Must Reads
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August 2009
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26th August, 2009
FT: Iceland shows the dangers ahead for us all
By: Robert Wade
In the build-up to the global crisis of 2008, tiny Iceland was a canary in the mine, a leading indicator of wider vulnerabilities. Now, amid growing optimism about global recovery, Iceland may again be a leading indicator of trouble ahead.
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26th August, 2009
FT: The case against Ben Bernanke
By: Stephen Roach
Barack Obama has rendered one of his most important post-crisis verdicts: Ben Bernanke will be nominated for a second term as chair of the Federal Reserve. This is a very short-sighted decision. While America’s head central banker deserves credit for being creative and courageous in orchestrating an unusually aggressive monetary easing, it is important to remember that his pre-crisis actions played an equally critical role in setting the stage for the most wrenching recession since the 1930s. It is as if a doctor guilty of malpractice is being given credit for inventing a miracle cure. Maybe the patient needs a new doctor.
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25th August, 2009
Guardian Letters: There is no easy way to bypass the banks
Read Ann’s letter in response to Jonathan Friedland’s article “Don’t just howl with rage. Try an idea that does away with banks altogether“.
The British Banker’s Association is not a secret cartel
A response to Ann’ letter from John Ewan, Director of the British Banker’s Association.
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July 2009
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21st July, 2009
FT:Economics is in crisis: it is time for a profound revamp
By: Paul De Grauwe
There can be little doubt. The science of macroeconomics is in deep trouble. The best and the brightest in the field fight over the most basic problems.
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14th July, 2009
WSJ:The economy is even worse than you think
By: Mortimer Zuckerman
The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.
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14th July, 2009
FT: After the storm comes a hard climb
By: Michael Wolf
Is the world economy on its way out of the crisis? Has the world been learning the right lessons? The answer to both questions is: up to a point. We have done some of the right things and learnt some of the right lessons. But we have neither done enough nor learnt enough. Recovery will be slow and painful, with substantial danger of relapses.
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June 2009
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30th June, 2009
Guardian: Market dogma is exposed as myth. Where is the new
vision to unite us?
By: Madeleine Bunting
“It’s the end of the era of market triumphalism,” declared the American political philosopher Michael Sandel in his recent Reith Lectures. The certainties that have dominated the last quarter of a century – that the market knew best, achieved efficiency and produced wealth – have collapsed. Few would disagree with him, but the clarity of that conclusion is matched by the confusion about what comes next.
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18th June, 2009
FT: King calls for tighter financial regulation
By: Chris Giles, Economics Editor
Mervyn King last night rebuked the City as he insisted that much tighter regulations were needed to prevent a recurrence of the financial crisis and restore popular trust in the market economy.
Speaking at the annual Mansion House dinner, hosted by the Lord Mayor and attended by City dignitaries, the Bank of England governor insisted change was essential just as memories of the near collapse of the financial system last autumn were beginning to fade.
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14th June, 2009
Guardian: Emerald Isle plots green revolution
By: Larry Elliot
Ireland seems ready to lead the way as Europe gears up for the low-carbon future
Of all the world’s developed nations, Ireland is the one that is closest to a depression. The banking system is shot, the housing market has collapsed, unemployment is expected to rise to more than one in six of the population. The deterioration in the public finances – and this is saying something – has been even more acute than in Britain. The Irish economy is expected to contract this year by just under 10%.
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14th June, 2009
FT: Washington cannot call all the shots
By: Michael Hudson
Challenging America will be the focus of meetings in Yekaterinburg, Russia, on Monday and Tuesday for Chinese President Hu Jintao, Russian President Dmitry Medvedev and other leaders of the six-nation Shanghai Co-operation Organisation. The alliance comprises Russia, China, Kazakhstan, Tajikistan, Kyrgyzstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia.
The attendees have assured American diplomats that dismantling the US financial and military hegemony is not their aim. They simply want to discuss mutual aid – but in a way that has no role for the US or for the dollar as a vehicle for trade among these countries.
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March 2009
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25th March, 2009
Rolling Stone: The Big Takeover
By: Matt Taibbi
It’s over — we’re officially, royally fucked. no empire can survive being rendered a permanent laughingstock, which is what happened as of a few weeks ago, when the buffoons who have been running things in this country finally went one step too far. It happened when Treasury Secretary Timothy Geithner was forced to admit that he was once again going to have to stuff billions of taxpayer dollars into a dying insurance giant called AIG, itself a profound symbol of our national decline — a corporation that got rich insuring the concrete and steel of American industry in the country’s heyday, only to destroy itself chasing phantom fortunes at the Wall Street card tables, like a dissolute nobleman gambling away the family estate in the waning days of the British Empire.
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24th March, 2009
FT: Successful Bank Rescue Still Far Away
By: Martin Wolf
I am becoming ever more worried. I never expected much from the Europeans or the Japanese. But I did expect the US, under a popular new president, to be more decisive than it has been. Instead, the Congress is indulging in a populist frenzy; and the administration is hoping for the best.
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12th March, 2009
FT: Lost through destructive creation
By: Gillian Tett
…In order to know where capitalism might be heading, it is imperative for policymakers, bankers, investors and voters to understand more clearly what went so badly wrong with 21st-century finance. Certainly, there is no shortage of potential culprits: naked greed, lax regulation, excessively loose monetary policy, fraudulent borrowing and managerial failure all played a role (as in earlier periods of boom and bust).
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February 2009
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20th February, 2009
FT: Summit to tackle ballooning U.S. Deficit
By: Edward Luce
The Congressional Budget Office shocked global markets a month ago, when it estimated that America’s budget deficit would hit almost $1,200bn this year – a number that would shatter all postwar records. Four weeks later, the CBO’s projections look positively rosy.
Mr Obama will host a bipartisan summit on fiscal discipline next Monday that will aim to address America’s long-term struggle to control entitlement costs in healthcare and social security. For most economists, it cannot come a moment too soon.
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7th February, 2009
Times:Economists are the forgotten guilty men
By: Anatole Kaletsky
I call this Kaletsky passing the buck. On a panel with me in Cambridge (at a Mellon-funded conference October 2007) Kaletsky said that money was like bread, and the invisible hand would sort out the crisis. He then recounted the story of the foolish Kruschev who asked to meet the man that distributed bread around NY when he visited there, and was told that no man did this. it was down to the invisible hand… When I challenged him, and argued that money/credit was not like bread, he back tracked a little… but not enough… and too late.
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January 2009
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26th January, 2009
FRBSF:Behavior of Libor in the current financial crisis
Federal Reserve Bank of San Francisco Economic Letter
One of the key features of the financial turmoil of the past year has been the credit crunch. For borrowing of many kinds, terms are tougher and interest rates are higher, reflecting skyrocketing risk premiums. Of particular importance are the elevated risk premiums on interbank loans—loans that banks make to each other.
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26th January, 2009
FT: Liquidation risk grows as finance dries up
By: Anousha Sakoui in London and Nicole Bullock in New York
US companies face a greater risk of liquidation because sources of finance to let them reorganise under the country’s bankruptcy code are drying up in the global financial crisis.
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14th January, 2009
Financial Week: Asset deflation could top $1 trillion
By: Tim Catts
Sharply declining prices for assets including securities and real estate pose the greatest risk to the global economy this year and could cost more than $1 trillion, according to a study by the World Economic Forum.
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12th January, 2009
FT: Greeks bearing gifts
By: John Authers
The market fears the Greeks, even when bearing gifts. It is also scared about the Irish and the Spanish.
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11th January, 2009
FT: Downturn hits rates of debt recovery
By: Nicole Bullock
Investors face the prospect of much steeper losses on the debts of distressed companies in the credit crunch than in previous downturns.
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8th January, 2009
FT: The Bank must act to bring lenders together
By: John Eatwell and David Pitt-Watson
The seizure of wholesale financial markets, distress of retail borrowers and apparent immunity of the financial sector to all remedial measures has produced an air of desperation among policymakers.
Yet the problem would have been familiar to John Maynard Keynes. Insufficient attention has been paid to the core insight in Keynes’s analysis – that recession is essentially the consequence of co-ordination failure.
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9th January, 2009
NY Times: An Economist’s Mea Culpa
Author: Uwe E. Reinhardt
Fewer than a dozen prominent economists saw this economic train wreck coming — and the Federal Reserve chairman, Ben Bernanke, an economist famous for his academic research on the Great Depression, was notably not among them. Alas, for the real world, the few who did warn us about the train wreck got no more respect from the rest of their colleagues or from decision-makers in business and government than prophets usually do.
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8th January, 2009
IPS: Bailouts Dwarf Other Global Crisis Spending by 40x
Authors: Sarah Anderson, John Cavanagh, Janet Redman: Institute for Policy Studies
The United States and European governments have committed 40 times more money to rescue financial firms than to fight climate change and poverty crises.
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9th January, 2009
GFI: Illicit Financial Flows from Developing Countries
This report from Global Financial Integrity re-engineers the concept of ‘capital flight’ and instead defines, and then tries to identify, ‘illicit financial flows’ from low income countries to rich countries. The report finds that there is a minimum of $1 trillion of illicit or illegal financial flows out of low income countries each year for deposit in the banks and financial institutions of rich countries. A must-read.
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7th January, 2009
FT: Savers are already the most pampered of taxpayers
By: Tom Brown
Sir, You are right that granting further tax concessions to UK savers is a false priority (“Saving the savers is not the priority”, FT editorial, January 6) in current circumstances.
You could have gone further by pointing out that savers are already the most pampered group of UK taxpayers (apart from non-domiciled persons!), benefiting from a wide range of reliefs and allowances: the annual £7,200 Isa allowance, tax relief on pension contributions up to £225,000, tax-free index-linked savings certificates offered by National Savings and Investments as well as the relief offered to employees participating in share incentive plans to invest in their own company’s shares. If the individual concerned can so manage his or her affairs, it would be perfectly feasible for someone earning £75,000 to salt away 20 per cent of gross income in tax-free savings. This would be a savings ratio to match the thriftiest of Germans or Chinese.
All that David Cameron’s Conservatives have chosen to do with the political stunt of promised abolition of basic rate income tax on all savings is to indulge populist railing against any tax on investments “because I paid tax on it when I earned it”. Coming on top of shadow chancellor George Osborne’s reckless and self-serving promise to raise the inheritance tax threshold to £1m – which would probably hand a mere 40,000 households a bigger tax-free windfall – it is clear that the opposition’s policy is stuck, even as George W. Bush leaves office, in a neo-conservative time warp of extra tax breaks with measurable benefits only to a tiny minority.
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5th January, 2009
FT: Saving the savers is not the priority
For every step forward, a score of false starts. The economic crisis has forced the UK government to take meaningful action. But, for every serious decision it has taken, it has produced a host of arguments, schemes, sops and ruses, many simply to unsettle the Conservative opposition. The Tories, however, have been little better.
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December 2008
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19th December, 2008
Dual Currency Banks in Brazil
I suggest you have a look at this 3 minute video describing the Banco Palmas , which has now 10 years of experience in the poorest part of Foraleza, in the Brazilian North East. The Banco do Brazil (Brazil’s central bank!) is now in the process of multiplying this model in 150 different locations in the country, at the rate of 10 per month. 23 are already operational, and they add another 10 in December, and another 10 in January…
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3rd December, 2008
Charlie Rose: A conversation about economics with Nassim Taleb
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November 2008
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7th November, 2008
The Oil Drum: Herman Daly on the financial crisis
The current financial debacle is really not a “liquidity” crisis as it is often euphemistically called. It is a crisis of overgrowth of financial assets relative to growth of real wealth—pretty much the opposite of too little liquidity.
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October 2008
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17th October, 2008
UK Guardian: Post-bubble possibility, A Green New Deal
By: Larry Elliott
Beyond the plummeting markets and whingeing banks is a ray of hope – for a Green New Deal.
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Letter to the Guardian: Financial, environmental and social reasons to save post offices
Ann Pettifor, The UK Guardian, 6th October, 2008.Faith. Belief. Trust. This economic orthodoxy was built on superstition
Madeleine Bunting, The UK Guardian, Monday 6th October, 2008There is no alternative, went the mantra. Now this corrupt mythology lies in tatters, the crisis of conviction is profound…
Thomas Frank, The Wall Street Journal, 1st October, 2008.Capitalism sure is fragile if subprime borrowers can ruin it…
Economists View, 28th September, 2008.The financial bailout plan looks more likely now that there has been a “breakthrough.” Barry Eichengreen says even with a plan in place, the crisis won’t end quickly and double digit unemployment is “not out of the question”…
Big Payments are Expected in Credit Default Swaps
Reuters, The New York Times, Monday 8th September 2008.The government’s takeover of Fannie Mae and Freddie Mac may lead to one of the largest ever payments in the credit default swap market, analysts said on Monday…
Banks Reel as ECB redraws Funding Rules
Bank stocks in Europe and the UK fell sharply and the risk of owning their debt leapt on Thursday after the European Central Bank declared a crackdown on abuses of its bank liquidity operations…
This year it emerged Macquarie Bank had constructed a deal backed by Australian car loans that could be used at the ECB and Lehman Brothers had formed a huge collateralised loan obligation of risky buy-out debt to use at the central bank
The Fed and Authoritarian Capitalism
Robert Reich’s blog, Tuesday 12th August, 2008.Chinese authoritarian capitalism, on display this week in Beijing, has me thinking about America’s democratic capitalism and how we practice it.
This train crash’s final impact is still awaited
John Authers, The Financial Times, Saturday 16th August, 2008It was Jeremy Grantham, one of the most respected sages in the world of fund management, who first described the problems gripping the credit market as a “slow-motion train wreck”.
Since he said that more than a year ago, the metaphor has metastasized. It has become one of the most popular descriptions of the market’s upheaval last year.
There is good reason for this…
The End of Financial Triumphalism?
Kenneth Rogoff , Project Syndicate.
An article by the ex-chief economist at the IMF:
Will today’s ever widening global financial crisis mark the end of the era of financial triumphalism? Ask a lay person to list the ten great innovations that drive our world today and you probably won’t find too many who mention the Black-Scholes formula for pricing options. But for the financial community, pioneering formulas that paved the way for modern hedging strategies should get just as much credit for the passing period of rapid global growth as cell phones, computers, and the Internet.
Jonathan Franklin, The Guardian, 8th August, 2008
With the US housing market in freefall, Jonathan Franklin visits the former Florida boomtown where repossessions are at an all-time high, pawnshops are thriving and residents predict an economic meltdown to rival the great depression…
Barbara Ehrenreich, The Huffington Post, 28th July, 2008A few days before Congress passed its Housing Bill, Carlene Balderrama of Taunton MA found her own solution to the housing crisis. Just a little over two hours in advance of the time her mortgage company, PHH Mortgage Corporation — may its name live in infamy — was to auction off her home, Balderrama killed herself with her husband’s rifle…
Slash interest rates now or risk deepening recession, Bank of England adviser warns.
The Guardian, Thursday 23rd July, 2008
The British economy is falling into a recession that could be deep and painful if interest rates are not cut sharply right now, says Professor David Blanchflower, a member of the Bank of England’s monetary policy committee (MPC).
Blanchflower, who spends half his time in the United States as an economics professor at Dartmouth College, thinks Britain could be in for a worse time than the US economy and needs to slash interest rates as the Federal Reserve has done over there. Hundreds of thousands of people are likely to lose their jobs, he thinks…
The Gods of Greed
G2, The Guardian, Monday 2nd June, 2008
Larry Elliot and Dan Atkinson offer the first of three extracts from their forthcoming book in which they critically explore the roots of the financial crisis.
How Britain’s middle classes were betrayed G2, The Guardian, Tuesday 3rd June, 2008
Larry Elliot and Dan Atkinson offer their second extract from their forthcoming book. Here they reveal how a wealthy elite rewrote all the rules – and conned the middle class.
The Fightback starts here G2, The Guardian, Tuesday 3rd June, 2008The excesses of banks, big business and the super-rich have shattered our economic system. In the final extract from their new book, Larry Elliott and Dan Atkinson put forward their principles for a fairer and more cohesive society.
Roubini still pesimistic over the economy The Financial Times, May 28, 2008Nouriel Roubini, founder of the RGE Monitor, talks to the Financial Times about the present state of the economy.
Welcome to my blog about the financial crisis. I'm Ann Pettifor, author and analyst of the global financial system, and co-author of the Green New Deal. I predicted an Anglo-American debt-deflationary crisis back in 2003, and am known for my work on sovereign debt and international finance, including Jubilee 2000. Currently a fellow of the 
