The recovery will be a jagged swoosh, not a V-shape

British economist Jim O'Neill says the global economy can bounce back right to where it was before, in a V-shaped recovery. But his argument is based on a lot of "ifs," plus comparisons to the 2008 recession and conditions in China and South Korea that may not truly apply. Ian Bremmer and Eurasia Group's Robert Kahn take issue with O'Neill's op-ed, on this edition of The Red Pen.

Today, we're taking our Red Pen to an article titled "A V-Shaped Recovery Could Still Happen." I'm not buying it. It's published recently by Project Syndicate, authored by British economist named Jim O'Neill. Jim O'Neill is very well known. He was chairman of Goldman Sachs Asset Management. He's the guy that coined the acronym BRICS, Brazil, Russia, India, China. So, no slouch. But as you know, we don't agree with everything out there. And this is the case. Brought to you by the letter V. We're taking sharp issue with the idea that recovery from all the economic devastation created by the coronavirus pandemic is going to happen quickly. That after the sharp drop that the world has experienced, everything bounces back to where it was before. That's the V. Economists around the world are debating how quickly recovery will happen to be sure. But we're not buying the V. Here's why. W-H-Y.


First, among his arguments, O'Neill points to stimulus money pouring in from all corners of the globe. He writes, "After all, governments around the world have mustered an absolutely massive economic response, exceeding the amounts even provided during the 2000, 2008-2010 financial crisis." No question. But this is not the 2008 recession. This moment has brought the entire world's supply chain, massive disruption, debt-distress, unlike anything we've seen in our lifetimes. And with the virus very much still exploding around the world and no vaccine for the moment and none really expected that would work and be distributed globally until at best, mid, late next year, we're likely to see a relentlessly stop and start economy that more resembles what we think is a jagged swoosh, then a V. Sure, we've had a good balance after a very steep decline, but all indications are that the hard part is still to come.

Second, O'Neill writes that improving conditions in China and South Korea bode well for the rest of the world. He writes, "despite China's ongoing challenges, the Caixin services PMI index rose to a 10-year high in June," and he points to increased exports from South Korea, too. Sure, China and South Korea, but they're doing particularly well because they contained the virus. They quarantined. They had contact tracing. They had early testing. That's not true in much of the rest of the world. Certainly not in my own United States, the world's largest economy. Not in Brazil. Not in India. Not in most of the world's emerging markets. A global recovery will not gain momentum while the world is following completely divergent parts.

And finally, O'Neill writes, "If lockdowns remain localized and temporary, if health systems continue to expand testing, and especially if a vaccine or more effective treatments are developed, the economic outlook need not be as bleak as many believe." Those are some very big "ifs", my friend. Testing is nowhere close to what it needs to be in the United States and in most of the developing world, aside from China.

Yes, the United States is testing a lot more than it used to, but nowhere close to the explosion of cases that we have right now. We're still looking for effective treatment options, let alone the vaccine that could potentially take years to develop and distribute globally. And if the first vaccines are not seen as effective, a lot of people are going to wait. They're not going to take them immediately. That's even with good education. That's even, never mind, anti-vaxxer sentiment. And it's not paying attention to vaccine nationalism and the fact that the world is not rowing together in developing a vaccine together, which is what you want to respond to a global pandemic.

In other words, all of this is not pointing to a V. It's this jagged swoosh. It's going to be a lot uglier than we'd like it to be. That's your Red Pen for today.

Each month, Microsoft receives about 6,500 complaints from people who've been victims of tech support scams. But it's not just Microsoft's brand that the scammers leverage; fraudsters have pretended to be from a number of other reputable tech companies and service providers. These scams will remain an industry-wide challenge until sufficient people are educated about how they work and how to avoid them.

To measure the scope of this problem globally, Microsoft commissioned YouGov for a new 2021 survey across 16 countries. Results from the 2021 survey reveal that, globally, fewer consumers have been exposed to tech support scams as compared to the 2018 survey. However, those people who continued with the interaction were more likely to have lost money to the scammers than we saw in our previous survey. To read the highlights of the survey, visit Microsoft on the Issues.

Next week, Ebrahim Raisi, a hardliner who is ideologically and personally close to Iran's 82 year-old supreme leader Ayatollah Ali Khamenei, will be inaugurated as Iran's president. This power transition comes as the country experiences a fresh wave of protests that started in Iran's southwest over water shortages earlier this month and has since spilled over into dozens of provinces.

Some close observers of Iranian society and politics say that popular discontent there is now more widespread than it has been in years, making the Iranian regime more vulnerable than ever.

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Was the world so focused on climate change that warning signs about the COVID-19 pandemic were missed? Historian and author Niall Ferguson argues that, while the climate crisis poses a long-term threat to humanity, other potential catastrophes are much more dangerous in the near future. "We took our eye off that ball," Ferguson says about COVID, "despite numerous warnings, because global climate change has become the issue that Greta Thunberg said, would bring the end of the world. But the point I'm making in DOOM [his new book] is that we can end the world and a lot of other ways, much faster." Ferguson spoke with Ian Bremmer in an interview for GZERO World.

Watch the episode: Predictable disaster and the surprising history of shocks

Tunisia, the only country that emerged a democracy from the Arab Spring, is now in the middle of its worst political crisis since it got rid of former autocrat Zine El Abidine Ben Ali over a decade ago.

On Sunday, the 64th anniversary of the country's independence from France, President Kais Saied responded to widespread protests over the ailing economy and COVID by firing embattled Prime Minister Hichem Mechichi and suspending parliament for 30 days. Troops have surrounded the legislature, where rival crowds faced off on Monday, with one side chanting in support of the move and the other denouncing it as a coup.

How did we get here, do we even know who's really in charge, and what might come next?

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Ian Bremmer shares his perspective on global politics this week:

As COVID-19 cases rise, are vaccine mandates coming?

Oh, you just want to get me in more trouble. Yeah, some mandates are coming, but they're not national mandates in the United States. In some cases, you're looking at federal and state employees, in some cases you're looking at lots of individual corporations, universities, and such. I mean I've already been to a number of events where vaccines have been mandated in New York. You've got this Excelsior Pass if you want to go to the Brooklyn Nets games, as I certainly do. You show it off and that gets you in with your vaccine. So I think it's really going to be a decentralized process. But clearly, given Delta variant and the number of people that are getting sick and dying because they're not vaccinated, you're going to see moves towards more mandates, as a consequence.

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Castillo takes over in Peru: After almost two months of protests, baseless allegations of fraud from his rival in the runoff election, and even rumblings of a coup, Pedro Castillo will be sworn in as president of Peru on Wednesday. A former rural school-teacher famous for riding on horseback, wearing a cowboy hat and waving a giant pencil to show how much he cares about education, Castillo has big plans to achieve big change. But he won by just a razor-thin margin in a deeply divided country, and Peru's dysfunctional political system will likely hobble his attempts to get major legislation passed. Moreover, despite having moderated his positions, half of the country still sees him as a communist who might turn Peru into another Venezuela. Castillo's most immediate task is dealing with the twin crises of a deadly pandemic and a COVID-fueled economic crisis that has hit poor Peruvians — his base — the hardest.

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13: The two Koreas have restored their communication hotline almost 13 months after Pyongyang abruptly cut it in response to Seoul not doing enough to prevent North Korean defectors from sending propaganda leaflets across the shared border. The hotline was established in 2018 following a historic meeting between North Korean Supreme Leader Kim Jong Un and South Korean President Moon Jae-in.

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Now that the Tokyo Olympics are finally underway, your Signal crew will be bringing you some intriguing, uplifting, and quirky facts about the Games that have many people on edge.

Today — what's the smallest country (by population) to win a gold medal in a summer Olympics?

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