24th October, 2008
The NS has published a short piece this week: “Economists simply would not accept that their model could fail“. An introductory sentence is not mine: “Who would have predicted..that prudent Gordon Brown (would) breach the EU cap on government spending?” Am writing to the NS to ask for a correction to be published.
22nd October, 2008.
I am dictating this piece down the phone from Budapest in Hungary where I have just arrived to deliver a lecture to the Ybl Club. My hosts were in a state of shock on arrival because the central bank of Hungary has just raised interest rates from 8.5% to 11.5%…
12th October, 2008.
The news that Britain’s local authorities may have lost up to a £1 billion in the collapse of Iceland’s banks beggars belief. The competence of their highly paid chief executives must surely be challenged, and powers to borrow on international capital markets curtailed.
Both the British Chancellor, Alastair Darling and the shadow Chancellor, George Osborne, have been on the radio this morning, resisting the idea that interest rates are political. Instead they have argued, vehemently, that the Bank of England is independent, and that the Bank must decide whether or not to lower interest rates.
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.
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?
20th September, 2008
In the midst of all this tragedy and chaos, one has to savour the moment. The sight of all those free-market capitalists, trained by economists at the Chicago School of neo-liberalism, handing over to ‘big government’ the financial system of the biggest free market economy in the world.
You have to admire the spin. The US Treasury Secretary, Comrade Hank Paulson, pictured here, announced today, Sunday 7th September, 2008 that the US government is natonalising two huge US banks, Fannie Mae and Freddie Mac. Which means in effect that Comrade Paulson is socialising the losses of the shareholders and investors in these banks - $5.4 trillion of guaranteed mortgage-backed securities (MBS) (mortgage backed securities) and debt outstanding. These liabilities are equal to all the publicly held debt of the United States. This in the words of Prof. Roubini is ’socialism for the rich, the well connected and Wall St.” (see below).
A Mr. David Smith in a letter to the Financial Times, (29 Aug 08) has suggested we brand this global recession ‘the bankers’ recession’. He has my support and enthusiastic commitment to raising awareness of the brand. Especially after today’s UK news.
In this big bad world of the Credit Crunch, powerful central bankers - civil servants all - have bent over backwards to help powerful and rich private bankers.
On one day, ‘debtonation day’, central bankers in Europe and the US pumped an eye-watering $150 billion into the financial system, to keep big banks afloat. According to Bloomberg, the US’s Federal reserve has ‘cycled $2.58 trillion through U.S. money markets since December’. (Bloomberg 8th August, 2008).
Joined-up policies to solve the triple crunch of the credit crisis, climate change and high oil prices.
Click here for the first report of the Green New Deal Group.
Ann Pettifor is a political economist and author of 'The Coming First World Debt Crisis' (Palgrave, 2006) and editor of 'The Real World Economic Outlook' (Palgrave, 2003). She is a fellow of the new economics foundation (nef) in London and director of Advocacy International.