Capital, move over – Public, move in!

Die LInke MP Sevim Dagdelen explains why she will be coming to London for the Europe Against Austerity Conference on 1st October:

“I strongly oppose austerity and the ‘German Europe’ in the making. EU economic governance was pushed through by the German government to set neo-liberal policies in stone and curb democratic sovereignty on economic policy. According to this, banks’ bondholders must be protected at all costs, working people and the most vulnerable in society are to take a hit. DIE LINKE stands against imperialistic wars and for disarmament instead of social cuts. DIE LINKE stands for an anti-capitalist strategy: against the neo-liberal policies of ‘dispossession’ attacking our social rights, the welfare state, public goods and wages: Expropriate the expropriators! Capital, move over. Public, move in.”

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European Attac Network backs conference

Attac groups from across Europe have just held their Summer Academy in Freiburg; they acknowledged the importance of the Europe Against Austerity Conference which will be held in London on the 1st October 2011.

Our societies are in crisis and the situation is not improving: on the contrary!

The political and institutional situations do not help and that makes the people’s mobilization all the more necessary!

With all the workshops planned, the Conference will deepen the analysis of the difficult situation we are facing. In addition, it will be an important milestone towards the necessary mobilization, with an accent given to the European level. This meets the methods and strategy of our organization.

For all theses reasons, the Attac network will participate and actively contribute to this Conference.

On behalf  of the European Attac Network,

Hugo Braun, Attac Germany

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Los especuladores financieros ponen a España y a Europa al borde del precipicio económico

Comunicado Mesas de Convergencia / ATTAC España / CEPS / Forum Feminista / Democracia Real Ya.

Ante la subida de la prima de riesgo española y las actuaciones del banco central europeo las organizaciones firmantes


1. Que el aumento en la prima de riesgo que encarece la financiación de la deuda pública española, y de otros países europeos, es exclusivamente el resultado de operaciones especulativas y que no responde a la situación objetiva de la economía española.

2. Que una gran parte de esas operaciones especulativas se llevan a cabo con dinero prestado a bajísimo interés por el Banco Central Europeo a los bancos privados con el fin de que éstos financien a las empresas y consumidores. Y todas ellas gracias a la falta de control y regulación de los mercados que consienten las autoridades europeas y nacionales.

3. Que esas operaciones proporcionan una gran rentabilidad a estos bancos y a los fondos que las llevan a cabo pero suponen un coste elevadísimo para nuestra economía. Y que éste recae sobre las clases trabajadoras y de modo muy particular sobre las mujeres, pues la reducción de gasto social y la pérdida de impulso de las políticas de igualdad les viene afectando especialmente.

4. Que esta especulación financiera es la causante de la crisis y la que hace que, en lugar de poder salir de ella, las economías europeas se encuentren cada vez más cerca del desastre.

5. Que es un imperativo ético acabar con estas operaciones especulativas que destrozan riqueza y condenan a los pueblos a sufrir daños innecesarios.

6. Que para acabar con el problema de la deuda que originalmente ha provocado la crisis generada por la banca internacional no es suficiente con que el Banco Central Europeo realice compras de deuda de vez en cuando, como viene haciendo, sino tomar otras medidas de mayor calado pero hoy día absolutamente imprescindibles como:

a) Establecer tasas disuasorias sobre esas transacciones financieras,

b) Auditar la deuda de los diferentes estados para rechazar el pago de la que se considere odiosa o ilegítima, reformar el mercado europeo de deuda para evitar la presencia de especuladores y poner en marcha un mecanismo permanente de financiación de los estados en las mismas condiciones en que se financió a los bancos que provocaron la crisis.

c) Y, si fuese necesario, imponer controles de capital para impedir que los especulativos pongan en peligro el proyecto europeo, la estabilidad económica y el bienestar social.

Reclamamos la puesta en marcha inmediata de este tipo de medidas y llamamos a la ciudadanía a manifestarse en contra de la pasividad y la complicidad de los gobiernos ante los especuladores financieros y a abrir un debate ciudadano, plural y democrático sobre las nuevas formas en que Europa puede liberarse de la tiranía de los mercados y del terrorismo financiero.

Democratic lessons on public debt from developing countries

Decades of bitter experience of financial crises have produced several lessons, argues economist Costas Lapavitsas. One is that engagement with multilateral organisations, principally the IMF, is to be avoided.

Public debt has become a focal point of the current economic crisis, serving to justify policies that cut public expenditure, push wages downwards and raise unemployment. But public debt also poses fundamental issues of democracy. What do working people – the “hard-working families” who are the favourite of UK politicians – know about its causes and composition? The answer is probably next to nothing. On what grounds are they then called upon to make severe sacrifices presumably to put public debt under control?

Elections are not an answer even when a government has been elected on an explicit debt ticket as, for instance, the UK Conservative party was. Electoral platforms offer little more than general, and often ideological, arguments about the implications of debt. The reality is that public debt is a multilayered magnitude that remains largely obscure to voters.

Further issues of democracy are posed by the social repercussions of public debt. The holders of public bonds lay claim on part of the annual product of a country collected by the state through taxes. In effect, public debt acts as a mechanism for the transfer of income and wealth among entire social classes and nations. It seems fundamental, therefore, that those who are called upon to bear the burden of servicing it should have an active say in its management. Public debt is far too important to be left in the hands of unelected technocrats and even politicians who are transparently ignorant of its nature.

But is there a way of translating into actual practice the democratic right of knowledge and active participation in the handling of public debt? An answer can be gleaned from the recent experience of developing countries.

The current crisis is the third great financial upheaval to have hit the world economy since the start of financial liberalisation in the 1970s. The first, in the 1980s, devastated Latin America and the then Eastern bloc. The second, in the 1990s, battered the Asian “tigers”, but also Russia, Argentina and Turkey. The disaster that commenced in 2007, on the other hand, has affected the core of the global financial and economic system, mainly the EU, the US and the UK.

All three crises have been associated with the so-called financialisation of capitalism, and hence exhibit common patterns. Stricken countries have often faced strong growth of domestic credit, but also heavy borrowing from abroad. Domestic and foreign credit frequently went to real-estate speculation, financial transactions and consumption, rather than production. When the inevitable crisis burst out, borrowers were left with vast debts, domestic and foreign, private and public. Multilateral organisations then arrived, imposing austerity, protecting the interests of lenders, and shifting the costs of debt on to society at large. The result was years of falling incomes and high unemployment.

Decades of bitter experience have produced several lessons, three of which merit mentioning. First, engagement with multilateral organisations, principally the International Monetary Fund (IMF), is to be avoided. Stabilisation policies lead to stagnation, and for sustainable growth it is best to keep the IMF at a distance. Second, the international machinery to deal with debt favours lenders, typically large banks and other bondholders. Effective debt relief requires sovereign intervention by borrowers to achieve substantial cancellation of debt. Even more, it calls for international co-operation among borrowers.

Third, protecting the interests of borrowers works best when broad layers of people are involved on a democratic basis. An important innovation has been the formation of independent debt audit commissions – often drawing on popular movements – that have demanded open access to information. An audit commission could examine public debt for its legality, legitimacy, odiousness and social sustainability, providing grounds for its cancellation.

Social and political conditions are different in developed compared with developing countries, needless to say. But the democratic right independently to examine public debt with the aim of advocating radical policies for its management, including cancellation, is the same. There are signs that this lesson from developing countries is increasingly appreciated across Europe, starting in Greece but also in Ireland, Portugal, France and elsewhere. Let us hope that working people in developed countries will find the strength to deploy the weapon of democratic audit commissions in confronting public debt.

Costas Lapavitsas is Professor in Economics at the School of Oriental and African Studies, Univeristy of London. He will be speaking at the Europe Against Austerity Conference. This article was first published on The Guardian’s Poverty Matters Blog.

Beware! The Right is exploiting the economic crisis

“Are we now to be held liable for entire countries? Already, we’ve had to pay up for the bank rescue.” Many people cannot understand why Greece, Ireland, and Portugal should be provided with aid, explains German economist and Die LInke MP, Michael Schlecht .

“Who else on Earth are we still to rescue?” asks the tabloid Bild, jumping on the bandwagon and detaling minutely the cost to Germany. Already, Germany is guaranteeing €200 billion and, from 2013 on, is to contribute another €22 billion to the next eurozone safety net.

In Finland, the right populists have managed to increase their seats more than six times by raising the slogan “We are not prepared to pay up for others’ mistakes.” And in France, Front National leader Marine Le Pen, preparing for her 2012 presidential election campaign, comes forward with even more aggressive slogans. Already now opinion polls show her as winner of the first ballot. Also in many other countries right-wing populists exploit the debt crisis in Europe for their propaganda.

In Germany, too, a new rightwing populist force may emerge. After all, representatives of this political turn of mind are already in parliament in the ranks of the Christian Democratic/Christian Social Union and the Free Democratic Party.

It is they who offer the fiercest resistance to further aid for Greece. Such aid, if provided at all, is to be combined with massive infringements of the country’s sovereignty, they say. CSU politician Hans Michelbach has called for an ‘agency’ which is to be largely sustained by the IMF and the EU and to have a major say on Greece’s internal affairs. According to him, “the Athens government should transfer all state enterprises and interests to this agency which then will handle the sales.”

This inevitably evokes memories of the Treuhand Privatization Agency which organized the liquidation and plundering of the GDR. Such a practice, however, would massively increase the resistance of the Greek people. This prospect nourishes hopes that such far-reaching attacks will be repelled.

Nevertheless, hardliners in the German ruling coalition have threatened to withdraw their support in parliament from any further aid, be it for Greece or in the shape of the European Safety Mechanism to be effective as from 2013. Thus whether a majority will come about now for Greece and in autumn for the ESM is still uncertain.

This poses the risk of an exacerbation of the crisis. Chancellor Angela Merkel’s strategy for solving the euro crisis has failed though she keeps stressing that Germany is the main profiteer of the euro and that everything has to be done for defending the euro and European integration.

In fact, the dangers precisely to the German export economy are tremendous. In case the threat of a break-up of the euro zone would materialize, the resultant national currency would be immediately upgraded by 30 to 40 per cent. Approximately one third of working hours are performed in the export industry and more than ten million jobs are depending on exports. Any upward revaluation would endanger millions of jobs.

Michael Schlecht MP is Chief Economist of the DIE LINKE Group in the German Bundestag and Spokesman for Trade Union Affairs in the Executive Board of DIE LINKE

Blame the parents (again)

David Cameron blames the family for the riots. In this, he is at one with most politicians and pundits are blaming the family for the riots, argues Lindsey German. Not the Royal family, of course. Not their families, you understand. Their children don’t riot or steal or behave badly. But our families.

Conveniently, that means the authorities can’t be to blame. Their policies, their opinions, their inactivity in the face of worsening inequality, cannot be challenged because it’s all our fault.

To do anything else, to show a glimmer of understanding of what is really wrong with society, would be to deny the policies which successive governments have followed now for three decades. So they devise a simple equation: marriage is at an all time low, divorce at an all time high, the number of children born outside marriage is also at record levels. So the problem must be the lack of a strong nuclear family,

Now it’s true that everyone lives in families. It’s true also that many families today are single parent families. Some as a result of divorce others because they didn’t get married in the first place. One third of all marriages in Britain ends in divorce and first time marriages are at an all time low.

But society doesn’t begin and end at the family. All sorts of other factors influence and affect what sort of family we live in. So the blame the family argument, whatever you think about it, is illogical – not least because it ignores any other common factors facing the communities involved in the riots.

Let’s look at a few of them.

Work: Women work outside the home on an unprecedented scale – not necessarily because they want to but because you need two incomes to maintain a family whereas one income sufficed a generation or two ago. We work some of the longest hours in Europe and in a quarter of all families with young children one parent works evenings.

Unemployment: Youth unemployment rates are high in most of the areas which saw rioting, and there is little prospect of finding well paid work.

Poverty and inequality: The gap between rich and poor is at its highest for 200 years in London, with the richest 10 percent there having wealth worth 273 times that of the bottom 10 percent, according to Professor Danny Dorling at Sheffield University. Inequality has grown in recent years.

Education: Many young working class children see education as their only route out of poverty. But their schools are denied resources and subject to a narrow curriculum (unlike in the private sector); their Education Maintenance Allowance is being cut, which will make it harder for poor children to stay in post 16 education; and tuition fees at universities will treble next year. Oxford, Cambridge and other elite universities have few black and Asian, or indeed working class, students.

Racism: Black and Asian kids are 7 times more likely than whites to be stopped and searched by police.

Housing: The right to buy council houses, the growth of a new class of private landlords, property speculation and rising prices have all led to a chronic housing shortage in London. Most young working class people have no chance of getting on the lowest rung of the housing ladder, nor of getting council housing.

Consumerism: For the past two decades we have been told that we define ourselves by what we consume. The happy family is a consuming family, and that the expensive brands are what we all aspire to. Yet real wages are falling and living standards are declining, so most of the consumer goods are denied to many.

Are we seriously saying that none of these factors had any bearing on what happened over the past weeks?

If you are on an estate like the Pembury in Hackney, just next door to where I live, then you are likely to be poor, you are likely to be in overcrowded housing without gardens or amenities for children, and your children will face a future with little hope for jobs and education. There may be no room for children to do their homework, and they may not receive proper meals. It is just two miles from the City of London, where bankers spend more in a night’s drinking in a champagne bar than these people live on in a month. It is around the same distance to the new Olympic park where resources go into stadiums, expensive shopping centres and luxury housing all out of the reach of local people.

So families are affected by income and life chances and by class. To be told by Eton educated David Cameron that you need to take more responsibility for your family is galling indeed. Most of the cabinet ministers hand over responsibility for their children to nannies, housekeepers and boarding schools. If they work long hours, there will be a myriad of services available to them to carry out the roles they would otherwise have done in the family. They can afford private health care, a range of personal services, and extra tuition for their children to ensure that they don’t fall out of an increasingly competitive education system.

Boris Johnson, the London mayor, talked of a sense of entitlement felt by young people who had rioted. The exact opposite is true. It is the Johnsons and Camerons who have a sense of entitlement. They believe that their background and education give them the right to anything that they want, and to deny so much to the poorest in society. They believe that the rich are entitled to become richer, while the poor have to accept devastating cuts in their incomes. While those on disability benefit are subject to pressures to find work at any price, Johnson advocates a tax cut for the very richest.

Many young working class kids, on the other hand, feel that society has little to offer them and does not value them. No wonder that some of them in the way that they did this week, by trying to grab some of the consumer goods usually beyond their reach.

This article was first published on Huffington Post


Merkel steamrolls Europe

The debate about an economic government for Europe has at long last put the central problem of the continent on the table argues German economist Michael Schlecht. And  the problem is clearly the imbalance in foreign economic relations!

Changing her long-standing negative attitude, Angela Merkel now jointly with Nicolas Sarkozy wants a European economic government – to synchronize national economies and remove imbalances in foreign economic relations. These, however, first of all consist of a disequilibrium between Germany and most European states, especially the southern ones.

Germany’s foreign trade surplus accumulated since 2000 amounts to €1.4 trillion large part of this stemming from the eurozone. The central reason behind this development is the stagnation of wages in Germany which in real terms have not increased since 2000. This is due to the Agenda 2010 labour legislation which has led to a marked deterioration in the living situation in the country. Internationally, it works as a battle axe in the hands of exporters. At the same time the internal economic development has been constricted curbing the sales prospects of foreign enterprises in the German market. Here the unit labour cost increased by six per cent as compared to 30 per cent in other eurozone countries.

Inversely, Germany’s foreign trade surplus has plunged other countries into an ever rising indebtedness of private households, enterprises, banks, and ultimately the respective state. This is the central source of the crisis. The finance and bank crisis with its own dynamics is creating serious problems as does the resultant debt crisis of the states. Yet the problems of the European economy will not be solved unless the imbalances in foreign economic relations are removed.

A European economic government ought to see to it that Germany corrects its course keeps the development of wages and social benefits in pace with other European countries.

But this is exactly what Angela Merkel does not want. She intends to use a prospective European economic government for forcing upon the other countries the “German road” and German hegemony. She intends to export the Agenda 2010! She wants to reduce wages and social benefits in Greece, Portugal, and other countries. Already, she has partially succeeded in doing so. As to Greece, she deliberately blocked aid until the hard-pressed Greek government had to bow to the German dictate. Now a prospective European economic government is to serve her for making Europe more German. Countries which have automatically adjusted the development of wages to inflation are to drop this social safety mechanism. Merkel wants statutory retirement age to be raised to 67 everywhere. And, finally, she intends to export the German debt brake to all of Europe.

All this is done according to the motto “German values shall cure the world”! Once it was German tanks, today Merkel is steamrolling the continent.

Michael Schlecht MP, is Chief Economist of the DIE LINKE Group in the Bundestag, Spokesman for Trade Union Affairs in the Executive Board of DIE LINKE

The violence of the alienated

Commentary following the outbreak of violence in Tottenham this weekend has already fallen into the tropes familiar to those with experience of other outbreaks of anger from local communities such as those that occurred during the 2001 Northern Disturbances, say Ratna Lachman and Neil Cooper.

The focus of press coverage and political reaction – both Labour and Conservative – has been to condemn the weekend’s events as ‘organised violence’ and ‘wanton thuggery’ perpetrated by ‘criminal elements’ who exploited anarchy on the streets to engage in an orgy of looting. However, whilst no one would wish to condone looting, burning and attacks on the police, it is also the case that focusing on the easy targets – the so-called ‘feral youths’ with their hoodies and face masks – avoids the harder questions the riots raise about the culpability of government policy.

David Cameron and the Coalition came to power with two big ideas. One was that the budget deficit had to be addressed by massive cuts in public expenditure – effectively leaving the single mother, the unemployed and the vulnerable to pick up the tab for the activities of feral bankers and city traders. The Chancellor, George Osborne, speaking from his theme park holiday in the US  valiantly informed us that following the downgrading of America’s triple A credit rating and steep rises in interest rates on Italian and Spanish bonds, the UK was right not to ‘buck the markets’ by holding firm to its programme of deep public spending cuts.

The second big idea was the Big Society – where an army of volunteers and do-gooders would miraculously step into the vacuum left by the state, fostering new bonds of community harmony and re-making social safety nets slashed by the Osborne axe.  However, the London Riots have exposed the emptiness of both big ideas by highlighting that the ‘markets’ in community trust, confidence and solidarity – even more so than the financial markets – just can’t be bucked.

The rioters in Tottenham have acted like a flash mob version of the international credit rating agency, Standard and Poors, effectively downgrading the government’s ‘social’ credit rating. No doubt the obligatory condemnations of violence will also be accompanied by ritualistic commitments to learn the lessons for policing and for social policy – but we have been here so many times before with successive governments that the British State is starting to look like a bad debtor when it comes to social welfare – endlessly promising to reform but continuously defaulting.

A decade ago the family of Stephen Lawrence wanted to know why they were denied justice following the murder of their son. Following Thursday’s shooting of a young Black man, allegedly by the police, the parents and family of Mark Duggan were asking the same questions. They deserved to know what led to their son’s death, as did Mark’s friends and members of the wider community. The failure of the police to treat them with the minimum standards of humanity that anyone – Black or White – ought to have been entitled to, raises serious questions about police conduct in this instance.

As the disorder spreads to other London boroughs, residents of Bradford, Oldham and Burnley are probably reliving the divisive legacy of the Northern disturbances which strained community relationships and created a breach between the police and Asian communities who metaphorically sold their shares in the police as public confidence dipped.  If we are to draw any lessons from Bradford’s 2001 Disturbances then it must be that an effective policy response will not be found through recourse to simplistic rhetoric – whether it be about parallel and segregated communities in 2001 or about the increasing gun and knife ‘criminality’ among African-Caribbean youth in 2011 – but by sustained engagement with multiple and complex social problems.

The violence in Tottenham certainly included opportunists looking to make a quick profit at someone else’s expense and – to the extent that it involved local people – might be described as a form of irrational behaviour which only succeeded in inflicting millions in damage to the local environment and left many without businesses and homes.  Of course much the same could be said for the City traders during the financial crisis – the only difference being that the Tottenham rioters will no doubt be banged up whilst the delinquents in the City still receive their bonuses and knighthoods, despite the fact that the vandalism they perpetrated on the British economy was nationwide and cost hundreds of billions.

But acknowledging that the riots were spontaneous and conducted by rebels without a cause does not mean we should also discount the idea that the event was also a political and economic protest – not the kind of protests we have witnessed during the Arab spring, with their clearly articulated grievances and political goals but the violence of the alienated and the angry who no longer feel they have a voice that is heard in the public discourse between politicians, bankers and the ratings agencies.

Tottenham is a stark reminder of the legacy of inequality that lies at the core of the African-Caribbean experience in Britain. The reality is that the community suffers high levels of deprivation; they consistently under-perform in education; they are over-represented in the criminal justice system; they suffer some of the worst health outcomes; they are disproportionately targeted in police stop and search statistics and the disproportionate deaths of Black men in police custody speak of systemic and structural barriers that have to be addressed. The facts are stark:

Unemployment among Black groups has risen 13% since March 2008, compared with 8% among White people. Today, half of young black people are unemployed. In Tottenham itself there are 54 people chasing each registered employment vacancy.

Only 39.4% of Black Caribbeans achieved A*−C grade GCSEs. 8% of all Black university students attend Russell Group universities compared to 24% of all White students. In 2009 only one Black Caribbean student was accepted to study on a course at Oxford University. Black Caribbean pupils are three times more likely to be permanently excluded than the school population as a whole.

Although minority ethnic groups make up 11% of the population in England and Wales, 25% of the prison population is now from a minority ethnic background. 3 out of 4 young Black men, aged between 15 and 34, have records on the DNA database and Black men were 8 times more likely to be stopped and searched than white men.

Moreover, the savage public sector cuts made to appease the markets has led to a slash and burn policy of youth provision by local authorities across the country leaving local areas with no meaningful infrastructure where the necessary intervention work to heal divides can take place. With London experiencing a 10% increase in gun and knife crime, already there were warnings of a summer of discontent as street workers and youth outreach workers are made redundant. As youth centres close their doors and programmes of summer youth activities are lost many of the young people without the luxury of paid summer holidays have little else to do but ‘hang out.’ For example, in the borough of Haringey, which includes Tottenham, spending cuts have already led to the closure of eight out of thirteen youth clubs.
These trends are being mirrored across the country – as young people’s stake in society narrows ironically local neighbourhoods have become the battleground over which they seek to exert power and control. No amount of casual volunteerism by community do-gooders of Cameron’s Big Society could have prevented what happened in Tottenham and the other London boroughs. It is hard to see how the National Citizen’s Service can replace the sustained, long-term interventions that youth work offers. What we are witnessing is the primacy of Conservative market-driven ideology over the needs of society. Youth work is a skill and we are losing it at our peril.

Of course, this does not mean that politicians will heed this lesson. Indeed, one consequence of the game of craven deference to the financial markets is that politicians get higher marks for talking tough about the need for cuts to public spending and social welfare. Conversely, tough talk on the need to address the deficit in the life chances of Black youth is likely to get short shrift from the growing band of politicians who believe that we live in a post-racial Britain.

As the full significance of recent events unfold, the worst that politicians can do is demonise the African-Caribbean community as they did with the Muslim community in the aftermath of 2001. Denouncing multi-culturalism may win the Prime Minister international plaudits and praise from the Far Right for standing up for British values but those young people who spilled out onto the London boroughs over the weekend are fourth generation British citizens – they don’t belong to a remote ‘Them’ – they are part of the collective WE.

The only difference is that being from Tottenham and from a BME community they are doubly deprived –  not so much an example of protest from David Milliband’s squeezed middle as from the ‘squeezed squeezed’. If Britain is going to be truly cohesive then this government cannot continue to remain blithely insouciant about the devastating legacy of its own actions. For example, its relentless attack on equal rights legislation at the behest of lobbyists who characterise it as a bureaucratic encumbrance is a symbolic slap in the face for minority communities who face persistent systemic and structural discrimination and institutional racism.

Whether the riots spread over the summer is hard to predict, but what is predictable is that without youth workers on the ground, society no longer has the tools to undertake the critical work of healing divides, re-engaging young people and restoring the breakdown in trust and confidence between young people and the police. It is a matter of deep irony that when the English Defence League came to Leeds and Bradford, the council deployed statutory and voluntary sector youth workers to work alongside young people to prevent a repeat of the 2001 disturbances. If similar riots were to break out or the Far Right were to return to our region we no longer have the tools in our armoury to contain the potential outbreak of violence on our streets.
We have a government that is obsessively monitoring every twist and turn of the international bond markets but which has embarked on cuts in social welfare and social provision guaranteed to destroy the community bonds that underpin effective societies – and economies. The rioters in Tottenham have just sent out their own message from the ‘social market index’ trading in public trust and confidence: between them, swingeing public sector cuts and Big Society tokenism have all meant the government has already defaulted on its obligations to the people of Britain. The big question is whether the government will be able to hear this message over the chatter between Wall Street and the City and – even if it does – whether it is capable of abandoning its ideological fixation with zombie neo-liberalism and, instead, invest in fostering the bonds of community. If it fails to do so then the hot money must surely be on the further growth of the already massive deficit in social harmony – and the consequent emergence of the Big Bad Society.

This article was originally published under the title, ‘The Big Broken Society: Reflections on the Tottenham and Northern Riots’, for JUST West Yorkshire, Promoting racial justice, civil liberties and human rights.

Penniless US is never short of money for endless war

When iPhone company Apple has more in the bank than the US federal government, Lindsey German asks how Obama pays for his war in Afghanistan, costing $2bn a week, the occupation of Iraq, the drone warfare in Pakistan and the new war in Libya?

Technology company Apple has more cash in the bank — $75.9bnbn — than the US government, which has just £73.8bn.

The figures underline why the US debt crisis has been making such headlines in recent weeks. That crisis appears to have been resolved – at least temporarily – at the expense of the poorest and most vulnerable in US society, who will find their welfare cut, their job prospects worsened and their circumstances even more straitened following a deal which was inspired – if that’s the right word – by the right-wing Tea Party movement.

As ever, there is one area of spending which is exempted from these cuts: the US addiction to war and militarism. So while the US government is on the verge of bankruptcy, it can still afford $2bn a week for the war in Afghanistan, where the air-conditioning alone for US troops is costing $20bn a year.

A study by the Eisenhower Research Project calculates the cost of the wars launched under the “war on terror” since 2001 could total $4 trillion, when future medical care and disability for war veterans is included. How is this possible? Through debt. America’s wars are financed almost entirely by borrowing. And interest has to be paid on all the war-related debt. $185bn in interest has already been paid. But between now and 2020 interest payment alone could reach $1 trillion.

Wars waged on borrowed money have been launched in an air of abandon with ever escalating spending and a belief that air strikes and troop surges can solve any of the political problems caused by US and British foreign policy over the past years.

Ending the wars would at a stroke transform the economic situation, but is not on the Tea Party agenda, which has its sights firmly on tax breaks for the rich.

It all shows how closely the economic, political and military are linked in this globalised world. Just as the living standards of the ever richer top earners are regarded as sacrosanct, so too is the military spending and the whole apparatus that goes with it. The corporations and elites need the back up of military might to enforce their rule round the globe.

Here in Britain war spending is a fraction of that in the US but it is just as sacrosanct. This, as in the US, flies in the face of public opinion. A Yougov poll carried out last year (11.2.2010) showed that 68% of respondents thought that British financial support for US wars was too high; only 5% percent thought it wasn’t. On nuclear weapons, 36% thought that too much was spent on nuclear deterrents as opposed to 13% who thought the government didn’t spend enough.

So cuts in wars and weapons expenditure would be popular as well as releasing enormous sums to spend on housing or health. Britain is spending $5bn a year on the war in Afghanistan, added to which we now have Libya, where the costs are anticipated to top £1bn if the war lasts till the Autumn. Add these sums to the £2.2bn the government spends each year on the Trident nuclear missisle system. The accumulated war costs between now and the likely date of the next general election in four years time will be approaching £30bn, which is around half of the total debt the government is aiming to reduce by implementing the deepest cuts in public services since before the Second World War.

No wonder the government is so vague about these costs. In June treasury minister Danny Alexander said the costs of the Libya war would run into ‘hundreds of millions’, just three months after the chancellor George Osborne told us it would only be “tens of millions”.

While the sick and disabled are subject to tests which try to get them off benefits and into work, while hospital waiting lists grow longer and there is a shortage of schools in many areas, the financial vagueness is used to deflect attention from the one area of public spending that is safe from cuts – the endless sums spent on fighting wars that most people in Britain do not support.

Lindsey German is Convenor of the Stop the War Coalition (UK). She is helping to organise one of the Conference workshops on this theme.

Understanding the market slump

International business news and other TV channels are offering a Babel-like interpretation of the current slump in world financial markets, argues economist Michael Burke.

European (including British) stations are reporting the Wall Street-led declines as a response to the continued debt crisis in Europe. But this makes no sense. An EU crisis would have been felt first in EU markets, and perhaps not at all in the US – US stocks had been rising over a prolonged period while Europe has been in turmoil. (And, despite what we may think, Greece or Ireland might fall into the sea while causing barely a ripple in the Hang Seng and the other plummeting Asian stock indices).

US channels have no explanation at all for the crisis – and analysis is limited to individual stocks, the scale of losses for investors and a generalised antipathy to Washington.

The Asian networks come closest to identifying the source of the current crisis – which isn’t in Europe at all. Their consensus is that markets are plunging because of the slowdown in the US economy.

But, why now? We are repeatedly told that financial markets react instantaneously to new information. The US GDP data for Q2 were truly awful, up just 0.7%. As the BEA annualises quarterly data (multiplies by 4) this means that the US economy grew by under 0.2% from Q1.

On closer inspection the data were even worse. Large downward revisions to both the prior quarter and further back mean that the economy fell by 5% in the recession, and has not recovered that prior peak in activity yet, as had been previously thought. This is the weakest US recovery from recession in the post-WWII period. Yet these data were published last Friday. If they were the immediate cause of the panic, it is a slow motion reaction.

No, the new news is the compromise agreement in Congress on Tuesday to raise the Federal debt ceiling in return for large scale cuts in Federal spending. This can only have one consequence – slower growth. Since the anticipated profits derived from growth drive stock prices, it is natural for stocks to fall when growth prospects are lowered. As Wall Streeters say, the US has just suffered a derating.
The crisis is driven by ‘austerity’- US austerity.

EU financial markets are caught in the backwash of this, as slower US growth certainly harms global growth prospects. This is felt most keenly in their weakest link, the sovereign debt markets, since these have assumed all the stresses of the EU economies and financial systems. But we should not expect stock and other markets in Europe to remain unscathed, especially bank stocks.

In particular, as reaction to the latest bailout of Greece’s creditors shows, bond markets do not reflect any confidence in these repeated prescriptions. Instead a first bailout of the economy is required, in Greece, Ireland and elsewhere.
There was a fondness before for asserting that Ireland was closer to Boston than Berlin. With the German economy recovering far more robustly than the US, we will hear less of that in the years ahead.

It might be wise instead to focus on the German and other answers to the crisis. This was not just short-term economic stimulus, but long-term productive investment.
For too long the Irish economy has been a weigh-station for US companies counting their profits. Instead of listening to their self-serving advice on economic policy (while following German strictures on fiscal policy) policymakers in Ireland should emulate what works, in Germany, Sweden and most of Asia, investment-led growth initiated and guided by the State. (first published on the Irish website, Progressive Economy)