Wednesday READ – 29 January 2014
Posted by greydogg, 99GetSmart
* IS THE WORLD REBALANCING?
By Yanis Varoufakis
Before the Crash of 2008, the dominant view amongst the world’s policy-making elites was that global imbalances were not a problem. The great and the good in Washington and in London, in Paris and in Frankfurt, at Davos and on the golf courses where deals of note are struck, dismissed as economically-illiterate moaning-minnies all those who dared warn against large current account imbalances. Caught up in the soothing fiction of the ‘Great Moderation’, and the toxic fantasy that finance had invented ‘riskless risk’, the powers-that-be were adamant that we were living in a ‘new paradigm’. In this ‘new paradigm’ of their over-excited imagination, risk was being dispersed (through financialisation) from the global financial centres to the rest of the world, net capital was flowing the other way (from the Periphery to the capitalism’s Metropoles), and the result was sustainably unbalanced current and capital accounts. In short, from the gilded perspective of the true believers in some fictional ‘Great Moderation’, untrammelled markets had produced, at a planetary scale, a virtuous, sustainable, and highly lucrative ‘equilibrium imbalance’.
After the Crash of 2008, their tune changed. And it changed even more radically when, two years later, the Eurozone’s never-ending crisis followed suit. Suddenly, it became fashionable to blame, retrospectively, the hitherto benign global imbalances for the crisis. America’s pre-crisis gargantuan current account deficit, amounting to 6% of the planet’s largest national income, as well as China’s 10% of GDP current account surplus, were no longer thought of as innocuous. Similarly, within the Eurozone, Germany’s and Holland’s pre-2008 combined €35 billion-plus current account surplus, juxtaposed against Portugal’s, Greece’s and Spain’s combined current account deficit of €31 billion, metamorphosed from ‘natural’ repercussions of creating a common currency area to sources of local and global instability. In short, the crisis of 2008 turned imbalances from symptoms of the neoliberal ‘Great Moderation’ to the villains of the piece.
Six years have passed since those heady days and it is now clear that the global imbalances are waning. America’s current account deficit has fallen from 6% to less than 3% of GDP while China’s current account surplus has diminished from a breathtaking 10% to a reasonable 2.5%. Even within the long suffering Eurozone, quasi-insolvent nations like Spain and Italy are eliminating their current account deficits, despite the rise and rise of Germany’s surplus. Perused from a planetary perspective, German surpluses and Turkey’s or India’s deficits seem like minor problems that should perhaps be of concern to Europeans or Asians though not to the world at large. From this perspective, the world seems better balanced now than at any time since the 1980s. But is it so? […]
* THE EUROPEAN PERIPHERY AS A POLITICAL LABORATORY
By Ricardo Campos, Roarmag
The periphery of the Eurozone has been in the spotlights since 2010, when the Greek government requested a bailout by the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission (EC) — or the ‘Troika’, as these three powers are collectively known. It has become a familiar story, with Ireland, Portugal and Cyprus eventually following, while Slovenia seems to be next and both Spain and Italy remain under stress. This sovereign debt crisis has been presented from its very start as the mere sum of distinct national macroeconomic performances, with some countries failing to be competitive enough (or, according to a less sophisticated formula, showing themselves to be ‘lazy’) and some governments failing to control the budget deficit appropriately (or, according to a less sophisticated formula, showing themselves to be ‘big spenders’).
The dominant narrative of the political economy of the Eurozone is neither innocent nor accurate and plays a deliberate strategic role. It is rather obvious that the specific economic and social backgrounds of each country — including different intensities of social conflict and forms of resistance — explain the different pace of the austerity measures applied and the capacity of each government to negotiate distinct conditions for loans. But there is no such thing as an independent national context within the Eurozone, as becomes clearer every time a mission of the Troika lands in a country under intervention. The alleged purpose of the policies imposed on these countries — controlling public debt by reforming the state and regaining external competitiveness in order to lower the trade balance deficit — are further from being achieved now than they were before the bailouts. The ECB is now studying how to keep the “adjustment” in these countries beyond the previously agreed schedule, even though all the austerity measures included in its recessive arsenal have been applied. […]
* ESCAPED MARXIST GUERRILLA CHRISTODOULOS XIROS ALARMS GREECE WITH PLEDGE TO RETURN TO ARMS
By Helena Smith, Guardian
A video threat by a member of the disbanded 17 November terror group creates a new crisis for a weakened state
Up close, Christodoulos Xiros does not come across as a menacing man – in many ways he still resembles the soft-spoken craftsman he once was. But this weekend, barely three weeks after absconding from the high-security Korydallos prison in Athens, the dark-eyed 56-year-old, a key member of the defunct 17 November terror group, has struck fear into the hearts of many across crisis-hit Greece.
In the space of five days, panic-stricken authorities have launched the biggest manhunt in modern times, placed a €4m bounty on his head – dead or alive – and thrown a security cordon around the capital not seen since the 2004 Olympics.
On Friday, as European justice ministers gathered in the country that currently holds the EU’s rotating presidency, there were sharpshooters on the roofs, sniffer dogs roaming the streets and more than 2,000 riot police outside government offices and hotels.
“I am worried that soon there will be an attack,” said former foreign minister Dora Bakoyannis, giving voice to the fears stalking Greece after Xiros failed to report to authorities while visiting his family during a nine-day leave from prison earlier this month.
It was 15 days before the self-described “free member of 17 November” re-emerged, with a video message vowing a return to armed action. “It’s time for battle,” Xiros said against a background of images depicting resistance fighters and a second world war communist hero. “I have decided to thunder the guerrilla shotgun against those who stole our lives and sold our dreams for profit.” […]
* ‘ONE BIG PROJECT’: ITALY’S BURGEONING MOVEMENT FOR HOUSING AND INCOME
By Alfredo Mazzamauro, Roarmag
If there is one day that can symbolically represent the current struggle against austerity and neoliberalism in Italy it must be the 19th of October 2013 — the day of the General Uprising (“sollevazione generale”) against austerity. On that date, behind a banner that read “Only One Big Project: Income and Houses for Everyone!” around one hundred thousand people took the streets of Rome in what could be considered the most successful demonstration by the Italian social movements since the economic crisis began in 2007.
The demonstration was the last day of a week of struggle structured around four national events. The first was the day of struggle against the environmental devastation caused by capitalism on October 12. The second was the European social strike on October 15, launched during the Hub meeting in Barcelona. The third day was the general strike of the rank-and-file unions with a national demonstration in Rome and many local marches across the country on October 18. The final day was the national demonstration against austerity in Rome on October 19.
This agenda was set up and promoted by the Living in the Crisis Network (“rete abitare nella crisi”) — a network of Italian housing action movements — along with many grassroots movements and autonomous groups such as student movements, rank-and-file unions, precarious workers and migrants following a series of assemblies organized by the No-TAV movement in Val Susa over the last summer. The purpose of the October week of struggle was to bring together in a few big national events all the grassroots movements and the local groups who work every day in their neighborhoods to oppose and resist the neoliberal attempt to make workers and the lower classes pay for the crisis of capitalism. In particular, the October 19 demonstration aimed to make visible the housing emergency which is affecting ever more families and low-income earners in Italy. […]
* THE WORKERS’ SCORECARD ON NAFTA
By David Bacon, Truthout
Sold by its promoters as a migration-preventing device that ultimately would produce more and better-paid jobs in all three countries, the North American Free Trade Agreement has displaced jobs and people, weakened unions and ravaged US cities and rural Mexico. But worker solidarity may prove to be its most important product.
In 1986, a provision of the Immigration Reform and Control Act created a commission to investigate the causes of Mexican migration to the United States. When it made its report to Congress in 1992, it found, unsurprisingly, that the biggest was poverty. It recommended the negotiation of a free trade agreement, modeled on the one that had been implemented a few years before between the United States and Canada. The commission argued that opening the border to the flow of goods and capital (but not people) would, in the long run, produce jobs and rising income in Mexico, even if, in the short run, it led to some job loss and displacement.
The negotiation of the North American Free Trade Agreement began within months. When completed, it was sold to the public by its promoters on both sides of the border as a migration-preventing device. During the debate, executives of companies belonging to USA-NAFTA, the agreement’s corporate lobbyist, walked the halls of Congress wearing red, white and blue neckties. They made extravagant claims that US exports to Mexico would account for 100,000 jobs in the agreement’s first year alone.
Some skeptics warned that the agreement would put downward pressure on wages and encourage attacks on unions, because its purpose was to create an environment encouraging investment and free markets. Their warnings were met with another promise – that a parallel labor side agreement would establish a mechanism for protecting workers’ rights.
Twenty years later, workers have a scorecard. The promises of profits from increased investment and freer markets were kept. But the promises of jobs and benefits for working people were not. As the commission predicted, NAFTA did lead to increasing unemployment, displacement and poverty. Workers in all three countries are still living with these devastating consequences, while the predicted long-range benefits never materialized. […]
Photo by Michael Coghlan released under a Creative Commons Share Alike license.