Friday, January 15, 2016

Europe should give hope

Europe should give hope to its citizens that it will do everything possible to give work (employment), houses, health and education to all, while making its contribution to lowering CO2 emissions.

Europe should also give hope to citizens in other parts of the world including the US, where poverty is large even though unemployment is low. Europe should give hope that a social and ecologically sustainable society is possible everywhere in the world.

Europe should not be dominated by the powerful, but by its citizens. That's what democracy is about. Here also we should give hope to citizens: hope that real democracy is possible.

I'd like to end this brief post with a personal message: Europe is a beautiful and attractive melting pot of cultures that we should cherish. I feel attracted by Mediterranean culture and just made a short video about my Italian grandmother that I would like to share with you -- see below. For those who do not understand Spanish, a translation of my voice-over is in the information about the video.

Enjoy! (joy also gives hope)


Tuesday, January 12, 2016

Greece Renews Challenge to Creditors’ Austerity Policies

“The war goes on”

Yesterday, there was an interesting article about Greece: "Greece Renews Challenge to Creditors’ Austerity Policies".
I quote: 'In an interview with The Wall Street Journal, Greek Labor Minister George Katrougalos said the ruling left-wing Syriza party hasn’t given up its fight against austerity, despite a tactical retreat last year. “We may have not won a battle, but the war goes on,” said Mr. Katrougalos. The 52-year-old lawyer, who is handling the crucial task of reforming Greece’s overstretched pension system, vowed to resist further pension cuts, a step some creditors see as unavoidable.'

Here are a few more interesting quotes from the WSJ article of yesterday (12 January 2016):

The Greek government last week presented a proposed pension reform that it hopes will satisfy both Syriza supporters and the international creditors. The plan, drawn up by Mr. Katrougalos, aims to save money mainly by unifying Greece’s fragmented pension funds, raising social-security contributions and reducing future retirees’ entitlements, while protecting current pensioners’ incomes.
Eurozone and IMF officials are currently studying the proposal. Some creditors, led by Germany and the IMF, believe Greek pensions remain too generous for the country’s weak economy, despite repeated pension cuts in recent years. Further cuts are anathema to the Syriza-led government and its slender majority in Greece’s parliament.
“For us it’s a red line not to reduce pensions for a 12th consecutive time,” Mr. Katrougalos said, adding that average Greek pensions have already been cut by around 40% under the country’s international bailout programs since 2010. Greece is flexible about “the details” of its pension proposal, he said.

Prime Minister Tsipras this month called on the IMF to soften its demands or end its role in the Greek debt crisis. But Germany and other North European countries want the IMF to stay involved, to help make sure Greece undertakes tough changes in return for its huge bailout loans.

“We still stick to our goal of changing Europe”

“We still stick to our goal of changing Europe. We hoped that we could change the balance of power in Europe very fast. It’s clear that we failed to have immediate results,” he said. (...)
But antiestablishment politics is on the rise across the Western world, Mr. Katrougalos, said, because “the middle class is eroding, and there is no longer the same faith and confidence in the establishment as in the past.”
“The real question is not whether we’re going to have change, but if this change will be by the left or by the right,” he said.

Will Capitalism Die?

Caputalism: Will Capitalism Die?

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Robert Misik
Robert Misik
The fact that western capitalism is in a severe crisis is now so commonplace that it’s become almost a cliché. In 2008 the global financial system stood on the brink of collapse and the rescue measures undertaken by panic-stricken governments will burden their economies for years to come.
Economists and analysts of a neo-conservative, economically liberal frame of mind have nothing to add to our understanding of this. Their models simply cannot explain why a system based on de-regulated market activities can ever get into crisis – and why it cannot rediscover the path to prosperity if the state is gradually dismantled and market forces let loose.
But economists and analysts tuned to Keynesian and reformist thinking are much closer to reality: their criticism amounts to saying that the wrong kind of policies – deregulation of markets, liberalisation of the financial system, shrinking the state and the scandalous growth in inequality – had already undermined the system’s stability. In a word: the wrong policies have been pursued for 30 years and a disastrous set of policies has been enacted since the outbreak of the crisis but the system can only be stabilized once the right policies are in place.
But let’s take a closer look at the world: Here’s Spain, with its ghost houses, monuments to a failed fresh start, stretching all along the beaches for kilometer after kilometer; or let’s cast a glance at the ‘solidarity’ clinics in Greece over-crowded by people with no health insurance; at rural America, where the jobless numbers refuse to go down despite growth on tick; at our inner cities in northern Europe where everything seems to be stable but we very quickly get to feel that things are not really progressing, it’s at best stagnation with ever-harsher competition for decent living standards and, along with that, rampant resentment without any confidence in the future. Briefly put: it ain’t working properly any more. So the question is: what if Keynesian tools don’t do the trick anymore?
The American economist Robert Brenner noted such a development as long as 20 years ago in his book The Economics of Global Turbulence – and forecast a crisis-ridden future. It was Brenner who coined the concept of “secular stagnation”: a phrase now spoken aloud by all mainstream economists.
The charm of Brenner’s analysis lies in that it explains the end of the post-war boom and the start of the slow decline through endogenous tendencies or the logical in-built dynamics of capitalism. And thus the conclusion follows: Even if they’re only crudely true then these critical tendencies cannot simply be wished away through a different set of policies because developed capitalism, for technological as well as economic reasons, is hitting limits that no longer allow for high rates of growth and productivity increases.
Because the profit margins of average firms are declining, business organisations, helped by friendly governments, began attacks on workers’ rights and the welfare state, thereby reducing the incomes of normal people but failing to solve the problem – as this depressed consumer demand again. Each answer to the crisis heightens it anew.
In such a situation it’s completely obvious that there will be a bubble on financial markets and financial institutions will become the determinant players of global capitalism. But bloated financial markets once again bring into play those intrinsic instabilities that top economists such as Hyman Minsky have analysed. The more reckless the gambling on the markets the more the entire system balances on a knife edge.

Why Capitalism Needs Growth

Kaputtalismusm (in German) will soon be published by aufbau Verlag. (Click cover for more info)
Kaputtalismus (in German) will soon be published by aufbau Verlag.
(click cover for more info)
Reduced growth is, for various reasons, a systemic problem. To understand this we must examine a decisive factor in capitalism. What made it so successful and prosperous was investment credit. In other words, it needs debt. Firms take out credit, run up debt in order to invest but these investments only pay back if there’s adequate growth; if not, there’s a wave of bankruptcy.
If we look back soberly on the last 20 years then we have to acknowledge there was a huge explosion of credit but only relatively low economic growth. If the general economic lesson to be drawn from such a credit explosion were that a gigantic amount of growth would ensue – it might remark critically that this growth would be unsustainable, would be diverted into the wrong channels, capital would not be allocated to the right places but it would smartly assume that a credit expansion on this scale would generate huge growth. But this didn’t happen. We have credit expansion and mini growth – and not just overnight.
One of the least observed but, possibly, most significant crisis symptoms is the general degree of indebtedness in capitalist economies. What we mean by this is the accumulated debt of all economic actors in an economy, not just the state: government, corporate and private household debt taken together. Most economies have gearing of 300% of GDP. Often 400%. A few decades ago the level was still only a quarter of this. How is one supposed to bring this level down if there’s low growth, how are the resultant repayments supposed to be financed?

The End Of Capitalism?

Can one therefore imagine that capitalism is a caputalism bearing the Cain’s mark of collapse? And how can we envisage this end?
“The image I have of the end of capitalism — an end that I believe is already under way — is one of a social system in chronic disrepair” is how the German social scientist Wolfgang Streeck put it two years ago. A permanent quasi-stagnation with at best mini-growth rates, explosive inequality, privatization of all and sundry, endemic corruption and plunder, where normal profit expectations get ever lower, a consequent moral collapse (capitalism is more and more linked to fraud, theft and dirty tricks), the West getting weaker and weaker, staggering along as it foments disintegration and crisis in trouble spots on its periphery.
(for further reading please click HERE)