She points out that many say we are “in the middle of the crisis,” but we are not, from an economic and vaccine perspective, this. However, from a political perspective, he could be grateful to say so to go beyond favorite projects. The question is what we’re going to “restart” now, as Treasury Secretary Magdalena Anderson talks about.
We talk 95 percent of the time about crisis industries that account for 3-4 percent of GDP, it is about poorly functioning hotels, restaurants and entertainment, but the rest is growing well and lacking in skills. It’s the crisis industries that should get help, we’ve treated them with stepmom a little bit. But she maintains that when the economy opens up again, we will not give money to taxis and hotels.
On the other hand, you can donate money for structural changes, but then you also have to be clear that we want to improve infrastructure, energy or artificial intelligence.
This is, for example, education, which is always a priority area. Here you can do more, and so does the issue of sustainability, and where energy is crucial.
Overall, Annika Winsth believes that economies have recovered surprisingly well, which is also true of the job market.
What also made the stock markets go so well was that central banks implemented such an extreme policy, pumping out money, leading to players taking more risks.
A fundamental factor in the economic recovery is that world trade opened up very quickly. Then it depends on which country you are looking for, but in Sweden, for example, we are back to the pre-crisis level early on in some sectors.
The fact that the vaccine was successful was a positive sign, and since then we’ve had stimulus packages behind us, as central banks and fiscal policy poured in during the pandemic. Moreover, they say they have to pump more money.
“We enter this recovery phase when the epidemic is behind us, but we still have a lot of money in circulation,” she says.
Then interest rates rise, and then they should not be at pre-crisis levels. The higher the interest rates, the more capital must strive to reduce risk in exchange for the same return, and since everyone is exposed to high risk, there can be significant shifts. Somewhere around 3 percent, Annika Winsth says you’re usually told to switch to safer paper.
Therefore, there is now a lot of focus on the extent to which central banks allow long-term interest rates to rise. So far, the Fed says that as long as interest rates go up “forever” for economic reasons, that’s fine. The European Central Bank is more concerned, they know Italy is too indebted, and they will be eager to fight back.
Anika Wenthe wants to praise central banks for managing crises this time, if it weren’t there, there would likely be “half-panic” in several markets, she said. But the problem is that they did not back down during the 2015-2019 boom.
“The lesson learned is that it is very easy to pay attention to but very difficult to undo,” she says.
The only ones who have managed to raise interest rates are the Federal Reserve, and there will be a discussion later on “the insiders and the foreigners”.
Central banks have raised inflation, but the problem becomes when the target of inflation becomes more important than financial stability. It had a very strong momentum to reach the goal and the result could be you have a housing market bubble bursting, which can take ten years to fix. It’s easier to accept inflation just below target.
“The risks with expansionary policy are greater than the gains,” she says in the interview. Direct trading.