July 15, 2020

“The economy has been severely damaged everywhere, we are in a global recession”


Madrid

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Alan Friedman (New York, 1956) lives between the United States and Europe. An expert in economics and politics, Friedman has worked for the Financial Times, Wall Street Journal, and International Herald Tribune. In addition to being the winner of four British Press Awards, the British Pulitzer. He began his career as a contributor to Jimmy Carter’s White House as the Presidential Management Intern. He later helped Rupert Murdoch create SkyTg24 in Italy in 2003 and Rainews24 in 1998. Television presenter, documentary producer, and author of nine bestsellers, including “Ten things to know about the Italian economy before it’s too late” (NewtonCompton) and «My Way: Berlusconi in His Own Words». This last book translated in 16 languages, also published in Spain: in this authoritative biography, Silvio Berlusconi talks to Friedman about himself as he has never done before. In the conversation Friedman offers his opinion on the international economy and politics analyzing this difficult historical moment:

The global health emergency seems to be slowing down but not ending: the announcements of new financial stimuli in Europe, the United States and China are not having the desired impact and new cases of infections are appearing in different countries, how much does this concern the markets? Will volatility continue?

The Covid crisis has been handled reasonably well in Europe, and the curve has flattened out and the economy is gradually opening up. But in the United States, Trump denied science, pretended there were no problems, and stopped testing. He also recommended that Americans ingest disinfectants and apparently doesn’t care if 150,000 or 200,000 Americans die. All he cares about is Wall Street and the numbers in the election polls for reelection.

Americans are seeing through this propaganda and deception network, so Trump may be disowned by the United States on November 3, 2020. For now, the economy has been severely damagedEverywhere we are in a global recession. The markets will be volatile in the coming months. The uncertainty of a second wave, the drop in consumption and the collapse of tourism, all this will make 2020 is a bad year for the European economy, losing between 8 or 9% of GDP, and it will be 2022 when we will probably return to the 2019 GDP level. Therefore, on the health front, the alarm is not over and we must be vigilant. And the key now is for governments to support families and businesses to overcome the crisis.

The virus is still present in countries in Africa and Latin America where it is expanding very rapidly. How will it impact the economies of these countries? What other countries will it affect?

The virus is spreading rapidly in Brazil, where Bolsonaro has ignored the problem and allowed what photographer Sebastiao Salgado calls a “genocide” in the Amazon. Russia has also failed and Boris Johnson Britain has been an incompetent leader in the United Kingdom. The virus will spread where governments don’t take the problem seriously. The fear is that poor countries in Africa, Asia and Latin America may be overwhelmed

“A slow and uneven recovery”

Hoping that a second autumn wave will not arrive, we will now analyze how in the different geographical areas the health emergency has impacted the economies. In the United States, before the pandemic, it was growing and unemployment stood at 4%.

The United States under Trump this year could suffer a fall in GDP of 8 or 9%, while 40 million Americans are out of work, so we have unemployment rates of around 12 to 15%. Wall Street remains volatile and subject to emotional sentiment, also because of Trump’s trade wars and news about vaccine development. So this crisis will be more of a “U” curve with a slow and uneven recovery, and not a “V” curve.

Can the economic situation, the current social tensions against racism and the November elections condition the international and commercial relations of the United States? What initiatives do you expect from Trump?

Trump has proven to be incompetent and corrupt. He has also poured gasoline on the fire of racial sentiment and incited violence with his tweets. It seems to be attractive to your hillbilly base, to white supremacists, but this may not be enough to win the elections. The United States has had a difficult time but also a social awakening, and when Coca Cola talks about the importance of Black Lives Matter it is because American companies also realize that we have a problem. I hope that some positive developments emerge from our social unrest and protests and that America wake up and become a multi-racial and multi-ethnic society where everyone is equal. Trump is a symbol of the worst racial hatred in the United States and is, therefore, not in a position to be president.

Will China emerge faster and stronger from the crisis, thanks to its centralized command power and relatively faster decision-making?

China will emerge as the 21st century economic superpowerAlthough this may not be clear for a few years yet. The United States in twenty years will be the second leading economy after China. Everything Trump has done has empowered China and Russia to divide, create new spheres of influence and fill the power vacuum that Trump has created by abdicating the leadership of the United States, due to his isolationism from «America First».

A European emergency

Europe is facing the most important test.

I am optimistic about Europe. I believe that Angela Merkel will do good things during Germany’s tenure as European President from July 1. I believe that the European Recovery Fund and other initiatives supported by Spain, France and Italy will materialize, and that Europe may have an opportunity to learn something from Covid about solidarity.

Are the European institutions coping well with the extremely difficult post-emergency economic situation?

The European Central Bank (ECB) has been excellent at introduce and almost double the Quantitative Easing and other measures. I believe that the ECB will continue, over the next two or three years, to buy bonds and support liquidity in the European financial system. I think the use of European loans such as the “MES” for healthcare expenses and loans from the European Investment Bank and the “SURE” can be useful. Europe needs to unite this time. We are facing an emergency across Europe.

Brexit is no longer discussed, what will happen if an agreement between the United Kingdom and the European Union is not reached? What will be the consequences?

I don’t care what happens to the British under Boris Johnson anymore: They’ve made their bed and now they need to lie down on it. They were wrong to vote for Brexit and Johnson was wrong and cheated on Brexit. The greatest damage will be done to economic growth in the UK, not so much to the rest of the European Union. Goodbye Great Britain, I say, and good luck.

Does accessing the MES mean being rescued and, therefore, being under strict European supervision?

Not at all! Access to MONTH means accessing low-interest loans, close to 0%, to invest in strengthening our hospitals, our medical schools and our research, for a vaccine against Covid. There is no hidden trick attached, there will be no Troika as a result of MONTH. Anyone who says that MONTH is a trick or a conspiracy is an ignorant or a person who loves the plot!

The future of Italy

Alan, you live in Italy for a long time, what do you think of the current political situation, the stability of the Government, and its ability to take advantage of the increased financial availability of the EU to regenerate the country?

I live between the United States and Europe, and I see problems in the politics of almost all the countries I visit. In the United States we hope to return to normal with the President Biden as a serious and honest new leader. In Italy I think the government has behaved responsibly and will take advantage of all available European funds, at least I hope so. I think this government will last at least until after the election of a new President of the Republic. And I wish all my friends in Italy and Spain the best. Southern Europe is my favorite part of the world.

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