Tuesday 30th September, 2008.
Anglo-American finance ministers and central bankers, like little Dutch boys, try desperately to plug leaks in the bursting dyke that is the international financial system. In the US, treasury secretary Hank Paulson hoped for $700bn to plug the gaping hole in Wall Street’s banks. In the UK, the government is not just plugging holes, but setting aside competition rules to encourage the monopolisation of finance.
Tuesday 30th September, 2008.
Sir, Your editorial “In praise of free markets” (September 27/28) conflates regulation of trade markets with that of financial markets.
This is a flawed analysis, one at the core of most economic orthodoxy – that money, like land, oil, soya beans, diamonds or gold, is a commodity, and therefore that trade and markets in money are no different from markets in, say, soya beans.
Monday, 29 September, 2008.
Is Warren Buffett right? If this bail-out had been passed by congress, would it have halted the meltdown?
I don’t believe so. Here’s why…
Lawmakers in the US struggle to come to terms with the scale of the financial crisis, the Paulson solution, and the role of government in resolving this crisis. Republicans, particularly conflicted, sabotaged the $700 billion bail-out last Thursday. At this moment Alan Greenspan proferrs advice from the lofty heights of the pedestal he still, astonishingly, stands on. “As a practical matter” he and others write in the Wall St. Journal (26.09.08) and “at the current stage of the crisis, the only way that financial institutions can continue to function is for the government to provide financial support.”
I am up ready to listen to the Presidential debate, so thought I would share my letter to the Guardian today. But first, may I beg readers’ tolerance for mixing too many metaphors…
The Prime Minister, Gordon Brown, speaking on Radio 4’s flagship current affairs programme this morning, repeated something he says regularly: that ‘interest rates are low’ and that his government, through the Bank of England, kept them low. The question the BBC should have asked is this: if interest rates are low, and have been so, why on earth are people/companies/banks having such a hard time paying debts? Surely the Credit Crunch crunched, because debts - of banks in particular - became both too large, too expensive, and unpayable? Do small businessmen/women pay low rates on investments? Mortgages? Credit Cards? Car loans? Does the PM live/work on another planet?
Hank Paulson, President George Bush’s Treasury Secretary, launched a unilateral plan to save the western banking system last Sunday, then appealed to western governments to bail out their own banks.
‘Fair enough’ one might say. After all, the US’s staunchest and most compliant ally, Britain, actively colluded in the build-up of these massive, and now unpayable, Wall St. debts, and British banks will likely benefit from the bail-out.
The US-centred financial crisis will damage the lives and futures of savers, employees, businesses and consumers across the world. All the more reason to address the systemic failures that led to it, is what I have argued in this piece published on Open Democracy today.
Neo-liberal, conservative economists are fond of blaming this crisis on ‘the housing market’. This way they avoid blame being laid at the door of financial de-regulators (central bank governors, finance ministry officials and elected politicians) or indeed of the finance sector. Instead the blame can be laid on those that took out mortgages, in particular those poor, desperate people in the ’sub-prime’ sector, for this crisis.
Lets not make any bones about it. Hank Paulson the US Treasury Secretary’s scheme announced yesterday represents a coup d’etat by the finance sector as Yves Smith rightly argues (21st September). The stakes are high. In a few months time we may have a Democrat President and a less compliant Congress. Right now, with the stock market gyrating and banks failing is as good a time as any for the finance sector to stage a coup d’etat.
A response to the "Triple Crunch" of financial crisis, climate change and oil depletion. Read the report published by the Green New Deal Group and nef (new economics foundation).
Welcome to my blog about the financial crisis. I'm Ann Pettifor, author and analyst of the global financial system, and co-author of the Green New Deal. I predicted an Anglo-American debt-deflationary crisis back in 2003, and am known for my work on sovereign debt and international finance, including Jubilee 2000. Currently a fellow of the new economics foundation and director of Advocacy International.