By Ann Pettifor – posted March 25th on Labour List
There is a ferocious battle being played out around how we should interpret and understand the financial crisis and its consequences. And I am not talking about the crude and quite hysterical response to the budget in the Conservative press today. That we can safely ignore. No, it’s more than that. It’s about key economic issues, and it’s vital that we all grasp them, and fight the good fight on behalf of those who will be victims of orthodox economic ideology.
The orthodox story line goes like this: the most momentous crisis facing the world is government debt – not economic failure and collapse; not the collapse of private investment; not financial instability, or deflation, or currency volatility or the threat of a dangerous rise in protectionism and a new global trade war. And certainly not the rise in unemployment.
By Ann Pettifor – Posted March 24th in the Guardian Comment is free
My more or less immediate response to Alistair Darling’s final budget:
This was a politically skilful budget. Alistair Darling faced the problem of the ongoing deflation of an economy de-leveraging its debt in unseemly haste, and dragging down economic activity, prices, profits, incomes and jobs as it does so. He also had to tackle the substantial decline in full-time employment over the course of the recession, only partly offset by increases in part-time employment. Thirdly, he had to counter the threat to Britain’s long-term energy and climate security.
By Ann Pettifor – Posted March 16th on Labour List
Together with the Prime Minister of Greece, Mr. George Papandreou, I am going to give evidence to the EU’s Special Committee on the Financial Crisis in Brussels this Thursday, March 18th.
So today’s leaked report from the EU, arguing that Labour’s plans for cuts to public spending are not “ambitious enough”, has got me really het up.
Labour, it appears, is just not ambitious enough about its goals for cutting investment and exacerbating unemployment. It does not have punitive enough targets for cutting benefits to the poor and services for the mentally ill and frail.
In the “imbecile idiom” (to quote Keynes) of today’s financial fashion, the EU, it seems, would prefer for unemployment to rise, for people to live in hovels, and for government “to shut out the sun and the stars” – so that we conform to an arbitrary number set in Frankfurt by a group of bankers, under a pact unwisely signed by an earlier British government.
“The pound of flesh which I demand of him is deerely bought, ’tis mine, and
I will haue it.” Shylock in the Merchant of Venice.
Despite the relevance of its theme to much of my work, I am not in the habit of quoting Shakespeare’s anti-Semitic play of 1596, the Merchant of Venice. But William Buiter’s column in the Financial Times of 2 March drove me back to the text. (‘Britain’s lack of credibility hurts sterling.’)
With Saturday’s Iceland referendum due in just a couple of days (6th March), Advocacy International’s directors have an op-ed article critical of the UK and Netherlands governments in today’s Morgunbladid, Iceland’s main daily newspaper.
So the negotiations have broken down, British and Dutch “bullying” (FT 27 February, 2010) continues and the referendum goes ahead. What next?
We emphasize that this is not a sovereign debt crisis, even if the British and Dutch want us to think it is.
It is a crisis of EU regulatory failure, and of the Anglo-American economic model.
The people of Iceland have a deep democratic tradition, and through the referendum have the opportunity to assert their sovereignty and autonomy.
Their leadership and example will encourage people in other democracies to reject harsh cuts in public services and living standards made at the behest of the very people and institutions responsible for the crisis. For through the wholesale nationalisation of private losses, we are all – not only in Iceland – asked to pay the price of private, reckless risk-taking. Read post »
If today’s speculators bring down the Greek economy, they will likely blow up more debtor nations, and then in a cascading effect, turn on their main benefactors, the now heavily indebted British and United States governments.
Citizens are rightly angry at the way both the Bush and Obama administrations, aided by Governor Ben Bernanke — pretty well unconditionally bailed-out the bankers of Wall St., just like governments in Europe and Asia.
While politicians and regulators rushed to dampen the flames of financial crisis with taxpayer funds, what happened to those guilty of financial arson?
Besides the odd rogue and loner like Bernard Madoff, none has gone to jail for crimes against the people, as far as I know.
As if to rub our collective noses in it, bankers have paraded their contempt for both politicians and taxpayers by using bail-out resources to post massive capital gains and bonuses. It’s hard to believe they could be guilty of worse.
But believe it you must. For now these self-same bankers are turning on their rescuers — the governments that bailed them out.
In the international financial system, the Rule of Law seldom applies.
It is in this context that a wake of vultures (for that is the collective noun) hovers over weakened debtor nations as diverse as the Congo, Iceland, Greece and Portugal and operate within weak international law.
They are international creditors, and their presence reminds us once again of the urgent need for governments to co-operate to devise international law to protect effectively insolvent sovereign nations from rapacious creditors. In just the same way that e.g. the US’s Chapter 11 protects insolvent companies from creditors.
Professor Kunibert Raffer of the University of Vienna has long argued for a framework for sovereign nations that simulates Chapter 9 of the US Legal code by protecting American governmental bodies (such as City governments) and their citizens from predatory creditors in the event of insolvency.
Once again apologies for a longish absence. This is down in part, to smashing (literally) building works, to a little grandchild-minding, and to other writing commitments. But have been itching to comment on a) Greece and the EU b) Iceland (it seems the UK is easing up on the pressure); c) the progress of the global recession; and d) China-US relations…..so posts on a, b, c and d are on their way….promise.
In the meantime this is the text of a letter I signed and helped draft, published in today’s Observer, and yesterday (20 Feb 2010) in the Times. It is a response to the letter written to the Sunday Times last week by 20 conservative economists, including Ken Rogoff of Harvard, Lord Megnad Desai, previously a Labour peer, and Bridget Rosewell, who was Mayor Ken Livingstone’s economic adviser.
Our letter has a number of distinguished economists as signatories, as well as my pals in the Green New Deal group – all of whom I am proud to be associated with. See below.
Sir,
We urge the UK government not to heed the siren song of the 20 economists who, having failed to predict the crisis, now seek to advise on its resolution. The world economy is in the deepest recession since the Great Depression. In the UK, output has collapsed by £70bn on an annual basis. Under such conditions, common sense tells us that the government must compensate for the collapse in private investment and address the high level of unemployment.
The only way to restore the public finances to health is to restore the economy to health.
I have a comment in todays Guardian on the new campaign on the Tobin Tax – the ‘Robin Hood Tax’. Click here to read the whole article:
Ann Pettifor:
“The proposed currency transaction tax (CTT) represents the tiniest grain of sand in the wheels of global, mobile capital, and places very little restraint on the movement of international capital. For that reason CTT will be welcomed, ultimately, by international financial institutions. The proposal lacks a framework of democratic, accountable governance for the disbursement of funds collected under a CTT scheme. NGOs and treasuries are debating whether funds should go, for example, to national treasuries; to the Global Fund to fight Aids, TB and Malaria, or to the UN for mitigation and adaption to climate change. Until disbursement and distribution of CTT revenues are accounted for in a democratic, fair, and transparent way, the CTT will be vulnerable to attack.”
A response to the "Triple Crunch" of financial crisis, climate change and oil depletion. Read the report published by the Green New Deal Group and nef (new economics foundation).
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 new economics foundation and director of Advocacy International.
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