31st December, 2009

Dear Readers.

First, thank you for the support you have given this blog, and for your helpful and insightful comments over this eventful year. I have much appreciated our conversations, and your loyalty. May 2010 bring you all peace of mind and economic stability. And may we together begin to grow a new political climate and a new political class, that will finally detach itself from the financial elite, and respond to democratically-determined priorities for peace, stability and social justice.

Second, apologies for this period of hibernation over the holiday season. I blame Andrew Ross Sorkin (of the New York Times) whose 540 page blow-by-blow account of the events leading up to the failure of Lehman Brothers and the massive TARP bail-out of October, 2008 is a must-read. “Too Big to Fail” was a constant companion over the holidays, interrupted only by my periodic, but lame attempts to prove that I too can bake mince pies, stuff chickens and light log fires.

Finally, a gift from the Financial Times, which yesterday published a poem illustrated here - The bankers who wouldn’t say sorry: a cautionary tale”.   Martin Dickson, the paper’s deputy editor speaks for all of us through this light-hearted ditty, but does more: he warns in the last verse of what is to come as a result of financial greed and political ennui. Sadly, I, and many others, share his gloomy forecast.

It would be good to end this story
In a nice blaze of moral glory,
Like Hilaire Belloc’s clever tales
Where evil-doing always fails.
Alas, the only moral here
Is bankers just themselves hold dear.
But there’s a price we all will pay
If politicians won’t display
A little courage and crack down
Upon these unsafe, grasping clowns:
Another bomb is being built,
By bankers with no sense of guilt.
It’s ticking now, will louder tick
Unless we stop it, fast and quick.
For mark my words, believe this rhyme,
It will go off in five years’ time.
You’ll hear no end of sturm and drang.
When it explodes with a loud BANG.

12 December, 2009

Thank you Jim Smith for your comment on the post below…Thought I would respond by quoting an excellent letter in today’s FT (not on the web) sent in by Mr. Alec McBarnet, of London N6.

Dear Sir,

City bankers are reported to be considering taking their business to Switzerland, the US or Hong Kong.

If that means that it will be Swiss, American or Chinese taxpayers who pick up the tab for their next irrational exuberance, perhaps we British taxpayers should offer to help with their relocation expenses.”

Aye to that, say I.

12th December 2009

At the end of last month I delivered the prestigious EBOR lecture at York. My address was entitled:

“Credit, usury and political power: chasing the moneylenders from the temple that is our democracy”

Click on the link below to read a PDF version of the full lecture:

EBOR Lecture November 25th (PDF)

11th December 2009

Last night I appeared on Newsnight alongside American Economist Martin Bailey discussing the much lambasted Tobin Tax. Click here or on the link below to watch the whole episode on BBC iPlayer (the Tobin Tax discussion begins at 15.00 mins in).

http://www.bbc.co.uk/iplayer/episode/b00pf036/Newsnight_10_12_2009/

9th December, 2009

It has been an extraordinary day this day, and something to witness: this frenzy of pre-election fisticuffs.

Extraordinary because Conservatives, like mindless bullies, are fighting a phoney war against the victims of this crisis.

The fact is the Tories are spineless scaredy cats, too timid to take on the perpetrators, who have successfully bribed them with various inducements, including the playground’s shiniest marbles.

As a result they have turned away from the perpetrators, and   are picking on nurses, policemen, teachers, civil servants, Alzheimer-carers, school cooks, hospital cleaners and psychiatrists - to categorise but a few.

All these victims of the financial crisis now stand accused - by the Tories and their friends -  of pillaging Treasury coffers of £250 billion  - the rise in government debt since this crisis started in 2007.

Read post »

9th December 2009

Watch Ann Pettifor interviewed live on Jeff Randall’s Sky News show tonight at 7.30pm. She will be joined by Nick Bosanquet for what should be a lively discussion! Click here to find out more about the show.

7th December, 2009

This is the press release from the new economics foundation:

“Two days ahead of the pre-budget report, and as the UN climate change talks open in Copenhagen – the second report from the authors of the original Green New Deal argues that the British Chancellor is likely to miss a historic opportunity to tackle public debt, create thousands of new green jobs and kick-start the transformation to a low-carbon economy.

The cuts won’t work, the Green New Deal Group’s second report shows how, contrary to the policy of all the major political parties, cutting public spending now will tip the nation into a deeper recession by increasing unemployment, reducing the tax received and limiting government funding available to kick-start the Green New Deal.

Instead a bold new programme of ‘green quantitative easing,’ rather than simply propping up failing banks, could help reduce the public debt and kick-start the transformation of the UK’s energy supply while creating thousands of new green-collar jobs.

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6th December, 2009.

Most economists (who should know better) confuse the government’s budget deficit with total government debt.

The distinction really is important.

Mixing them up is a little like confusing stocks and flows.  Or confusing your outstanding mortgage – say £200,000 – with your monthly debt repayments. They are quite different things, and if you were to lose your job, the flows (paid with your salary) come to a halt, and then it’s the stock - the £200,000 - that really matters.

Furthermore it is quite possible to increase your mortgage – and lower your monthly payments.  Many did this in the boom years of mortgage re-financing. Or even to decrease your mortgage and increase your monthly payments.

So, just as the movements in regular mortgage payments tell us little about the outstanding stock of debt, so government deficits tell us little about the stock of debt invested and the stock of debt outstanding.

Read post »

6th December, 2009

The Observer asked a small group of people to comment in advance of next Wednesday’s Pre-Budget Report. This from yours truly:

“Public debt will rise higher if government slashes spending, and recovery will elude us. Unemployment has high costs, but productive government spending, unlike private spending, pays for itself by creating jobs that generate tax revenues and cut welfare benefits.

Will the bond markets revolt and raise interest rates? No, because the markets apply common sense, as they did when Britain exited the exchange rate mechanism. Despite a rise in government debt from 40% to about 70% of GDP, and the extension of the Bank of England’s balance sheet by £200bn, bond markets have been positive – only too grateful for a safe haven in turbulent times. Confidence in sterling will only return when the economy recovers, and only then. Without public investment compensating for the collapse in private investment, there is little hope of recovery or confidence.”

December 1st, 2009

There was much huffing and puffing by the cheerleaders for premature economic recovery when the Office for National Statistics revealed that the UK was still in recession last week. These same ‘pied pipers’ tried to discredit the ONS’s previous factual announcements. Now the CBI has reported an ‘unexpected’ dip in sales in the service sector and then there was a ’surprise’ dip in manufacturing during November.

No surprise to those of us living in the real world - with no vested interest in talking up stocks and shares.

And no surprise to those of us watching thousands of jobs disappear as companies as varied as Borders, First Quench (Threshers and other drinks outlets) and General Motors in Luton - cut back, or close down.

And no surprise to the millions of workers whose compensation has fallen for five straight quarters on an annual basis.  I am grateful to Graham Turner of GFC Economics for the chart below - and strongly recommend his latest book ‘No Way to Run an Economy’