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It has been a busy week in Australia – I will be posting in more detail very soon. But for now you can listen to an interview with me on ABC Radio National Breakfast: http://www.abc.net.au/rn/breakfast/stories/2011/3310691.htm For any of you in Sydney – come along to the Catalyst event: ‘Making the boom pay… if not now, when?‘. I will be speaking along with others, more details are here: http://www.catalyst.org.au/catalyst/.
The picture above is not of some Regency building in Brighton, England. It is in fact the oldest (or so I was told) Trades Union Hall in the world – the Melbourne Trades Hall. Sure is impressive, and with a lovely relaxed, unbureaucratic feel to it…. We were up at the crack of dawn to fly to Melbourne from Adelaide…newspapers full of the crisis inside the Labor government. Julie Gillard looks to be in deep trouble over the handling of Australia’s policy on refugees. And then found the appalling tale of Babcock and Brown – Australia’s biggest ever corporate collapse – the Ned Kellys of this age…only Ned Kelly could never have dreamed of looting so much ‘swag’. And Kelly – whose remains have just been unearthed (see here) – was at least caught by competent Aussie cops at the time, and tried by a competent judge. As the Sydney Morning Herald noted, the Aussie ‘watchdog’ didn’t even sniff Babcock and Brown…. Went straight from the airport to the fine Melbourne university campus for a meeting with climate and sustainability scientists and university trade union officials – to talk about financing the transformation of the economy away from fossil fuels….Not at my best after a night of fitful sleep…Then, after a nap, a wonderful evening at the above mentioned Trades Hall – it was titled Babbling in the Bar -but was in fact a lively discussion of economic policy, the financial system and the policies that Australian trades unionists should be demanding of their Labour government…..From there to the famous Lygon Street,Melbourne’s ‘Little Italy’ – for dinner at – a Vietnamese….times are a’ changin in Melbourne. And finally, after a ride on a tram and train ….sleep!
Read about my speaking tour of Australia below – from the SEARCH Foundation: The SEARCH Foundation is currently touring eminent British economist and author Ann Ms Pettifor is visiting Adelaide, Sydney, Melbourne, Canberra and Brisbane for speaking “Before the Credit Crunch of 2008-2009 Brits and Americans were convinced that the good “Australians would be well advised not to fall into the same trap.
31st August, 2011. G’day from sunny Adelaide. I am here on a short lecture tour organised by the Search Foundation, and supported by the Don Dunstan Foundation, Catalyst , the think-tank in Sydney, as well as trades unions in Melbourne, Brisbane, Canberra and Sidney. It’s an interesting time in Australian politics, not only at national level with the controversy around the new carbon tax, and yet another political sex scandal….but also here in Adelaide, the home state of Don Dunstan, progressive Labour Premier from 1967-79. Dissatisfaction with the current Labour leadership has forced the resignation of Mike Rann, the premier. And today, the Australian Supreme Court has ruled illegal the government policy of deporting refugees to Malaysia…..So interesting times… But arriving at Adelaide airport, and standing in the slow and long passort queue, more than a little dazed after the long flight from London, I was confronted directly with the crisis back in Europe. There was only one customs official clearing our long queue, and so it moved very slowly….Next to me were a couple with two restless kids, so I handed over my phone and offered to teach them how to play my favourite game: “Angry Birds”. (Although to be honest the reason I really love it is for the sound effects and those had to be turned down in the queue….) We soon got chatting, and it turned out that they were a family from Ireland. Mum and Dad, they told me with shock written all over their faces, had both lost their jobs in the past few months. Four years ago, they raised a mortgage and built their own home. Now they have abandoned both their home and their families to start a new life in this strange city. The father had found a job, and they had rented a home somewhere in Adelaide – they had no idea where and hoped that the Satnav on the hired car would get them there. They know no-one in this city, and the pain of leaving behind her family was etched in the face of the mother…The teenage daughter looked sulky, and the younger boy grumpy….There was clear anxiety in the father’s face. And incredulity as they discussed the way that private Irish bankers are being bailed out, while they are obliged to pay the cost of the crisis….I wished them well, and hoped that Australians would welcome them…. It’s a bad old world….but great to be among Australians determined to do something about transforming it.
Last Sunday I went on the Sunday Morning show with Ricky Ross to talk about Jubilee 2000, the fight to cancel the debt of the world’s poorest countries, and how the campaign on issues of international finance, sovereign debt and social justice continue. I also got to play some of my favourite bits of music – Janet Baker singing the Mendelssohn Aria ‘O Rest in the Lord’ and Bob Marley’s ‘Redemption Song’. Listen to the whole show here – my interview starts at 7 minutes in: http://www.bbc.co.uk/programmes/b013n0zg
Wall Street plummeted as concerns over European debt and the US economic downturn spurred a broad sell-off. Photograph: Shen Hong/Xinhua Press/Corbis Read my article from Guardian Cif, Friday 19th August: As bank shares and stock markets plummet, and investors flock to the safety of government bonds; as obstinate EU leaders crucify their countries in a futile struggle to defend today’s equivalent of the gold standard; as British and American politicians adopt austerity policies and drive their economies closer to the cliffs of depression; and as most professional economists stand aloof from the escalating crisis – what lies ahead for ordinary punters like you and me? First, let’s take look at the big political picture. This crisis is already sharpening the divide between left and right in both the EU and the United States. Studying a precedent – the implosion of the 1920s credit bubble in 1929 – we note that four years after that crisis erupted, the political divide sharpened decisively. The United States and Britain moved to the left. Germany chose a different path. After 1930, Germany’s Centre party under Chancellor Brüning adopted austerity policies that resulted in cuts in welfare benefits and wages, while credit was tightened. At the same time the German government engaged in wildly excessive borrowing from the liberalised international capital markets. The ground was laid for the rise of fascism.
I appeared on Al Jazeera’s ‘Empire‘ on Thursday evening – hosted by Marwan Bishara, the panel was made up of myself, Dr. Georges Corm (former Lebanese finance minister and former special consultant), World Bank Professor Alex Callinicos (director of European Studies, King’s College London and author of ‘Bonfire Of Illusions’) and Dr Mario Blejer (former governor, Argentine Central Bank and former advisor, Bank Of England). Click here to watch the hour long special > “Marwan Bishara asked: will the International Monetary Fund regain its influence and reshape its role? “The world is undergoing seismic economic changes, from the international financial crisis to the shifting balance of power between developed and developing countries. “In this new world order the International Monetary Fund (IMF), the most prestigious and powerful international economic organisation on the planet, is reduced to a mere advisor, even spectator. I would welcome responses and insights on something that has troubled me since I first heard of comments made by the Governor of the Bank of England, Mervyn King on Wednesday,10th August (presenting the Inflation Report) and reported since. Namely that the Bank of England has no role in the allocation of credit across the economy – in particular to small enterprises. Instead he argued, credit allocation is a matter for government. Alex Brummer of the Daily Mail asked the Governor if ”there are monetary policy steps which can be taken, or can the Bank take steps directly, to try and make sure some money gets to those parts of the economy?” This was the Governor’s reply: “I’m afraid not. I think this is a problem of the structure of the banking system, and questions about the allocation of credit. And those are fiscal actions and they’re for government, not for a central bank. It’s very dangerous for a central bank to stray, as you know, into political territory, and we don’t intend to do that. The amount of lending by the banking system to non-financial companies is falling. It’s been falling for some while, and it’s still falling. This is a natural consequence of the deleveraging of the banking system. But let’s be clear about it, it is falling; and it’s particularly problematic for small companies because at least big companies can go to the stock market to issue equity, or to the corporate bond markets to raise money through the issuance of bonds. Small companies don’t have that opportunity, and they’re suffering as a result. But this is a question about the allocation of credit within the economy, and that’s very much a fiscal decision, and that is a matter for government.” First, is credit allocation a fiscal matter? Surely not. Surely it is a matter for monetary policy and regulation. In light of the Governor’s statement, one really must ask: what is the Bank of England for? And, if it is not for managing the allocation of credit across the economy, do we really wish politicians to make those decisions to, e.g. small businesses? Given the number of businessmen represented in Parliament, and given the number of bankers elected at the last election, we have a pretty good idea of how they might use this power. So, given that we cannot trust the private sector to allocate credit wisely either acting alone as they do now, or indeed guided by their friends in Parliament and Whitehall: given this, surely then it is the role of the “guardian of the nation’s finances” to manage, regulate and ensure the sound allocation of credit to the real economy? And if we have a “problem with the structure of the banking system” – surely Mr King should be arguing for this problem to be remedied: urgently. If not, what is Mr King for?
 Chart courtesy of Gavyn Davies, FT 25 January, 2011 "UK GDP figures too bad to be true".
12 August, 2011 Post updated: 17.03 12 August, 2011. Maybe its because I was born and grew up in an ex-colony, but yesterday’s speech by the Chancellor, delivered as part of the emergency debate on the riots did strike me as reeking of empire. The tone was censorious – both of Britain’s feckless, heavily indebted citizens but also of all world’s economies. (I am tempted to ask once again: who set the framework for the creation of ‘easy money’? Feckless citizens or Parliament? Who was responsible for Competition and Credit Control, (CCC) and then the City’s ‘Big Bang’ and the massive growth of credit/debt that followed? Conservative governments, not feckless citizens – because CCC was implemented without parliamentary scrutiny. My recollection is that until the 80s it was very hard to get a credit card, or credit. By the noughties bankers were spraying credit card promotion bumf into every post-box in the land – on a daily basis. Where were our politicians then? Cheering them on.) But the speech was not just censorious, lecturing our OECD partners when really the UK does not have much of an economic leg to stand on. It was also frightening.
Markets react rationally to austerity The piece below was posted on the “Left Foot Forward” website on Monday, 8th August, 2011 “It is important that we understand the events of last week not as a new outbreak of crisis, but as a continuation of the banking crisis that first came to the public’s attention in 2007-9. It is now just four years since the ‘debtonation’ on 9 August, 2007, when banks lost confidence in the viability of other banks, and stopped lending to each other. After a year when the fuse of huge debts endured a ‘slow burn’, the 2008 Lehman bankruptcy exploded the financial system and threatened systemic failure. Without consulting taxpayers, central bankers and politicians rushed to the aid of bankrupt financiers. Private losses were socialised, and attempts at recovery were nursed by central bankers who pushed interest rates down to very low levels. Thanks to the weakness of politicians and central bankers this nationalisation of private losses was offered almost unconditionally to an immensely wealthy, and unaccountable elite. |
In the September 2003 edition of openDemocracy I wrote: 
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