Posted in Finance

Capital strike: global corporations hoard cash and refuse to invest

capital_on_strikeThe world’s largest companies are hoarding cash and cutting productive investment at the same time. The Financial Times reports a survey from one leading ratings’ agency, Standard & Poor’s, which shows that the 2,000 largest private firms globally are sitting on a cash mountain of $4.5 trillion, which is approximately double the size of Britain’s annual GDP.

Yet capital expenditure, or ‘capex’ by those firms fell by 1% in 2013 and is projected to fall by 0.5% this year. But this does not presage an upturn. Steeper declines in productive investment are projected by those firms in both 2015 and 2016. Taken together, if these projections materialise the actual and projected falls in capex over the 4 years from 2013 to 2016 will approach the calamitous fall in productive investment seen at the depth of the recession in 2009. Continue reading →

Wonga should be regulated out of existence

loan-sharkThe payday lender Wonga should be investigated by the police for sending threatening letters from non-existent law firms ‘Barker & Lowe’ and ‘Chainey, D’Amato and Shannon’ in order to pressurise their victims into repaying their debts.   It is certainly not sufficient that Wonga has been forced under pressure to repay the 45,000 customers affected, when the compensation works out at only around £50 per customer.   Worse still, Wonga charged the recipients of these fake legal letters an average of £9 each, a further total of £400,000 extracted by this rapacious firm for fabricated reasons.   It’s true that Wonga is making these paybacks with interest, though the interest rate offered, at 8%, turns out to be rather less than the 5,853% ‘representative’ rate that Wonga themselves advertise on their website for their own loans. Continue reading →

“A plan only banksters will love”: WikiLeaks reveals permanent global deregulation plan

The Trade in Services Agreement (TISA) a trade agreement covering 50 countries and more than 68 percent of world trade in services is being drawn up between the EU and the US. The draft agreement was supposed to remain secret and you weren’t going to be told why it was being agreed or what its effect would be until five years after it was agreed. But now you know, thanks to Wikileaks. And TISA is arguably the worst “trade deal” proposed to date. It aims to set in stone the extreme deregulatory model of the 1990s by forbidding countries from improving financial regulation. Continue reading →

A royal whimper when we need to supplant 35 years of Tory and pseudo-Tory rule

Child dressed as RoyalThe Queen’s Speech, drafted in deathlessly trite prose by civil servants and special advisers, should – and occasionally does – rise to the challenge of setting the national agenda. This one was flat all the way through.

  • There was nothing about countering austerity, allowing hard-working people to share in the recovery with a proper wage increase.
  • There was nothing about rebalancing the economy from the City to industry to create decent jobs and a sustainable livelihood.
  • There was nothing about warding off the risk of another financial crash or tackling continuing banking scandals.
  • There was nothing about the revival of manufacturing to erode the massive inflow of imports rising year after year.
  • There was nothing about reversing grotesque inequalities in income and wealth, or making the super-rich pay for the economic/financial breakdown and extended recession that they largely caused.
  • There was of course nothing about redrawing the boundaries between State and markets even though the papers are filled almost daily with revelations of the greed, corruption, performance failures and poor service of the privatised and outsourcing companies.

Continue reading →

Do we want a society based on work and innovation or on rent?

The Office of National Statistics data published last month found that the richest 1%in the UK owned as much wealth as the poorest 55%. Oxfam, even more poignantly, calculated that 5 billionaire families controlled the same level of wealth as 20% of the population (i.e. 13 million people). In fact these figures almost certainly greatly underestimate the inequality in wealth because of the huge diversion of wealth to offshore tax haves which account for, on the latest estimate, some £21 trillions of savings.

It seems strange therefore that the Financial Times, in particular their right-wing political commentator Chris Giles, a close friend of Osborne, should be seeking to rubbish the conclusions of the French economist, Thamas Piketty, that inequality has been rising in the West since the 1970s. Even more they have been attacking Piketty’s contention that rising inequality is the central contradiction of capitalism. This was not just an intellectual cross-checking of data (which is always desirable in principle). What is at stake is the urge on the part of the Right to portray rising wealth as a social benefit spread across society, not a monopoly of a tiny elite. Continue reading →