt instruments and ours.
Or there is also the possibility of expansionary spending, which resorts always and only to deficit public spending – i.e. by issuing more public debt instruments – which can be “Keynesian” if it regards investment, but simply expansionary if rents, annuities and current expenses are privileged, in addition to investment.
Sometimes even this may be necessary.
The British economist, however, maintained that public spending applies above all to new investment, while for the “old markets” – as he called them – the self-equilibrium of private enterprises is also good.
The childish idea underlying this conceptual duality is that you can be either “big spenders” (especially if “you come from the South”) or “strict” (especially if you are self-controlled and you come from the North), but this is just a vaudeville skit, not a serious economic policy idea.
Thinking – as many people within the EU institutions believe – that “family” rigour has an impact on the State budget is a “paralogism” – just to use an ancient philosophy concept.
The equivalence between households and States – a concept often reiterated by unexperienced economists – would be fine only if households could issue face value money, which could be spent immediately according to their needs. These needs, however, would be linked to the credibility of their private “money”.
People believe in these fairy tales, especially within the European Commission.
However, the European constraints of any Stability Law are the following: 1) a 3% ratio between the actual and the forecast public deficit and the national GDP – a fully specious and abstruse ratio, even in a phase of restrictive policies; 2) 60% of the ratio between public debt and GDP, another bizarre figure, which may also regard non-Keynesian policies when – for example – a “mature” sector has to be restructured or investment must be made in new and promising areas; 3) the average inflation rate, which cannot exceed by over 1.5 percentage points the one of the three best performing Member States in the sector during the previous three years. Are EU experts aware that there is also ‘imported inflation’?
This happens when the prices of goods and services purchased abroad rise – although this formula is already quite wrong.
Inflation is imported when the costs of imported products increase and obviously countries like Italy, which are processing economies, are also great importers. God knows – in these economic phases – how import-related inflation (just think of oil products) is important for the European economies.
Furthermore, the EU has no strategic, military, geoeconomic and financial ability to change the oil and gas producers’ treatment towards it. The same holds true for the other particularly important raw materials.
Let us now focus on constraint 4): compliance with the long-term Nominal Interest Rate, which must not exceed by over 2 percentage points the one of the best performing Member States in terms of price stability.
This is the Taylor Rule. As the U.S. Treasury Secretary Taylor said in 1993, it is an equation in which the interest rate is a dependent variable, while inflation and national income are regressors.
The rule is the following: ii = i*+α(πi- π*) +βγ+εi
The long-term inflationary target is π. It is the inflation rate that will prevail in the long term. Taylor here assumed that the long-term inflation rate should be 2%, as often happens in the United States, but the current interest rate is π that, only for the USA is a GDP deflator. If we were all just stockbrokers, it might also be true.
But there are costs that are included in the GDP and are neither predictable nor changeable from outside.
The actual nominal interest rate in the equation is γ. The rest is easily calculable.
Hence what does the Taylor Rule mean? When inflation starts reawakening the rates are expected to rise.
This is not at all implicit in the Maastricht rules, which also stem from these formulas.
As the Taylor Rule also shows, the increase in interest rates reflects a decrease in the supply of real monetary rates.
Not necessarily so because there may be many balances available, but with a less “attractive” monetary composition.
Again according to Taylor, investment is inversely correlated with interest rates, but this holds true for the economies that live on loans, not for many of our entrepreneurs who use – almost exclusively – “own resources” or bank loans to secure own resources.
Because of this pseudo-mathematical sequence of events, if investment decreases, the national income and also unemployment increase – which is here the only cure for inflation. But where did these guys study?
Another theory resulting from the Taylor Rule is that when the economic activity slows down, the medium-term interest rate must fall.
This has never happened, not even in the recent U.S. history. Just think of the 2006-2008 crisis.
It is also strange – and I say so from a purely analytical viewpoint – that the purpose of economic theory is only to reduce inflation, considering that – as already pointed out above – it does not depend solely on the excess of public spending, of the availability of low-cost capital (which, instead, is considered in the Taylor Rule) and the use of “moderate” budgets, according to the theories of the ignorant economists à la page.
Let us revert, however, to the procedure of the Italian Stability Law.
According to the procedure known as European Semester, the EU Member States must submit their budgets to the European Commission and the European Council by the end of April, which ipso facto limits our legislation, which also provides for a budgetary role until December 31 of the same current year.
For the time being, the penalties envisaged for some delays can be reduced, at most, to the single penalty equal to 0.2% of GDP for the year under consideration.
The principles of the State budget and the related Stability Law are again the traditional ones established by Law 468/1978, including specification, whereby all budget items must be defined analytically so as to avoid ambiguities in their intended use; truthfulness, whereby no revenue overestimations or expenditure underestimations are allowed and, finally, publicity, whereby the budget must be made known with the most suitable means.
There is also the issue arising from the adoption of Law No. 1/2012, which amended Article 81 of the Constitution, thus enshrining the principle of “balanced budget” in the Constitution.
It is a laughing matter: since the invention of the double-entry accounting by Frà Luca Pacioli – Leonardo da Vinci’s friend and sometimes drinking companion – all budgets “break even” by definition.
Otherwise they are not budgets.
In fact, the term “break even” is never used in the rule. The more cryptic term “balanced budget” is used. We all know that, in physics, the balance can also be unstable.
As already noted above, it is an unintended funny rule.
What could we do if the Vesuvius erupted – an event which may be sure in the future, but unpredictable? Would we issue debt instruments, but for ten years at least, so as not to disturb or offend the E.U. accountants and their search for a liquid monetary base for an improbable and incorrectly calculated immediate fiscal liquidity to support debt instruments?
Hence are millions of homeless people to be left in the city of Naples, possibly in the Vomero and Pietanella neighbourhoods, or in the Sanseverino Chapel, waiting for these accountants to decide to study economics and political economy on the right handbooks?
This is a rule that should not only be deleted, but should also be mocked by some famous comedian, better if with some knowledge of political economy.
In addition to the “balanced budget” requirement, as from January 1, 2014, Law 243/2012 provided for the establishment of the “Parliamentary Budget Office”, with the task of carrying out “analyses, verifications, checks and evaluations” – thus replacing the role of politicians who should be the sole ones responsible for distributing the resources available and the forecast ones among the most suitable budget items.
Moreover, in the summer of 2016, Legislative Decrees No. 90 and 93, as well as Law 164, were enacted, which amended Law 243 in relation to the Local Authorities’ balanced budgets.
Another mistake, albeit a partial one: Local Authorities live on a complex mechanism – on which we need not to elaborate here – of remittances and transfers from the Central State and of sums partially withheld by these Authorities, which are then recalculated by the Central State, again in a too complex way that need not be explained here in great detail.
In this case, how can we repay the local administrations’ colossal debt? Just think that the European Court has already condemned us for these matters. If the current legislation remains in force, there is no way out.
In short, the “European cure” on the State Budget has worsened its ambiguities. It has depoliticized the selection of budget items, thus often moving it away from voters’ and citizens’ real needs. It has not allowed a modern solution to the Local Authorities’ financial crisis. It has also devised the funny mechanism of the “balanced budget”, which literally means that there is no longer a provisional budget (hence how can the real items be calculated?). Finally, it forces us into a debt cycle that is both excessive and, at times, burdensome, but always uncontrollable.
Coronavirus: Now a two headed monster
Coronavirus, like a two headed monster killing
people on one side the other side global economy;
The warrior leaderships of rich nations now creating a rain of trillions of dollars to drown one of the heads. Rich nation and their printing machines have just approved trillions of dollars, as this aggressive move will help each other and also less fortunate economies to safeguards global economic order as one global goal.
Most significant is the largest amount allocated to support Small Medium Businesses…
USA alone has allocated 350 billion dollars and many other countries doing similar initiatives, this largest ever, once in a lifetime boost to abandoned and struggling SME of the world may just open a bright new future to transform into pillar of superior performance and a pleasant surprise to all.
Coronavirus is still a global force to reckon while massive shortages may create havocs…uncertainty lingers, the stimulus packages will keep the morale and nations safer. As rightly mentioned by President Trump, the depression and suicides rates are major concerns.
Today, nation by nation, no other local economic power base as strong as the small medium business economy of the land, and increasingly with technology the same sectors in the unfolding future stand like very powerful pillars; a random collection of many, many millions small medium businesses around the globe, like smart entities, globally savvy, technologically driven, block-chained, AI+AR+VR, entrepreneurial centered creating local grassroots prosperity.
Difficult questions: As most of these funding offered as easy loans;if SME wish no more additional loans or create additional debts to further risk their own future; but what if they rather get smart-help, global-age upskilling and re-skilling for their enterprises or global exportability guidance and customer connectivity expertise, how far will the loans concepts work? Like receiving full y subsidized payrolls or full funded digitization to improve market size. Fully funded programs, on special upskilling and skilling grants to make the fields of SME new upgrading and learning battlefields is another option. With loans only format where will they go out and shop what levels of solutions and how will they uplift on performance and exportability? They were already stuck before, now for fears of new debt, they may remain stuck again. Leadership must explore National Mobilization of Entrepreneurialism Protocols
Simultaneous synchronization of national SME base is the novel art and science of the National Mobilization of Entrepreneurialism Protocols. Not to be confused with some MBA curriculum or export promotion agency guidelines. Nations without digital platforms on SME upskilling and reskilling beyond post Coronavirus world would look like nations without Internet in the nineties.
Two steps for Midsize Business Economy to advance on grassroots prosperity:
ONE: Identify 1000 or 1000,000 high potential small and midsize enterprises within a region or a nation, and create a national agenda to quadruple their performance on innovative excellence and exportability.
Deploy digitization of top national trade associations and chambers of commences to upgrade to world-class digital platforms so that their entire membership can skate nationally and globally showcasing their goods and services. This is a global age revolution based on entrepreneurial mobilization… study Pentiana Project
TWO: Upskilling, reskilling million small medium businesses and women entrepreneurs across nation:How do you place 10,000 or 1,000,000 SME owners on digital platforms to boost exports and innovative excellence? Why such ideas are not major funding dependent but mobilization hungry and execution starved? What special skills are required to uplift midsize business economy in 2020, how to transform? How did Alibaba generated USD$39 Billion within 24 hours on 11–11–2019, how to optimize? How Round-tables and Cabinet Level discussions are a good starting point?
Rest is easy…
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