Ending ‘life support’ for western economic model underlies China crisis

chinas new world orderAfter two days of trouble and strife in global stock markets, the Federal Reserve’s New York President William Dudley said in remarks to reporters that a September interest rate hike seemed “less compelling” now than in recent weeks. These two words alone calmed global financial markets, and pushed up the price of oil.

So everything’s going to be all right then? That is what some would have you believe. “Relax. Its just a correction” say the analysts. “The stock market always goes up and up and up. Hang on in there.” However, I do worry. Where there’s volatility and instability, the causes are ultimately fundamental. Given this week’s events what can they be? Is it all to do with China?

I doubt it. When the governors of the People’s Bank of China announced a cut in interest rates – stock markets continued to fall. When a Fed governor uttered two words off the cuff – markets rallied. So when looking for a cause we need to look west, not east. Continue reading

Labour’s panicky establishment referencing the wrong period in history

Governor of the bank of England Montagu Norman with Labour Prime Minister Ramsay MacdonaldThis young country will be proud of its identity and its place in the world, not living in its history, but grasping the opportunities of its future.” Tony Blair: Leader’s speech, Brighton, 1995.

Tony Blair and those associated with Blairism embraced globalisation and studiously ignored Labour Party history – except to denounce and disown “Old Labour”.  Labour’s economic history was of very little interest to the Blairite generation. And it appears that the history of the 1930s is of little relevance to today’s leadership election debate.

Instead commentary repeatedly harks back to Bennism and the 1980s – when the relevant era is surely the 1930s.  As most economists acknowledge, the 1930s and the great depression are widely and rightly understood as the only modern precedent to the great financial crisis that began in 2007, and that still dogs the global economy. Continue reading

Global economic crisis: has Labour dodged a bullet?

a speeding bulletWhile Labour and LibDem activists mourn, and political opportunists seize the moment, is the loss of the election such a bad thing? Might this be a good time to lose an election?

I think so. The reasons can be found in both domestic and global financial imbalances, in the advance of de-globalisation trends that are manifest in shrinking capital flows and growing nationalist movements; and in rising geopolitical tensions.

As I write, out in the big wide world there are upheavals in Eurozone and other sovereign bond markets.  Whether this violent volatility will lead to a global bond market crash is an open question, but in just two weeks markets have already marked up almost €1tn of losses.  Shares in booming stock markets have begun to slide, while currency movements are increasingly erratic. Continue reading

Workers of the world unite against the new generation of trade deals

No TTIPDavid Cameron’s ringing endorsement at the G20 of the proposed EU-US trade deal, the Transatlantic Trade and Investment Partnership (TTIP), was perhaps predictable but also has opened up the topic of TTIP and its like to greater public awareness. Until Brisbane discussion of this new generation of multi-lateral trade agreements was very much a topic for aficionados.

From opening up TTIP to public debate we can hopefully unspin the web of secret negotiations that are taking place more or less across the planet that are seeking to bind the peoples of the world into an all-encompassing corporate friendly, neo-liberal settlement.

As well as TTIP, currently the Labour movement should also be concerned about the proposed EU agreement with Canada, CETA; a multilateral agreement on trade in services, TISA; and, a parallel deal that the US is trying to construct in the Pacific Basin, with the exclusion of China, TPP. Continue reading

Mr Carney, you cannot fly to “Planet Croesus”

Mark Carney, Governor of the Bank of EnglandOn the 24th October, 2013 Mark Carney, the new governor of the Bank of England, made a plea for the UK to reclaim its place “at the heart of a renewed globalisation. Such engagement would be timely” he said, “because globalisation itself is under siege.”

Mr Carney called for nothing less than that regulation of the banking system should be removed from oversight by the nationalised Bank of England, and instead should take place on what Peter Kellner recently called “Planet Croesus” – that place in the economic stratosphere occupied by global bankers and beyond the reach of accountable governments. Continue reading