On May 23, I chaired a roundtable at St. Paul’s Cathedral with “Public Philosopher” Michael Sandel of Harvard University, Bishop Peter Selby, Professor Julian Le Grand of the LSE, and Stephanie Flanders of the BBC. We discussed how we have moved from having a market economy to being a market society, and the dangers that poses to the very fabric of democracy. The event was attended by over 1,900 people. View the video below:
I am posting below my latest contribution to openDemocracy published on May 28. In an open letter to the leaders of Europe, I argue that they need to abandon the fetters that chain them to the interests of private wealth, and threaten European disintegration:
“On May 15th, in what can only be described as an act of coercion, an impoverished and effectively insolvent Greece acceded to the handover of a bond payment – €436 million – to private financial ‘vulture funds’. The Greeks had little choice. However, in acquiescing to this handover – facilitated by its paymasters,‘the Troika’ – impoverished Greeks protected reckless private wealth from the consequences of their risks. Namely: losses and bankruptcy, and the discipline of market forces. Continue reading… ›
Posted below is a Viewpoint piece I wrote for the BBC published on May 23. There may be stormy times ahead for Greece but I believe it can survive a default:
“It now seems inevitable that Greece will default on its debts, with all sorts of disastrous scenarios being discussed, particularly if it has to leave the euro.
But I know from my experience of working with Jubilee 2000 to “drop the debt” of poor countries in Africa and Latin America that there is life and economic recovery after sovereign debt crises. Continue reading… ›
Last weekend, I attended the Just Banking conference in Edinburgh, organized by Friends of the Earth. I gave a talk titled, “Five Tools and Six Steps towards global economic recovery: Making finance servant, not master of the economy” and have posted my speech notes below:
Last year, on the 13th December, 2011 Newsnight asked a group of economists to identify the most important chart of the year.
I chose this one, which had appeared in the first paragraph of the British government’s Budget Report of 23 March 2011. It shows, as you can see, the extraordinary high levels of UK private debt – but makes no reference to public debt.
This week, I was interviewed by the Renegade Economist. We discussed regulating the banks, the rise of the far right in France, economists as “hired guns,” and what we can do about it. Watch the video below to view the whole interview:
I have posted below my contribution to the New Statesman Current Accounts economic blog, in which I discuss the lessons we can learn from Iceland’s crash and recovery:
“Let’s confess, it felt good to see a Prime Minister criminally charged for the financial mismanagement of his country, as happened to Iceland’s Geir Haarde. But it also seems fair that he was convicted only of negligence.
After all, he and his government had full policy cover from mainstream economists like Richard Portes (ex-President of the Royal Economic Society) in the bubbly lead-up to the banking collapse in October 2008. Professors Portes and Baldursson co-authored a November 2007 report for the Icelandic Chamber of Commerce, in which they concluded that:
I have posted below my contribution to the Left Futures blog, where I discuss in more detail my criticism of Budget 2012:
“Since 2009 the economy has struggled to recover from the mire of a slump caused by the banking sector. But each time economic activity quickens, it hits a series of buffers. These buffers are well known , but denied by the Chancellor: a vast overhang of private debt now slowly being de-leveraged; a banking sector whose financial transmission system is broken; falling real incomes, rising unemployment, high energy costs and a collapse in investment.
In conditions of uncertainty, without the steady and cheap availability of credit, firms and individuals wisely refuse to spend and invest. And so the private sector is stuck, and the economy stagnates.
I am posting below my contribution to yesterday’s Guardian ‘Comment is Free’ panel on the budget:
“George Osborne today reconfirmed Britain’s prolonged collapse in economic activity, and thrashed around for supply-side “solutions”. He announced a long list of measures: taxpayer guarantees to banks reluctant to lend; tax cuts for the very rich; loans for youthful entrepreneurs; a kite-flying pilot on Sunday trading hours; deregulation of public sector pay and planning; incentives for private investment.
The chancellor expects these supply-side measures to stimulate recovery – on their own. Given that Britain has the highest levels of private debt in the world, given the broken banking system, high unemployment and sustained economic weakness, he appears to anticipate little real opposition to these measures. The British public have quietly accepted that incomes are falling in real terms, and there is little resistance to rising unemployment.
Yet all the supply-side solutions in the world will do little to aid recovery in the absence of growing demand for goods and services. Nothing will happen if customers (of banks, firms, shops) simply cannot or will not walk through the door.
Today the chancellor resolutely refused to address falling levels of demand. The budget’s sound and fury signifies, macro-economically, nothing but sustained stagnation.”
Newsnight’s Paul Mason put together a package about a company in Lincoln that is doing really well and about a community that shows every sign of emerging from the credit crunch. I was then invited onto the show to comment on whether or not this latest outgrowth of green shoots is sustainable.
As I have emphasised before (to no avail it seems) Britain’s crisis is one of a vast bubble of private sector debt.
These private debts eclipse – by a huge margin – our public sector debt as a share of the national cake. They help explain why the economy struggles to recover from the shocks of 2007-9, and why the banks still pose a grave systemic threat.
The fact is Britain’s household, corporate and financial sector debts are vast, and may well never be repaid. As the McKinsey Global Institute points out, British banks, corporates and households are only beginning to ‘de-leverage’ these debts – pay them down, or write them off.
The more is paid down, the less is available for spending. The more are written off, the greater the losses for banks.
Yet our government has skilfully led public opinion to believe that the crisis in the private finance sector is over (bar the odd spat over bonuses), and now centres on public sector debt – a point of view endorsed, according to Twitter, by Angela Knight of the British Banking Association last week.