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(en) France, Union Communiste Libertaire UCL - UCL Economics Working Group, What to think of the oil crisis, and other economic news (fr, it, pt)[machine translation]

Date Wed, 6 May 2020 07:15:05 +0300

This note was produced by the UCL Economy working group, aimed at synthesizing essential data on the economic situation we are going through with the coronavirus crisis. It is as sourced and factual as possible, and aims to link the main data on the economic situation with more general political and social analyzes. However, it was carried out by activists who are not economic professionals. do not hesitate to report any errors to the working group. ---- State of production and employment ---- The INSEE economic outlook dated 23 April tells us that the French economy is operating at a level 35% lower than the ordinary situation. In the market sector alone, the loss is estimated at - 41%, and even - 49% excluding rents. If we tighten the focus on agriculture, the loss of activity would increase slightly: -13% against -10% two weeks ago. Conversely, in industry and construction, the reopening of businesses slightly mitigates the loss of activity: -39% against -43% in industry -79% against -88% in construction.

Partial activity is required for 10 million employees, and hirings are down 22.6%. The consequences for the social security accounts are disastrous: the "optimistic" forecast deficit is counting on 41 billion euros, on the assumption that the deferrals of employers' contributions will be paid by December 2020. However, the government is already working has its cancellations for certain sectors ... [1]

Household consumption would be 33% lower than normal. We note that media unrest, communication and government measures that encourage recovery have little effect on production and demand. The revival of production will be long and to establish long-term prospects is complicated. For all sectors, INSEE has 80% pessimistic bosses, figures which exceed those of the 2008 crisis. [2]

On the oil side, the consequences of an episode of tensions between producing countries, in particular between Russia and Saudi Arabia are still being felt. On April 12, 23 producing countries (Opep +) certainly found an agreement to limit their production, despite the tensions between Ryad and Moscow: 10 million barrels less would be produced each day. But this agreement will take effect on 1 stMay Besides, one might think that this significant reduction will not be enough to rebalance the market. [3][4]

Note n ° 4 in PDF to download
Situation of the financial sphere
This week, much has been said about the price of oil [5], which turned negative in New York Monday, April 20. This little event does not in reality indicate much positive nor, in reality, much interesting. Of course, it is symptomatic of the sharp fall in economic production in general, which has greatly reduced the demand for oil. This results in excessively high reserves, to the point that the storage capacities are saturated: the owners therefore seek to dispose of their reserves, even if it means selling at a loss. [6]

However, the importance of the event should not be overstated. On the one hand, this price concerns mainly the United States and Canada, because it takes as reference the "West Texas intermediate" (WTI), a form of crude oil exploited in North America, and not the "BrentWhich is a benchmark in Europe. [7]However, Brent "serves as a tariff base for two thirds of world production[8]and is maintained at a price that revolves around twenty dollars for each barrel, with a downward trend. In addition, WTI prices quickly rose after Monday's floor. [9]

Clearly, what must be remembered is not this short-lived negative price but the general decrease in oil prices in the medium term, which is bad news: this drop marks the unresolved character of the diplomatic conflicts between seller countries. and oil buyers and the extremely serious economic crisis we are going through. The impact of this drop on gasoline prices at the pump is quite limited: the cost of fuel is largely determined by the regulations of the authorities and by the level of taxes on which the State grows ... [10]As for the ecological effects, they remain rather uncertain: the instability of the oil market may tend to discourage investment in this sector, but persistently low oil prices reduce the competitiveness of renewable energies. [11][12]After the crisis, it is therefore very likely that the economic recovery will be extremely oil-consuming in the absence of political measures favorable to an ambitious energy transition.

The fall in oil prices weighed on general stock quotes, on Wall Street as in Europe. The CAC 40 thus continued to fluctuate heavily this week [13], generally staying at the level of the past month. [14]

The "business climate " indicatorprovided by INSEE has experienced a collapse this past month since its creation, going from 94 points in March to 61.7 points in April. By way of comparison, at the height of the economic crisis that followed the subprime crisis, a floor value of 68.8 points had been reached in March 2009. This indicator is constructed from several data collected in a monthly qualitative survey and aims to represent the employers' confidence in the future of the economy INSEE nevertheless emphasizes that the exceptional situation may have made data collection less precise than usual. [15]

Economic policy measures
The first attempts at deconfinement in Asia ended in a return to square one (Japan, Singapore). In addition, the absence of an appropriate reaction in Brazil and to a lesser extent in the United States is starting to have disastrous effects on all of the two countries. Everything seems to indicate that only a definitive treatment would put an end to the pandemic.

Thursday, April 23, a new meeting of European authorities ended in a new failure to set up the mechanism of a European debt claimed by the countries of the "South" including France. This failure demonstrates the fragility of the Union and runs the risk that the less solid states borrow at prohibitive rates, which would cause unbearable tension on the Euro.

In parallel with a gradual deconfinement, Austria and certain German lander (regions) have set up an air bridge to bring in seasonal Romanian workers while the borders are closed. The measure caused jostling at airports, conducive to the contamination of suitors for travel. The Federal State (or the Landers) take care of not only the plane ticket but also the hotel for the quarantine of Romanian agricultural workers ! Wouldn't it be more logical to offer working conditions acceptable to Austrians ?

In France, the massive use of partial unemployment and sick leave (which affects more than ten million employees), added to the additional medical expenses and combined with the promise of an unprecedented recession will lead to an unprecedented deficit in Social Security: 41 billion euros, in a "favorable" hypothesis according to the Minister of the Economy. [16]The latest measures voted by the right in Parliament (uncapping of overtime tax exemption ...), and those already taken by the government do nothing to improve the situation. It is very difficult to conceal that the date of the start of deconfinement and the reopening of schools given for May 11 is primarily for the economy and not for the decline of the epidemic, which is difficult for him feel.

At the same time, support plans for certain sectors are becoming more precise (tourism and hotel industry, aviation, etc.). For Air-France, the government releases 7 billion in aid without going up in capital and the Dutch government should add 3 billion in support to KLM. Proposals to postpone the summer holidays, or to extend working hours, are under consideration, without further details. These sectors, which represent millions of jobs, are at 80 or even 95% stopped. The social and economic consequences of the current crisis could be catastrophic for all workers who depend on these sectors, and socially devastate entire cities, such as Toulouse. [17]

In the mobilizations launched around the Luxfer oxygen cylinder plant, the government remains silent while the SCOP (cooperative) project is very advanced. On the other hand, Macron operates an unexpected reversal by promising support via massive orders for the reopening of the mask factory in Plaintel. The factory has been shutdown for a longer time, however.

It may be noted in passing that in other sectors, the implementation of "emergency" measures by the government turns out to be a failure. This is the case for agriculture where, as in other European countries, the sector depends on immigrant labor: the establishment of the platform of volunteers by the government, despite the success of registrations (300,000 people ) [18], does not seem to be working well (only 15,000 workers placed). If the reasons for this discrepancy are not yet known, we can think that this initiative was built largely outside the demands of farmers on the ground, on a rude bureaucratic finding and the support of industry leaders in the sector (FNSEA ), very far from the actual organization in the fields. In addition, labor inspectors are concerned about the consequences for people who are ill-prepared in this sector where working conditions are very poor. [19]

Furthermore, even consultations with the employers of large groups to help the crisis economy turn out to be completely insufficient: only around fifty PSA employees would be concerned for the fitting of respirators according to an internal source, and the possibilities of using actually these respirators are hypothetical. [20]

After more than a month in crisis, one thing is clear: the government finds itself incapable, politically, of questioning its liberal dogma, and of imposing in a serious and effective manner the measures necessary to respond effectively to the health and economic: planning, requisitions, nationalizations and nationalizations of scale are obviously not on the program ... Worse, it continues to take the measures which could lead in the long term to a collapse of the already weakened social protection systems.

Overall, the Covid-19 health crisis will only exacerbate pre-existing conditions of inequality wherever it strikes. In the more or less short term, some expect uprisings or even revolutions. The International Labor Organization (ILO) has also warned that the crisis threatens 1.25 billion people with "layoffs, loss of activity and income". [21]However, most of them were already poor ...

UCL Economics Working Group, April 27, 2020


[1]https://www.challenges.fr/ entreprise / sante- et- pharmacie / coronavirus- le- deficit-de- la- securite- sociale- atteindra- le- niveau- abyssal-de- 41- milliards-d -euros_706733

[2] https://www.insee.fr/fr/statistiques/4481458?sommaire=4473296

[3] https://www.insee.fr/fr/statistiques/4481458?sommaire=4473296

[4] https://www.lepoint.fr/economie/les-pays-exportateurs-de-petrole-decident-d-une-baisse-histor-de-la-production-12-04-2020-2371141_28.php

[5] https://www.lemonde.fr/economie/article/2020/04/21/aux-etats-unis-les-prix-negatifs-du-petrole-balayent-la-strategie-energetique-de-trump_6037258_3234 .html

[6] https://www.20minutes.fr/economie/2764671-20200421-coronavirus-baisse-extraordinaire-ca-veut-dire-quoi-petrole-americain-cours-nul-negatif

[7] https://www.huffingtonpost.fr/entry/le-prix-du-petrole-peut-etre-negatif-mais-ce-nest-pas-une-bonne-nouvelle_fr_5e9ef35ac5b6a486d07f5047

[8] https://www.lejdd.fr/Economie/prix-negatif-du-baril-de-petrole-pourquoi-il-sagit-dun-trompe-loeil-3963438

[9] https://www.ouest-france.fr/economie/energie/petrole/petrole-le-brut-americain-se-redresse-peu-peu-apres-son-plongeon-histor-6814284

[10] http://www.francesoir.fr/societe-economie/covid19-le-prix-du-baril-est-devenu-negatif-quelles-consequences-pour-le-prix-du

[11]https://www.franceculture.fr/emissions/radiographies-du-coronavirus/le-petrole- less- cest- cher- plus- ca-nous-coute

[12] http://www.nouvelobs.com/coronavirus-de-wuhan/20200421.OBS27791/prix-negatifs-du-baril-americain-de-petrole-4-questions-sur-un-plongeon-histor.html

[13] https://www.tradingsat.com/cac-40-FR0003500008/actualites/cac-40-le-cac-40-succombe-au-chaos-sur-le-marche-petrolier-910375.html

[14] https://www.boursorama.com/bourse/indices/cours/1rPCAC/

[15] https://www.insee.fr/fr/statistiques/3532408?sommaire=3530678

[16] https://www.lemonde.fr/economie/article/2020/04/23/la-crise-due-au-coronavirus-fait-exploser-le-deficit-de-la-securite-sociale_6037512_3234.html

[17] https://france3-regions.francetvinfo.fr/occitanie/haute-garonne/toulouse/coronavirus-premiers-chiffres-crise-economique-liee-au-confinement-haute-garonne-1813404.html

[18] https://www.francebleu.fr/infos/agriculture-peche/coronavirus-en-bourgogne-franche-comte-des-volontaires-par-milliers-pour-aider-nos-paysans-1587563281

[19] https://www.bastamag.net/contrat-saisonnier-agricole-condition-de-travail-SMIC-pesticides-TMS-covid19-coronavirus ?

[20] https://www.lunion.fr/id146727/article/2020-04-23/les-respirateurs-fabriques-en-urgence-en-france-non-adaptes-au-covid-19-le

[21] https://www.lefigaro.fr/social/coronavirus-1-25-milliard-de-travailleurs-courent-un-risque-de-licenciement-ou-de-reduction-de-salaire-selon-l -or-20200407

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