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In this big bad world of the Credit Crunch, powerful central bankers – civil servants all – have bent over backwards to help powerful and rich private bankers.
Their insolvency now threatens a global systemic financial crisis, and their taxpayer-funded bailout of shareholders, bondholders and an incompetent management exposes the hypocrisy of much neo-liberal cant. Open Democracy, 7th July, 2008.
The precedent of the United States’s great depression and Japan’s post-bubble collapse should haunt today’s G8 summiteers, writes Ann Pettifor in Open Democracy. Japan hosts the G8 summit in the northern island of Hokkaido on 7-9 July 2008 at a time when its prolonged period of deflation and economic failure have rendered its politicians impotent. Philip Stephens notes that – despite Japan’s still considerable role in the global economy – the country’s politicians are the weaklings of global geopolitics. “Where is Japan?”, he asks. “The question is one of psychology rather than geography. Japan is still the world’s second most powerful economy. Politically, it is all but invisible” (see “Japan goes missing: invisible host at the summit“, Financial Times, 4 July 2008). My friend the formidable economist, Mark Weisbrot put it most succinctly. On a day when Nationwide warned that in the UK “The pace of house price falls accelerated in May as more weak economic news added to the gathering momentum of negative sentiment about the housing market,” his point is a timely warning that while the UK lags the US, nevertheless the levels of household and corporate indebtedness and the scale of our housing bubble means we still have far to fall. By Ann Pettifor, Open Democracy, 11th December, 2007 On 9 August 2007, globalisation’s rickety financial levees were broken by a storm-surge of debt, invisible to most punters, but scary enough to frighten bankers. This debt includes highly leveraged corporate debt traded on secondary markets, household mortgages, credit-card debts, car loans and other substantial outlays. But what scares financiers and other experts are the truly big debts racked up by financial institutions, including those that have insured against loan defaults. One of the least understood, but potentially most lethal financial products they have engineered – away from the regulatory scrutiny of central bankers and finance ministries – is called a credit default swap (CDS). In reality, they are not “swaps”, but a form of insurance (for illumination, read the blog of one “Hellasious”, of Sudden Debt). |
In the September 2003 edition of openDemocracy I wrote: 
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