Sunday, January 25, 2015

Crucial vote today as Greek workers are set to reject Austerity

2013: Greek public sector workers strike against cuts

Here is Irish poet Kevin Higgins on Greece as the Greek workers vote today.  The Greek translation is below.

Austerity Mantra
Everything must be on the table.
Your ninety seven year old granny
is no longer cost effective, would
benefit greatly from being brought face to face
with a compassionate baseball bat.
The figures speak for themselves and will
be worse by morning. The paraplegic
in his insanely expensive wheelchair
will have to crawl as God intended.
Here are the figures that won’t stop
speaking for themselves, this is the table
everything must be on. Yesterday my name was
Temporary Fiscal Adjustment.

Tonight, the insect in the radio calls me
The Inevitable. When the economist
puts his hand up, take care not to cough.
Everything’s on the table and
the table’s tiny. I’d send you a pillow
to hold hard over the child’s face
‘til the kicking stops, but at current rates
there’ll be no pillow. I am the unthinkable
but you will think me. Pack her mouth
with tea towels, hold down firmly
your old mildewed raincoat,
‘til there’s no more breath.

Tomorrow I’ll be known as
Four Year Consolidation Package.
Lock the cat in the oven and bake
at two hundred degrees centigrade.
Tie your last plastic bag over
your own head. The figures speak for themselves
and there is no table.

Kevin Higgins
Greek translation by Lina Sipitanou  



ΜΕΤΑΦΡΑΣΗ: ΛΙΝΑ ΣΙΠΙΤΑΝΟΥ


Όλα πρέπει να μπουν στο τραπέζι
η ενενηνταεπτάχρονη γιαγιά σου
δεν είναι πλέον οικονομικά αποδοτική,
θα είχε όφελος αν την έφερναν καταπρόσωπο
με κανένα πονόψυχο μπαστούνι του μπέιζμπολ.
Τα νούμερα μιλάνε μόνα τους και θα ‘χουν
χειροτερεύσει ως το πρωί. Ο παραπληγικός
στην  εξωφρενικά ακριβή αναπηρική του καρέκλα
αναγκαστικά θα έρπει, όπως το θέλησε ο Θεός.
Ορίστε τα νούμερα που δεν σταματούν
να μιλάνε μόνα τους, αυτό είναι το τραπέζι
που πάνω θα τα βάλουμε όλα. Χθες το όνομά μου ήταν
Προσωρινή Φορολογική Προσαρμογή.
Σήμερα, το έντομο στο ραδιόφωνο με αποκαλεί
το Αναπόφευκτο. Όταν ο οικονομολόγος
σηκώνει το χέρι, πρόσεξε μην βήξεις.
Όλα είναι πάνω στο τραπέζι και
το τραπέζι είναι κούτσικο. Θα σου ’στελνα μαξιλάρι
να το κρατήσεις γερά πάνω στο πρόσωπο του παιδιού
μέχρι να σταματήσουν οι κλωτσιές, με τις σημερινές τιμές όμως
μαξιλάρι δεν έχει. Είμαι το αδιανόητο
όμως εσύ θα με διανοηθείς. Στούμπωσε το στόμα της
με ποτηρόπανα, πάτησε κάτω γερά
το παλιό σου μουχλιασμένο αδιάβροχο
ώσπου να μην έχει άλλη ανάσα.
Αύριο θα με ξέρετε ως
Τετραετές Πακέτο Σταθεροποίησης.
Κλείσε τη γάτα στο φούρνο και ψήσε την
στους διακόσους βαθμούς κελσίου.
Δέσε την τελευταία σου πλαστική σακούλα
γύρω από το κεφάλι σου. Τα νούμερα μιλάνε μόνα τους
και τραπέζι δεν υπάρχει.

Kevin Higgins
Μετάφραση: Λίνα Σιπιτάνου

Saturday, January 24, 2015

The King is Dead

The King Is Dead 
A poem on the occasion of the death of King Abdullah of Saudi Arabia.

Royal flag at half-mast flies
Forgotten victim sadly sighs
Only another despot cries
When a bloody tyrant dies

The great and good will eulogise
Sing loud his praise to blood-red skies
Soft-wrap his crimes in sweet disguise
When a bloody tyrant dies

Jail and flogging was the prize
For those whose voice and word defies
So must we now not criticise
When a bloody tyrant dies?

Keep alive financial ties
Watch the price per barrel rise
A show of grief keeps oil supplies
Flowing when the tyrant dies

Beheaded victims can not rise
To say good riddance not goodbyes
Speak truth through cant and fawning lies
So next it's tyranny that dies.

Friday, January 23, 2015

The ECB, QE and escaping stagnation

by Michael Roberts

The announcement by Mario Draghi at the council meeting of European Central Bank (ECB) yesterday that the ECB and the national central banks of the Eurozone would inject €1.1trn of new credit over the next 18 months into the area’s banks has certainly had a quick result. The euro dropped to an eleven-year low against the US dollar.

euro

The ECB has finally joined the Federal Reserve, the Bank of England and the Bank of Japan is what is called outright quantitative easing (QE). This is the outright purchase by the central banks of government, corporate and real estate bonds paid for by ‘printing money’, or more precisely electronically creating reserves of money in banks.

Up to now, the ECB has shied away from doing this QE and instead merely lent money or credit to the banks for increasingly longer periods of time (now up to three years) at virtually zero rates of interest. The German and northern European governments were opposed to the outright purchase of the bonds of Ireland, Spain, Portugal, Italy and Greece, the profligate governments. They feared that such purchases would allow these governments to spend as they pleased and put at risk the German taxpayer from any defaults on this debt.

But such has been the stagnation of most Eurozone economies and the growing prospect of outright deflation that the Germans, Dutch and Finns have been ‘persuaded’, kicking and screaming, that the ECB must go for broke and buy Italian and Spanish bonds held by banks, insurance companies, pension and hedge funds and hope that it helps kick-start the Eurozone economy and avoid deflation.
As I explained in a previous post
(https://thenextrecession.wordpress.com/2015/01/11/the-spectre-of-deflation/)
and also now in an article for the Weekly Worker this week
(http://weeklyworker.co.uk/worker/1042/the-spectre-of-deflation/),
there is the spectre of deflation hanging over Europe, which could drag the whole region into a deep depression and a renewed euro crisis. So action was needed.

The Draghi package is much bigger than expected, injecting funds equivalent to 0.6% of Eurozone GDP every month. This is bigger in relative terms than any other QE programme from the Fed, the BoE or the BoJ.
ECB balance sheet

There was a figleaf to the German doubting Thomases in that 80% of the supposed risk from new purchases of government debt would be down to national central banks and not shared across the Eurosystem. But that’s an illusion: if any national central bank got into trouble with losses from the purchase of its own government’s bonds, the ECB would have to bail them out anyway.
So the real question is: whether this huge QE will lift the Eurozone economy from its near deflationary depression. Well, it certainly is driving the euro down. That will help Eurozone exporters to compete in world markets against the likes of the Swiss, US and some Asian producers. But as most exports of each EMU member state are to each other, a weaker euro will not be enough to get things going.

Unless real wages (which have been falling in most Eurozone economies) and business investment (which remains stagnant in most Eurozone economies) start to pick up, there will be no escape from stagnation and depression. And QE will not do that, as I explained in more detail in a previous post (https://thenextrecession.wordpress.com/2014/11/02/the-story-of-qe-and-the-recovery/). Since the use of QE from 2010 by various central banks, global growth has remained weak and below trend and the recovery in employment and investment has been poor despite a huge electronic printing of money.  Real economic growth has not responded.

It’s demand for credit or money that drives the supply of money, not supply creating demand. And the demand for money has been weak because economic activity is weak. To use another cliché: you can bring a horse to water, but you cannot make it drink.  The ‘money multiplier’, the ratio of the amount of money printed by the Fed relative to the amount of money flowing into the wider economy has dropped like a stone.
money multiplier
QE has not worked in raising rates of economic growth back to pre-crisis levels. So where has all the money gone? It has gone into the banking system to shore up their balance sheets and restore their profits. And it has engendered a massive bubble in financial assets; and the prices of government and corporate bonds and most of all, stock prices, have rallied to record highs.
QE and stocks
The only beneficiaries have been the top 1% of wealth holders everywhere as they own the bulk of financial assets.

When QE was begun back in 2010, mainstream economists, both monetarists like former Fed chair Ben Bernanke and Keynesians like Paul Krugman, saw QE as the main economic weapon to get economies moving. Krugman even argued that the Bank of Japan’s QE programme would get Japan out of its stagnation.

How wrong can you be? The BoJ’s target of a 2% inflation rate remains a chimera some four years later, while Japan’s real economy hovers near recession, despite a QE programme that has meant a rise in the BoJ’s holdings of government bonds equivalent to 50% of GDP and rising (https://thenextrecession.wordpress.com/2014/10/13/japan-the-failure-of-abenomics/). It will be the same result for the ECB’s QE programme: the euro may fall, as did the yen after the BoJ started its programme. But there will be no significant recovery in economic growth.

The Keynesians go insisting for even more QE. But they also look to more fiscal action, namely running higher budget deficits for longer so that governments start to spend more on infrastructure, government services and benefits and even defence. This might provide some limited support for growth. But extra government borrowing is anathema to the strategists of capital because it would eventually mean higher interest rates and possibly higher taxation down the road, and thus lower profitability at a time when profitability in most economies is still below the level before the Great Recession (see my post, https://thenextrecession.wordpress.com/2012/06/13/keynes-the-profits-equation-and-the-marxist-multiplier/ and the joint paper by G Carchedi and me on the effectiveness of Keynesian-type fiscal spending, The long roots of the present crisis).

Indeed, far from looking to increase QE or government spending, the US Fed is getting ready to hike its ‘policy rate’ later this year. And the risk is that if the Fed does implement a hike in interest rates in 2015, then the financial boom will also collapse and profits will begin to fall, increasing the risk of a new slump (see my post, https://thenextrecession.wordpress.com/2014/08/01/the-risk-of-another-1937/).

Mainstream economists have started to recognise that the major capitalist economies are not ‘returning to normal, but are locked into something they now like to call ‘secular stagnation’, the main theme of the recent annual meeting of the American Economics Association (see my post). How can economies escape?

A new report from the OECD attempts to provide some answers (escaping-the-stagnation-trap-policy-options-for-the-euro-area-and-japan-1). The OECD is starkly clear: “The global economy continues to run at low speed and many countries, particularly in Europe, seem unable to overcome the legacies of the crisis. With high unemployment, high inequality and low trust still weighing heavily, it is imperative to swiftly implement reforms that boost demand and employment and raise potential growth. The time to act is now. There is a growing risk of persistent stagnation, in which weak demand and weak potential output growth reinforce each other in a vicious circle.”
Even more darkly, it goes onto to say: “The cylinders of the world economy continue to fire at only half speed. Growth is low and uneven and some parts of the world, such as the euro area, are at risk of falling into a trap of persistent stagnation, an extended period of low overall economic activity and low employment despite extraordinary monetary stimulus. A vicious circle is developing, with weak demand undermining potential growth (e.g. via a deterioration of the capital stock, structural unemployment and higher inequality) and weak potential growth further reducing demand (e.g. by discouraging capacity-expanding investment).”

It really could not be worse, short of another global slump. So what is to be done?
The OECD backs the current policy of QE and talk of investment spending. “With Japan’s launch of the “three arrows” in 2013, the EU’s recent launch of an investment plan and the euro area’s expected move towards quantitative easing, the likelihood of escaping the stagnation trap is increasing.” But it won’t be enough: “further action is needed to sustain this positive reform momentum.”

And what could this be? “structural reforms are urgently needed to remove regulatory bottlenecks to investment, reduce the administrative burden for business, and facilitate company restructuring.” In effect, the OECD wants even more deregulation in business practices, complete ‘flexibility’ in labour markets and more free trade, particularly in services: “reducing regulatory barriers …Further dismantling border and behind-the-border barriers to the international movement of goods and services will serve both to expand demand and make markets more competitive and dynamic”. In other words, the OECD wants more ‘neoliberal’ policies to allow ‘market forces’ to work. In effect, it wants ‘free markets’ in labour to keep wage costs down and free movement of capital internationally to raise profitability. Apparently, the problem is that capitalism is not being allowed to work, not that it does not work.

QE has failed in the last four years to get the major capitalist economies going; fiscal deficit spending has not worked in Japan either; so the strategists of capital look to the ‘third arrow’ of weakening labour and extending the ‘free’ movement of capital as the answer. But another slump that destroys capital values and raises average profitability is more likely to be the way out for capital.

Thursday, January 22, 2015

Saudi King Abdullah is dead.

Another despot bites the dust.
by Richard Mellor
Afscme Local 444, retired

King Abdullah, the 90 year old member of the family that runs the country of Saudi Arabia, (with US weaponry backing them up) is dead. Might it have been he was so upset at having to postpone the weekly flogging of a journalist due to international pressure? Was it possible that there was a threat of a mass mobilization by all the leaders of the "free" world to stand with the journalist and free speech?

US president Barack Obama, not known for pulling punches when it comes to old Putin, expressed his "personal sympathies and those of the American people".

Obama went on, "As a leader, he was always candid and had the courage of his convictions. One of those convictions was his steadfast and passionate belief in the importance of the US-Saudi relationship as a force for stability and security in the Middle East and beyond,"

Abdullah had the courage of his convictions alright. He believed in absolute power, religious intolerance, funding Islamic fanatical groups and religious schools. He opposed unions, free speech and women's rights. He did not consider women his equal by any measure and by some accounts has been married some 30 times fathering 25 children.

Could it have been that there were not enough beheading's last month or possibly that those damn women are still complaining about not being able to drive a car or leave home without a male family member. (even a teenage boy)

Saudi Arabia is stable alright but then so was Nazi Germany and the Soviet Union under the iron heel of Stalinism. Despots are OK if they share the loot with the US ruling class. One has to marvel at the absurdity of bourgeois politics.  The tiny Island of Cuba is blockaded for 60 years by the world's most powerful military power, the largest gathering of world leaders perhaps ever, went to Paris to stand up for free speech as the Saudi journalist received his first 50 lashes for daring to publish a website supporting freedom of speech for Saudi Arabia and the president of the US gives praise to a despot.  A Saudi woman was sentenced to 60 lashes in 2009 for simply participating in a TV show in which a Saudi man publicly talked about sex. No doubt all the freedom loving folks in the US Congress have nothing but kind words for this nasty individual. Why shouldn't they though, they are all in this together.

The thousands of workers who are brought to Saudi Arabia from places like Nepal and Bangladesh have no rights. Many of the women who work as maids have been treated with the utmost brutality, raped and in some cases killed by rich Saudi's that hire them. 

The folks at the Pentagon and in Congress don't speak for me, neither does the president.  Their diplomacy and reverence for each other and the so-called "rule of law" is phony

I hear the Bush family are in a state of grief having lost such a fine family friend.

Wednesday, January 21, 2015

The Islamisation of Birmingham


We have published numerous poems from our friend in Galway, Irish poet, Kevin Higgins. This is his response to the report by Fox News that England's second largest city is "Totally Muslim". Enjoy. FFWP Admin.

The Islamisation of Birmingham
there are actual cities like Birmingham that are totally Muslim
where non-Moslems just simply don’t go
Steve Emerson, Terrorism Expert, on Fox News

Most reckon it was the day Ozzy Osbourne
walked out the gates of Winson Green Prison,
ready to commit acts of musical terrorism
in a desperate effort to undermine Christ,
that the City began turning instead
to Mecca. All agree

the situation grew
more serious each time Roy Wood sang:
I Wish It Could Be Christmas Everyday
in the hope we wouldn’t notice
the big mad beard he got
at a training camp in Pakistan.

Spaghetti Junction was already
jammed with Moslem only vehicles,
the night the Mulberry Bush
and Tavern in the Town
were blown up by Moslems
disguised as IRA men.
Since then every nil all draw
between Aston Villa and Birmingham City
has been celebrated by stadiums half full
of nothing but Moslems.

Truth is, it started way back,
the night Chamberlain signed
his secret treaty with Adolf, agreeing
in the event of war with Russia, to hand
the birthplace of Enoch Powell
over to the Islams.

These days the local economy is mostly
Jaguar Cars and Cadbury’s chocolate
being secretly manufactured by Moslems
for export to terrorist countries busy
thinking up new ways to kill us.

KEVIN HIGGINS
Note: All people, pubs, companies, and football teams mentioned in this poem are native to Birmingham, with the exception of the late Adolf Hitler, who was born in the small Austrian town of Braunau am Inn, though his people did visit Birmingham in 1940, 41, 42, & 43.
.

Satire and free speech.

From Birgitte in Denmark

Satire means to ridicule the human weaknesses, vices and pieces of folly.

At least in Denmark satire has traditionally been used against the ruling elite. The only exception - until the recent satire began to be used against the Muslim Religion - was as far as I am aware, the satire used by the fascists against the Jews up to and during the 2nd World War.

It is not difficult to see which political wing at present is embracing the right to use satire against the Muslim religion - calling it "the freedom of speech right".

But our freedom of speech right is not threatened by attacks from a few terrorists. The threat comes from a completely different direction - the same direction where terrorism has come from - the economic mess the capitalist system finds itself in.

The terrorists in Paris were not motivated by a wish to hit our right to print or draw what suits us, but by a need to avenge the insult to their religion and not least their prophet. What some call satire was in their eyes defamatory.

Look at the situation of the Muslim population to day. What do we see? Poverty and degradation.
One of our traditions is - or should be - things are changing - that we do not walk over the weakest people. You do not step on someone who is lying down.

Syriza, the economists and the impossible triangle

by Michael Roberts

All the polls show that the leftist Syriza alliance is set to win the general election in Greece next Sunday.  It may not get an outright majority and may have to form a coalition with one of the small centre parties.  But it looks most likely that the incumbent coalition of Samaras’ conservative New Democracy and the degenerated social-democrat PASOK will lose power.

Financial markets are getting worried and Greek government bonds have dropped sharply in price as investors fear a default.  Greek banks are losing deposits as Greek corporations and the rich (or at least those that have not already done so) shift their euros overseas.  Three banks are now asking for what is called Emergency Liquidity Assistance (ELA) from the Greek central bank (in effect, liquid funds from the Eurosystem controlled by the European Central Bank).

So what will happen if Syriza becomes the government next week?  A guide to this was provided by a question and answer session with Syriza’s ‘shadow’ finance minister, Euclid Tsakalotos (soon to be finance minister?) at the London School of Economics that I attended this week.  Tsakalotos is an Oxford university graduate, now at the University of Athens (http://uoa.academia.edu/EuclidTsakalotos).

The meeting was arranged by Professor Mary Kaldor at the LSE and Paul Mason, the Channel Four broadcaster (you can read his comments on the meeting on his blog, blogs.channel4.com/paul-mason-blog/Greece-syriza-election/2941).

Other attendees included some leftist think-tanks like the Jubilee debt campaign and Red Pepper.  But also present were none other than Professor Chris Pissarides, the Cypriot-born economist at the LSE and a Nobel prize winner for economics for his work (see http://personal.lse.ac.uk/pissarid/).  Pissarides announced that he was currently an economic adviser to Samaras!

Along with Pissarides was the former head of the Cyprus central bank and ECB council member, Panicos Demetriades.  Demetriades was sacked by the Cypriot president after the bailout debacle there last year.  He had been appointed by the previous Communist president and then was blamed by the Conservatives for the bank meltdown.  But if he was a ‘liberal’, he did not show it at the meeting!  His main line was that the ECB and the Euro leaders would not compromise on debt reduction and Syriza was living in cloud cuckoo land.

What was Tsakatolos’ position?  He said that Greece had to get ‘fiscal space’.  By this he meant that the government needed funds to spend on ending the humanitarian crisis, save health and public services and end desperate poverty.  This could be done if the EU agreed to a debt reduction sufficient to reduce debt servicing to the minimum; and for the government to run a primary budget balance rather than a 4% surplus as the Troika (ECB, EU, IMF) demands.

Tskatolos was clearly right in his priorities.  The Greek economy remains in a parlous state. Unemployment was more than 25% at the last count.  GDP has collapsed by more than 30% since its peak before the crisis: a decline comparable only to that seen in the US during the Great Depression.  Public services have been decimated and poverty is rife, despite the resilience of the Greek people.  The austerity measures demanded by the Troika  for its loans and implemented by the coalition government with hardly a whimper has been draconian.  A widely recognised measure of fiscal stance is the underlying (cyclically corrected) primary balance (the deficit less debt interest). It shows that Greek austerity has been huge.
Greek austerity
If Greece got its ‘fiscal space’ then the Syriza government would have €6-7bn a year to spend.
The debt issue is clearly essential to deal with.  Greece’s public sector debt to GDP ratio is at an astronomical 175% of GDP.  Whereas the majority of that debt was held by French and German banks up to 2012, after the ‘orderly restructuring’ of the debt, now 78% of the Greece’s €317bn of public sector debt is held by the Troika.
greek debt
As I have pointed out in previous posts, around 90% of the €217bn of loans provided by the Troika went to pay off Europe’s banks and the hedge funds that held the debt.  The banks got most of their money back, leaving the Greek people with the bill.  This is now owed to the Troika. Back in 2012, the EU leaders finally recognised that the huge public sector debt that the Greeks had incurred in bailing out their banks and in funding the repayment of debt and interest to foreign lenders (mainly German and French banks) was just too great. They agreed with the conservative government in Athens that more funds would be made available, but that private creditors would take a ‘haircut’ in what was owed them.  So French and German creditors swapped their Greek government bonds for new ones worth a little less, but guaranteed by the euro stability funds (see my post, https://thenextrecession.wordpress.com/2012/03/09/greece-the-biggest-debt-default-in-history/).

This ‘haircut’ (along with savage austerity measures) was designed to reduce Greek government debt from 165% then to 120% of GDP by the end of this decade.  But the problem is that, if the Greek economy does not grow and drops into a deflationary spiral, then, even if the euro value of Greek debt is reduced, the euro value of Greek GDP will fall even more, so that the debt burden rises, not falls. And that is what has happened. Three years later, the Greek debt ratio is even higher at just under 175%.

The IMF continues to have the ludicrous position that this debt ratio can fall by 40 percentage points by 2019 – if austerity continues, as agreed by the conservative government with a primary budget surplus of 4% of GDP, if real GDP grows by over 3% a year and if inflation returns at a rate of over 1% a year.  Instead the Greek economy is deflating. The debt ratio is likely to rise even more.

Tsakalotos reckoned that the EU leaders would agree to debt relief and an adjustment of the fiscal programme because it was sensible and had support in other parts of the Eurozone too. But the question of how to grow the Greek economy even if Syriza gets a debt deal with the EU, which remains in doubt, was not properly dealt with in his answers.   Nobel prize winner Pissarides argued that the real task was to raise productivity through ‘labour market reforms’ along the lines of the Germans and now Italy’s social democrat PM Renzi.  Pissarides meant by that ending restrictive practices in the trade unions; money for training instead of welfare benefits, privatisation etc. This openly neoliberal position was, of course, opposed by Tsakalotos.

Instead, Tsakalotos advocated a ‘social market’ model (apparently he is an advocate of the old ‘Alternative Economic Strategy’ in the UK promoted by the likes of Stuart Holland and other left reformists) where government intervenes to correct or help the capitalist sector. And he called for an investment programme using EU money from the EIB etc. But there was no mention of control of the Greek banks and strategic industries and we know that defence spending will be maintained and Syriza will not leave NATO (as Paul Mason pointed out).

Overall, my impression of Tsakalotos was his strategy was to put forward a ‘reasonable’ set of proposals to the Troika and hope/expect them to compromise on a debt deal.  This was partly a hope and also tactical for the media.

What will happen?  Can Syriza maintain what some have called the impossible triangle: namely 1) stay in power, 2) reverse austerity and 3) stay in the euro?  Or will one or more have to go? Well, if Syriza does not get an outright majority, then debt negotiations will be weakened by a coalition government and there would be the possibility of a new election by the summer.

Probably the best that Syriza can expect is possibly some form of ‘London agreement’ (debt reduction along the lines that Germany got after the war) or more likely an extension of the terms of the debt with lower debt servicing costs or even perpetual rollover bonds.  But this would have to be made available to the likes of Portugal and Ireland who otherwise may object that Greece is getting special treatment.  But then the Germans could say, as they have already done, that Greece is an exception that proves the rule that the Eurozone works.

I still think the Germans do not want to push Greece out of the euro, despite the pressure of the eurosceptics in the AfD, as they see the risk of an involuntary exit with debt default as risky for the Euro project.  So they may eventually offer some concessions (but probably way short of what Syriza needs).

The Breugel research think-tank has done some estimates of the likely losses that Germany would incur if there is a ‘Grexit’, i.e. Greece is forced out of the Eurozone.  The Eurosceptic IFO Institute reckons that Grexit would cost Germany €76bn while a Greek default within the Eurozone would cost €78bn.  Not much difference.  But Breugel reckons that IFO has ignored the impact of losses for German corporations if there is Grexit and many Greek companies default on their trade debts.  German banks and industry could take a big hit if Grexit happens (http://www.bruegel.org/nc/blog/detail/article/1542-why-a-grexit-is-more-costly-for-germany-than-a-default-inside-the-euro-area/).
The negotiations on the debt are likely to be tortuous and so I expect the EU leaders/ECB to keep the Greek banks and government afloat over the next few months.  I doubt there will be a run on the banks or a collapse of Greek banks.  It is too dangerous for the Eurozone as a whole for the ECB to allow it.

Then the question is posed to Syriza: do they accept less than acceptable debt terms and hope to use the time to grow the economy on a capitalist basis; or do they reject them and opt Argentina-style for a unilateral debt reduction and budget spending?  The latter option would mean possible EU loan suspension and ECB lending (although that would be illegal under EU rules).  Then Syriza would have to take over the banks and leading industries, involve workers in production control; slash defence spending and monies for the army and police; and appeal for EU support for an EU-wide growth plan based on public investment.

I think a compromise deal is most likely; giving Syriza some time to hope for recovery on a capitalist basis.  What are the chances of that working?   Well, Greek labour costs have been slashed so Greek capitalism is more ‘competitive’ …
Greek labour costs
but the private sector is not investing and profitability is very low.
Grek profitability
The EU will likely inject some EU funds into Greece but not €6-7bn a year as Syriza hopes – and even that is nothing after the 40% cut since 2009.   So over time, the pressure will build from below for more serious action to end poverty, create jobs and restore public services, particularly education, housing and health.

If Syriza cannot or won’t respond to that pressure, then it will split or its supporters will become disillusioned and Syriza will fall back.  Syriza is divided between those like Tsakalotos who look for a ‘social market’ solution within the Eurozone and those like Costas Lapavitsas who reckons the only answer is for Greece to leave the Eurozone.  Lapavitsas is a professor at London University most noted for his work on financialisation in modern capitalist economies (see my post, https://thenextrecession.wordpress.com/2013/11/12/the-informal-empire-finance-and-the-mono-cause-of-the-anglo-saxons/).  Now he is standing as an MP for Syriza.

And he is not the only leftist/Marxist economist doing so.  It seems that Syriza has more UK or US-trained economics professors on their MP list than any party in Europe!

Another on the Syriza list is Yanis Varoufakis, professor of economic theory at the University of Athens, who has been calling for a Europe-wide, EIB backed investment programme to revive the Eurozone economy (http://yanisvaroufakis.eu/).  He has had misgivings about being a candidate for parliament as he is not sure ‘the triangle’ is possible (http://www.bostonreview.net/world/varoufakis-greece-austerity-syriza-left).  During the Cypriot banking crisis and bailout last April, he advocated selling back the recapitalised banks to the private sector
(https://thenextrecession.wordpress.com/2013/04/20/why-sell-back-the-viable-banks/).

Public ownership of the banks and strategic industries should be a central part of Syriza’s programme for economic revival, but it is not.

The ‘impossible’ triangle for Syriza of staying in power, reversing austerity and keeping the euro remains a question mark.  But no crisis of policy and action is likely in months as some at the LSE seminar seemed to think.  I think we could be discussing the same dilemmas on debt, growth and the EU this time next year.

Monday, January 19, 2015

Religion and Charlie Hebdo

Not with original article: source
We are sharing this commentary for the interest of our readers.

by Finbar Geaney

Comrades:

In the battle against backward ideologies and reactionary political movements it is not correct for Marxists to create a special category for religion. Like other political ideas, belief in a supreme being - of whatever vintage – can only be properly understood in the context of the concrete social and political circumstances of the time. In the endeavour to persuade workers and other oppressed layers of society of the necessity for socialism we must firstly be honest. Belief in any God or any coterie of prophets is nonsensical. While it is always necessary to be clear about this question - on the occasions that it comes up - those who don’t agree with that position can still work closely with Marxists and socialists towards the achievement of reforms or revolution.

The prophet Mahomed is an absurd invention, as are Jesus Christ, the biblical Moses and the angel Mormon. The primary task in any political discussion is to be honest. To concede that any veracity attaches to the inventions of religion is to patronise. To pretend that Jesus Christ, or Mahomed, or Joseph Smith were some kind of forerunners for modern socialism is totally ridiculous, but worse, it is dishonest. All people, however oppressed, are capable of understanding truth. None of these religions are peace-loving fraternities. Excepting perhaps the coven of witches and warlocks that is to be found in South West England!

Unfortunately religious ideas have been gaining some traction in recent years. This is primarily because of the failure of the organisations of the labour movement to robustly oppose capitalist society and to convincingly present a socialist alternative. Jorge Bergoglio (aka Pope Francis) was enthusiastically received last week in the Philippines; six million people are reputed to have turned out to observe his ministrations. The Hindu gods have gained a new lease of life since the coming to power in India of Narendra Modi and his Bharatiya Janata Party. Islam has increasingly been mobilising supporters, principally in the Middle East and Asia but also in the poorer suburbs of some European cities. This religious revival is traceable to increasing poverty and alienation in the poorer nations of the world. Without exception this development in religious fervour constitutes a reactionary movement and creates barriers to the growth of socialist ideas.

Different groups and individuals will inevitably confront the influence of religious ideas in different ways. The courage of Charlie Hebdo’s cartoonists is beyond doubt, as is the barbarity of their murders. There is no single template that Marxists can realistically expect to be universally applied in the ongoing struggle against backwardness. Satire and ridicule are but two means by which the falsehood of a political position can be exposed. Lengthy written analysis or short pithy summaries are other vehicles that are used in the continuing battle against reaction and obscurantism. There is room for all forms of serious criticism.

There is nothing obnoxious or distasteful about caricature in the everyday battle against cant and medievalism. In fact sometimes caricature may be the best tool to employ. There are occasions when a good cartoon can be more effective in raising consciousness about a particular circumstance than a lengthy polemical article. One needs only to look at some of the great cartoons of Gerald Scarfe or Ralph Steadman during the Thatcher years. Incidentally, the 1963 cover of the Private Eye Annual had a Scarfe cartoon showing Harold Macmillan as a naked Christine Keeler. That issue of the paper was banned in many English shops at the time. The eighteenth century cartoonist William Hogarth exposed the hypocrisy of church and political leaders in his series of cartoons A Harlot’s Progress, which depict a young female character Moll Hackabout being ruthlessly exploited. Alan Hardiman’s cartoons, which appeared regularly in the British Militant, are amongst the most brilliant of their genre.

Those people who object to the overtly sexual content of the Charlie Hebdo cartoons can argue about the aesthetics or the politics of the representation but, from the point of view of the devout Muslim, the Prophet should not be depicted at all in any form whatsoever; so that if Charlie Hebdo’s artists had depicted Mahomed in his best dress and having supper with his family it would equally offend. It is probably true that few would choose to caricature Mahomed in the manner chosen by Charlie Hebdo’s cartoonists but comrades should not be too precious about this. Good taste is not always a feature of the cartoonist’s art. Comrades will recall the outcry about the sexually-explicit Rupert Bear cartoons published in OZ magazine in 1970 and the obscenity trial that followed.

There have been times when some Christian sects too forbad the representation of their iconic figures. In this regard Savonarola and his iconoclasts had great fun in fifteenth century Florence going around destroying images. But if this prohibition had continued unchecked what would have happened to Renaissance art! Or to the pre-Raphaelite painting by Holman Hunt, The Light of the World!

The fact that supporters of particular religions have sensitivities about how their icons are treated in the media is not surprising. However we do not worry unduly about for example the proclivities of Devil worshippers. A group of deluded wikkas in Western Cornwall could not expect to escape being caricatured in the media. And what about Rastafarians wandering around Brixton offering homage in their own way to Ras Tafari Makonnen!

All the major world religions have had a barbaric history, peppered with slaughter and sacrifice. Aztec priests in Mexico sacrificed members of their own religion in an endeavour to appease the god Huitzilopochtli? Wahhabi autocrats in Saudi Arabia today carry out beheadings and other barbaric punishments under the guise of Sharia Law in an effort to protect their regime; last May a Saudi man was sentenced to one thousand lashes for the crime of insulting Islam, a sentence that is currently being carried out. (Note the silence from the US.) Apart from assisting slaughter on the battlefield the god of Judaism and Christianity supposedly demanded that one of his most fervent admirers, Abraham, murder his own son. The expansion of Islam was achieved through military conquest. But there is nothing new in Islam; it is just that their current jihadist injunctions come hundreds of years after another of the favoured religions ‘of the Book’ discarded the useful and self-serving notion that death on the battlefield in the cause of the Supreme Being brings immediate and tangible rewards in Paradise.

It is not racist to combat Islam or to caricature Mahomed. Neither is it racist to lampoon the leaders of Catholicism, or of Judaism, or of Mormonism. The fact that the Front National in France or UKIP in Britain or Pegida in Germany is currently targeting members of the Muslim religion does not mean that we, or anybody else, have to remain silent on the backwardness of these religions. Nor should it mean that our criticism should be muted merely because it might cause offence. There are concrete reasons why a particular news outlet might decide not to republish Charlie Hebdo’s cartoons, among them being a real fear of the most extreme violence being used against anybody who defies the zealots on this question. Employers too have a duty of care to their workers. But such decisions are practical; they are not about trying to avoid causing offence.

No set of ideas is above criticism. No individual, real or invented, should be protected from satire and caricature. The origins of today’s Islam are traceable to the imperial needs of the expansionary Arab empires of the seventh and eight centuries. The bloody civil wars within Islam on a world scale today have their origin in wars between competing Arab empires more than a thousand years ago. It is the leaders of these empires and their equivalent today who are being taken to task in our critique of Islam. It is they who generated the inventions and myths that surround the person of Mahomed and that were used then to secure the allegiance of the peoples of these empires and that are being employed now to hold back support for socialist and revolutionary ideas. For example the Muslim Brotherhood wish to see restoration of the rule of the Arab landlord class and the destruction of socialist ideas throughout the Middle East.

Christianity became the official religion of the Roman empire during the fourth century when the emperor Constantine allied himself with the Christian hierarchy in pursuit of his imperial ambitions. The story of Christ was welded to the material needs of this soldierly emperor. Young Muslims were not born with a belief in Mohamed. The belief system of Islam, as of Christianity, is inculcated through family, schools and socialisation. It is necessary that believers reach an understanding that they are being exploited and that the ban on the representation of Mahomed is but an attempt to elevate the reactionary ideas of Islam beyond the reach of criticism. There is no easy route to this goal. But to try and reach this objective without directly confronting religious backwardness would lead only to a strengthening of illusions and further divisions between peoples.

Friday, January 16, 2015

Remembering Frank Fried 1927-2015


Here is an obituary and tribute to Frank composed jointly by several of his friends at the request of his family. 

As indicated at the conclusion of the obituary (below), there will be a memorial for Frank on January 24, 1pm to 4pm, at the Grand View Pavilion, 300 Island Drive, Alameda. 

Jack Gerson

Frank Fried
Franklin Fried, who devoted more than 70 years to supporting and fighting for freedom, justice, equality, and liberation for working and oppressed people in the U.S. and around the world, died Tuesday, Jan. 13, at his home in Alameda, California. He was 87.

Frank was the principal presenter of folk and popular music in Chicago for a quarter of a century, but he always thought of himself, first and foremost, as a revolutionary socialist. In his own view, his signal achievement was a historic 1968 series of benefit concerts in Chicago for the Southern Christian Leadership Conference, which he organized at the request of Dr. Martin Luther King, Jr. He also produced the Beatles’ 1964 and 1965 Chicago appearances, along with innumerable concerts by the Rolling Stones, Led Zeppelin, Miriam Makeba, Pete Seeger, Frank Zappa, the Chad Mitchell Trio, and many other artists.

Frank was a radical, a socialist, and a labor and civil rights activist throughout his life, and he took great pride in never having abandoned his principles of fair play throughout his storied show business career. “After shaking hands with some managers and promoters in the business, you would have to check if you still had all your fingers,” he would half jest. The colorful story of how he tried to be different, with mixed success, is recounted on his web site, showbizred.com.

Frank was born in 1927 on Chicago’s north side. His father, a lawyer in private practice, died when Fried was a child. His mother worked as a secretary for the Illinois State Athletic Commission. After serving briefly in the Navy at the end of World War II, Fried joined the Socialist Workers Party (SWP) as a teenager and worked as a welder in Chicago’s booming U.S. Steel South Works plant. He was attracted to the SWP’s democratic vision of world socialism.

In 1947, he and his Chicago comrades helped lead a broad and successful defense campaign for James Hickman, who was up on murder charges. Hickman, an African-American sharecropper who had recently moved his family to Chicago from the South, was accused of shooting the landlord who had burned his family out of their apartment, killing three of Hickman’s children. With help from SWP organizers, community pressure got the charges reduced and Hickman released. The dramatic story is recounted in a recent book from Haymarket Press, People Wasn’t Made to Burn, which is dedicated to Frank.

Frank called the campaign “perhaps the party’s finest hour” and credited that organizing experience for much of his later success in building broad coalitions for social justice. Frank had a remarkable ability to collaborate with folks from across the left spectrum, and to help others reach out and build in ways they would not have done without his help and counsel.

A few years later, Frank was expelled from the SWP along with prominent dissident Bert Cochran and many of the party’s foremost intellectuals and labor activists. In 1954 Fried helped that group launch the American Socialist, a magazine that aimed to free the idea of socialism from its association in the American mind with Stalinist dictatorship, and he traveled the country promoting it. The magazine folded in 1959, a victim of the poisonous cold war atmosphere, Frank said later. “The trajectory that we expected of hooking up with militant sections of the labor movement and a new beginning of the radical movement never happened,” he explained.

“The group did not leave much of a footprint, but individuals played an important role in the labor and civil rights movement, and the attractive style and open tone of the magazine did leave an imprint on the New Left that came after us,” he added.

For Frank, the value of the American Socialist group lay in reaching out and attempting to regroup with other socialists without rejecting its Trotskyist background. “We attempted to bring our heritage to the problems and radical language and organization of the modern world without ever forgetting the legacy of Leon Trotsky, who had an incredible impact on me as he stood up for workers democracy against the tides of history,” he said.

Frank stumbled into show business when he met Martha Schlamme, the European chanteuse, at the Gate of Horn, an early folk music venue in Chicago. In need of a job and intrigued by the power of folk songs to move people emotionally and politically, Frank went to work as an assistant to Albert Grossman, the club’s owner. On a 1956 trip to San Francisco on Grossman’s behalf, Frank met the Gateway Singers, a racially integrated folk-singing group, and managed the group through their period of greatest commercial success. He had a knack for managing, and by the end of the 1950s he was also handling the Chad Mitchell Trio and numerous other prominent folk and popular music performers.

Frank opened Triangle Productions in 1959, with fellow socialist Fred Fine, in order to raise money for leftist projects through benefit concerts. When folk music became a pop craze during the Kennedy administration, the business took off. This was a major cultural turn away from the repression of the 1950s, both culturally and politically. Many of the folk artists were unabashedly radical, and some, like Pete Seeger, were still blacklisted. Frank took special pride in being one of the first commercial promoters to book Seeger, whose sold-out concerts on Frank Fried’s stage in 1957 marked a defeat for the McCarthyite blacklist.

When Bob Dylan’s turn from folk toward rock resulted in an explosion of psychedelic, blues- and country-inflected music, Frank recognized that the new groups would seize the spotlight from both acoustic folk groups and more traditional, pasteurized pop. He moved quickly on this insight. By the early 1960s, Triangle shows dominated live entertainment programming in Chicago and the surrounding area. Triangle Productions ran tours and concerts for the Rolling Stones, the Mothers of Invention, and many other major acts of the time. Meanwhile Frank Sinatra, Harry Belafonte, Johnny Mathis, and Barbra Streisand remained regulars on his stages.

Throughout his career, Frank tried to weave themes of social justice into his cultural promotions, paying special attention to Miriam Makeba and other politically engaged artists. In 1963 Frank served as producer for “We Shall Overcome,” the only commercial recording by the SNCC Freedom Singers, on Mercury Records. He took an active role in the movement against the Vietnam War as a leader of Business Executives Move for Vietnam Peace.

In 1977 he returned to his roots in the steel industry as a key backer of Ed Sadlowski’s insurgent “Steelworkers Fight-Back” campaign. Frank traveled the country with Sadlowski, working plant gates and union halls in an attempt to divert the Steelworkers Union from what Sadlowski had dubbed “tuxedo unionism” and toward a militant working-class perspective. He and Sadlowski became lifelong friends.
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Frank sold his production company in the early 1980s and moved to Los Angeles with his wife Françoise, hoping the weather might help ease her congenital degenerative disease. After Françoise’s death in 1985, Frank moved to New Orleans as the CEO of the Delta Queen Steamboat Co. He remarried there in 1988 and moved to the hills above Oakland, California with his second wife, the mystery writer Alice Wilson-Fried, and their daughter Teasha.

Frank’s friendship with Miriam Makeba inspired him to active solidarity with the fight against Apartheid in South Africa. After Apartheid, he was a stalwart supporter of the struggle to build a Socialist alternative as the only way to guarantee the promise of Liberation. He helped launch Amandla!, a popular radical opinion magazine associated with the Democratic Left Front, and remained a valued advisor to its editors.

Frank met the writer Daniel Singer when they fought together to defend Solidarnosc against the the Polish and Soviet Stalinist parties. In the 1990s, Frank led the launch of the Daniel Singer Prize, an annual essay competition for young people on topics related to socialism.

In 2011 Frank plunged into supporting the renovation of the Trotsky Museum in Mexico City, organizing a U.S. tour by Esteban Volkov, Trotsky’s grandson. Frank recently joined the Solidarity chapter in the Bay Area as a means of being connected to the movement he invested so much of his hopes in. His longtime comrade Carl Finamore reported that even when Frank was too frail to speak, “he was able to muster enough energy to give us the middle finger and the raised fist at separate points during our discussions.”

Preceded in death by his first wife, Francoise Nicolas, and his elder sister, Vivian Medak, he is survived by his wife Alice, his children Pascale, Isabelle, Bruno, Troy, and Teasha, and many grandchildren, nieces and nephews.

Frank’s memorial celebration will be held January 24, 1pm to ­4pm. at the Grand View Pavilion, 300 Island Drive, Alameda, California. In lieu of flowers or gifts, the family requests that donations in Frank’s memory be sent to Amandla! Magazine (in care of editor Brian Ashley,brian@amandla.org.za) or to the Center for Constitutional Rights (http://goo.gl/H4Cmcr). 

Tsunami comes to Davos

by Michael Roberts

“Words fail me,”
said Swatch Chief Executive Officer Nick Hayek speaking yesterday, “Today’s SNB action is a tsunami; for the export industry and for tourism, and finally for the entire country.” Hayek was referring to the decision of the Swiss National Bank (SNB) to drop its peg or cap of the Swiss franc with the euro. The SNB had been fixing the exchange rate of the franc at 1.20 to the euro. It was doing this to try and keep Swiss industry competitive with the rest of its Eurozone competitors in France, Germany and Italy. But international companies, financial institutions and investors wanted to hold their cash (ill-gotten gains?) in Swiss francs, the epitomy of safety, so money kept flooding in from euros and other currencies into the franc. The only way the SNB could dam this flood was by using its FX reserves to buy euros as fast as investors bought Swiss francs.

But this meant that the SNB was building up a huge stock of euros on its balance sheet and the euro was still losing value against other currencies. Its stock of euros reached 80% of Swiss GDP. When it became clear that next week the European Central Bank was going to start printing huge amounts of euros to buy Eurozone government bonds in order to weaken the euro even more in an attempt to make France, Germany etc even more competitive in world export markets, the SNB decided that it could not hold the dam anymore, let it be breached and the tsunami came.

The Swiss franc appreciated against the euro by over 30% in a few hours before settling back to a 17% rise. This is a catastrophe for Swiss companies, especially relatively small ones that make their money in euros rather than dollars. Hayek’s company, Swatch, the world’s biggest maker of Swiss watches, dropped 17% in value. Holcim, the world’s biggest cement maker, slid 13%. Even Nestle, the world’s largest food company, which gets about 98% of its revenue from outside Switzerland, declined as much as 11%, the biggest intraday drop in more than 17 years.

The SNB will try to stem the purchase of Swiss francs by investors by charging to hold deposits in Swiss banks. In other words, if you want to have Swiss francs, you won’t get any interest on your deposit; on the contrary, you will pay up to 1.5% a year to the bank for the privilege! This is unprecedented in post-war banking.  The Swiss action is a barometer of the growing deflationary pressures on the major economies. As IMF director general Christine Lagarde put it yesterday, global growth was “still too low, too brittle and too lopsided”. There was a risk, she added, of the Eurozone and Japan getting stuck “in a world of low growth and low inflation for a prolonged period”.

Next week, the global corporate chief executives and politicians meet in the Swiss ski resort of Davos for the annual jamboree where the great and the not-so-good discuss the key problems of world capitalism and strategies for dealing with them. Last year it was inequality and the need for emerging economies to close the gap with advanced economies. This year it is going to be the spectre of deflation and continued slow global growth. The Swiss franc tsunami will concentrate the minds.

The consensus continues to rely on the US economy to lead the way out of the Long Depression. Last week the World Bank cut its forecast for global real GDP growth – yet again. The bank forecast the world economy will grow 3.0% this year and 3.3% in 2016, down from its earlier forecast of 3.4% and 3.5%, respectively. Indeed, this lower forecast relies on the US growing faster than the 2.5% rate in 2014, or 3.2% in 2015.

But it made the point that supposedly stronger US economic growth this year would be unable to compensate for slowing growth and deflation elsewhere; in the Eurozone, Japan and the major emerging economies of Russia, Brazil, China, South Africa and Turkey (only India might grow faster this year).
Global growth reduction
World trade growth continues to fall well behind trend before the Great Recession.
Global trade
The so-called emerging economies are running well below their full potential, according to the World Bank.
EM gap
The slowdown in China threatens to push the economy into deflation there too.
China deflation
A new report by the IMF shows that, while global unemployment is finally back to levels seen before the global financial crisis, global employment is growing at just 1.5% a year, far slower than the 2.0-2.5% growth rate seen before the crisis.
Global unemployment
The new report shows a striking divergence between advanced and emerging economies. Unemployment in advanced economies stood at 7.4% in 2014, far higher than the 5.7% seen in 2007. The Eurozone is largely responsible for that elevated level, with most economies other than Germany struggling to regain ground. And the report clearly underestimates unemployment in the major emerging economies, which is likely to rise during this year, as Russia and Brazil go into recession; and China, Turkey and South Africa slow.

As Mohammed El-Erian, the guru of bond fund managers, put it, the optimism likely to be expressed in Davos is based on some doubtful assumptions: faster US economic growth, no more tsunamis for corporations like that with the Swiss franc, and a stop to the slide into deflation as energy prices drop.

The flood of credit injected into the major economies since 2009 to kickstart economic recovery and return to sustained trend economic growth has failed to do so. The ECB and the Bank of Japan are planning more credit injections, while the US Fed has stopped and now wants to tighten credit and ‘normalise’ interest rates. Global monetary policy is thus at sixes and sevens because of the low and imbalanced rate of growth.

Most important, the hopes of Davos attendees that the US will lead the way are likely to be dashed. All the very latest data from the US suggests that the economy has slowed considerably from its apparently fast pace in Q3 2014 (see my post,
https://thenextrecession.wordpress.com/2015/01/11/the-spectre-of-deflation/).  The US inflation rate, out today, fell to just 0.8% in December.

|The US will be unable to hold up the world like Atlas. A deflationary tsunami is weighing it down.

PS don’t forget my facebook site at https://www.facebook.com/pages/Michael-Roberts-blog/925340197491022