(Image source: Bloomberg Businessweek)
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… ›
Last week I gave a talk in Brussels at a debate moderated by Pierre Defraigne, Executive Director of the Madariaga – College of Europe Foundation. It was A Citizen’s Controversy with Lars Feld, Professor of Economic Policy at the University of Freiburg and Member of the German Council of Economic Experts.
Below is my slideshow from the talk:
With acknowledgements to the Economist: front cover 26 November, 2011
Dear readers…posted this last night, but failed to add links…so have updated this morning….And now at 12.54 on 28 Nov, following revelations from Bloomberg, am adding in a reference to the extent that Morgan Stanley was bailed out in 2008.
A petard, I am reliably informed by the Web,
“was a bell-shaped metal grenade typically filled with five or six pounds of gunpowder and set off by a fuse. Unfortunately, the devices were unreliable and often went off unexpectedly. Hence the expression, where hoist meant to be lifted up, an understated description of the result of being blown up by your own bomb.”
Correct or not, this is a helpful analogy for the crisis of the Euro. The grenade that is the Euro has a fizzing fuse that threatens to explode imminently, causing visible panic in markets, in parliaments and treasuries across the world. Mainstream economists are either dodging the bullets and like the cowards they are, pretending that ‘it’s nothing to do with me guv’. Or else they’re panicking in ways that are crass and unhelpful, banging their heads against the brick wall that is the Bundesbank and ECB, and demanding that someone, somewhere defuses the bomb.
The Economist has a dramatic leader this week (“Is this really the end?”) warning of grave threats and offering Chancellor Merkel and other EU leaders ways of avoiding a comet-like crash. Like many others, leader writers on the Economist, somewhat belatedly, want the ECB to act as a central bank, and to provide liquidity to sovereign members of the Eurozone.
Continue reading… ›
I appeared on Newsnight last night, to discuss the Eurozone crisis – and Greece in particular. (You can watch it with the BBC’s iPlayer..our slot is about 7 minutes into the show.)
By Ann Pettifor. An edited version of this piece was published on Left Foot Forward, 14 September, 2011. This original, longer version posted 19 September, 2011.
The game is up. The 2007-9 private banking crisis that started with the unpayable debts of the US sub-prime sector, was never over. The crisis has now moved on to include the unpayable debts of sovereigns owed to private European bankers. It is increasingly clear that there is declining political and institutional support for further private bank bailouts. The dramatic resignation on Friday 9th September of Jürgen Stark, architect of Europe’s equivalent of the Gold Standard – the Growth and Stability Pact – marks an important step in the resistance to bailouts by the ECB; in the inevitable collapse of the Maastricht Pact, and with it, the utopian vision of the neoliberal Euro.
And so the age of liberalised, de-regulated finance appears to be over – at least in Europe. That is the conclusion of investors in both Wall St and the City of London and explains the collapse of confidence in banks and the volatility of stock markets as investors rush for the exits, transferring speculative gains into the safety of government bonds.
Continue reading… ›
So, five of the world’s biggest central banks have decided on co-ordinated action to bail out – once again – the European private banking sector. In other words, central bankers are hoping to shore up private bankers, help their defer their losses, and prevent them being disciplined by market forces for their reckless lending to EU sovereigns.
Shareholders and investors in these banks must be delighted. Once again, reckless speculation and lending has paid off. Once again the world’s taxpayers have ridden to the rescue.
Continue reading… ›
I am staying with my hostess in an old homestead like this one in North Adelaide….
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.
Irish Finance Minister Noonan and Luxembourg Treasury Minister Frieden attend an EU finance ministers meeting in Brussels. Image source: www.reuters.com
I find it hard to write about the crisis in Greece….because the tragedy unfolding there is so reminiscent of the tragedies that unfolded in Africa, Latin America and South East Asia in the 80s and 90s – and I was very close to those. Seeing the same economic mismanagement replicated in well-armed Europe is scary. Watching as tensions rise between the peoples of Europe…given our bloody history….is frightening. So I have been silenced by rage.
But my outrage boiled over today, because of what the FT wrongly calls a ‘subtle’ change unveiled by EU finance ministers to the terms of the massive Eurozone bailout fund – a fund backed by European taxpayers. This is how the FT explains it:
Any bonds issued in future by the eurozone’s new €500bn rescue fund on behalf of Ireland, Greece or Portugal will not enjoy “preferred creditor status” – an alteration to the fund intended to help those nations return more swiftly to private capital markets.
For those who do not dabble much in sovereign debt, let me explain. Common to the whole of the international financial architecture/system for sovereign lending, there is one principle that overrides all others. That the IMF/World Bank are ‘preferred creditors’. Just as when a company goes bankrupt, the supplier that sold it widgets, is ranked lower than the bank that provided the overdraft – so in international ‘law’ – taxpayer-backed lending from the IMF and World Bank is ‘preferred’ when it comes to repayment – over all private commercial lending. And it is preferred because it is public money.
Continue reading… ›
26th April, 2010
Dear readers….this is my latest Huffington Post.
“The humiliating surrender of Greece’s economic autonomy came just last Friday, 23 April, 2010. The democratically elected Prime Minister, George Papandreou transferred to unelected officials in Brussels and Washington the power to determine Greece’s fiscal policy. In other words, decisions about taxation, and how tax revenues should be spent.
In a 26 April interview with the Financial Times
on the island of Rhodes, the Prime Minister, George Papandreou admitted his country had accepted “a partial surrender of sovereignty”.
“Our struggle” he went on to say, “will be to recover our autonomy and liberate Greece from the surveillance imposed by the forces of conservatism”.
Back in 1765 Bostonians such as James Otis and Samuel Adams regarded “taxation without representation as a form of tyranny”.
Today, a nation that served as the cradle of western democracy will effectively be governed by remote, invisible and unaccountable officials. Continue reading… ›
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.
Continue reading the article…