Zombie Capitalism Crisi economica e debito pubblico Maurizio Donato Università L. Vanvitelli, 19 dicembre2017

Zombie Capitalism 10 years after the outbreak of the crisis, the main explanations : excess of finance, greed, inequalities, secular stagnation, etc. Profitability and counter-tendencies: increased labor exploitation, fictitious capital, devaluation of capital. The monetary policy of the central banks (zero interest rates) has favored the movement of capital from Advanced Economies to Emergent Economies and then their indebtedness, have fueled financial speculation and hence corporate and public indebtedness. The Increasing indebtedness, in turn, stimulates the tendency to centralize the financial system and the firms in general. 1. Weak recovery and increasing indebtedness 2. Public debt, corporate debt and growth: it is not a high public debt that impedes growth, but it is weak growth that raises public debt 3. Zombie-firms and productivity: too little competition? Too much (and useless) exploitation.

«A modest cyclical recovery» OECD Economic Outlook, 2017 Consumer and business confidence Global industrial production growth

.. not yet, still present, will not suffice … While world economic growth is accelerating a bit, the OECD reckons that "on a per capita basis, growth will fall short of pre-crisis norms in the majority of OECD and non-OECD economies." So the world economy is still not yet out of the Long Depression that started in 2009. The OECD went on: "Whilst the near-term cyclical improvement is welcome, it remains modest compared with the standards of past recoveries. Moreover, the prospects for continuing the global growth up-tick through 2019 and securing the foundations for higher potential output and more resilient and inclusive growth do not yet appear to be in place. The lingering effects of prolonged sub-par growth after the financial crisis are still present in investment, trade, productivity and wage developments. Some improvement is projected in 2018 and 2019, […] but this will not suffice to fully offset past shortfalls, and thus productivity gains will remain limited."

Nominal GdP growth Global, Advanced Economies, Emergent Economies

Real GdP growth 2007-17 Global, Advanced Economies, Emergent Economies

Gross fixed investment-GdP ratio

The secular decline of the interest rate

Long run real interest rates

Interest rates and indebteness source: BIS 87° report, 2016-17

Debt has been rising more quickly than GdP

Private and public debt By the end of 2015, the global debt of the non-financial sector of the economy, including governments, households and non-financial corporations, reached a remarkable sum of 152.000 billion dollars, representing 225% of the world GDP, the highest figure always . Of this debt mountain, two-thirds are private debts and a third is public debt. In December 2016, the total US debt, including that of the various States, industry and private individuals, amounts to approximately $ 68.5 trillion (a figure of world GDP), while the US Gross Domestic Product reaches 18 thousands of billions.

Debt-to-GdP ratios are now above pre-crisis levels

“Despite some deleveraging in recent years, the indebtedness of households and nonfinancial businesses remains at historically high levels in many countries, and continues to increase in some.”  

Household debt-to-income ratio

“If borrowing is well used, higher indebtedness contributes to economic growth by raising productive capacity or augmenting productivity.” Rather than financing investment, firms took on debt to return funds to shareholders.

Debt in Advanced Economies Total, non-financial private , public

Debt in Low-Income Countries

Speculative flows to emerging markets bn US$ source: IMF Global Financial Stability Report 2017

Sectoral changes in Debt (% of GDP) households, non-financial corporations, government

The real side: Productivity Growth in the G-7 1970-2015