Appropos the debate about Keynes below Graham Turner of GFC Economics and author of The Credit Crunch, submitted a fascinating article to the FT on this subject. In it he cites the experience of Japan’s failed attempt to kick-start the economy with public works expenditure in the 1990s.
Archive for the ‘Globalisation’ Category
Graham Turner on Keynes Misunderstood
Central Bankers Add to the Economic Malaise…
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%…
The new Bretton Woods: economies of scale.
21st October, 2008
A new Bretton Woods: To save economies and the planet, we must tame markets,upsize the state, and downsize the global single market. This piece is derived loosely from the book I edited at the new economics foundation “Real World Economic Outlook” (Palgrave, 2006). The proposal for an International Clearing Agency draws on John Maynard Keynes’ proposal for an International Clearing Union, but also on additional insights by Jane D’Arista of the Financial Markets Center in the US.
Ann Pettifor on BBC Radio 4: Return of Bretton Woods?
The World Tonight, Monday 14th October, 2008, 10.38pm.
Rates: the BoE is not independent - it has a political mandate
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.
Bring back Keynes… in the Guardian
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.
Interest rates, Keynes and the longevity of the rentier
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?
Comrade Paulson, nationalised banks & socialism for the rich.
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).
Ratcheting up the interest rate rack of torture.
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).
Fannie and Freddie impact will be global, systemic
Fulfilling my duties as a citizen, I am now confined to the Southwark Crown Court as a juror, so have little time to update the blog. However the effective insolvency of two US government sponsored banks or enterprises (GSEs) - Fannie Mae & Freddie Mac - will now impact not just all those US individuals, institutions and local governments that may have invested in these banks; not just on US taxpayers who are expected to bail them out; but also on you and I (our banks may well hold Fannie and Freddie securities); the central banks of the world that have bought their debt - confident that it will always be repaid.
Their insolvency now threatens a global systemic financial crisis, and their taxpayer-funded bailout of shareholders, bondholders and an incompetent management exposes the hypocrisy of much neo-liberal cant.
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