Former European Central Bank President Mario Draghi illustrated the latest report by the Group of Thirty, recommending that governments implement a “creative destruction“ procedure for changing the economy to a post-COVID Great Reset, brave new world. In his presentation, he said that the world economy is on the edge of a cliff. Whereas in the first phase of the pandemic crisis the problem was liquidity, the coming crisis will be over insolvencies. Governments won’t be able to bail out all activities and therefore they must choose who should live and who should die. https://group30.org/publications/detail/4820
Complementary to Draghi, his accomplice Mark Carney issued a memo with guidelines for mandatory CO2 disclosure (see below).
Here are some quotes from the Group of Thirty report:
“Governments will increasingly need to move away from broad support to more targeted measures. This means refraining from trying to preserve the pre-pandemic status quo, and enabling the reallocation of resources needed for economies to emerge fitter and stronger. Further, private sector capabilities should be relied on to prioritize and administer support in jurisdictions with strong private financial institutions and deeper capital markets. Government intervention is best focused on addressing market failures, and to managing the pace of the needed creative destruction….
“The business sector that emerges from this crisis should not look exactly like it did before due to permanent effects of the crisis and the pandemic’s acceleration of existing trends such as digitalization. Governments should encourage necessary or desirable business transformations and adjustments in employment. This may require a certain amount of “creative destruction” as some firms shrink or close and new ones open, and as some workers need to move between companies and sectors, with appropriate retraining and transitional assistance. However, even governments that support such adaptation in principle may need to take measures to manage the timing of creative destruction to account for the knock-on effects of excessively rapid shifts, such as for insolvency regimes that could become overwhelmed….
“Attitudes toward firm failure and employment: Policymakers will vary in their weighting of preserving the status quo and existing jobs, versus allowing or encouraging the process of ‘creative destruction,’ in which firms fail, allowing jobs and resources to flow from unsuccessful firms to ones that are better suited for the new economy….”
Piyush Gupta, CEO of Singapore-based DBS bank, expects the issue of zombie firms to be a real challenge among SMEs and predicts a wave of defaults that will add pressure to the financial sector, posing a question policymakers need to confront: “Do you keep…using public finances to support companies or do you let creative destruction happen à la Schumpeter?”
The Group of Thirty gathers former and current central bankers with CEOs of private financial institutions and academicians. It is the successor to the “Bellagio Group,” which was set up in the 1960s by David Rockefeller with the task of suggesting proposals to “improve” the Bretton Woods monetary system. The Bellagio Group used to meet at Rockefeller’s Villa Serbelloni in Bellagio, Italy.
