Alternatives to Corporate Capital
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Full Employment: R.I.P.
Jobs Deficit, Investment Deficit, Fiscal Deficit
Peak Oil and other threats
Like many economists, I believe that the immediate crisis facing the United States economy is the jobs deficit, not the budget deficit.
The magnitude of the jobs crisis is clearly illustrated by the jobs gap – currently around 12.3 million jobs.
That is how many jobs the economy must add to return to its peak employment level before the 2008-9 recession and to absorb the 125,000 people who enter the labor force each month.
At the current pace of recovery, the gap will be not closed until 2020 or later ...The President Surrenders
Are the Bush Tax Cuts the Root of Our Fiscal Problem?
Until about a decade ago, the effects of globalization on the distribution of wealth and jobs were largely benign.
Globalization and Unemployment
On average, advanced economies were growing at a respectable rate of 2.5 percent, and in most of them, the breadth and variety of employment opportunities at various levels of education seemed to be increasing ...
But as the developing countries became larger and richer, their economic structures changed in response to the forces of comparative advantage: they moved up the value-added chain.
Now, developing countries increasingly produce the kind of high-value-added components that 30 years ago were the exclusive purview of advanced economies.
This climb is a permanent, irreversible change ...
foreignaffairs.com
So, three sources of the oil price 'spike' - if it is a spike.
Opinions about Peak Oil are many and varied. Some believe it has already peaked.
The DECC, basing its beliefs on the work of the
International Energy Agency, holds to the view that all will be well until about 2030.
This is disputed by a whistleblower from within the
organisation.
A report from Uppsala University disputes the IEA's 'belief' that peak oil is
twenty years away, claiming that by 2030:
... our scientifically-based calculations show that production of oil will be 25 million barrels per day lower than stated ...
The UK Energy Research Centre, in its The Global Oil Depletion Report offers a date of 2020:
A growing number of commentators are forecasting a near-term peak in global oil production with potentially serious economic impacts. Others, however, argue that production will be sufficient to meet rising demand well into the 21st century.
The report, a review of over 500 studies, analysis of industry databases and comparison of global supply forecasts, seeks to bring some clarity to this debate.
The report finds:
Despite large uncertainties in the available data, sufficient information is available to allow the status and risk of global oil depletion to be adequately assessed. But the available methodologies can frequently lead to underestimates of resource size and overly pessimistic forecasts of future supply
The rate of decline of production is accelerating. More than two thirds of existing capacity may need to be replaced by 2030 solely to prevent production from falling
While large resources of conventional oil may be available, these are unlikely to be accessed quickly and may make little difference to the timing of the global peak
A peak in conventional oil production before 2030 appears likely and there is a significant risk of a peak before 2020. Given the lead times required to both develop substitute fuels and improve energy efficiency, this risk needs to be given serious consideration UKERC
Food prices hit record high
Unilever warns of price rises as food costs soar
Two recent headlines telling the same story: just as demand for oil will soon exceed supply, the same factors forcing up the price of oil are at work
with foodstuffs. If it's in short supply, there's a buck to be made gambling on futures.
Blogger porsupuesto sums it up pretty comprehensively:
24 September 2010 1:34PM
To reiterate what I've posted before.
1. The UN WFP predicts a 50% increase in population between now and 2050
2. Based on dietary changes and global average per capita increase in food consumption, that means at least a 70% rise in food production is required by 2050 to keep global starvation within the WFP predictions
3. 90% of that food production will come from land already in agricultural production, so intensive farming will increase not decrease which means fertiliser demand will increase.
4. Phosphorus is essential for food production and is depleting: Peak P is predicted for 2034 and present global reserves are expected to run out by 2070. Unlike energy, we cannot survive without food&P
5. Those WFP projections do not allow for the P issue on fetrilsier price or the current level of competition for agricultural land between biofuels and food (US- recently 26% of grain production went to biofuel production).
This is all combined with an expectation of increasing GDP per capita for all governments from now to 2050. The global average electricity production is 80% fossil fuelled today. Decarbonising that requires a level of strategic activity and investment far beyond political BAU.
Energy efficiency can only reduce demand, not eliminate it. Therefore, to decouple rising GDP per capita from the significant continued global rise for energy associated with increasing per capita GDP, year on year, we have to decarbonise energy production.
The political class has globally and in the UK, and is now, doing nothing effective to meet the food and energy/carbon/climate challenge. The level of investment and infrastructure development required in the UK alone would be more than for a manned space programme.....and 2050 is only 40 year away.
Unlike newpapers and politicians, numbers and facts dont lie. The world is in a difficult place and politicians are simply failing to manage these critical crises. Guardian 24 Sept 2010
Anthony Ward has made a 'reputation' in the world of corporate sociopathy with his trading in cocoa.
When he met up with 'barriers to trade' in Ghana, the coalition's Development Secretary was on hand to
use the Foreign Office - not his department - to assist Mr Ward with his problem.
The World Development Movement - [The great hunger lottery] - reports that speculation has played a part
in recent food price spikes which hit poorer countries hard.
Peak Everything
Food prices hit record high
Unilever warns of price rises as food costs soar
The new era of global food revolutions
The Arab crisis: food, energy, water, justice
Urgent action needed to avert global hunger
Feeding the world in 2050
Rising commodity prices will push up food costs
World food prices enter 'danger territory'
World food prices at fresh high
Commodities
We can now see the true cost of globalisation
A growing body of research suggests that yawning inequality isn't just a moral and political question – it's an economic one. The credit bubble of the past two decades helped consumers in the US and Europe to prop up their quality of life in the face of the relentless decline in real wages; but that conjuring trick only works for a while, and the resulting legacy of debt will now take many years to work off ...
Obs 29 Jan 2012 Global Risks 2012 Globalization Log IMF
In China, Human Costs Are Built Into an iPad
Spain's unemployment total passes five million
The fruits of austerity ...
The National Statistics Institute said 5.3 million people were out of work at the end of December, up from 4.9 million in the third quarter.
The rate rose from 21.5% in the third quarter to 22.8% - the highest rate in nearly 17 years.
The new figures show more than half of all 16-24 year-olds are jobless - 51.4% compared with 45.8% before ...
The Bank of Spain predicts the country's economy will shrink by 1.5% this year, saying the eurozone debt crisis has destroyed business confidence and closed off bank credit, causing a large drop in domestic demand.
BBC NEWS 27 Jan 2012 Global Risks The Merkozy Plan
Saving the Euro with Fiat Money Government by Corporate TechnocracySpain demands new 'realism' from EU ...
David Cameron will call for 'popular capitalism'
WTF are you drivelling on about now, Mr C?
David Cameron will set out his vision in a speech that is due to call for reforms to make capitalism more responsible.
I believe you got a first in PPE at Oxford, yet either you know nothing about capitalism, or you are pretending to a gullible public that you have the power, and the will, to roll out some UK version of West German Ordoliberalism, which existed before the collapse of the Berlin Wall, and was driven out by the Washington Consensus.
The current version of capitalism confirms Marx dictum that competition leads to monopoly, which is in fact what is happening as any page on mergers and acquisitions will confirm.
SMEs represent real capitalism, Dave, but you and your Bullingdon Club friends are only interested in jobs in the corporate sector when you get tired of politics, or the voters - God help us - switch to the other corporate state party, jokingly known as the Labour Party.
As another blogger has correctly stated on here, what we have now is the corporate state, minus Mussolini's brand of nationalism.
It's the worst of all possible worlds.
He will argue that the Conservative agenda is well-placed to usher in a new era of moral capitalism.
The Prime Minister will say that the Tories are naturally opposed to monopolies and favour transparency in business as the best way to root out unacceptable practices.
Though he will promise to act to ensure excessive pay is tackled, he will insist on the benefits of free markets.
His address in London will come after Goldman Sachs disclosed that its staff pay and bonuses for 2011 totalled almost £8 billion.
Tel 19 Jan 2012Cameron sets out vision for 'popular capitalism'
Dave's call for 'popular capitalism' is full of oxymorons ... "fair and free" ... and downright untruths ...
"We won't build a better economy by turning our back on the free market. We'll do it by making sure that the market is fair as well as free." ..."That's the vision of a better, more worthwhile economy that we're building."
"I want these difficult economic times to achieve more than just paying down the deficit and encouraging growth. I want them to lead to a socially responsible and genuinely popular capitalism. One in which the power of the market and the obligations of responsibility come together. One in which we improve the market by making it fair as well as free, and in which many more people get a stake in the economy and share in the rewards of success. That's the vision of a better, more worthwhile economy that we're building." ...
"I believe that open markets and free enterprise are the best imaginable force for improving human wealth and happiness," said Mr Cameron. They are the engine of progress, generating the enterprise and innovation that lifts people out of poverty and gives people opportunity. And I would go further: where they work properly, open markets and free enterprise can actually promote morality ...
Ind 19 Jan 2012 'Divi' Dave Log Is Capitalism the only game in town?Cameron is coming for the crony capitalists – whoever they are
New forces are driving the world economic order
Please read Mezzum's blog in full.
In an amazing turn of events, virtually every western country must now worry about its credit ratings, while quite a few emerging economies continue to climb the ratings ladder.
We can now consider the image of western delegations heading to emerging countries to plead, cap in hand, for financial support, both direct and through the IMF ...
Fortunately, despite having lagged rather than led this process of consequential (and increasingly disorderly) global change, it is not too late for policymakers to catch up.
But doing so requires more than just better national policymaking in Europe and America; it is also time for urgent and deep reform of the multilateral system and its main institutions.
That process requires joint leadership by the emerging world as a true equal and partner of western powers.
Gdn 21 Dec 2011 Contesting the Markets Global Risks 2012
Contesting the Neoliberal Dystopia Neoliberal Fiancial TerrorismArgentina's Lessons for a Crisis-Ridden Europe
Executive pay consultants behind escalating boardroom salaries
Recent trends are illuminating: in 1978, the head of British Aerospace was paid £29,000.
By 2010, the head of its successor company, BAe Systems, collected a package worth nearly £2.4m, a rise of 8,000%.
That compares with an increase of 556% in median male income over the same period.
But why has boardroom pay skyrocketed in recent years?
Critics point their fingers at the pay consultants appointed by remuneration committees at top companies, describing their relationship as being akin to a cartel.
Twenty years ago such firms did not exist and pay negotiations were thrashed out between the executive and the board with some help from lawyers.
There are now half a dozen specialist pay consultancies in the City whose sole job is to advise remuneration committees how much executives should be paid and how to structure their pay packages.
The consultants' fees are kept private but are in line with those charged by accountants and lawyers ...
A recent survey by Income Data Services found senior directors at FTSE-100 companies last year enjoyed a 49% pay rise, earning on average £2.7m – 113 times the national average of £24,000 for a worker in the private sector, where salaries have risen 3% in the last year.
The average chief executive saw their total payout jump by 43% to £3.9m.
And all this at a time when business groups are lobbying for the scrapping of the 50% higher marginal tax rate ...
Gdn 18 Nov 2011 A 'Greed is Good' Wealth Log Corporate Sociopathy
Global Risks 2012 Inequality Third Meltdown Log
The markets distrust democracy. Just ask the masters of Beijing and Moscow
Why is the democratic world faring so much worse than its non-democratic rivals in the current storm?
Start with austerity.
It may not be the best solution for a worldwide crisis of anaemic growth and falling demand – indeed it is surely making the problem worse – but it is what the markets demand in return for manageably low rates of interest on the money they lend to governments.
That it is these men, not those we elect, who are all-powerful is not new: Bill Clinton discovered as much nearly two decades ago ...
Given that it is the markets who call the tune, the question then becomes one's ability to dance to it most nimbly – and in that endeavour democracy is an impediment ...
In the immediate postwar era, people might have been readier to endure rationing and hardship in, say, Britain because there was a sharper sense of collective identity and solidarity ... now society is less cohesive: austerity is seen as the result not of defeating foreign tyranny in a just war but of bankers' reckless greed; and few believe, as they once did, that they are guaranteed to be better off than their parents ...
The larger problem of democracies' weakness has not been caused by the economic crisis, so much as revealed by it.
The growth statistics for the pre-crash decade tell a revealing story. The EU, US and Japan did OK, clustered together in the low single digits.
But China and Russia enjoyed figures nearly twice as high. The best performing economies were the most authoritarian states ...
Gdn 15 Nov 2011 Contesting the Markets Global Risks 2012
Losing Democracy Log Neoliberal Globalization: Pawns or Players? Third face of powerSergei Magnitsky
Is corruption in Russia's DNA?
The EU crisis demonstrates that free trade has gone far enough
The unravelling of the euro is not just an economic and financial crisis, it is also a crisis of democracy.
The peoples of Europe are losing the capacity to determine their own futures. From Antwerp to Athens, they are being told that there is no alternative.
The people of Greece, Italy, Spain, Portugal and Ireland have already learned that they must accept programmes of austerity, reductions in employment protection and the sale of public assets to the private sector.
If they haven't elected leaders willing to do what is necessary, unelected leaders will be imposed instead ...
Capitalist investors see a Europe that is divesting itself of the democratic accountability that is so often a drag on the uninhibited pursuit of profit ...
Free trade ... involves international agreement on the most contested areas of modern politics: the role and size of the state, levels of taxation, employees' rights, the extent to which we should protect the environment ...
It is not just the EU that needs re-thinking, it is the whole world trade regime ...
Gdn 14 Nov 2011 Contesting the Markets Log Global Risks 2012
Ed Miliband: business, finance and politics are out of touch with people
Motherhood and apple pie: we all support them.
The Tories are discussing how to make it easier for firms to fire people.
Ed's problem is that he does not seem to understand the 'terms and conditions' on which the current economy functions: globalised free markets driven by the Washington Consensus, which demands that the great majority of the population accept precarity and powerlessness as the norm.
Nor does Ed begin to address the role that the state must play in 'rebalancing' the economy away from that greed-driven dystopia, the City of London.
A practical start would be re-nationalise the Bank of England, and get it to capitalise the Green Investment Bank.
We are developing policies so they can hire people.
We would start by creating thousands of new jobs paid for by a tax on the bank bonuses.
It is about rewarding the right values, not the wrong values, in our economy.
Young people wanting to go to university fear being burdened down with debts of £50,000 when they leave.
It makes no sense and it does not reward aspiration and hard work.
So, instead of proceeding with tax cuts for the banks as the government plans to do, we should use that money to cut the maximum tuition fee from £9,000 to £6,000.
And we should apply the right values in the rest of our economy.
Our welfare system needs change to reflect not just the compassion of our country, but also the values of hard work, contribution and getting something out when you put something in.
Rather than wringing our hands about electricity bills, we would break up the rigged market of the energy cartel so that new competitors can drive prices down.
And let us tell the top CEOs that, if they are unwilling to justify their rewards to an employee on the committee that decides salary packages, they will not get it.
These choices are all affordable and can all be made now to help get Britain working again for most people.
But they also pave the way for a better economy and a more responsible capitalism in future ...
Obs 06 Nov 2011 Ed Miliband Full Employment: Where is it coming from? Pawns or Players?Occupy London
Revealed – the capitalist network that runs the world
Jobs crisis threatens global wave of social unrest, warns ILO
... the organisation's World of Work report ... found that only half the 80m jobs needed to return employment to its pre-crisis levels were likely to be created over the next two years, and that the stalling of the global recovery was already leading to an increase in joblessness ...
In a new "social unrest" index, the ILO said there was growing unhappiness over the lack of jobs and anger over perceptions that the burden of the crisis is not being shared fairly.
It noted that in over 45 of the 118 countries examined, the risk of social unrest is rising, with particular signs of tension in the EU, the Arab region and to a lesser extent Asia.
Official figures released today showed that unemployment in the 17-nation eurozone had climbed to a 15-year-high of 10.2%.
Young people are being hardest hit by the lack of jobs, with youth unemployment at 29% in Italy, 43% in Greece and 48% in Spain ...
Gdn 31 Oct 2011 Full Employment? Global Risks 2011 Youth UnemploymentUnemployment and employment statistics
Is narcissism the new capitalism?
What is it about high corporate pay that so enrages us?
We discovered last week, through an Incomes Data Services survey, that FTSE 100 chiefs earned an average of £3.8m last year.
Some of the highest paid, such as Sir Martin Sorrell of the advertising giant WPP, received £4.2m, while Xstrata's Mick Davis took home £18m.
Both have been highly successful ... But are they worth a 40 per cent – after stripping out inflation – increase year on year? ...
Executives defend themselves by claiming that they operate in a competitive, international free market for talent.
That's patently not true. It's a distorted market fed by this closed shop. It's become too easy for directors to make fortunes because of these incentives, which are the corporate equivalent of MPs' expenses and bankers' bonuses ...
All this is giving rise to a rather uncomfortable narcissism which is infecting the corporate world and giving capitalism a bad name.
That's why it was disappointing that Sir Martin sounded so petulant when he was interviewed on the radio last week to comment on his bumper package.
It was a great chance for him to explain to the public, and to show that he really was "worth it".
Instead, he came across as pompous by claiming his base £1m salary was "very low" – not the sort of remark to make when for most people real incomes are declining ...
Ind 30 Oct 2011 A 'Greed is Good' Wealth log Bonus Culture Pawns or Players?
Gordon Gekko Inequality 'No such thing as society'Cover-up at St Paul's
G20 leaders prepare for Cannes ...
... there will be a full agenda for G20 leaders in their two days of talks: Europe, exchange rates, commodity prices, the responsibility on countries running trade surpluses to help those going through austerity programmes, new forms of innovative finance to fund development and what to do about the world's 200 million unemployed workers ...
The quickening pace of globalisation over the past two decades has meant that it is no longer possible for a country or region to decouple itself from what is going on elsewhere.
Hence China may be sympathetic when Europe asks for a contribution to its bailout fund ...
Hence also the demands of Barack Obama for the surplus countries – China, Japan and Germany in particular – to expand their domestic economies so that deficit countries like the US and the UK can export more.
Washington's case is likely to receive backing from the International Monetary Fund, which has been preparing a so-called spillover report, identifying the ways in which decisions in one powerful country affect everyone else.
The IMF's new managing director, Christine Lagarde, would like Beijing to allow the Chinese currency to strengthen on the foreign exchanges, making imports into the world's fastest growing economy cheaper.
The fear at both the IMF and the World Trade Organisation is that unless the surplus countries offer support to the deficit countries, the result will not just be lower growth and higher unemployment, but protectionism ...
Gdn 28 Oct 2011
Full employment? Globalization Log Global Risks 2011 IMFG20
Eurozone crisis is a handy excuse for faltering UK economy
Throughout, the response has been late, timid and wrong, but convenient for George Osborne, David Cameron and Sir Mervyn King because they can now blame Britain's slide into a double-dip recession on events on the other side of the English Channel.
King's speech in Liverpool last week was a case in point. The gist was that we had a nice recovery going in the UK until the little local difficulty in Greece turned into a question of whether monetary union has a future.
The Bank of England governor insisted that following the depreciation in the value of the pound and the implementation of the coalition's government's "credible" plan for the public finances "we were on track".
This simply won't wash. Growth had ground to a halt in Britain long before the situation in the eurozone went critical.
Credit flows to business have been declining for at least two years.
Even before Britain's important European markets started to become more difficult, there was no underlying improvement in export performance, largely because companies used the benefits of a cheaper pound to plump up their profit margins ...
Gdn 23 Oct 2011 A free market train wreck Coalition Log Whither Britain? Log
'Bad luck' generation will be blighted by youth unemployment for several years
For 'several' read 'many'
The ILO predicts the number of unemployed 15-24-year-olds will stand at 74.6 million, or a rate of 12.6% for 2011.
That is down slightly from 12.7%, or 75.1 million, in 2010 but the report attributes this more to young people opting out of the labour market, rather than looking for jobs.
It said that pattern was especially true in developed economies and the European Union and unlikely to improve soon.
"A lot of these young people are simply giving up and they are saying 'enough is enough. What is the point of looking if there's nothing out there?'" said Sara Elder, ILO economist and the report's author ...
The report warns that consequences around the world could be dire.
"Increased crime rates in some countries, increased drug use, moving back home with the parents, depression – all of these are common consequences for a generation of youth that, at best, has become disheartened about the future, and, at worst, has become angry and violent," it says ...
Gdn 19 Oct 2011 Full Employment? Global Risks 2011 IMF
'Reserve Army' Third Meltdown Log What is to be done? Log Youth Unemployment
The Myth of Full Employment
My goodness are these economists such ideologues
... where these neo-Keynesians go wrong is in failure to recognise the extreme dangers for Britain of financial market and sovereign debt contagion.
They don't seem to realise what a perilous, knife edge, position the UK is in.
Aggregating all debt together – sovereign, household, private sector and banking – the UK is far and away the most indebted country on the planet.
Tel 14 Oct 2011Double-Dip Recession in Britain Watch
Right now record-low interest rates are not a tool for improving the economy.
They are a consequence of the fact that the British economy is 100% scr—d and about to become 150% scr—d.
The risk that other investments in Britain will go south as the double-dip hits is sufficiently large that investors are terrified and willing to buy British Treasury debt at absurd and outlandish prices ...
Brad DeLong 12 Oct 2011 A free market train wreck Falling living standards Whither Britain? LogLow Rates As A Sign Of Failure
Fools Run The World
Europe's grand plan risks slow death by a thousand cuts
Lack of action on jobs risks a lost generation
Re-arranging the deckchairs on the Titanic ...
It is not as if there is nothing the Government can do ...
... the judicious use of planned infrastructure investments could make a real difference.
Contractors bidding for work on large-scale schemes such as road upgrades or the roll-out of high-speed broadband might be required to invest in high-quality apprenticeship programmes, or take on and train unemployed youngsters.
There is arguably even a case for a public housing investment programme, helping to address the looming housing crisis and to boost the struggling construction sector, while also creating job opportunities, particularly for young people.
There are also options on the supply side that deserve consideration.
A structural review of the labour market would help find creative ways to boost flexibility using, for example, short-time working and job-share schemes.
Apprenticeships and internships also need expansion and reform. Previous moves to boost apprenticeship numbers, while welcome, have not gone far enough.
And existing schemes would benefit from a clampdown on the worrying number of companies using them as a source of cheap, or even free, labour and offering little or nothing in terms of training in return ...
Ind 13 Oct 2011
A free market train wreck Full Employment? What is to be done?
Fiat Currency Banking The Myth of Full Employment Towards the Good SocietyWhat is the "Green Economy"?
The Great Transition
Prosperity without growth – but how?
Is it time to re-think economic growth?
Prosperity without Growth?
The Global Green Growth Institute
The euro debt crisis must force a re-evaluation of capitalism
Is anything being learned from the debt crisis in Europe? Apparently not.
For what is being passed off to the anxious public as crisis management has nothing to do with the "productive effects" Kocka wrote of.
In the race against "the markets" to rescue the euro, governments are only proving where power truly lies.
Rather than tackle the causes of the economic and political crisis, those causes are being explained away as the solution.
What is still left to the state is that, since 2008, it has had to bear the social burdens of a private financial crisis.
And no sooner had the public budgets been saddled with the cost of propagating private wealth than another diet was prescribed to cure the disease now called the "crisis of state" ...
...
According to a recent poll, two thirds of EU citizens believe that the single market has benefited only large corporations.
Half believe that the European status quo has debased working conditions and that the current state of political integration brings nothing for the disadvantaged.
That says a lot about the character of the Europe that Merkel and others want to save.
What's at stake is no less that this: either the euro crisis will be solved "from above" and will lead to an EU regime of authoritarian austerity, which will restrict room for manoeuvre for policy-making on the ground and reinforce the centrifugal social forces away from the European ideal, or pressure "from below" will force governments to correct their course ...
Gdn Contesting the Markets Globalization Log Global Risks 2011 What is to be done? LogJürgen Kocka: “Capitalism and crisis”
Andrew Tyrie questions economic strategy
The Ludwig von Mises growth strategy?
In the pamphlet for the pro-free market think tank, Centre For Policy Studies, [Andrew Tyrie] said the government had to review its positions on the reform of public services, the increase in overseas aid and some aspects of its environmental agenda.
The pamphlet, called It's the Economy, says:
"Without the lynchpin of a clear strategy for growth in place, other attempts to provide a more appealing theme than austerity are unlikely to succeed.
"The Big Society; localism; the Green strategy - whether right or wrong - these and other initiatives have seemed at best irrelevant to the task in hand, if not downright contradictory to it; likewise the huge spending hike on overseas aid and the cost of the Libyan expedition."
He said instead there should now be a relentless focus on improving living standards.
Mr Tyrie called for the tax system to be simplified and business taxation to be reduced, and said he wanted to see fewer regulations and changes to labour laws.
"There is much to do, and it is not just a question of gaps in policy," he said.
"A coherent and credible plan for the long-term economic growth rate of the UK economy is needed." ...
BBC NEWS 01 Oct 2011 Coalition Log Full Employment Globalization LogNo tax cuts before the next election
Ludwig von Mises Institute
Ludwig von Mises
Ed Miliband's 'quiet crisis' is down to capitalism
Capitalism, and the so-called 'free' markets have several problems which make them anti-social.
What Miliband is talking about is a crisis of social reproduction – that is, a breakdown in the ability of individuals, families and communities (ie society) to sustain themselves, to educate and care for one another, and to develop.
First, they expect their costs - social (unemployment) and ecological (fossil fuels) - to be picked up by the tax payers and not factored in.
Second, they use greed and 'keeping up with the Joneses' to motivate people to buy their products.
Yes, I agree the fault is also in ourselves on this one.
Third, there is what Joseph Stiglitz calls 'asymmetries' - they seller always knows more than the buyer.
Yes, I agree caveat emptor is the watch-word here, but this assumes that the buyer can get hold of the info s/he needs, which is not always the case.
Fourth - and Marx got this one right - competition becomes monopoly, which is why the US went in for 'trust busting' before WWI.
In the UK the Competition Commission is largely toothless, either by choice or design.
Put those four issues right, and you can count me a supporter of markets.
But they will not be put right because, underpinning the four of them, are the traders who profit by gambling on other people's needs: capitalism is irredeemably social Darwinistic. [Gdn]
In many ways Labour's leader is correct. After more than three decades of neoliberal policies – privatisations, marketisation and "new enclosures" – our own individual and collective ability to access social wealth is so entwined with the market and wage-labour that capitalist crisis spells, for many of us, an inability to reproduce ourselves as 21st century humans.
When the markets crash, it's human beings that get burned.
(In fact, as financial trader Alessio Rastani bluntly explains, the crash and burn of the markets and human livelihoods is just another profit-making opportunity.) ...
If the financial meltdown has taught us anything, it's that markets don't work.
If the ever-increasing global temperatures – and other indicators of potentially catastrophic climate change – have taught us anything, it's that markets don't work.
If the Arab spring and movements for real democracy in Greece, Spain, and even on Wall Street, have taught us anything, it's that markets don't work.
In the middle of this quiet crisis, we need to start imagining a future for humanity disentangled from capital, markets and wage labour.
Gdn 27 Sept 2011 Contesting the markets Log Third Meltdown Log What is to be done? Log'Capitalism is survival of the fittest, and sometimes it's not pretty'
Gambling on our financial future
G20 economies urged to invest in jobs as shortfall heads for 40 million
1. No mention of peak oil, the food crunch, 'parched planet', overfishing, and the multiplicity of threats to the ecosphere - and the biosphere - caused by 'growth', aka greed.
The ILO said employment in the G20 would need to grow by at least 1.3 per cent a year by 2015 to recover the 20 million jobs lost since 2008.
2. No spelling out the fact that the global 'players' don't want full employment: it threatens profits.
However, the slowdown in the global economy and already anaemic growth in many G20 countries suggests employment growth could be less than 1 per cent a year, the ILO said ...
Job creation of 0.8 per cent a year is "a distinct possibility" and would double the jobs shortfall from the start of the crisis to 40 million by the end of this year, with a far bigger shortage to come by 2015 ...
Ind 27 Sept 2011 Falling Living Standards Full Employment Global Risks 2011 Reserve Army
Third Meltdown Log What is to be done? Log
Pawns or players? The myth of full employmentThe trader who lifted the lid on what the City really thinks
Disastrous BAE Systems job losses threaten the wider northern economy
Should government reward 'good' businesses?
To put it in highfalutin' economic terms, there are plenty of externalities generated by companies: these are the various impacts that companies have on society and the economy that aren't captured by the pricing mechanism.
That is one reason why we have government, to deal with those externalities ...
BBC NEWS 27 Sept 2011 Ed Miliband What is to be done? LogMiliband war on 'fast buck' society
Miliband pledges 'new bargain' for UK
Labour launches tax war on 'bad' businesses
Has Western capitalism failed?
Chandran Nair - Global Institute For Tomorrow - takes the long view of capitalism, and argues it is
It is important to understand that fundamental principles of capitalism - that human beings are rational and markets behave rationally, and that markets will assign prices - are flawed.
"based on under-pricing resources and externalising costs" ...
It is also important to understand the roots of modern capitalism.
You could argue that slavery was the first attempt to under-price resources.
When slavery came to an end there was colonisation, which was again an attempt by the capitalist model to use resources cheaply.
With the end of colonies, we had the globalisation argument of economic growth and then the globalisation of finance.
When I speak about this in Europe, they say there has been 30 years of over-leverage, but I say they should multiply that by 10 and look at 300 years of essentially exploited growth.
What we need to recognise now is that the world is a very different place from what it was 100 years ago when we had one billion people.
With a current population approaching seven billion, things will have to change.
A fundamental issue that the world will have to recognise, and which Western capitalism has conveniently ignored, is that the goods and services which companies and economies seem to thrive on are based on under-pricing resources and externalising costs ...
BBC NEWS 23 Sept 2011 Contesting the Markets Log Eating the Future Log
The Anthropocene
Origins of the Euro Crisis
Kash Mansori has an excellent post about the origins of the euro crisis. He documents the fact — which the Germans cannot bring themselves to acknowledge — that fiscal irresponsibility had very little to do with it.
And he shows that what really predicts who found themselves in crisis was capital inflows ...... the peripheral EZ countries were up against powerful exogenous forces - capital flow bonanzas and sudden stops - that tended to push them toward financial crisis.NYT 23 Sept 2011 Contesting the Markets Log EU Log
They were playing against a stacked deck ...
Rather than large current account deficits being the result of fiscal mismanagement or excessive consumption, the current account deficits were the necessary and unavoidable counterpart to the surge in capital flows from the EZ core.
Rather than above-average inflation rates and deteriorating competitiveness being signs of labor market inefficiencies or lax fiscal policies in the peripheral countries, appreciating real exchange rates were inevitable as the mechanism by which those current account deficits were effected ...
... it must also be recognized that as soon as those countries adopted the euro, powerful forces were set in motion that made a financial crisis likely, and very possibly unavoidable, no matter what the governments of the peripheral euro countries did.
Irresponsible behavior by the periphery countries did not set the stage for the eurozone crisis; the common currency itself did. TSLGreece sees default with 50pc haircut on debt
The Fatal Mistakes of Berlin's Bailout Strategy
G20 leaders pledge to protect banks from Europe's debt crisis
The current generation of politicians bought into the globalised fiat currenncy 'utopia' and are now standing around its corpse, wondering how to bring it back to life.
"We commit to take all necessary actions to preserve the stability of banking systems and financial markets as required," the G20 said in a communique after a dinner meeting.
A Debt Jubilee is the only answer, but that would ruin their cosy relationship with corporate finance.
The pawns? They get the 'hair cut', a.k.a. higher unemployment.
Tel 23 Sept 2011This is a political problem - and governments are all out of ammunition
... the sense of policy fatigue and indecision is palpable.
As one government official remarked:
“We’ve already sent the best of our cavalry into battle, and it’s come back in tatters. There’s a limit to what more we can do.”
But governments are doomed to try and, as has long been apparent, the action that must take priority over all else is further measures to underpin the banking system.
A second injection of public funds so soon after the last one would to many seem not just unaffordable but politically unacceptable.
Unfortunately, the alternatives look a great deal worse ...
Tel 22 Sept 2011Global economy: it could be autumn 2008 all over again - but worse
The fact that only six members of the G20 could be persuaded to sign up to David Cameron's round-robin letter urging Europe to sort out its sovereign debt crisis says much about just how divided leaders are about what needs to be done.
Churchill's words from a different era were made for today's politicians who are "resolved to be irresolute, adamant for drift, solid for fluidity and all-powerful for impotence" ...
The real concern is that three years after Lehmans the global economy's problems have proved so intractable.
It is not just the tough winter ahead that politicians need to worry about. It is the risk of a lost decade as the whole world goes Japanese.
Gdn 22 Sept 2011BRIC nations helping eurozone overcome debt crisis is impossible
The countries said in a statement after their meeting that they would provide support “if necessary” through the IMF or other global financial bodies.
The BRICS are also “concerned with the slow pace of quota and governance reforms in the IMF”.
With work lagging on implementing changes agreed in 2010, BRICS are more likely to contribute to the new agreement on borrowing as a way to help through the IMF than trying to further boost their sway by raising their shareholding, [Russian deputy finance minister] Storchak said.
Tel 22 Sept 2011The Fatal Mistakes of Berlin's Bailout Strategy
A haircut which mirrors the debtor's real ability to meet financial obligations could, of course, leave some banks in trouble and threaten a new banking crash.
But this problem could be easier to control than one outrageously expensive bailout after another.
Above all, this solution would be cheaper for the countries; indeed, the burden would be borne by the lenders.
Banks which, thanks to the stress test, are known to be in a precarious position, would have to be weatherproofed before the debt haircut with fresh capital.
This "recapitalization" must take place through the state because private investors would certainly not rush to take on such a risk.
In return, governments would be shareholders in the banks ...
Der Spiegel 23 Sept 2011
Bankocracy Log EU Corporate State Log Global Risks The Pawns Whither Britain? LogOperation Twist marks a turn for the worse
Terminally ill patients told their benefits may be cut
Osborne urged to scrap 50p tax rate
As Karl Polanyi so aptly put it:
"We are concerned that Britain's 50p income tax rate is doing lasting damage to the UK economy," wrote the economists, who include Cambridge University academic Bob Rowthorn and former members of the Bank of England's Monetary Policy Committee DeAnne Julius and Sushil Wadhwani.
"For the entrepreneur the lure of profit; for the worker the fear of starvation."
"It gives the UK one of the highest personal tax regimes in the industrialised world, making it less competitive internationally and making us less attractive as a destination for both foreign investment and talented workers.
"It punishes wealth creation by imposing on entrepreneurs and business people a marginal tax rate in excess of 50% once national insurance contributions are added in. This is particularly damaging when the UK needs to create new businesses in new industries."
The economists, who said the rate applies to just 1% of people who pay 24% of all income taxes, added:
"We call on the Government to drop the 50p tax at the earliest opportunity as part of a package of measures to stimulate growth.
"Only by returning to an internationally competitive tax regime will Britain enjoy long-term sustainable economic growth." ...
Ind 07 Sept 2011 Coalition Log Trickle Down Theory
Switzerland's protectionist move unlikely to pay off
The Swiss have clearly had enough. After months of watching their franc appreciate remorselessly on the foreign exchanges, the Swiss central bank announced that it would do whatever was needed to prevent the currency overvalueing against the euro.
This was a big and decisive move, with implications beyond the narrow confines of intervention in the financial markets.
It is an indication of the stresses and strains in the global economy as it battles to emerge from recession, and it shows an increasing willingness on the part of central banks and finance ministries to insulate their economies from problems elsewhere.
Currency intervention is protectionism by the back door ...
Europe's sovereign debt crisis has been the catalyst for the surge of hot money into Switzerland, which is seen as one of a handful of safe havens at a time of global turbulence.
The overvaluation of the franc threatens Switzerland with recession and deflation: hence the commitment to buy other currencies in "unlimited amounts" ...
Gdn 06 Sept 2011 Contesting the Markets Globalization Log
Markets plunge as America fails to create any jobs
Cuts in the manufacturing industry and among government workers offset modest hiring in America’s services sector, according to a widely anticipated report released yesterday by the US Labor Department ...
As the engine of global growth since the Second World War, a second recession for the US would cast a shadow over economies everywhere.
Britain sends about 15pc of its exports to America ...
Tel 02 Sept 2011Construction hit by 'double whammy' of bad news
Markets slide as US jobs stagnate
US unemployment figures shock with no job growth in August
Central bank flight to Federal Reserve safety tops Lehman crisis
Central banks and official bodies have parked record sums of dollars at the US Federal Reserve for safe-keeping, indicating a clear loss of trust in commercial banks.
Data from the St Louis Fed shows that reserve funds from "official foreign accounts" have doubled since the start of the year, with a dramatic surge since the end of July when the eurozone debt crisis spread to Italy and Spain.
"This shows a pervasive loss of confidence in the European banking system," said Simon Ward from Henderson Global Investors.
"Central banks are worried about the security of their deposits so they are placing the money with the Fed."
These dollar accounts are just over $100bn (£62bn) and are small beer compared to the vast sums invested in bonds as foreign reserve holdings. Yet they serve as stress indicator, reflecting the operating decisions of the world's top insiders ...
Tel 01 Sept 2011 Bankocracy Log Contesting the Markets Log
Neoliberal Financial TerrorCancel our Debt
Biblical debt jubilee may be the only answer
Debt Repudiation: Good Idea or Bad Idea?
Europe needs a debt jubilee
Odious debt, Jubilee, and the cost of ignoring history
Why are the failings of capitalism only being exposed by the right?
From 1989 to 2008, the handsomely remunerated representatives of financial capital ruled the world and dared politicians to challenge their power. No party did.
Chastened by the debacle of communist rule, the democratic left lacked all conviction, while the bankers and speculators were full of passionate intensity.
As the veteran leftwing historian, Eric Hobsbawm, wryly observed of John Paul II's regular fulminations against untamed global markets:
"It is not encouraging when the only person of global importance to condemn capitalism is the Pope."
On Thursday, during his visit to Spain, Pope Benedict was echoing the same theme, stating :
"Man must be at the economy's centre, which is not profit, but solidarity."
Now that the Vatican has a British ally in Charles Moore, the biographer of Margaret Thatcher, the time is ripe for Labour to resume the corrective role that it performed with such distinction in the postwar period.
Different solutions and approaches will be required for a different world, although some of the features of "the golden age" – capital controls and an enhanced role for reformed trade unions – may be worth revisiting.
But the starting point is to recover some of the old moral dynamism that gave the party its reason for being in the first place ...
Obs 21 Aug 2011 Ed Miliband What is to be done?I'm starting to think that the Left might actually be right
The moral decay of our society is as bad at the top as the bottom
Global markets take fright at the return of the zombie banks
In the 1990s, the Japanese government prevented its financial system from collapse but only at the expense of creating zombie banks, neither alive nor dead but kept functioning thanks to the largesse of the state.
The reason the sell-off in financial stocks has been more pronounced than the fall in stock markets as a whole is that investors believe Europe and North America now have their own zombie banks ...
Today, governments are seen not as the solution but as part of the problem.
The debt burden accumulated by the banks was, in effect, nationalised during the crisis.
It was hoped this would prove temporary, but the persistence of weak growth means that a private debt crisis has now become a sovereign debt crisis.
What's more, the markets sense that policymakers have run out of bullets to fire.
They can't cut official interest rates, they find it hard to justify more quantitative easing when inflation is at current levels and almost every Western government is currently trying to cut its budget deficit.
Put all that together and you get the full Japanese package: weak growth, weak banks, weak policy response ...
Gdn 19 Aug 2011 A Faustian Pact Log Full Employment?
The End of A Faustian Pact?Debt crisis: live
The Wrong Worries
Consider one crucial measure, the ratio of employment to population. In June 2007, around 63 percent of adults were employed.
In June 2009, the official end of the recession, that number was down to 59.4. As of June 2011, two years into the alleged recovery, the number was: 58.2.
These may sound like dry statistics, but they reflect a truly terrible reality.
Not only are vast numbers of Americans unemployed or underemployed, for the first time since the Great Depression many American workers are facing the prospect of very-long-term — maybe permanent — unemployment.
Among other things, the rise in long-term unemployment will reduce future government revenues, so we’re not even acting sensibly in purely fiscal terms.
But, more important, it’s a human catastrophe ...
The point is that it’s now time — long past time — to get serious about the real crisis the economy faces.
The Fed needs to stop making excuses, while the president needs to come up with real job-creation proposals.
And if Republicans block those proposals, he needs to make a Harry Truman-style campaign against the do-nothing G.O.P.
This might or might not work. But we already know what isn’t working: the economic policy of the past two years — and the millions of Americans who should have jobs, but don’t.
NYT 05 Aug 2011 America Full Employment Global Risks 2011 IMFJob listings say the unemployed need not apply
Osborne plans to cut 50p income tax rate
Plan B: Trickle-Down Theory to the rescue?
David Cameron and George Osborne are ... intent on cutting the top rate of tax, for those earning more than £150,000 a year, to 45 per cent – possibly as soon as in the Budget next April ...
The Conservative plan ... is being driven by Treasury analysis suggesting that the extra revenue generated between the 45p and 50p tax bands could be as little as £750m ...
Ind 05 Aug 2011 Coalition Log Full Employment IMFIMF: UK must be ready for more QE if economy flags further
UK set for low growth as the mood 'darkens'
Boris Johnson tells George Osborne to cut NI and 50p tax
How Trickle-down Economics Works
Trickle-Down Theories Don’t Hold Up
Trickle-down theory
When the dust settles the global financial system will look very different
If Hamish McRae has it right, it might only be their lack of convertibility preventing the yuan from replacing the dollar as the world's reserve currency
Were currency holdings to reflect trade patterns there would be much more significant holdings of the Chinese yuan and the Indian rupee.
But these are not really suited to be in reserves as they are not fully convertible.
Notwithstanding the projections that China will pass the US in economic output in about 15 years' time, the Chinese do not like foreigners holding their currency.
Until they – and other large emerging nations – are happy for that to happen, the dollar and the euro will continue to dominate.
There is however something else happening that deserves notice. It is that if you want a store of value, there are physical alternatives to currencies and one of the best is iron ore and scrap ...
Things will not change overnight but there will be a gradual switch from financial assets in the US, particularly those bonds now trading at very low yields, towards a wide range of physical assets ...
Ind 05 Aug 2011European Central Bank paralysis sparks global crash
Europe seems caught in a surreal world of counter-productive competition to see which nation can don the most uncomfortable hair shirt.
The negative consequences for growth scarcely need spelling out.
In the meantime, the financial crisis is back with avengeance.
In less than a month, the FTSE 100 has fallen by more than 10pc.
In recent days we've seen both the Japanese and Swiss central banks move to counter the ruinous effect the strong yen and Swiss franc are having on their industry by powering up the printing presses again in an attempt to deter the inflow of capital.
With the recovery stalling in both the US and the UK, it cannot be long before the Federal Reserve and the Bank of England follow suit.
We appear to be in the early stages of a classic race to the bottom of competitive devaluation.
The way things are going, protectionism won't be far behind. The fiscal canon is exhausted and policymakers are struggling to find alternatives.
Not since the deepest days of the banking crisis, when we were looking into the abyss of a second Great Depression, have things looked so scary.
Policy seems impotent before the storm.
Tel 04 Aug 2011Stock markets tumble amid eurozone fears over Italy and Spain
Commission president José Manuel Barroso called for the eurozone rescue fund to be significantly enlarged.
Barroso warned the crisis was spreading and that Europe risked losing the faith of the financial markets.
"Markets remain to be convinced that we are taking the appropriate steps to resolve the crisis," Barroso told European leaders, as he urged them to review "all elements" of the €440bn (£382bn) European financial stability facility (EFSF) and its €500bn replacement, the European stability mechanism (ESM).
"We are no longer managing a crisis just in the euro-area periphery," Barroso said. "Euro-area financial stability must be safeguarded."
Analysts have warned that neither the EFSF nor the ESM has sufficient firepower to handle a bailout of either Italy or Spain, having already provided support to Greece, Ireland and Portugal ...FreespeechknightGdn 04 Aug 2011 Bankocracy Log Full Employment
4 August 2011 3:15PM
These debts seem to be entirely secured against payments by future taxpayers which is only possible if there is very strong growth.
However Taxpayers across the world have become incensed by politicians who make promises they cannot keep in order to buy votes.
The other problem is that there will be no growth because global demand for resources in energy and materials cannot be met now without taking into account the continuing population growth and since growth entirely depends on resources it looks as if the world has passed the point where any significant growth will ever be possible again.
Countries were allowed to join the Euro, in my personal opinion, on the basis of a massive political deception because they could never have matched the entry criteria and then politicians borrowed amounts that these economies could never repay to enhance their personal kudos.
Now this is all loaded onto the very poor who cannot repay without suffering the most dire hardship and poverty.
It is clear that democracy has broken down and when that happens the people have no other recourse than to the streets and I suspect that the scenes in Greece will be repeated because politicians have corrupted the democratic contract.The Wrong Worries
Meltdown 2?
E.C.B. Fails in Bid to Quell Sovereign Debt Crisis
Eurozone bailout fund 'needs boost'
UK car sales fall for 13th consecutive month
European debt crisis
Financial Crisis
Even Marked Up, Luxury Goods Fly Off Shelves
Does the NYT buy into the trickle-down theory of growth?
While the free spending of the affluent may not be of much comfort to people who are out of jobs or out of cash, the rich may contribute disproportionately to the overall economic recovery.
“This group is key because the top 5 percent of income earners accounts for about one-third of spending, and the top 20 percent accounts for close to 60 percent of spending,” said Mark Zandi, chief economist of Moody’s Analytics.
“That was key to why we suffered such a bad recession — their spending fell very sharply.”
Just a few years ago, luxury retailers were suffering. Too many items were chasing too few buyers, and high-end stores began cutting prices.
As a result, consumers awaited 70 percent discounts rather than buying right away. Sales of luxury goods fell 17.9 percent in October 2008 from a year earlier, SpendingPulse said, and double-digit declines continued through May 2009.
Now, many stores are stocking up on luxury items, as shoppers flock to racks of expensive goods ...
NYT 04 Aug 2011 Neoliberal Consumer Culture Full EmploymentTop Republicans insist no taxes in U.S. debt deal
Senate Republicans Vow No Tax Hike on Rich
Senate Republicans firm on tax cuts for rich
How Trickle-down Economics Works
Trickle-Down Theories Don’t Hold Up
Trickle-down theory
One of the biggest shockers from the detail of Thursday's OBR assessment is the escalating amount of money going straight down the drain of debt servicing costs.Britain's £200bn time bomb of debt interest
As public debt rises, these payments rise from £30.9bn last year to £66.8bn in 2015/16, or from 4.6pc to 8.8pc of all government spending ...gandalfgeoTelegraph 24 Mar 2011
Once again, the hedonistic days of the massive real estate binge in the UK will have their day of reckoning.
Unfortunately, the average man in the street will cop the bill and spend a generation paying for it.
Young people with any quality degrees or trades would be well advised to get out and seek opportunities in Australia, Canada and New Zealand.
The UK is essentialy "stuffed" for the long term.
Of course the plutocrats living in the Country spreads and pads in Knightsbridge will be fine as staff will become cheaper and easier to get and fire.
Britain is a "hot money junkie" and the world's greatest tax haven for the international multi-millionaire and billionaires set, including the Arab royal families and rulers, Russian Oligarchs such as Abramovich and Berezovski and their ilk where easy tax treatment and residency laws enable them to evade tax on a grand scale.
Hence London is a huge bee hive for the super rich where the millions of poorly paid paid workers service the Queens, enduring long travel times and modest incomes, burdened with huge mortgages in their cradle to grave existence.
This folks is the capitalist democratic dream you all voted for, and very much the future of the British people.
Is the World Producing Enough Food?
So Much for Market Efficiency
Food inflation has returned for many of the same old reasons: the demand for meat has returned with the recovery of middle-income economies; the price of oil is up, which both raises the cost of food production and transport, and stokes the diversion of food crops into biofuel production.
Speculators are taking pounds of flesh in the commodity exchanges. And, of course, freak weather has disrupted production in key export zones.
But what makes the weather matter? This is hardly the first La Niña weather cycle, after all. Every human civilization has understood the need to plan for climate’s vicissitudes.
Over the centuries, societies developed the tools of grain stores, crop diversification and "moral economies" to guarantee the poor access to food in times of crisis.
Global economic liberalization discarded these buffers in favor of lean lines of trade.
Safety nets and storage became inefficient and redundant – if crops failed in one part of the world, the market would always provide from another.
Climate change turns this thinking on its head.
A shock in one corner of the world now ripples to every other. The economic architecture that promised efficiency has instead made us all more vulnerable.
Little has changed in this crucial respect since the last food crisis. But this isn’t simply a rerun of 2008.
While the global recession has turned a corner for some people in some countries, unemployment remains stubbornly high for many, and hunger has trailed it.
There are 75 million people more undernourished now than in 2008.
At the same time, governments are cutting back on entitlement programs for the poor as part of austerity drives to fight inflation.
Urban families are unable to afford food and fuel, and governments are unresponsive to their plight.
Under such circumstances, as Egyptians know too well, food prices and climate change are revolution’s kindling.
Raj Patel, a fellow at the Institute for Food and Development Policy, is the author of "The Value of Nothing" and "Stuffed and Starved."
NYT 15 Feb 2011
Britain is on the brink of a new mergers and acquisitions boom, with companies awash with cash and chief executives emboldened by the surge in share prices over the last year ...British companies the target of rising takeover fever
MrFixitObserver 12 Feb 2011
13 February 2011 4:33AMJane Coffey, head of UK equities at RLAM, said: "We expect a lot more M&A this year with many corporates throwing off cash after aggressively cutting costs in the wake of the financial crisis.I was amazed to learn that for the first time in UK economic history, the manufacturing sector is a net lender to the financial sector rather than being a borrower.
"Directors have to do something with the money: it's pointless keeping cash on the balance sheet when the returns are minuscule. Companies will return surplus funds to shareholders via increased dividends or share buybacks, but many will choose M&A."
The article explains so much about the abject failure of UK business since Thatcher's decimation of the manufacturing base back in the $2.40:£1.00 era of the early 1980s.
Whereas they are sitting on cash and with a weak Pound Sterling, you might think that it would be logical to INVEST in productive plant and capacity to expand organically.
But as most companies are now run by and for the benefit of the accountancy profession and technology, products and exporting are purely secondary considerations to "throwing off cash" and "delivering enhanced shareholder value", it would appear as if, yet again, we are going to squander a golden opportunity to grow and expand UK productive capacity.
Tragic just doesn't convey how appalling this all is.Mergers and acquisitions
In the summer last year the US economy had begun to add more than 400,000 jobs a month before suffering a reversal in the autumn. A rise of around 200,000 in November appeared to signal a resurgent economy, but has proved a false dawn as jobs growth has slowed again.US employment figures disappoint
The figures will be studied closely by the Federal Reserve, which has argued it needs to pump further liquidity into the economy through its $600bn (£372bn) quantitative easing programme to boost confidence and employment.
Rob Carnell of ING said the figures disguised some disturbing trends. He picked out that hours worked fell on average by 0.1 hours, and aggregate hours worked were also lower.
He said: "One might be tempted to read something positive also from the fall in the unemployment rate from 9.4% to 9%. But despite a 117,000 gain in employment measured by the household survey in Jan, most of this fall in the unemployment rate was the result of a further 507,000 decline in the civilian labour force, which contributed most of the 622,000 decline in 'unemployment' this month. Moreover, adding to the sense that all is not entirely well with the US labour force, the average duration of unemployment continues to drift higher."HemelgarnGuardian 04 Feb 2011 Barriers on the Road to a Green Economy Is Capitalism the Only Game in Town
4 February 2011 3:44PM
The greed of Neo-Liberalism and Neo-Conservatism has come home to roost in both the United States and the United Kingdom. Thank you Ronald Reagan and Margaret Thatcher!
The bursting of the Subprime Bubble was the moment when the fantasy of the Invisible Hand of Self-Interest always ensuring that risk would be calculated met the reality of greed stimulated by psychological neediness.
The issue before us is one of demand or rather lack of it. Dysfunctional labour arbitrage has ensured over the last thirty years by leonine employment contracts, outsourcing and deliberately lax immigration quotas that wages would decline and demand accordingly.
Increase in debt was used to mask this reality. Now in the face of uncertain economic conditions there is massive de-leverage of debt.
In such circumstances there is little point in Quantitative Easing because very few want to borrow.
The only alternative in the face of a reluctance of the non-government sector to borrow is for the government sector to spend into the economy directly on public goods provision.
The provision of further tax cuts that the die-hard Neo-Liberals and Neo-Conservatives propose as a stimulus will not cut the mustard because in will either go towards paying off debt or to increase savings in preparation for yet more rainy days.
This is why governments should run larger than normal deficits and why they should make the effort to understand Modern Monetary Theory or Chartalism to understand why it is viable to do so as a controlled expenditure process that will not result in national bankruptcy.Chartalism
Rising commodity prices will push up food costs
The Dark Side of QE
mariansummerlight 1 February 2011 8:15AMThinktank NIESR urges delaying spending cuts
Economists and their predictions!
Fantasy, pure fantasy - I predict and I'm just as likely to be correct as they are. Nil or - growth and 5%+ inflation (oil prices are not going to go down, but up as demand increases and supply can't. Add the factor of speculation into the equation and its up,up up).
The policies of this gov can have only one outcome, recession. The markets may be happy, but at what price?
The complete destruction of our social fabric is too high a price to pay to keep a bunch of rich out of touch speculators happy. The don't give a flying duck about the effects of their behaviour on other people, economies, societies,or the environment. Short terms gains from gambling.
Growth and even inflation are not necessarily that important. This country is extremely rich and doesn't need to grow. Capitalism needs growth because it has to have expanding markets in order to maximise profits.
Remove the profit motive and redistribute the wealth so that it is shared more equally and the need for growth no longer exists. The majority of the worlds economies do not need to grow in order to feed, house, educate and treat the illnesses of their populations.
They do need to institute an alternative and rational means of allocating resources so that needs are met, the environment is not further damaged and societies are stable.
Then we need to lay the foundations for a sustainable non carbon based economy - a massive challenge which is not going ot be met by appeasing the markets, growth and allowing corportations and the financial sectors to grow so large they are more powerful than nation states.
Inflation is not that much of an issue for ordinary people as long as incomes can keep pace with prices. Money is only a means of exchange anyway and value is determined by factors other than just cost of production and are often quite arbitary.
The impact of inflation would also be lessened if we were not completely reliant on money as a means of exchange and a non monetarised market was encouraged to develop.
Guardian 01 Feb 2011
... while the rise in inflation is routinely regarded by some as a sign that the Bank of England has lost the plot, the rise in prices has, to date, not been matched by any significant rise in wages.West remains on life support
This latest dose of inflation is, therefore, not like the inflations of the 1970s, when both prices and wage rose rapidly.
Indeed, the bigger worry at the moment is not so much that inflation will continue to rise but, instead, that the higher cost of living will erode real incomes and spending, thereby threatening the pace of economic recovery in 2011 and beyond.
Combine that with the ongoing austerity in the public sector and it becomes abundantly clear that the UK economy, like other Western economies, is not yet out of the woods.
Indeed, the Western world remains on economic and financial life support ...lettusIndependent 20 Dec 2010
The UK economy is bleeding to death because big companies pay far less than they should in tax.
Until that is cured - and the only cure I can think of is a turnover tax - nothing will change.
In addition to bringing in much-needed public funds, a turnover tax would have a second advantage which is even more important: it would level the playing fields between big companies and smaller companies.
Encouraging smaller companies is vital to economic growth because smaller companies employ proportionately more people.
My analysis is that the whole of the UK's economic woes have arisen because of the disproportionately high power of the big companies.
Over the past fifteen years, the power of the biggest companies has surged. That's why the crash happened - because the banks had become so big and powerful that they could simply lean on the government not to regulate.
And the other big corporates simply lean on the government to change laws in their favour and to cosy up to the tax man so that their tax avoidance measures remain nicely protected.
Big companies spend a lot of their money overseas - in the form of investment in overseas subsidiaries and overseas workers, and investment in machinery to replace what would otherwise have been jobs for UK workers.
So, a lot of the economic activity of bigger companies goes overseas and that's why the economy of the UK is bleeding to death.
Smaller companies, by contrast, can't afford to operate on a world scale and so their economic activity is concentrated on the UK and benefits our country.The proverbial have taken over the asylum
UN report warns of threat to human progress from climate change
In its annual flagship report on the state of the world, the UN said unsustainable patterns of consumption and production posed the biggest challenge to the anti-poverty drive.
"For human development to become truly sustainable, the close link between economic growth and greenhouse gas emissions needs to be severed," the UN said in its annual human development report ...
"The divide between developed and developing countries persists: a small subset of countries has remained at the top of the world income distribution, and only a handful of countries that started out poor have joined that high-income group", the report said.
"The gap in human development across the world, while narrowing, remains huge."
Championing the role of governments in human development, the report said that markets were generally "very bad at ensuring the provision of public goods, such as security, stability, health and education.
"For example, firms that produce cheap labour-intensive goods or that exploit natural resources may not want a more educated workforce and may care little about their workers' health if there is an abundant pool of labour.
"Without complementary societal and state action, markets can be weak on environmental sustainability, creating the conditions for environmental degradation, even for such disasters as mud flows in Java and oil spills in the Gulf of Mexico."
Guardian 04 Nov 2010 Eating the future Fire, Floods and Climate Chaos
Labour market participation of households – November 2010
Workless households across the UK
In January to December 2009, there were three areas across the UK where more than three out of every ten households had no one in work.
These were:
Liverpool (32.1 per cent)
Nottingham (31.1 per cent)
Glasgow City (31.0 per cent)
Over the same period for the UK as a whole, 18.7 per cent of households had no one in work.
There were large variations across the country with the lowest percentages in:
Bedfordshire (9.2 per cent)
Surrey (10.9 per cent)
Inverness and Nairn and Moray, Badenoch and Strathspey (11.0 per cent).
Changes on year
This was the second consecutive year that Liverpool came out on top with the highest percentage of workless households, and was an increase of 1.2 percentage points on a year earlier.
Glasgow City was also in the top three in 2008 and increased by 1.3 percentage points.
For the UK as a whole the percentage of workless households increased by 0.9 percentage points.
ONS 04 Nov 2010 'Reserve Army' 'We're all in together'Third of Liverpool households are jobless
Beyond Keynes and Hayek
The essential point is that both Hayekians and Keynesians believe that once the economy has collapsed, recovery takes a long time ... is there a way of speeding up recovery? ...
First, in order to make consumers spend rather than save we could adopt Silvio Gesell's idea of stamped money ...
The easiest way to put money in consumers' pockets would be to give them a shopping voucher valid for one month after issue.
Second, a recovery loan that will mop up money in banks, firms and households for which there is no present use – and use it for infrastructure projects ...RossCopelandGuardian 28 Oct 2010
29 October 2010 1:52AM
Messrs Desai & Skidelsky, you seem to have failed to grasp a quite small but nevertheless quite essential fact: Capitalism has moved way beyond being able to, in the most general of terms, serve to improve the lot of the majority of people in society.
As an engine of industrialisation where money was largely made by producing things and selling, capitalism created real wealth in that material goods were produced that in many cases served to make life easier.
Indeed, capitalism combined with strong unions served to improve the lives and living conditions of all citizens, both materially and qualitatively, particularly in the period between 1945 and the mid-seventies - I wouldn't really include the 80's since that when an illusion based on credit was offer whilst the system was being restructured.
The trouble was, by the mid-70's there was very, very little profit to be made from the manufacture and sale of consumer goods, capital had to find another means by which it could better capitalise - let us not forget, the essence of capitalism is making money, not producing goods.
The "liberalisation of the financial markets" - the removal of restrictions on capital movements - at the end of the seventies/beginning of the eighties provided financial (banking) and, later, corporate capital with new easier means of generating new capital: currency trading.
Soon came derivatives "trading", LIFFE was born and the hub of the capitalist world became the international finance "markets".
The production of goods became somewhat of an entertaining sideshow, wherever possible replacing people with machines and where people were still needed, having the work done cheap-labour countries.
A system came into being that sees company share prices determined less by the quality of the merchandise the company produces and the sales they generate, than by the speculation on their future share value.
It's worth noting, I think, that one of the things that serves to increase the value of a company's share is the laying off of large number of workers.
The ability to soak up government handouts and avoid paying taxes also play a big role.
As we all know only to well, the concentration of capital in financial speculation eventually led to what we are still, very euphemistically, calling the "financial crisis", which was nothing other than the final bursting of a totally over-inflated bubble.
A bubble that had long lost any connection it may once have had with reality, money that never existed anywhere in real form of any kind 'disappeared'.
Thankfully (irony alert) our governments rushed in and bailed the finance gamblers out with our money; yes, that's right folks, our money!
Money taken from the tax-payer, money intended for the provision of public services was diverted to replace the imaginary money the gamblers had lost playing futures roulette.
So whereas Capitalism once improved the lives of the average person, we are now having to finance both gains and loses, a point Osbourne's budget makes only too clearly.
This is all a rather long-winded way of saying that this is a system we should neither be trying to revive nor should be trying to prolong its death.
Time to wake up, enough is enough is enough, to quote Chumbawamba.
The current global political economy is not one that works, if we take works and meaning that it serves to improve the quality of life for the majority of people.
It is a system that finds it acceptable to see tens of thousands of people die as result of hunger every day although we produce 4 lbs of food for every person on the planet every day.
It is system that creates wars and engenders conflict in pursuit of profit; it is a system that is, ultimately, destroying the very planet on which we live.
It has also all but destroyed humanity's major strength: that we evolved as a social animal. Only through working together did we survive.
Yes, Hayek was wrong, woefully wrong.
Keynes' ideas allowed for manufacturing capitalism to raise the standard of living for most people, however, since we're now in an age of finance capitalism, Keynes has little significance.
So yes, we need another approach, personally I'd look to Kropotkin for a few ideas.
I might also take a closer look at Mondragon, the Spanish co-operative. It is clear that we need a complete re-appraisal, a new direction.
We can, however, only start looking for a solution once we've recognised that we have a problem, once we've accepted that what we have doesn't work.
Only then can we sit down together and work out a 'new way'.
I'd like to make it clear before the silly comments flow, that I'm not advocating some kind of Soviet state-capitalism, neither am I saying that making a profit is a bad thing.
I'm saying it's time to sit down together and work out how we can devise an economic system that is fir for and worthy of humanity.
Crumbling America has a $2.2 trillion repair bill
It's a case 'free market' neoliberalism in action: if it doesn't yield a return this year, we don't go there!It's happening everywhere, from potholed interstate highways and grimy railways, to congested airports and a creaking air traffic control system that only adds to the increasingly third world experience of flying in the US.
And hold your breath when you cross an American bridge: a 2005 study found that fully a quarter of them were structurally inadequate or obsolete ...
Since Reagan, public suspicion of government intervention has taken a quantum leap.
Whatever you think of the Tea Party movement, the hottest thing in American politics right now and which holds the Republican party to ransom, one thing is sure.
Tea Partiers are not into building bridges and modernising airports out of the public purse, or endowing the US with a state-of-the-art passenger rail system ...
Long-term borrowing rates are rock-bottom; a 9.6 per cent unemployment rate underlines how much spare capacity exists in the economy.
As the infrastructure declines, so does the country's international competitiveness ...
Independent 17 Oct 2010
Contesting austerity The Achilles Heel of Recovery
Income Inequality: Too Big to Ignore
During the three decades after World War II ... incomes in the United States rose rapidly and at about the same rate — almost 3 percent a year — for people at all income levels.
America had an economically vibrant middle class.
Roads and bridges were well maintained, and impressive new infrastructure was being built.
People were optimistic.
By contrast, during the last three decades the economy has grown much more slowly, and our infrastructure has fallen into grave disrepair.
Most troubling, all significant income growth has been concentrated at the top of the scale.
The share of total income going to the top 1 percent of earners, which stood at 8.9 percent in 1976, rose to 23.5 percent by 2007, but during the same period, the average inflation-adjusted hourly wage declined by more than 7 percent.
Yet many economists are reluctant to confront rising income inequality directly, saying that whether this trend is good or bad requires a value judgment that is best left to philosophers ...
There is no persuasive evidence that greater inequality bolsters economic growth or enhances anyone’s well-being.
Yes, the rich can now buy bigger mansions and host more expensive parties. But this appears to have made them no happier.
And in our winner-take-all economy, one effect of the growing inequality has been to lure our most talented graduates to the largely unproductive chase for financial bonanzas on Wall Street.
In short, the economist’s cost-benefit approach — itself long an important arrow in the moral philosopher’s quiver — has much to say about the effects of rising inequality.
We need not reach agreement on all philosophical principles of fairness to recognize that it has imposed considerable harm across the income scale without generating significant offsetting benefits.
No one dares to argue that rising inequality is required in the name of fairness.
So maybe we should just agree that it’s a bad thing — and try to do something about it.
Robert H. Frank is an economics professor at the Johnson Graduate School of Management at Cornell University.
NYT 16 Oct 2010 InequalityIn an unequal society, we all suffer
The crime equation
Turning the heat on Rupert Murdoch
It is March 2015, a couple of months before the general election.
One media company bestrides British politics – spanning television, newspapers and the internet.
It is more than twice the size of the BBC, with a turnover of £9bn. Controlled by Rupert Murdoch, it is called News Corporation.
Bound by none of the BBC's tradition of impartiality, the Murdoch family is deciding whether to endorse David Cameron for a second term.
They meet in the knowledge that behind them lies the support of a company whose Sun and Times titles account for two-fifths of all newspapers sold in Britain and whose broadcasting operation is larger than the BBC, ITV and Channel 4 combined.
This vision of financial and political power has so terrified rivals that they are already ganging up in alarm.
From the Daily Telegraph to the Daily Mirror, from the Guardian to the Daily Mail, a joint letter has been prepared for the business secretary, Vince Cable.
Sent today, the purpose of the memo is simple – to persuade Cable to block News Corp's proposed £8bn bid to take full control of BSkyB ...
Guardian 11 Oct 2010 News of the Fox Rupert MurdochRupert Murdoch: Mr Cable's obligation
The Fox in Vince Cable's backyard
Missing the point about Murdoch's BSkyB move
Angry investors balk at News Corp's $2m gift to Republicans
British media join forces against Murdoch takeover of BSkyB
Rupert Murdoch and BSkyB
The man responsible for policing global trade warned policymakers today that growing currency tensions risked the return of 1930s-style protectionism.WTO director-general Pascal Lamy warns of 1930s-style protectionism
Amid fresh evidence that governments are seeking to boost their own economies' growth by manipulating their exchange rates, Pascal Lamy expressed concern that the next step would be the erection of tariff barriers ...
Figures released in Washington today showed the US trade deficit with China reaching a fresh record of $28bn (£18bn) in August, up from $25.2bn the previous month, while the overall trade gap widened from $42.6bn to $46.3bn.
Paul Dales, a US economist with Capital Economics, said:
"The widening in the international trade deficit, and in particular the jump in the bilateral deficit with China to a record high, will only fuel growing speculation of a currency war." ...matkovitsgGuardian 14 Oct 2010
14 October 2010 9:08PM
The problem is not the Chinese Yuan. China's leadership is doing what is best for China. Unfortunately the same is not true for the USA!
US economists still believe that by spending huge amounts of money on Infrastructure improvement we will be able to recover from the recession!
Unfortunately Keynesian Economic Theory was not devised for a Globalized World.
Spending Government stimulus money in the US just creates more employment in China, which manufactures almost all of our industrial products from tooth paste to steel, to rubber hammers, vitamins and computers.
We are simply not recovering from the recession as a nation, only the financial industry is doing OK again!
Ordinary people have no jobs because they have been off-shored to China.
The $ losing value makes no difference to the ordinary person here beside the cost of oil going up!
I wish it would ASAP! That would make solar, wind and Nuclear power more cost effective! Unfortunately even Wind Turbines are imported by GE from Europe into the US.
I wish we were more protectionist, unfortunately we are not! Even my daughter and her husband (both mechanical engineers) are driving Japanese cars!
Without rebuilding our off-shored industrial base there are not going to be real jobs in the USA, ever.
We have an extremely creative work force. I used to work for Control Data at their Arden Hills 'big shed'.
Our team invented the Micro Architecture of the PC. Unfortunately we did not have the technology to build it with.
The money for it has been spent by our CEO on investing in banks.
It was my team members who went via HP to Intel and to AMD (they use IBM chip technology with ex-CDC system architects).
In addition to off-shoring our Financial Industry is spending ~$7billion/year (net to India) on imported cheap Indian technicians with short term work visas.
Even the Democrats and the Obama economic advisers are ignorant about the real basics of our economy, sadly they are mostly lawyers!
Bush junior off-shored over 6 million manufacturing jobs during his 8 years of reign.
Our financial parasites (channeled by the US Chamber of Commerce) are spending literally billions to keep on continuing our suicidal decline into an absolute Depression!
With the teaRethuglicans we simply get there faster! Under the Obama/democrats we might be able to survive longer.
Unless our Keynesian Economists committed mass suicide there is simply very little hope, even with Democrats in charge!
The bottom line is that within the next ~4 years we are going to dive into the biggest depression the world ever seen!
1929 was nothing to the upcoming global economic tsunami.
Add to this Climate Change and we do not have to worry about world over population any more.
If you Brits are smart than you will isolate yourselves from the continent and start growing 'Victory Gardens' again!
Pre-building a few guillotines on Wall Street might be also cost effective (we might use some old French expertise here) and could save some time in calming future mob violence/hysteria.
The French shortened ~70,000 aristocrats during the revolution, that is why they still have the best social safety net in the world.
Their ruling class is simply terrified of a repeat performance! -- George (Minnesota, just another Pelosi Democrat)
PS. Having a creative works force pays only for its food, when the technology inventions are manufactured within that country and the wealth created is redistributed to pay for more education!
China & the Decline of the West The Achilles Heel of the Recovery WTODig for Victory!
Obsession with growth is asset stripping the planet
Andrews Simms, the policy director of the New Economics Foundation, said the "oil-fired" obsession with growth amounted to "treating the biosphere like a business in liquidation" ...
[He] made a broader argument.
He said the world could no longer afford to pursue an economic model based entirely on competition and growth.
Mankind must break the "vicious cycle" which assumed that greater wealth and consumption always equalled greater happiness.
We would have to seek alternative approaches, based on principles of "equilibrium" – such as "cooperation" and "symbiosis – which were as much present in nature as raw competition ...
Independent 27 Sept 2010 Eating the Future
Localism vs globalism: two world views collide
The Sustainable Planet Forum is focusing on the issue of sustainable development – how we can provide for our needs without stopping future generations from satisfying needs of their own (and without wrecking the planet) – which until less than a decade ago was the animating cause of the environment movement, until concern for climate change swept everything before it.
The forum also has an underlying subsidiary theme, which is Europe and its future.
But it was the idea of economic growth, or rather degrowth, to use the term of Mr Ariès – décroissance – which set the debates going with a bang.
The French thinker is not just opposed to economic growth, but actively wants to stop it, seeing it as the root of all our evils.
In fact, he is opposed to sustainable development, as – to paraphrase his thought – for him, the development bit cancels out the worth of the sustainable bit ...
Independent 25 Sept 2010 Eating the FutureGM Food
Inventing for the Sustainable Planet
The End of Growth
Ireland's austerity measures show us how not to do it
Savage budget cuts have prevented the Irish economy, once the poster child for deficit hawks, from returning to growth ...
The government in Dublin announced not one but three slash-and-burn budgets that took the axe to the public sector and welfare entitlements.
Unemployment has tripled; emigration of talent has resumed. But it was deemed to be a price worth paying.
The aim was to reassure the financial markets that the government was serious about cleaning up the mess left behind in the banking system from the colossal boom-bust in the property market.
And it won plaudits for doing so.
Take this hymn of praise from Jean-Claude Trichet, the president of the European Central Bank, as the problems piled up on Greece and the other weak members of the eurozone earlier this year.
"Greece has a role model and that role model is Ireland," Trichet said.
"Ireland had extremely difficult problems and took them very seriously – and that's now been recognised by all."
The UK's deficit hawks insisted that it was not just Greece that could learn some lessons from Ireland.
Writing in the Sunday Telegraph in April, Liam Halligan contrasted Ireland's "mature, responsible approach to fiscal consolidation" with the UK's "weak-willed approach".
By taking the deficit seriously, Ireland was winning the respect of the bond markets, leading to lower long-term interest rates.
They, in turn, would lay the foundation for economic recovery ...
So how are things going across the Irish Sea? Well, figures out today showed that the economy has bombed ... the bond markets that were once impressed by the bravery of prime minister Brian Cowen's government have now turned on Ireland with a vengeance.
One measure of market confidence is the difference, or spread, between the yield on Irish government bonds and German bunds.
Today that widened to a record level.
The reason for this is simple: the budget cuts have impaired the economy's ability to grow ...bartelbeGuardian 23 Sept 2010 Contesting Austerity Is Capitalism the only game in town? Autumn Spending Review
24 September 2010 1:55AM
The one thing you use to be able to say about the British, is we kept our heads in a crisis.
No longer, the pace that the Con-dems want to pay off the deficit is down to panic.
There is no rational reason for cutting back so quickly. We could slow the pace, take two parliaments instead of one.
Instead it is slash and burn. Praying that the economy doesn't tank, cut the tax take, leading to spending cuts making the deficit worse.
The more worrying situation, is the lack of a long term plan.
The deficit will sort itself out one way or another. The only question is how much pain will be inflicted in the process.
What won't fix itself, is the structural weaknesses in the British economy.
Our short termism, over dependence on house price inflation, and the property market in general.
Our unwillingness to invest in manufacturing or reign in the over mighty city.
Not to mention our pitiful levels of spending on research and development.
On these issues the government is silent.
Their policy seems to be, we will keep doing what we've been doing for the last 30 years, and hope for a better result. The very definition of stupidity.Cable is right about capitalism
Beyond bureaucracy and market
In his journey from analysing communism in Poland to analysing consumerism in the West the game does not change – it is about social control and the systematic reproduction of authority and privilege.
Socialisation by secret police turns into socialisation by seduction.
You can fight the secret police but how on earth do you fight seduction – why would you even want to?
As capitalism shifts from the exploitation of the physical virgin territory of empire to the emotional virgin territory of our minds – the space for profit accumulation expands exponentially ...
Zygmunt offers hope – for two reasons.
First because he describes how strong the chains are that keep us in place – and therefore informs us how big and strong our bolt cutters need to be.
And second he provides the prospect of much more meaningful freedom than we find as pressurised shoppers on the high street ...
openDemocracy 22 Sept 2010
Vince Cable brushes off criticism and attacks capitalism
Business secretary delivers speech to Liberal Democrat conference following barrage of negative reaction to elements of the address released last night ...
Cable said: "Why should good companies be destroyed by short-term investors looking for a speculative killing, while their accomplices in the City make fat fees? Why do directors forget their wider duties when a fat cheque is waved before them? Capitalism takes no prisoners and kills competition where it can."
He said the government would announce a consultation of takeovers and executive pay. It will examine whether shareholders can have a greater say in the company's strategy and whether clarification is needed of the Companies Act of 2006 allowing directors to have more information about takeovers.mikeeverestGuardian 22 Sept 2010
22 September 2010 1:03PM
We cannot consider ourselves civilised when some human beings roam the world in private jets and yachts while others' children die for lack of clean drinking water, nor when one woman's worry is which Gucci handbag to carry while another's is whether she will survive giving birth to a child without any prospect of medical intervention should she and her infant need it.
And all the fear-laden, callous claims that "it's the best system we have" won't change the outcome of the moral test we are put to; it's time to make a better system.
leftrightleft
22 September 2010 1:53PM
Exactly mikeeverest. The pantomime squabbles about socialism, communism and capitalism mask a deeper truth; they are each but a variant of elitist, top down control, only who is at the wheel and where the money-profits are directed changes from system to system. We need something different to all of them.
These are the outdated assumptions:
1. competition is best and always delivers the best results
2. there is such a thing as ownership
3. human nature is greedy, ambitious, competitive, selfish etc
4. there is no other way
5. infinite growth is Good
On 1.: cooperation/co-evolution delivers amazing results too. Look at the work of biologists Lynn Margulis and Bruce Lipton (among others), as well as modern research by behavioural economists into money as a motivator of creative/cooperative endeavours, which proves that the 'money-drive to be the best and have the most' is ill-fitted to a modern world of increasingly distributed power (at least nascently), one in which job-types are slowly changing towards the more humanly creative and cooperative. The growing combination of automation and narrow AI leaves little for the human being to do in the economy which is not creative. This is a first in human history.
On 2.: property is an idea in the form of a paper agreement. In the end ownership is more usefully seen as access. Having the right amount of the basics available to all planet-wide would reduce the need for ownership and dramatically lower property-based crime (property is nine-tenths of the law).
On 3.: See 1.
On 4.: A new money system in which money is in no way a commodity (perhaps along the lines proposed by Modern Monetary Theory), and therefore cannot make more money from itself, would be a lead-in to the real alternative system to our current, creaking and poison-spewing anachronism; post-scarcity or resource-based economics. This would place abundance and not scarcity, access and not ownership, cooperation and not competition, right at the heart of the human experience. It would be a global revolution ending millennia of elitist control, and therefore an almighty challenge, but unless we somehow manage to change course towards such a process, I believe we doom ourselves to extinction.
On 5.: This is just plain stupid, and yet it is repeated mantra-like in all mainstream media outlets.
Our real treasure is the ecosystems which birthed us and which continue to make our lives and civilization possible. They are far more important than any money-type can ever be. We forget this simple truth at our peril. While we see money and business as the ultimate arbiters of what we can 'afford' to do, rather than looking directly at the resources and skills at our disposal, we will continue to put the cart before the horse, as well as lead ourselves towards the cliff edge. It's that simple.Cable's speech was hardly anti-capitalist
City lashes out at 'rabble-rouser' Cable
Cable's City Blast
Cable attacks bankers as 'spivs and gamblers'
Weaning places off the state
Middlesborough's problem with the shrinking of the state
Today's Experian data finds that 42% of workers are employed in the public sector.
In the decade to 2008, it's estimated that while private sector employment created only 168 jobs, 13,000 public sector jobs were created in Middlesbrough, Redcar and nearby Stockton.
No wonder today's survey finds this area so vulnerable to a shrinking state ...
The town's elected mayor, Ray Mallon, is very bullish about Middlesbrough's prospects but he does accept that there are challenging times ahead.
"We will lose something like £6m this year from the budgets and something like £12-18m next year and over the next three years it will be over £30m" he told me.
"Clearly we will get job cuts (but) we will survive this because we have the get up and go and the will to deal with what we have got."
It is estimated that 11,000 public sector jobs could be lost following the cuts in the Tees Valley and the big question is whether the private sector can replace those workers as fast or faster than they disappear ...
Mark Easton's UK 09 Sept 2010
Autumn Spending Review 'Pawns or Players?'North East and Midlands 'least resilient' areas
'There is an alternative'
UK trade deficit hits new record
Defiant Dick Fuld blames false rumours and the Fed ...
In the seven years between 2000 and 2007, Fuld was paid more than $310m and his uncompromising attitude made him, in the eyes of Wall Street's critics, one of the poster boys for the banking industry's excesses.
A 2,200-page report compiled by a court-appointed bankruptcy examiner in March found that Lehman had used a contentious accounting technique known as "repo 105" to understate its liabilities to the tune of $50bn.
Along with his wife, Kathleen, Fuld has exhibited a modest belt-tightening.
In the wake of Lehman's failure, the couple auctioned off a $20m personal collection of 16 abstract drawings including art by Willem de Kooning and Barnett Newman.
But he and his wife still own a nine-bedroom mansion in the wealthy New York commuter town of Greenwich, Connecticut, and they have a beachside retreat on Jupiter Island, Florida.
Guardian 01 Sept 2010Dick Fuld blames the Fed ...
One is left with the hard fact that Fuld could have done more to assist Lehman.
Bear Stearns was rescued six months earlier by JP Morgan Chase.
That ought to have been a cue for Lehman, as only the fourth-largest US investment bank, to seek its own saviour.
The desperate scramble for a white knight came too late.
To some degree, all the US investment banks were guilty of playing chicken with the Fed, believing that a big collapse would not be allowed to happen.
But Lehman had more to lose than most, as Fuld should have appreciated.
Guardian 01 Sept 2010US financial crisis panel grills Lehman boss Dick Fuld
George999xGuardian 01 Sept 2010 Corporate Sociopathy Log Fractional Reserve Banking Moral Indifference Log
1 Sep 2010, 6:55PM
Yves Smith, a former financier, deals with Dick Fauld in her excellent blog:
"The English language needs a new word to describe the nature and degree of disconnectedness from reality represented by Dick Fuld. He occupies a weird funhouse realm in which he did no wrong, those mean people in DC and the evil shorts brought down a viable enterprise. Remember, this is the man who certified financial statements goosed up to the tune of $50 billion via Repo 105, a ruse that ought to have been an accounting fraud but wasn’t, says he never heard of it, yet considers himself sufficiently well informed about what was happening at his former firm to be a qualified judge of whether it could have survived."
slowfood
1 Sep 2010, 6:58PM
If he had been British, then we would have given him a knighthood, just like our own banksters. Pip PipLehman Brothers rescue would have been unlawful, insists Bernanke
Richard Fuld
Burning Down His House
Ex-Lehman chief Dick Fuld sells $13m home to wife for $100
Lehman CEO Fuld Blames Everyone But Not Himself
Letting Dick Fuld off the hook
Repo 105
America's century is over ...
Giovanni Arrighi in his book The Long Twentieth Century argues that there have been four major phases of capitalist development since the Middle Ages, starting in Genoa and moving on to Holland and Britain before the start of American dominance during the Great Depression of 1873-96.
It was during this period, Arrighi argues, that commerce started to play second fiddle in Britain to finance, just as it had in Genoa and Holland when their phases of pre-eminence were drawing to a close.
The financialisation of the American economy in turn can be traced back to the mid-1970s, so by this interpretation of history, the dotcom collapse of 2000-01 and the financial crisis of 2007-08 (with the military entanglements in Iraq and Afghanistan sandwiched in between) are part of a much longer term development.
According to this thesis, the concentration of economic power on Wall Street, the stagnation of incomes for all but the rich, the structural trade deficit, the military overreach, the switch from being the world's biggest creditor nation to its biggest debtor add up to a simple conclusion: we are in the twilight years of the long American century.
Guardian 23 Aug 2010 A violent aggressive culture China
Merger mania predicted as cash-rich firms stalk takeover targets
Takeover fever is gripping global markets amid speculation that a mergers and acquisitions (M&A) boom is on the cards as cash-rich companies splash out on expansion ...
Bloomberg published research showing that August could be one of the busiest months for M&A since the financial meltdown in the autumn of 2008.
By the end of last week, proposed deals tabled over recent weeks topped $175bn.
Ian Richards, head of European equities strategy at RBS, said companies that had been hoarding cash during the recession were now willing to spend because "corporate cash flow is very high".
Richards said attractive targets were likely to be firms with strong export potential and with exposure to emerging markets.
He added that "the sweet spots" were mining and resources; industrial goods and services; personal household goods; and food and beverages ...
Observer 22 Aug 2010 Fractional Reserve BankingMergers and acquisitions mania disrupts bankers' summer breaks
Mergers and acquisitions mania disrupts bankers' summer breaks
Mergers and acquisitions this year represent about 35% of global investment banking fees, still below a 10-year average of 38%, according to Guardian calculations based on ThomsonReuters data.
The sector peaked in 2008, when M&A accounted for 48% of all investment banking fees.
Bankers usually charge between 1% and 3% of the value of deal worth less than $500m, while the fee is down to between 0.8% and 1% for deals between $500m and $1bn, and to less than 1% for the biggest transactions, worth more than $1bn.
Banks are also turning back to corporate clients after courting national governments as one of their main sources of income last year.
Multibillion-pound sovereign bond issues by high-deficit countries, such as Britain, the US, Greece and Spain proved juicy earners over the past 12 months.
As countries have already bailed out banks and rescued the near-collapsed financial system, government bond deals have almost halved this year to $851bn, down from a whopping $1.4tn over the same period last year, the data shows.
Banks prefer corporate clients to high-profile government deals, which often bring more prestige than real income.
More focus on companies and less attention to governments and distressed deals has lifted investment banking fees by 53% in Britain, the data shows ...
Guardian 20 Aug 2010
Banking Commission Fractional Reserve Banking Rebalancing the EconomyMergers and Acquisitions
How greed begets hunger
Crop shortages alone are not behind global food crises. Speculators have been pushing prices up ...
The anti-poverty group World Development Movement, whose recent report singles out the investment bank Goldman Sachs as last year making more than $5bn (£3.2bn) in profits from commodity trading, describes the practice as "dangerous, immoral and indefensible".
"Silent mass murder" is the phrase used by the former UN special rapporteur on the right to food, Jean Ziegler.
The European single market commissioner, Michel Barnier, speaking at the European parliament earlier this year, described the fact that a billion people worldwide were suffering from food insecurity while others profited by speculating on agricultural raw materials as "scandalous" ...
Guardian 13 Aug 2010Choc Finger's Big Bet
It is only in mahogany-panelled boardrooms that things are looking up ...Bonuses are up – so the economy must be doing well, right?
We're all in it together?
Executive pay specialists Hewitt New Bridge Street have released their annual report on packages in the FTSE 100, which shows that although companies have been more restrained on basic salary awards, bonuses have risen.
Median pay for the highest paid directors in the FTSE 100 has risen from around £2.5m to £3m, and the typical bonus earned was about 120% of salary ...
The main problem with the bonus spiral ... is social.
It is divisive to have a super-class operating several cloud levels above the rest of society, being rewarded for activities that are not always obviously beneficial to society as a whole.
A couple of modest proposals: bonuses should be a fraction of salary, not a multiple, and FTSE 100 executives should sign up for Warren Buffett's charity drive.
Guardian 11 Aug 2010
Growing Inequality Pawns or Players? Wealth LogCompany bosses enjoy £500,000 pay increases
Corporate pay Britain
'Fat cats' still have some slimming to do
How incentive bar was set so low that executives could hardly fail
Older workers 'trapped in long-term unemployment'
Youth unemployment for two years or more soars by 42pc
Youth unemployment rising in most regions
Credit crunch consequences:
three years after the crisis, what's changed?The economic meltdown of 2007 shook the world – but financial reforms have failed to address fundamental problems ...
"Of course the credit crunch is leading to lots of changes and we haven't seen all of them yet," says Sir John Gieve, the former deputy governor of the Bank of England.
"But in two big respects, I don't think it did change the world. First, the speed of globalisation, the integration of the global economy, including finance, is continuing, and second, it is continuing around broadly a free-market model.
"There have been far fewer repercussions than there were after the 1930s," he adds. "Then there was a real contest in the world about what was the right model for a modern society, and the crash convinced many people that capitalism and free markets were not the right way forward, but there has been no echo of that this time.
"Maybe India and China have slowed down on deregulating their financial industries, but broadly speaking, the direction the world had been moving in is continuing. It reflects an end of ideology. Capitalism is still the only game in town." ...
Observer 08 Aug 2010Blogs in response to 'Credit crunch consequences'
leftrightleft
8 Aug 2010, 10:31AM
This is not a left-right issue, neither is it a capitalism-socialism issue, nor is it even a question of fiat versus commodity-backed money.
The 2007-20?? crisis is one of hundreds of monetary and financial crises that litter human history. To stay even in the last twenty-five years there have been around 200 of the buggers.
This is therefore a systemic issue whose roots go to the very heart of the scarcity-based thinking that has produced the institutions and other societal structures we suffer under, and even to the current paradigm of survival-of-the-fittest and competition for ever.
We are so drenched and dyed by the output from all corners of the status quo that most people reading what I write here will dismiss it out of hand.
Nevertheless, we are going through a transition the like of which humanity has never experienced. It is global, and it is profound.
It is simply impossible, in a 5000 word blog post, to penetrate the multiple layers of deceit and wrongheaded thinking that need to be understood and (mostly) discarded. For any interested enough by my wee plea here, Charles Eisenstein's "The Ascent of Humanity" is a good place to start (available online, and all roughly 600 pages need to be read), as is the work of Bernard Lietaer, some of whose presentations are available on YouTube.
In terms of biology and the ending of the 'selfish gene' nonsense, Bruce Lipton is very instructive (good stuff from him on YouTube), as is Lynn Margulis.
For the bold, John McMurtry's "The Cancer Stage of Capitalism" is an elegant critique of where we are, though written over a decade ago.
In the end though, there is no one single person out there with all the 'answers', nor will there ever be, which means it is up to us to understand, and then be creative with what we have understood.
In fact, the tendency we have to expect 'experts' to sort out the mess, to remain meek and ignorant, compliant and yet tribally loyal to silly nationalistic or party-political notions, is perhaps the first thing that must change if humanity is to dig itself out of this hole.
So called experts and 'expertise-ism' is part of the problem. Blaming politicians and/or bankers is part of the problem.
Money itself is part of the problem, as it has manifested out of our now very out-of-date ideas about how the human world, as embedded in and dependent upon nature, functions, or should function.
The global status quo that benefits from and controls the current money system is not going to press for its own downfall (this includes the mainstream media!), hence its collapse will be very messy indeed, hence the pressing need to look outside the main, and very cleverly controlled avenues of information flow.
husavik
8 Aug 2010, 11:48AM
Of course nothing has changed because we still have an economic system based around production and consumption where an unquestioning objective is increased GDP, which requires us to make more crap to be consumed, which requires us to get in to debt to afford the crap.
Almost no-one has used the financial crisis to address the REAL question - why do we expect GDP to rise forever? And what is the benefit of rising GDP?
Some common answers that I've heard (and my reply):
* Higher incomes - but what's the point of this if it doesn't make us happier. On most measures of well-being, we are getting worse.
* Improved living standards - many studies have shown that over a certain (and relatively low) annual salary, our quality of life doesn't get better.
* Reduced unemployment - the trend (with obvious blips in certain years) has been for rising GDP since the 50s, but has there been a continuous trend of falling unemployment?
* More money to spend on public services, as buying and selling more leads to more tax - if we reform the tax system, we don't need to rely on pointless spending to bring in tax revenues.
* It raises money to be spent on protecting the environment - what this is saying is that we need economic growth to raise money to spend on environmental damage that comes from.....economic growth. If we weren’t damaging the environment by consuming pointless stuff that doesn’t improve our well-being, we wouldn’t need to spend so much money on protecting the environment.
The only really compelling point that I've heard for increasing GDP is this - GDP (i.e. how much we consume) is a function of our labour market and the productivity with which that labour market carries out work.
With a capitalist market, there is an obvious incentive on companies to increase labour productivity (to maximise their profits).
If this happens, and with no change in consumption, then unemployment will increase.
So we need consumption (i.e. GDP) to increase to ensure that we just 'stand still' on employment levels.
This, to me, simply points out how ludicrous our economic system is.
It is in need of reform. And we need radical ideas of the sort pushed by the New Economics Foundation or Tim Jackson around steady state economies - sharing out the available work more so that a) we don't need to consume more just to prevent higher unemployment and b) we can all benefit from the improved well-being that comes from working less (e.g. more time with loved ones, more time to pursue activities that genuinely benefit us and our communities).
A GDP that always increases is not logical. But we can't deny growth to poorer countries (and I do accept that capitalism can work in lifting poorer countries out of poverty).
I like the idea of economies similar to living organisms, that grow throughout puberty but then mature into steady state, less consumption-focused developed economies. But maybe I'm just a hippy.
Anyway, I'd be interested in thoughts, as CIF is, after all, meant to be a debating tool and not just a place to put people down (as is so often the case).
I'd be interested in people's arguments as to why increasing GDP is necessary.
This week Steve Chalke, a UN special advisor and founder of Oasis, Stop the Traffik and Faithworks, told Trussell Trust Director Chris Mould that every church should consider having a foodbank.Every church should consider a foodbank
With a challenging economic climate and government cuts already starting to bite, the need for foodbanks across the UK is greater than ever.
Whilst 69 foodbanks are currently launched nationwide, people are still going hungry in towns without a foodbank.
Trust Director Chris Mould says:'I spoke to a couple with a young baby at a foodbank about what they would do if there was no foodbank, they said that they would have had to steal something to feed their daughter.Last summer we helped Chris, April and William after Chris was made redundant and suffered 12 weeks benefit delay.
'13 million people live below the poverty line in the UK. It is so easy for people on the breadline to be pushed over the edge meaning that they cannot afford to eat.'
They were selling their possessions just to put food on the table. April says that the foodbank helped get them through this tough time.
Now, a year later, Chris has a job and they are expecting their second baby.
As more people hit crisis, we want to help more families like Chris and April to get through hard times. This is where UK churches need to help.
The Trussell Trust 06 August 2010Cameron pledges to protect vulnerable
Cameron: 'We're in this together'
Cameron's cuts: We're not all in this together
The rich want a better world? Try paying fair wages and tax
"Philanthrocapitalism", as it has been called, veers towards tackling symptoms of poverty and distress rather than underlying causes. Gates has done admirable work against TB, malaria and Aids, and begun work against diarrhoea and pneumonia, which are much bigger killers. He and his wife Melinda have started to talk about clean water supplies, inadequate housing, public health infrastructure and agricultural productivity. They are undoubtedly among the most sophisticated of the new philanthropists.
But it seems doubtful they will move into considering issues of, say, land ownership and distribution. The Gates Foundation wants to "give where we can effect the greatest change". But the greatest change is likely to come from transforming the economic system and the pattern of property ownership. Will Gates fund projects that undermine his own power and economic status?
There is another danger: that the poor are written out of their own story, that business tycoons, accustomed to getting their own way, do things to the poor, rather than with them ...
Guardian 05 Aug 2010 Economic Democracyphilanthrocapitalism
The market fundamentalist model, Kaletsky argues, has now run into the sand and will be replaced by Capitalism 4.0, an acceptance that both markets and governments are prone to error.Capitalism 4.0 by Anatole Kaletsky
Pragmatism will replace free-market ideology, the right lessons will be learned, and the long post-cold-war upswing will resume after a fairly brief interlude.
Kaletsky is relatively kind to the banks and saves his real venom for Henry Paulson, the former Goldman Sachs chief executive who was US Treasury secretary during the crisis ...
It was the failure of Paulson, steeped in the anti-government culture of Capitalism 3, to rescue Lehman Brothers in September 2008 that turned a "fairly normal boom-bust cycle into the greatest financial crisis of all time".Guardian 07 Aug 2010... the long post-cold-war upswing will resume after a fairly brief interlude.Capitalism 4 is going to come against the same problem as Capital 3: the fact that we live on a finite planet.
The global "just-in-time" economy is predicated on the assumption that there is an infinite supply of cheap oil to drive the vehicles, shipping, aviation which it demands; and also to provide the growing quantities of cheap food via the Haber Bosch process, which growing populations are going to need.
If you wish to known where this is heading, and what is to be done, then none of the above books are going to help.
Go instead to Michael C Ruppert's "Confronting Collapse".Confronting Collapse
Growth ... It is time we gave it up
Prosperity without Growth?
None of the building societies that were turned from mutuals into publicly quoted banks in the 1980s and 1990s has survived as an independent entity.Co-operatives offer template for David Cameron's big society
They have all either been gobbled up in takeovers, gone bust or been bailed out by the taxpayer. The past three years have exposed as a fallacy the idea that the only way to run a company is as a profit-maximising, shareholder-driven plc.
Against this backdrop, it was perhaps unsurprising that all three parties went into the election campaign supporting the idea of co-ops and mutualscalminthestorm
2 Aug 2010, 1:21AM
...
Larry Elliot seems to have stumbled onto co-operatives, Googled out a few "facts" and written a piece on mutuals without the slightest understanding of the history or values of the co-operative movement and its politcal links.
Co-opertaives are about community working together for the benefit of all, not giving cover to "rolling back the state" What the author of this piece is avocating is actually counter to many mutual ideas. It is a venier of co-operatives for the selfish, just like "free-schools" It is appropraiting co-operative and mutual language for something that isn't co-operative at all in many respects and in others fails to see it is already being advocated because of some anti-Labour blinkers.
I will take just one example, Royal Mail. Tories now say they plan a "John Lewis" model. How? By offering shares to employees. Well that isn't a "John Lewis" model, it is not equal ownership or influence. It is giving them a few shares. Same old polices dressed up as something new to fool those who write business columns that have no real idea of the mutual movement.
Basically some of the column is what the Co-op Party and co-operative movement has been saying and doing for years.
It really does make me mad that the few mentions co-ops get in the mainstream media are often simply so wrong as to misleading. Do your homework next time Larry.
Guardian 02 Aug 2010Co-operative Party
• Commodity speculators push cocoa to 33-year highHedge funds accused of gambling with lives of the poorest as food prices soar
• Bets 'risk the most vulnerable in the world starving'
The WDM's Great Hunger Lottery report says "risky and secretive" financial bets on food prices have exacerbated the effect of poor harvests in recent years. It argues that volatility in food prices has made it harder for producers to plan what to grow, pushed up prices for British consumers and in poorer countries risks sparking civil unrest, like the food riots seen in Mexico and Haiti in 2008.
Deborah Doane, WDM director, said: "Investment banks, like Goldman Sachs, are making huge profits by gambling on the price of everyday foods. But this is leaving people in the UK out of pocket, and risks the poorest people in the world starving.
"Nobody benefits from this kind of reckless gambling except a few City wheeler-dealers. British consumers suffer because it pushes up inflation, because of unpredictable oil and raw material prices, and the world's poorest people suffer because basic foods become unaffordable."
Guardian 19 July 2010
Take the highest stakes, riskiest economic behaviour ever devised, and marry it to the most fundamental basic need of humankind, and you have the subject of this report.Food Speculation
Executive Summary
Over the past decade, the world’s most powerful financial institutions have developed ever more elaborate ways to package, re-package and trade a range of financial contracts known as derivatives.
A derivative is not based on an exchange of tangible assets such as goods or money, but rather is a financial contract with a value linked to the expected future price movements of the underlying asset.
Derivative contracts are traded on a growing number of underlying assets, from share prices, to mortgages, bonds, commodity prices, foreign exchange rates, and even index of prices.
Derivatives trading has been one of the most lucrative parts of the financial industry, but it is the increasingly complex, opaque and disconnected nature of these and similar products that ultimately triggered the collapse of the banks and the worst financial crisis in human history.
Of course, the financial crisis has been an economic disaster of seismic proportions for millions around the world, plunging many countries into recession causing millions to be thrown out of work, soaring public debts and cuts in vital public services.
But while betting on the value of sub-prime mortgages or foreign currency values undoubtedly leads to disastrous consequences, there is another area where the speculative behaviour of the world’s largest banks and hedge funds represents a threat to the very survival of people: food commodities.
In The great hunger lottery, World Development Movement has compiled extensive evidence establishing the role of food commodity derivatives in destabilising and driving up food prices around the world.
This in turn, has led to food prices becoming unaffordable for low-income families around the world, particularly in developing countries highly reliant on food imports.
Nowhere was this more clearly seen than during the astonishing surge in staple food prices over the course of 2007-2008, when millions went hungry and food riots swept major cities around the world.
The great hunger lottery shows how this alarming episode was fueled by the behaviour of financial speculators, and describes the terrible immediate impacts on vulnerable families around the world, as well as the long term damage to the fight against global poverty.
In the report we describe how the current situation came to pass, the risks of another speculation induced food crisis, and what specifically can be done by policymakers here in the UK as well as in the US and EU to tackle the problem.
But at its heart, The great hunger lottery carries a very straightforward message: allowing gambling on hunger in financial markets is dangerous, immoral and indefensible.
And it needs to be stopped before any more people suffer to satisfy the greed of the banks.
WDM: Full Report .pdf July 2010
Choc Finger's Big Bet
WDM
Goldman Sachs
Goldman Sachs: Annual Report .pdf
The co-option of “fairness” by the UK's new government has unnerved many on the left. Yet in reality, all sides have always drawn on the language of fairness. What is at stake is really the interpretation of the causes of inequality; a matter of economics. This article suggests how we should interpret the inequalities of modern society from a post-Keynesian perspective ...Productivity does not explain wage differentials
openDemocracy 07 July 2010
In the first of a wide-ranging three part conversation, Anthony Barnett and Gerry Hassan discuss the state of British politics and democracy and how the left - weak and disorganised in the face of a resurgent neoliberalism - can propose and build alternatives to the dominant dogmas of the past thirty years ...Where do we go from here?
openDemocracy 02 Aug 2010Challenging the "official future"
Agency and self-determinations, retaking the future without Marx
This ... was a crisis that economists said couldn't happen. Not wouldn't, couldn't. This was an era when all the big macro-economic problems were supposed to have been solved.Economics emerges from the rubble in a fragile state
This was a decade that saw the ultimate triumph of mathematical, model-based economics not just in the classrooms of Cambridge and Chicago but in the dealing rooms of the City and Wall Street.
Those who argued that global finance was heading for a big fall were slapped down. How could that be when markets were efficient? Those who said the boom in US house prices would be followed by a bust were told in no uncertain terms that the market never lied: prices reflected every piece of available information about the past, present and future.
And it was all bunk. The mathematical models blew up when faced with problems familiar in every bubble since Tulipmania in the Holland of the 1630s – herd behaviour, irrational exuberance, greed and panic.
Human nature intervened, in other words: something not possible to capture by algebra, no matter how sophisticated ...
Guardian 29 Dec 2009On the mechanistic modelling of human behaviour
Systemic Fiscal Reform – way to beat boom and bust
By Dr Adrian Wrigley, Neale Upstone and Robin Smith (10th Sept 2008) – SystemicfiscalReform.Org
Systemic Fiscal Reform is a radical programme for the reform of taxation, subsidies and welfare. It is designed to stabilize economies, improve quality of life, and facilitates the transition to full environmental sustainability.
The reforms mainly comprise the abolition of cumbersome and wasteful tax, welfare and subsidy systems, together with abolishing the bureaucracies which implement them.
In their place, a simple integrated tax and welfare system is introduced. This includes retaining a number of existing taxes which have been found to operate effectively where they have been tried.
The wasteful burden of personal and corporate tax returns is generally eliminated.Key Reforms
No Income or Corporation Taxes – Replaced by a Land Value Tax
Income Tax and Corporation Tax are to be abolished (along with all payroll taxes, National Insurance payments and Gains taxes).
In their place a Land Value Tax is levied on landowners, equal to the value of their land, but excluding any buildings, crops or other improvements.
The land values are calculated using a standard procedure applied by local assessors. Landowners generally pay the annual fee in regular monthly instalments to their local government.No Value Added or Sales Taxes – Replaced by a Carbon Tax
VAT and sales taxes are to be abolished. In their place, a uniform Carbon Tax is levied on all extraction and importation of fossil fuels.
This Carbon Tax is in proportion to the pollution and climate change potential of the fuel when used in the normal way.No Estate (Inheritance), Gift, Transfer or Stamp Taxes
Estate taxes such as Inheritance Tax and Accession Taxes are to be abolished. All Stamp Duties are to be abolished, including those on share and real-estate transfers.No means-tested welfare benefits – Replaced by a Citizens’ Income
Welfare benefits based on poverty and joblessness tests are to be abolished. Any welfare payments based on disability are retained.Universal Welfare-a Citizens’ Income
All resident citizens and lawful residents are entitled to claim a universal welfare payment called the Citizens’ Income. Such payment is made monthly by the local government, and may be directly used by home owners and their families to offset or cancel out their Land Value Tax obligations.
Citizens’ Incomes for those in prison and state-funded care are retained by the state to help pay the costs incurred. Those in state-funded education will have an amount deducted from their Citizens’ Incomes to help pay for the education costs.Subsidies abolished
Many tax-based subsidies cease to exist with the abolition of Sales, Value, Income and Corporation taxes. For example, tax exemptions on aviation, fuel, public transport, education and food simply disappear.
Business subsidies such as investment relief, tax rebates, pension relief also disappear.
Explicit subsidies including those on energy and carbon emissions trading schemes should be abolished.
Banking subsidies are withdrawn by removing banks’ rights to create new money in the economy (seignorage) in exchange for increases in debt.Effects of Systemic Fiscal Reform
General economic effects
Widespread effects are certain, because Systemic Fiscal Reform addresses core economic issues, such as the costs and benefits of business activity, land ownership and employment.
* Enterprise is promoted by removing the tax and administrative barriers to employment and business activity. We get free trade within nations.
* Bureaucratic activity such as tax accounting, planning and advice are eliminated. Workers in these sectors move to other work, entrepreneurship, early retirement or reduced hours.
* The ‘black’ and criminal economies no longer gain an unfair tax advantage.
* High value-add products such as software, music recordings or consultancy fall in cost as their tax burden falls.
* Fuel efficiency is promoted by raising the costs of fuel and goods particularly in energy-intensive industries.
* Labour intensive goods such as restaurant and other services, recycling, and education become less expensive.
* Economic output grows rapidly where real value is delivered. Waste is reduced.Effects on housing, homes and land
The Land Value Tax has far reaching and revolutionary effects: property speculation ends; new and second hand houses become a comparable market to second hand cars reflecting their size, efficiency, condition and quality; urban land values fall, encouraging regeneration of poor and derelict land and housing; property price inflation becomes similar to that of other goods; housing becomes and remains affordable, contributing to a drastic shift in social mobility.Effect on poverty
The universal welfare payment will virtually eliminate poverty. All in society benefit from the “social dividend” created by a thriving society and effective government.
The poverty trap will be a thing of the past, with financial barriers to employment removed. Elderly home owners with insufficient income to pay their Land Value Tax will be able to “roll up” payments secured on their house value, while others will choose to move house.
Universal Welfare is as significant a step forward for society as universal healthcare or universal education has been in most developed nations.Effect on oil prices
By imposing a rising Carbon Tax on imports and production of oil, coal and natural gas, demand will be progressively reduced, improving the balance of payments (trade deficit) considerably.
Suppliers will be forced to accept lower prices or reduce output (or both).
If this policy is implemented by the major energy consuming nations, a substantial fall in international fuel prices will occur.
A Carbon Tax is particularly attractive to nations such as the US or the UK with rising dependence on fuel imports.Effect on politics
At present, government spending on local amenities brings direct windfall benefits to owners of nearby homes and land.
The spending is mainly taken from workers’ taxes. This misalignment of taxpayer and beneficiary is at the heart of many political conflicts and failures.
Systemic Fiscal Reform ensures the beneficiary of local spending (i.e. landowner) is the taxpayer, eliminating this fundamental conflict.
Any excess benefit over spending is returned through the Citizen’s Income.Conclusion
Systemic Fiscal Reform answers the challenges of today and of the future. It resets the creeping state control and interest in every aspect of household and business life while ensuring an efficient, equitable, stable and free society.
Claverton-Energy.com 11 November 2008