Tag: England

“Our starting point for 2015/16 will be that we cannot reverse any cut in day to day, current spending unless it is fully funded from cuts elsewhere or extra revenue – not from more borrowing.

So when George Osborne stands up next week and announces his cuts in day to day spending, we won’t be able to promise now to reverse them because we can only do so when we can be absolutely crystal clear about where the money is coming from (Ed Miliband, June 22, 2013 (http://www.channel4.com/news/miliband-labour-will-not-borrow-more-to-reverse-cuts).”

It has become rather obvious that the tactic of shifting the Labour party to the left is futile, even in situations where government cuts are unpopular and they can pick up votes they refuse to reverse direction (e.g., bedroom tax and changes to child care benefit). Instead of saying we won’t be borrowing to reverse changes, the idea of taxes on wealth, the introduction of a general financial transactions tax, or introducing more bands on income tax to make it more progressive or closing tax loopholes to fund these changes is not discussed.

Adoption of neoliberalism as the basis for economic policy decisions is a political decision! It is not as though there is a dearth of other choices for economic policy that do not rely on lowering wages to maintain profitability and privatisation of public services.  As such, choices in the electoral arena are essentially mainstream political parties upholding a neoliberal position. There is essentially no political party that represents the interests of the majority in the context of a grotesque attack on the social welfare state, divide and rule ideology, and privatisation of what remains of the state sector including parts of the NHS.

h/t to Elise Hendricks for the title of this piece!

Cross posted from The Stars Hollow Gazette

As Atrios said, not at all unexpected when “you put the put a bunch of evil skimmers and the stupidest f#%$ing man on the face of the planet in charge of your economy.”

Britain’s economic output collapsed by 0.7% in the second quarter of 2012 as the country’s double-dip recession extended into a third quarter [..]

The first double-dip recession since the mid-1970s – when the UK was beset by high inflation and rising unemployment – meant GDP in the second quarter of 2012 was 0.8% lower than in the same three months of 2011. [..]

The news will come as a fresh blow to the chancellor, George Osborne, whose deficit reduction plans have been thrown off course by the poor performance of the economy. Output has declined in five of the last seven quarters. [..]

The data shocked City analysts. Howard Archer of IHS Global Insight said the figures were “a very nasty surprise indeed”. And Labour were swift to criticise the chancellor. Rachel Reeves, the shadow chief secretary to the Treasury, tweeted that the 0.7% contraction was a “disastrous verdict on George Osborne’s failed plan”.

The reason for Osborne’s sticking to his austerity guns is the AAA rating from the same discredited ratings agencies that rated Lehman Brothers and AIG as safe investments right before their crash in 2008. His policy has just exacerbated Britain’s “deep-rooted economic problems”

In his response to today’s terrible GDP figures (the economy shrunk by 0.7% in the second quarter), George Osborne wisely resisted blaming the eurozone, the weather or the Jubilee for the third successive quarter of contraction. Instead, he dwelt on the UK’s “deep-rooted economic problems”. Britain has many long-term problems – an economy too dependent on finance, a lack of long-term investment, and persistently high levels of youth unemployment – but the charge against Osborne is that he has made them worse, not better. [..]

At times of recession, when consumer spending is depressed and businesses are hoarding cash, the state must act as a spender of last resort and stimulate growth through temporary tax cuts and higher infrastructure spending. Yet it is precisely this option that Osborne has rejected at every turn, dismissing well-intentioned critics as “deficit deniers”. Today’s figures are his reward. [..]

While Osborne’s arbitrary targets are of little economic importance they are of immense political significance. Should he abandon his debt rule, the UK could lose its AAA credit rating. Standard & Poor’s, for instance, has previously warned that our top rating is conditional on Osborne meeting his fiscal mandate. But why should we listen to the discredited agenices that rated Lehman Brothers and AIG as “safe investments” days before the crash? The answer is simple: we shouldn’t. But this doesn’t alter the fact that Osborne did. Having adopted the UK’s credit rating as his metric of success (he once boasted that we were “the only major western country which has had its credit rating improve”) he can hardly change tact now.

The Cameron government should be fired and sent packing to a special asylum for treatment of “Austerity Insanity.”

Cross posted from The Stars Hollow Gazette

“Europe is watching us, I am sure that when the result was announced, in many European countries there was relief, hope and the notion that finally austerity can no longer be the only option.

“And this is the mission that is now mine — to give the European project a dimension of growth, employment, prosperity, in short, a future. This is what I will say as soon as possible to our European partners and first of all to Germany, in the name of the friendship that links us and in the name of our shared responsibility.”

“We are not just any country on the planet, just any nation in the world, we are France.”

~François Hollande, President-elect of France~

François Hollande is the new President of France defeating Nicholas Sarkozy. With half the votes counted, M. Hollande won a narrow victory with 50.8% to Sarkozy’s 49.2%, as per the French Interior minister. According to exit polls, the vote is closer to 52% for M. Hollande.

Crowds roared at the center-left candidate’s campaign headquarters as the exit poll results came out Sunday evening.

“Many people have been waiting for this moment for many long years. Others, younger, have never known such a time. … I am proud to be capable to bring about hope again,” Hollande said in his victory speech.

Celebratory car horns blared along the Champs-Elysees in Paris.

“It’s a great night, full of joy for so many young people all across the country,” said Thierry Marchal-Beck, president of the Movement of Young Socialists.

Hollande will be the nation’s first left-wing president since Francois Mitterrand left office in 1995.

His victory and the elections in Greece and Germany are sending economic shock waves through Europe:

François Hollande’s election threw down the gauntlet to Angela Merkel, the German Chancellor, who has railroaded the eurozone into agreeing a new “fiskalpakt” treaty enshrining Germany’s austerity doctrine.

The economic doctrine of austerity, to cut the burden of state spending to free up the economy, has ruled supreme with the support all of Europe’s leaders, the European Union and financial markets.

But political leaders were on Sunday night conceding the consensus had been shattered beyond repair.

With Europe’s economies plunging further into recession and as unemployment in the eurozone breaks record levels, voters demands for a new approach had finally become to great to ignore.

The popular backlash to EU imposed austerity to the centrist New Democracy and Socialist parties in Greece threatens the existence of the euro itself.

While in Germany, Chancellor Merkel was sent a message from German voters:

Exit polls by German broadcaster ARD put Mrs Merkel’s Christian Democrats at 30.5 per cent, just one per cent more than the left-wing Social Democrats.

But the Free Democrats, Mrs Merkel’s ailing coalition ally, scored a lowly 8.5 per cent, meaning that the coalition that has ruled the rural state on the Danish border since 2009 faces the prospect of being unseated.

Experts predict that the Social Democrats will try to cobble a coalition together with the Greens, the third biggest party, in order to take control of the state. [..]

While the Free Democrats appears to have avoided the humiliation of being wiped out all together in Schleswig-Holstein the continuing unpopularity of the party could force Mrs Merkel to search for a new coalition partner come next year’s federal elections.

I don’t think this is a surprise to most Europeans. It should be a clear message to the leaders of countries who are considering only austerity measures as a solution to debt.

Cross posted from The Stars Hollow Gazette

The French Presidential election will take place this Sunday, May 6. Meanwhile, the campaigning has ended Friday evening with the Socialist challenger, François Hollande, still predicted to defeat current President Nicholas Sarkozy:

The last Ipsos poll for French television and Le Monde puts Hollande on 52.5% with Sarkozy closing the gap but still behind on 47.5%. The poll was taken before the dramatic decision by centrist François Bayrou to throw his weight behind Hollande in the second round.

The vast majority of voters appear to have made up their minds, with 92% saying they know who they will vote for, and 82% saying they will definitely turn out.

Many are seeing this as not just a referendum about Sarkoszy’s “hyperactive” style but the start of a revolt against austerity which many now believe has slowed the recovery from the recession. Wolfgang Münchau wrote in the Financial Times that Hollande is start of progressive insurrection:

Nicolas Sarkozy does not look like a president, talk like a president, or act like a president. But there is a better reason why he deserves to be ejected. He won the 2007 campaign with a promise of ambitious economic reforms. He was one of the few European politicians with a mandate for big changes. He flunked it for a reason that already became apparent during the 2007 campaign: he was hyperactive. Reforms are for boring politicians. [..]

The main reason why I look forward to a Hollande presidency is for its impact on Europe. At present, all the large, and many of the small, eurozone countries are governed by centre-right governments. Angela Merkel is their undisputed queen. Mr Hollande is not going to be a comfortable partner. On some issues, such as the fiscal pact, he will challenge her outright.

I would welcome a Hollande presidency on the grounds that it would introduce a much needed shift in the toxic narrative about the eurozone crisis and its resolution. According to this narrative, the crisis was caused by fiscal irresponsibility. Its prescription is austerity and economic reforms. The tool to achieve the former is the fiscal pact, which Mr Hollande has said he will not sign unless it is complemented by policies to boost economic growth.

I wish that Mr Hollande would go further because austerity will snare countries in a low-growth trap. No set of structural policies will change this. I understand the political reason why he does not want to go further. He does not want his presidency to start with an existential fight with Germany – and the dreaded prospect of another panic attack by global investors.

While, as Paul Krugman as noted, the prospect of a Hollande presidency has generated some “hysteria” in the financial world:

Today’s FT is all Hollande, all the time. Some of it is sensible; some of it is like, well, this piece by Josef Joffe, which declares that Hollande’s likely victory is “a bleak prospect for all but new Keynesians and old socialists.” [..]

Joffe is, however, useful as a guide to the German view, which is basically that we got ourselves competitive and restored growth, so why can’t everyone else. Somehow he never mentions that Germany’s recovery in the 2000s was driven by a huge move into trade surplus; is everyone supposed to do the same thing, all at once? What’s the Germany for “fallacy of composition”?

The voting ends at 8 PM Paris time and the results will be reported here Sunday afternoon around 2 PM EDT.

Cross posted from The Stars Hollow Gazette

It’s very strange that governments knowing that austerity is just deepening the recession in Europe, they continue down the same path.

UK GDP fell faster than previously estimated in fourth quarter, ONS says

• UK GDP fell 0.3% rather than 0.2% in fourth quarter

• Economists had expected no change

• Disposable incomes fall 1.2% – worst since 1977

Britain’s economy was even weaker than expected at the end of last year, underlining the country’s struggle to avoid another recession. [..]

The signs from business surveys and much of the official data so far for this first quarter have been taken as evidence of at least a small new-year bounce-back. But there are widespread doubts over whether that can be sustained. Economists cite many headwinds facing the UK economy, including high oil prices, a government austerity drive and the sovereign debt crisis in the eurozone. [..]

Government spending, exports and household consumption grew, but economists warned that pattern had little chance of holding up.

“The government purse strings are being tightened, growth is deteriorating in key export markets, with the eurozone now likely to be in another recession, and revised retail sales data have signalled a far weaker start to the year than previously thought, raising concerns that households are continuing to retrench amid worries about the economy, jobs and rising prices,” said Chris Williamson, chief economist at Markit.

So what did the Cameron government do? If you guessed double down on austerity, you’re right. Jonathan Portes analogy with Shakespeare’s Macbeth is quite apt:

I described this as the “Macbeth argument”, from the following quote:

   “I am in blood stepped in so far that should I wade no more, Returning were as tedious as go o’er.”   [Act III, scene iv.]

In other words, since Macbeth has already killed Duncan and Banquo, it is better to carry on (and order the deaths of Macduff and his family) than to stop. So, although misguided policy has led to unnecessary economic damage, that damage is (returning to economist speak) a sunk cost; and the pain ahead is less then the pain that we would suffer if we changed course, as a consequence of the possible negative financial market reaction.

The Treasury also appears to subscribe to a variant of this argument.  When the original fiscal consolidation plan was welcomed by the rating agencies, that was a vote of confidence:  

   “Standard & Poor’s, the ratings agency, revised its outlook on Britain from negative to stable..The Chancellor said: “”That is .. a vote of confidence in the Coalition Government’s economic policies..”  Telegraph, 26 October 2010

But when the same rating agencies realised the damage the plan was doing to growth, that made it even more necessary:

   “Fitch revised the outlook on the UK’s rating to negative from stable….”A week from the Budget this is a reminder of why it is essential Britain sticks to its plans to deal with its debts,” a Treasury spokesman said…”  Telegraph, 14 March 2012

Spain has already fallen into another recession, sucked in by the black hole of austerity:

Spain’s economy is suffering its second recession since 2009, the Bank of Spain said, a development that obstructs the government’s efforts to reorder public finances as it prepares the budget for this year.

“The most recent information for the start of 2012 confirms the prolongation of the contraction in output,” the Madrid-based central bank said in its monthly bulletin today.

Spain’s gross domestic product declined 0.3 percent in the fourth quarter of last year, less than two years after emerging from the last recession. Prime Minister Mariano Rajoy will present his 2012 budget on March 30, amid growing pressure from investors and European peers to rein in the deficit, which was 8.5 percent of GDP last year.

The spending plan, his first since coming to power in December, won’t increase tax on consumption nor cut civil servants’ salaries, Rajoy said today in Seoul. The previous administration slashed wages of public workers by an average 5 percent in 2010.

Rajoy, who leads the pro-business People’s Party, hasn’t said where he will cut spending, even as he pledged today to present a budget that is “very austere.”

And just as with Britain and Greece, the same causes are exacerbating the Spanish problem, from Delusional Economics at naked capitalism:

Back in November last year I posted on my confusion over the jubilation shown by the citizens of Spain as they elected Mariano Rajoy as their new political leader. Mr Rajoy’s strategy during the election campaign was to say very little about what he was actually intending to do to address his country’s financial problems, preferring to simply let the incumbent party fall on its own sword so that he could take the reins. It became obvious soon after the election that, despite his party’s best efforts to dodge questions, the intention was simply to continue with even more austerity.

Since that post I have continually warned that although Spain is obviously a different country to Greece in regards to how its problems have manifested, it still faces significant macroeconomic challenges that were not being correctly reflected in the bond market. [..]

And in the United States, conservative state governments continue with their austerity agenda that continues to be a drag on the economy:

Republicans seized control of both branches of the legislature in 11 states after the 2010 elections. It’s in these very states that public sector layoffs are disproportionately concentrated, leading to one of the biggest rounds of job losses for the public workforce since record keeping began. Governors and state legislators promised to focus on creating jobs and balancing budgets during campaign season-even newly elected Pennsylvania Governor Tom Corbett still claims that creating jobs is one of his “top priorities.” Instead, these newly Republican states are targeting public workers, causing a significant drop in employment in the public sector that has threatened the entire economy. [..]

Economists argue over how significantly public sector layoffs in a weak economy hurt the recovery, but many agree that it has a substantial impact. Paul Krugman has estimated that if the government workforce had grown at a Reagan-era rate instead of decreasing rapidly, unemployment would now be closer to 7 percent, instead of the 8.5 percent it’s been hovering around for the past five months.

Growth in  public employment would have three positive effects on the economy:

1. It would increase spending in the private sector, thus improving the GDP;

2. It would increase tax revenues to not just the federal government with increased collection of payroll tax, but also increase the tax revenues of both state and local governments.

3. Increased spending by would have a positive effect on employment in the private sector with a need for workers to meet the demand for goods and services.

Don’t try to tell this to economic conservatives because there is more blood to be spilled. No matter how much they wash, the stain of recession remains in the hands of conservative governments in Europe and the US.

Cross Posted from The Stars Hollow Gazette

Coming to a country near you:

Frustration in this impoverished neighborhood, as in many others in Britain, has mounted as the government’s austerity budget has forced deep cuts in social services. At the same time, a widely held disdain for law enforcement here, where a large Afro-Caribbean population has felt singled out by the police for abuse, has only intensified through the drumbeat of scandal that has racked Scotland Yard in recent weeks and led to the resignation of the force’s two top commanders.

The riot was the latest in what has turned out to be a season of unrest in Britain, with multiple demonstrations escalating into violence in recent months. And there was not long to wait until a new one erupted: across London, skirmishes broke out on Sunday between groups of young people and large numbers of riot police officers, which one officer said were drawn from forces around London.  

snip

Economic malaise and cuts in spending and services instituted by the Conservative-led government have been recurring flashpoints for months.

Late last year, students demonstrating against a rise in tuition fees occupied a building near Parliament and clashed repeatedly with the police. Prince Charles and his wife, Camilla, the Duchess of Cornwall, were attacked in their Rolls-Royce as protesters – some of whom were subsequently jailed – shouted “Tory scum,” a reference to the Conservative Party’s traditional links with the aristocracy, and “off with their heads!” In March, a reported 500,000 people marched against the cuts, with some protesters occupying the exclusive food store Fortnum & Mason – Prince Charles’s grocer.

On Saturday night, as rioters in Tottenham threw fireworks and bottles at police officers, one man shouted, “This is our battle!” When asked what he meant, the man, Paul Rook, 47, explained that he felt the rioters were taking on “the ruling class.”

Rioting and looting that started in the London suburb of Tottenham on Saturday evening was sparked by the shooting of a 29 year old black man during a car stop by police earlier that day. There is a lot of conflicting reports about what sparked the incident in the first place but what is known is the young man, a father of four and alleged cocaine dealer was armed, was shot once on the chest by a police officer and died. A peaceful protest march of about 200 degenerated into gangs attacking police cars, shops, banks and other buildings with widespread looting around Tottenham. The unrest in and around London has now spread across England to Bristol, Birmingham, Liverpool and Nottingham.

There are more reasons for this rioting and goes to the heart of the Cameron government’s austerity that has cut the social safety net for the very poor and unemployed who are mostly minorities.

Like many European cities, London is in the midst of serious fiscal inadequacies, and poor neighborhoods such as Tottenham and Hackney have suffered the most. Unemployment is rampant in such areas, especially in North London.

“Tottenham is a deprived area,” recently laid-off Uzodinma Wigwe told Reuters. “UnemploymentMetro police, as well as a private agency, are investigating the riots and the shooting.

The violence has marred otherwise peaceful rallies in London against government austerity measures.

In March, isolated clashes erupted in London between police and protestors marching from Piccadilly Circus to Hyde Park to Parliament. Police fired tear gas on the protestors, who in turn threw rocks, bottles, paint and light bulbs filled with ammonia at the police officers.  That clash injured 31 police officers and led to the arrest of 214 people.

snip

Earlier in the year, student protests against a tuition hike also turned violent, with students and police clashing on London streets. Demonstrators broke out shop windows and attacked Prince Charles’ Rolls Royce as it rolled down Regent Street. is very, very high … they are frustrated.”

“We know we have been victimized by this government, we know we are being neglected by the government,” said a middle-aged man who declined to give his name. “How can you make one million youths unemployed and expect us to sit down?”

Unemployment here in the US hovers around 9.1%, among African Americans it is 15.9%, nearly double that of unemployed whites (8.1%). While not nearly as bad as 1982 when unemployment for Afican Americans soared to 19.2%, the wealth gap has widened dramatically

ndeed, blacks have suffered disproportionately in the ongoing crisis, since they have lost tens of thousands of manufacturing jobs and endured huge cuts in public sector spending. Black teenagers bear the worst of it – their jobless rate is at a staggering 39.2 percent (versus 23 percent for white teenagers).

According to a recent study by the National Urban League (NUL), almost all the financial/economic gains that blacks have accomplished over the past three decades were wiped out by the Great Recession.

The economic collapse is not only thinning the ranks of the black middle class, but has likely condemned millions more to permanent poverty.

The NUL report further indicated that the nation’s housing crisis has disproportionately hurt black home ownership, which “has fallen at three times the rate of white home ownership.”

These are the same factors that have sparked the violent unrest in England. The president and congress would be wise to cease the talk about spending cuts and talks of more austerity and pay more attention to job creation. The US has seen this many times in it’s 235 year history, the most recent during the 80’s and 90’s when the socio-economic disparity was high as it is now. It is has been proved historically that putting people back to work correct the deficit and reverse the spiral towards recession.

An important report on a Europeans review of Veterans, U.S. Veterans Courts, PTSD and Justice and Help for!

This is the type of lead the rest of the World used to look to the U.S. for, we were never perfected but working that way, and many here were once so good at it. Sadly this issue is another that comes out of our recent failed policies of destruction and terror waged on others, DeJa-Vu all over again. But shows that those who deplored our actions recently, and have been turning their backs to us in many area’s including economic, are finding some of the old America and it’s once Leadership Role in the World Community as we try to rebuild what we’ve lost and move back in the right direction!!