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Bracing for Hurricane Democracy
With the conclusion of the two ceremonial national conventions of the two US parties, the Democrats and the Republicans, one may say that the presidential race has begun in earnest. The current election will be unique in modern American history for its overlap with a pandemic which may not be the deadliest in recent times, but it is certainly the most mediatized and has elicited the strongest public policy reactions ever. At the same time, much like 2016 but also other important American elections, the Presidential campaign takes place against the backdrop of rioting, looting and general social strife which has become inextricably linked to the political race. The issues are more complicated than breathless media analyses make them out to be and there is a great deal of unknowns for an event that is scrutinized by the entire world in unison as a determining factor of the next four years in the still-extant Pax Americana. Ultimately, trying to predict the result of the November election can be as mystical or as wonkish as we want – some may try polls and statistical models and others the tea leaves. Both options are equally valid in the current climate. More
Zombified Finance and the Walking Dead Economy
The financial crisis of 2007 was the result of a constant accumulation of risks facilitated by the gradual lowering of interest rates. This decrease allowed the emergence of an allocation of resources incongruous with the economic reality, decisively affecting the complementarity of production processes. As a viable example, the Federal Reserve, led at the time by Alan Greenspan, decided that between December 2000 and June 2003, the federal funds rate would be reduced from 6.5% to 1%. Immediately after that, in June 2004, the federal rate was increased by 0.25%, to curb the rise in inflation in the real estate market. But a constant decrease in the interest rate was reflected in specific, interest-sensitive sectors, such as real estate. This increase in investment appetite in the real estate sector was also due to legislative provisions, such as the Housing and Urban Development Act, which obliges GSEs such as Fannie Mae and Freddie Mac to have at least 30% of their loan purchases directly linked to affordable housing, which would stimulate mortgage lending in communities with limited resources. This phenomenon was also precipitated by the appearance of the Community Reinvestment Act, all of which facilitated a loosening of lending standards. At the same time, to support these mortgage practices, mortgage-backed assets appeared and implicitly the development of the shadow banking system. As these investments were interest-sensitive, with the increase in inflation in the real estate sector, a tightening of monetary policy affected the profitability of these investments and hence the ability to repay, effects that have also translated into the shadow banking system, repo markets and, finally, international markets. The detailed processes that led to the outbreak of the financial crisis are not the subject of this article, but their brief presentation was necessary to continue the presentation of the phenomenon of economic zombification. More
Romania’s Recovery According to the World Bank
The data included in the autumn report of the World Bank, “COVID-19 and Human Capital”, which brings the forecast for Europe and Central Asia countries up to date shows the skepticism of this institution’s specialists regarding a rapid recovery of the Romanian economy, by reference to official estimates issued locally. Thus, the National Commission forecasted an economic decrease of -3.8% this year, followed by a recovery of 4.9%, which would bring GDP level in 2021 to + 0.9% above that registered in 2019. More
The COVID-19 Pandemic – Changing the Paradigm
For almost three months now the entire world is in the midst of a very aggressive and rapidly evolving outbreak with new Coronavirus, that today is known as COVID-19. The origin of the outbreak is in China, the province of Hubei (Wuhan) and its surroundings. Coronaviruses are a large family of respiratory viruses with some causing less-severe disease, such as the common cold, and others more severe disease such as Middle-East Respiratory Syndrome (MERS) and Severe Acute Respiratory Syndrome (SARS). Some transmit easily from person to person, while others do not. The first cases with COVID-19 virus were reported as “pneumonia/respiratory disease of unknown etiology” in the last third of December 2019. The initial symptoms were mild, which permitted many people to travel before stronger symptoms were detected. At that time, the incubation period had not been stated. More
The 2008 and 2020 Global Crises – Differences and Similarities
The years 2008 and 2020 saw two global crises with important similarities, which evoked numerous comparisons. I shall briefly sketch differences and similarities between these two global crises and the European Union response. This comparison will help us understand how European Union’s institutions are learning and adapting their reaction to the volatile environment. More
From Marxism to the Ideology of Free Society in 1989 Romania – Transition or Rupture?
The turbulent times in which a revolution takes place delegitimize almost any claim to understand in real time what is happening. Only after things have got back on track can a lucid, cold analysis of events be undertaken – in philosophical terms, the history’s power to reveal the truth is recognized –, and this is the case the 1989 Romanian Revolution. In that year, the population taken to the streets was hoping only for an improvement in living conditions or, rather, for a profound change that would, at one time, have led to a better life – here’s an outdated problem. It is certain that those events have led to substantial changes in Romania – among which the most important place seems to be held by the change of ideological-social commitments, at all levels. More
The Race to the Bottom in Oil
With the developed world in transition towards a short and medium-term economic self-flagellation as a means of reducing the impact of the SARS-COV-2 virus spread, there is little room for economic news that is not related to markets tumbling and toilet paper becoming contraband. While it started with the shutdown in Hubei province in China and the associated tough (but successful) quarantine and social distancing measures, the economic crisis has moved onto Western nations, where the collective impact of the virus has already exceeded that in China. The measures which the experts (and, reluctantly, and too late for comfort, the politicians) are calling for are throwing prodigious amounts of sand in the gears of a system that developed organically to thrive on mobility, access, just-in-time logistics and a global division of labor. Regardless of the terrifying human costs of the crisis, the economic consequences will be the making of the leadership and will unravel carefully synchronized supply and production chains, as well as industries on which the (precarious) livelihood of millions depends, such as tourism. More
Europe’s Paradigmatic Dilemmas amidst Pandemic Woes: How the Covid-19 Crisis May Reshape EU’s Geostrategy
The much-awaited vaccine has recently been announced and reignited hope that the coronavirus pandemic that has kept the planet in a tight grip for about a year now is about to end. Though the vaccine itself is not beyond suspicion as some question the methodology used to validate it (normally, vaccines are vetted after being tested over several years), the world is gasping for a glimmer of hope against a threat it has struggled to understand and contain with mixed success. After an initial wave in the first and second quarters of 2020 that brought most of the planet to a halt with businesses closing down, unemployment rising and trade plummeting, the lockdown measures succeeded in putting a damper on the spread of the virus, leading to a relaxation of the lockdown measures during the third quarter so as to breathe new life into the ailing economy. Yet, this has caused the virus to emerge once more, thereby sparking a new wave starting around the middle of the third quarter of 2020 and continuing to this day. More
The Power of Vague Things: A Cautionary Tale
Paul Valery contends that power is founded on belief (a “vague thing”). Harold J. Berman believes the rule of law relies more on moral force than a police force. Yet the modern positivist worldview emphasizes the practical rather than the moral dimension of power. What are some consequences of this positivist belief? More
On the Self-Testability of the Minimum Wage
As I have shown, in a previous intervention, in which I explained the conceptual difference between the minimum salary (the actual minimum wage, with the particularity that is generated by the market, rigorously called “minimum nominal salary”) and the minimal wage (administrative wage, with the particularity that it is administratively established, rigorously called “minimal nominal salary”) in the present intervention I will argue about the self-testability of the minimal wage. I have also shown, in the same intervention, that the establishment of the minimal wage without using a method by which it is methodologically anchored by a macroeconomic indicator, relevant for ensuring sustainable economic growth, entails the possibility of it functioning as an instrument of social protection only. More
Playing on High Difficulty: The Trade Barriers of Modern Video Gaming
Over the course of the last few decades, video games have evolved from being a niche of the entertainment industry to being a major pillar, generating revenues greater than even blockbuster films (Zackariasson & Wilson, 2010). Multinational companies invest tens or even hundreds of millions of dollars into developing the most technologically advanced video games they possibly can. These companies compete primarily on an international level, since only a global market can generate the returns that make such investment worthwhile. There is virtually no such thing as national gaming markets, outside of niched East Asian segments that are culturally alien to the globalized pastiche of Western culture. Another aspect worth pointing out is that the gaming market is increasingly of the “winner takes all” variety, where a product must, without exception, come up to the highest standards of quality for the category that it belongs to in order to have any chance against those offered by the competition (Nieborg, 2011a). These two factors combined mean that any game that is not good enough to achieve international success can be considered a failure. More
Brâncuși’s Endlessness and the Scarcity of Some Means
The public subscription for Brâncuși’s “The Wisdom of the Earth”, to get it from private hands “back” to the Romanian state, failed not so long ago. In markets, big money is paid for his works, more than “all” Romanians managed to gather. The moral? Art may be a public good, but it is, above all, and shall stay so, a private thrill as beauty is also in the eye of the legit beholder. More
