The Conservatives were supposed to cut the deficit, not incomes. But hats off to Dave and his toffee-nosed rabble, he has slashed on average £1,350 from household income. In the West Midlands it’s £1,550/year, or just shy of 30 quid every week. An achievement only equalled by Dave’s presiding over 35 consecutive months of falling wages – a feat unmatched by any other Prime Minister. Take a look: Continue reading
Tagged with Debt
Demand, debt mountains and the next crash
The problem – a very big problem indeed – for capitalism at its present stage is that demand is flat, or falling. That underlying pattern has existed for the past 40 years, since the demand for continent-wide reconstruction after the Second World War gradually petered out in the 1970s. Thereafter the flatness of demand was obscured by the Cold War acceleration of global arms expenditure, as well as by the world-scale development in technology applying to cars, planes and computers.
The unipolar power of the US as the world’s hegemon plus the lack of technological breakthroughs with worldwide industrial application have left a growing vacuum of demand. Demand, that is, sufficient to power a global capitalism that depends on it. That comparative vacuum which was met by the enormous explosion of debt in the 1990-2000s, and which led directly to the global financial crash of 2008-9, is once again being met by the huge expansion of debt which cannot conceivably be sustained long-term.
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The Troika’s ‘Men in Black’ and the crime of organised money
Continuing to force states to finance themselves at high-interest rates is just a strategy to justify wage control, the privatisation of public services and, ultimately, to enslave peoples, says Juan Torres Lopez, Professor of Economics at the University of Seville.
Spain has once again received a visit from the so-called Men in Black, the Troika inspectors, coming to elucidate if all is going as it should, so that Spanish banks can continue their recovery to the ultimate benefit of Germany and other European countries. Continue reading
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Why is Labour so reticent about spelling out the true position on debt?
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If there’s one thing that haunts Labour, however much the Tories are determined to commit hara kiri, it is the accusation that ‘Labour was responsible for all this mess in the first place’ by gross over-spending. Since this is not true, why doesn’t Labour refute it at every opportunity? Just before the crash in 2007-8, the UK budget deficit stood at just 3% of GDP, low by contemporary OECD standards and tiny by historic standards. At the end of the Napoleonic wars government debt was over 250% of GDP. Just before World War I it was about 30%, rising to 175% by 1918. It was still 125% at the start of World War 2, by the end of which it stood at 230%. It then fell to no more than 25% by 1990, but since then rose to almost 70% by 2010. Following the banking bail-out it has risen now to just under 90%. Continue reading
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The theory on which austerity is built is now shown to be false
Two years ago the Harvard economists Carmen Reinhart and Kenneth Rogoff published their best-selling book This Time is Different which purported to show that one natioanl debt exceeds 90% of GDP, economic debt declines rapidly. It was seized on by Right-wing governments, media and academic pundits generally to justify a policy of extreme cutbacks in public spending in order to keep debt below the watershed level of 90% at all costs.
The theory, according to the Right’s mantra, was that high debt levels can crowd out economic activity and entrepreneurial dynamism, and thus hamper growth. Though it profoundly satisfied policy-makers who believe it counter-productive that governments should spend money in a recession and that a pro-cyclical austerity is more plausible than a Keynesian response, it turns out that the Reinhart-Rogoff thesis is quite wrong, first about the threshold and second about causality. Continue reading
