Þt Putin’s Attack on Ukraine May Trigger a European Recession Is Not þe Most Important Thing, &

BRIEFLY NOTED: For 2022-04-13 We

FIRST: That Putin’s Attack on Ukraine May Trigger a European Recession Is Not the Most Important Thing:

But it is a thing. And it is a thing that me, playing my position, should take note of:

Barry Eichengreen:

Barry Eichengreen: Europe’s Economy on a Knife Edge: ‘Before Russian President Vladimir Putin’s attack on Ukraine, Europe’s recovery from the damage wrought by the COVID–19 pandemic was solidifying…. But then the war dented consumer confidence by heightening uncertainty and raising energy and commodity prices…. More costly energy will no doubt be a drag on growth. But if Russian gas continues to flow, higher prices will not bake in a recession…. But using less gas is one thing; using none at all is quite another. In the latter scenario, gas-powered factories won’t be economizing; they will be shutting down…. Whether gas supplies are suspended depends entirely on Putin, who could decide to terminate shipments in retaliation against Western sanctions. He may need the revenues, but this would not be the first time that anger and pride trumped economic logic. If the West makes payments not to Gazprombank but into escrow accounts, Putin will lose his last remaining incentive to keep the gas flowing…. If Putin allows his army to continue committing atrocities against Ukrainian civilians, Western European publics and policymakers will unite against him. Given their country’s history, Germans will not be able to sit back comfortably, in homes heated by Russian gas….

It is easy for an American, heated by natural gas from Texas and the Dakotas, to say that Europe should endure a recession in order to ratchet up the pressure on Putin. But if President Joe Biden’s administration and the US Congress think it crucial to intensify the pressure on Russia, then they can make it worth Europe’s while. Europe will take the lead in Ukraine’s postwar reconstruction. The logistics are easier…. But if Europe is the logical party to do the legwork and administer the aid, then the United States can provide the bulk of the finance, beyond that portion financed by escrow accounts and Russia’s other external assets. This will be an appropriate humanitarian gesture once the war is over. But a US commitment now to compensate Europe for the steps it must take, starting with a ban on imports of Russian oil and gas, is also a way to incentivize it to help bring the war to an early end…

LINK: <https://www.project-syndicate.org/commentary/europe-economic-growth-depends-on-putin-by-barry-eichengreen-2022-04>

I endorse this from Barry-down-the-hall 100%. Ukrainian reconstruction should be financed 100% out of Russia’s seized external assets, and then by the United States. Europeans should start paying for Russian gas into escrow accounts on which Ukraine reconstruction has a lien. Given the pictures and videos that have come out and will come out of Ukraine, and given the willingness of European voters to look at them in a way they would not look at pictures from Syria or Grozny, there is a very high probability that European politicians will ultimately be forced to act. It is much better for them to take control of the action now rather than to be reduced to the position of mid-1800s French politician André Ledru-Rollin: “There go my people! And I must follow them, for I am their leader!”

Those steps taken now should greatly concentrate the minds of Putin’s circle about the need to bring a war that Russia will be paying for both sides of to a rapid end. But Putin himself needs a line of retreat. The line of retreat I would offer him would be a Second Yalta Conference: International recognition of the redrawing of borders to place Crimea, Lohan's, and Donetsk on the Russian side; in return, immediate Ukraine accession to the EU and to NATO, plus Russian assets paying for Ukraine reconstruction (but not subsequent development); and the US funding a Marshall Plan for Ukraine.

Such a second Yalta conference will be generally condemned in a generation as a betrayal of the people living in Crimea, Luhansk, and Donetsk. And it will be rightly so condemned.

But I think it may well be the best thing we can do, given the situation.

One does not, after all, walk into a negotiation with a crazy man controlling nuclear weapons and expect roses and unicorns and rainbows.

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Some Pictures:

Dan Jones: Apocalypse Wow: ‘A giant tapestry in the Château d’Angers tells the story of the end of the world…. The Apocalypse Tapestry, today brilliantly displayed in a gallery at the castle in Angers, was commissioned in 1373 by Louis I duke of Anjou. Although only 25 years old, the duke already owned dozens of fine tapestries—but this one was a doozy…

THE SUNDAY SNAP(S): APOCALYPSE WOW

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Very Briefly Noted:

• Martin Sandbu: Ukraine Needs an Ambitious New Marshall Plan from Europe: ‘Physically rebuilding what Putin has destroyed must wait until his war stops, but other aspects of reconstruction need not… <https://www.ft.com/content/39912ad6-c542-40b3-a254-27f5490f4e77>

• Financial Times Editorial Board: A Better Balanced US Supreme Court: ‘The landmark elevation of the eminently qualified Brown Jackson… <https://www.ft.com/content/796a9785-2f8d-4fff-a208-8523fbd83c7a>

• Matthew McManus: A Critical Legal Examination of Liberalism and Liberal Rights <https://www.amazon.com/Critical-Examination-Liberalism-Palgrave-Classical-ebook-dp-B08P2SPDT1/dp/B08P2SPDT1/ref=mt_other?_encoding=UTF8&me=&qid=>

• Anton Troianovski: Spurred by Putin, Russians Turn on One Another Over the War: ‘Citizens are denouncing one another, illustrating how the war is feeding paranoia and polarization in Russian society… <https://www.nytimes.com/2022/04/09/world/europe/putin-russia-war-ukraine.html?referringSource=articleShare>

• Megan Gibson: Francis Fukuyama: We Could Be Facing the End of “The End of History”: ‘Fukuyama… said that when he wrote his thesis he perhaps didn’t fully appreciate the concept of “political decay: the idea that once you became a modern democracy, you could also go backwards”… <https://www.newstatesman.com/encounter/2022/03/francis-fukuyama-on-the-end-of-the-end-of-history>

• Paul Romer: Mathiness in the Theory of Economic Growth: ’II. The Fork in Growth Theory*… <https://paulromer.net/mathiness/Mathiness.pdf>

• Cory Doctorow: An Unfinished Masterpiece by a Legend: ‘John M Ford’s… unfinished masterpiece, Aspects… <https://pluralistic.net/2022/04/09/john-m-ford/#aspects>

• Chenzi Xu: Reshaping Global Trade: The Immediate & Long-Run Effects of Bank Failures: ‘The first modern global banking crisis… in 1866…. Countries exposed to bank failures in London immediately exported significantly less and did not recover… <https://academic.oup.com/qje/advance-article/doi/10.1093/qje/qjac016/6563147>

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Twitter & Stack:

• Noah Smith: Five Reasons China’s Productivity [Growth] Slowed Down: ‘Productivity growth is the thread that ties together the entire story of the Chinese economy since 2008…

Five reasons China's productivity slowed down

How about my friends Noah Smith <https://noahpinion.substack.com> or Matt Yglesias <https://www.slowboring.com> or Matt Klein <https://theovershoot.co> or Robert Reich <https://robertreich.substack.com> or Charlie-Jane Anders <https://buttondown.email/charliejane> or John Ganz <https://johnganz.substack.com>?

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