Crisis opening in 2007

Where has the money gone?

The stock of "broad money" (which is mostly not notes and coins, but the total of money that individuals and firms have in readily-accessible bank accounts) has been shrinking since late 2010, reports Martin Wolf in the Financial Times (16 June). This seems paradoxical. The Bank of England has been lending to commercial banks at exceptionally low rates, and spending £325 billion in "quantitative easing" (which means, essentially, replacing banks' holdings of less "cash-like" financial assets by actual cash). That should increase the stock of "broad money" in circulation. The problem is that...

A turning point from neo-liberalism?

Hugo Radice spoke to Solidarity about the eurozone crisis. This version of the interview is revised and expanded from the version in the printed paper. What concessions do you think are likely from the EU on "growth strategies"? Some left-wing economists, for example the EuroMemorandum group , have been calling for a growth strategy throughout the crisis. But until recently most media, academic and business economists believed that a strategy of cutting public deficits would automatically lead to a resumption of private-sector growth. But by the end of 2011, not only were commentators like...

The long slump and the global working class

There is no definitive Marxist assessment of the current economic crisis or of the period leading up to it, but there is a vibrant debate among Marxists trying to grapple with the underlying causes of the world we’re in. David McNally’s book provides one of the most panoramic and provocative accounts with many insights. He argues that the crisis of 2008 represents the terminus of a quarter-century wave of economic growth — neoliberal expansion — and the transition to a protracted period of slump. He defends three broad arguments: 1. From 1982 an era of severe capitalist restructuring took...

Greece: will Merkel budge?

John Palmer, former European editor of the Guardian , spoke to Solidarity about what the current talk among EU leaders about “growth initiatives” is likely to yield. In the polls in Greece, New Democracy are about two or three points ahead of Syriza at this point of time, so it’s by no means certain that the outcome on 17 June will be the Syriza victory which looked likely shortly after 6 May. If Syriza emerges on top, what happens will largely depend on the nature of the agreement which is to be negotiated at the European summit on 23 May. The Syriza leader has been invited to France and...

No Keynesians in the Netherlands?

The Netherlands' right-wing, neo-liberal, fiercely pro-cuts coalition government collapsed over the weekend 21-22 April, unable to agree on measures to reduce the country's budget deficit to the EU's 3% target in 2013. This collapse should, and must on some level, strengthen the hand of the labour movement in arguing against cuts. The Financial Times (25 April) reports, however: "Anyone expecting the Netherlands to turn towards the anti-austerity prescriptions of neo-Keynesian economists in London and New York has another think coming... "The idea that wealthy countries like the Netherlands...

Economists debate Europe

Current European Union policies will produce "Great Depression conditions for a decade" in southern Europe, predicts economist Engelbert Stockhammer. This is a longer version of this report than in the printed paper Stockhammer was the opening speaker in an economists' conference about the crisis in Europe on 19 April at Kingston University, in London. Many of the other speakers were, like Stockhammer, members of the "Euro-memo" network of leftish economists from across Europe. Euro-memo produces briefings each year arguing against the neo-liberal direction of EU policy and (on a broadly...

Hurrah for the LTRO?

Hurrah for the LTRO! So say the business pages of the press. The LTRO is the scheme under which the European Central Bank (ECB) has lent over a trillion euros, at very low interest and for three years, to European banks. Some of the banks have used some of this cash to buy bonds issued by Italy and Spain, on which they can get more like 5% interest. Thus the banks have put themselves in line for tens of billions of profit on the deal, as long as Italy and Spain do not default within the next three years; and the yield (interest) on Italian and Spanish bonds has subsided, at least for a while...

Euro-leaders set course for worse crisis

By Martin Thomas David Cameron's veto, on 9 December, of the plan for a new economic treaty backed by all 26 other European Union governments, may shake British politics and Britain's future relations with the EU. The 9 December summit itself may shake more. The 26 adopted a plan which has little chance of smoothing the financial crisis shaking the eurozone, and may make it worse. Felix Salmon, economic commentator for Reuters, was the sharpest of many mainstream economists who saw it that way: "A continent which has risen to multiple occasions over the past 66 years has, in 2011, decided to...

The endless bailout of Europe

By Michel Husson (2 November 2011) In French: below or at http://hussonet.free.fr/bailout11f.pdf . The decision by Greek prime minister Georges Papandreou to put the Eurosummit agreement to a referendum marks a new step in the European crisis. To understand the causes and what is at stake in this crisis, we must first situate it in the broad sweep of events. It is not just a sovereign debt crisis. It is also, and more fundamentally, a crisis of the European construction. Today it is obvious that neo-liberal-style Europe was botched. The single currency was supposed to serve as a wage-control...

The endless bailout of Europe

By Michel Husson La décision de Georges Papandreou, le premier ministre grec, de soumettre l’accord du sommet européen à référendum marque une nouvelle étape dans la crise européenne. Il faut d’abord situer cette crise dans la durée, pour bien en comprendre les causes et les enjeux. Cette crise n’est pas seulement une crise des dettes souveraines, c’est aussi, plus fondamentalement, une crise de la construction européenne. On s’aperçoit aujourd’hui que l’Europe à la mode néolibérale était mal conçue. La monnaie unique devait servir d’instrument de police salariale puisqu’il devenait imposible...

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