Not Man With a Plan but Solidarity against Finance

After Bush it was a relief to have in Obama a US President who was witty, urbane and physically attractive. However, in policy terms I think we have to admit that he has been an utter failure. US citizens need a President who can stand up for them, as Roosevelt did in the 1930s, but the US seems like a state utterly captured by financial interests. Although we will never know what happened around the Camp David hearth, we can be sure that the pressure was on Merkel to provide more cash for the vulture financiers.

It has been embarrassing in recent days to see the self-created powerlessness of our 'leaders', as one after another they call for a plan to tackle the exhausting and debilitating crisis. The absence of leadership results from the obvious fact that what is needed is a political challenge to the power of finance, while all our politicians are utterly in hock to those same financiers. The only solution to this crisis is to be honest about the gap between the real economic value of the world's economies and the phoney book value, and then to negotiate an arrangement to bring these back into balance. This would mean huge losses for all those who control the financial value. This is why it never reaches the negotiating table. Instead we have political performances of terror and concern, which are intended to soften us up for the next round of ruthless exploitation and loss of social and democratic rights. I put forward such a plan last summer, and it still seems just as relevant today.

This weekend 20,000 European debt audit campaigners have been camped and demonstrating in Frankfurt, the heart of European financial power and home to the European Central Bank. They have a simple platform of demands: refusal to accept a fiscal pact that puts finance in control and sidelines democracy and the needs of ordinary people; expression of solidarity with the struggles of the people of Greece and support for the political platform of Syriza; and rejection of the way that the debt crisis is being used to usher in the next phase of neoliberalism, that is to say financialisation and the sale, at often low prices, of public assets. Their call is for a thorough audit of all European public debts and state assets so that a real negotiation can take place about what the value of the economics is and how it can be fairly shared.
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Unified Continent not Single Currency

The first time that I was in the uncomfortable position of agreeing with Conservatives was some ten years ago when, on behalf of the Green Party, I joined the national campaign against Britain joining the Euro. The pro-finance and little Englander Tories felt the need for a bit of breadth and so invited Euro-sceptic former foreign minister David Owen, a couple of anti-European Labour MPs and a representative from the Green Party to join them.

Around the same time I published a chapter in a book called Implications of the Euro: A Critical Perspective from the Left. In my chapter I discussed the ways that a single currency would force the pace of political change in a way that the institutions could not follow and would alienate the peoples of the countries involved. This, and the growing tensions between nations that would be created, could threaten the future of the European project as a whole. The self-interest of finance could overwhelm the common interest of peace.

This morning I believe we have seen these predictions come to pass. This is why I believe that David Cameron was right not to join the treaty although, just like the Tories on the anti-Euro committee a decade ago, we could not be further apart in terms of the economic route Britain should follow. Cameron's interest is almost entirely to protect the City and to avoid its spivs and speculators from being forced to consider the social consequences of their actions. However, some in his party are articulating concerns about democracy that I still believe have merit.

It is tempting to believe that the European institutions might impose acceptable standards on the City, just as they have forced us to improve our environmental standards and reduced exploitation at work. But the problem every time has been that we have not had the power to make these decisions democratically. We do not elect people with sufficient power to make decisions at the European level and so these decisions have no more political authority than the current unelected prime ministers of Italy and Greece.

The democratic deficit is more threatening to the aims of the EU than the collapse of the euro. For many years the single market and then the single currency were ambitions driven by business to serve its interests. They have utterly distorted the institutions of Europe and have alienated many of the people of Europe from this organisation that was designed to protect their peace and prosperity. How else can we interpret the huge votes in many of Europe's most loyal members for parties of the nationalist right?

Although the details of the new treaty are as yet unclear we do know that it will involve allowing unelected European officials to set levels of spending and rates of taxation in countries over which they have no democratic mandate. The Euro always constrained monetary policy and therefore reduced the room for manoeuvre in terms of fiscal policy. But as the fiscal straitjacket is imposed, and austerity follows, it is Europe and the other nations that make up the continent that will be blamed by the citizens of the countries who suffer.
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My University Has Turned into a Bank

Previous posts about the government's determination to infect our higher education sector with the market ideology and its focus on finance rather than education in planning its policy for universities indicate a clear direction of travel: across the Atlantic.

If you want to know what they will find there, and what the shape of our universities is therefore likely to be in the next few years, you should read the article 'How universities became hedge funds' by Bob Samuels. Bob, the President of the lecturer's union AFT branch at the University of California, tells a disturbing tale of the financialisation of US universities.

The process he describes of the movement from educational institution to finance house follows five steps:

'To understand how both public and private research universities have gotten themselves into this mess, one needs to understand five inter-related factors: the state de-funding of public education; the emphasis on research over instruction; the move to high-risk investments; the development of a free market academic labour system; and the marketing of college admissions. These different forces have combined to turn American universities into corporations centred on pleasing bond raters in order to get lower interest rates so that they can borrow more money to fund their unending expansion and escalating expenses.'

We already have at least three of these features either in place or in development in the UK higher education system.

As I pointed out in an earlier post about the creation of social enterprise bonds, the marketisation of public services is not about increasing choice and putting the person who pays in control. It is about finding new ways to use debts, in this case the debts created through student loans, to create income streams that can be securitised and profited from. The filth of finance is being forced into our schools, universities and hospitals.

*The nasty pigurines are a poorly chosen selection of gifts to young savers created by Nat West in the 1980s - capitalist pigs all.
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Answers in the Trees

I do hope that there is wisdom in the woods, since I have chosen to spend my summer holiday this year at Clissett Wood in Herefordshire, where I will be learning green woodworking. I'm not so ambitious as to think I will actually make a chair, but I should become better acquainted with a shave-horse, and spending that much time outdoors is enough of a thrill for me.

The rap poet Paradox is offering wisdom from the trees in his poem about the scandal of money, banking and interest. You will have heard this message many times before since the Crash of 2008, and read plenty of similar stuff on this blog, but none of it as stylish, I think, as this six minutes of poetry. Tweet

If it is all Greek to you, read on

I'm convinced that much of the discussion about finance, global and corporate, is deliberately obfuscatory. Simple activities that could be described using words like 'gamble' or 'risky investment' are concealed in arcane phrases such as 'taking a position' or 'creating a collateralised debt obligation'.This certainly worked - even the CEOs could not understand what was going on.

But I know a woman who does. Mary Mellor has helped me find my way around the mysteries the financialised global economy, and she has also had the good sense to publish a book on what when wrong, and what we should do to put it right. It's called The Future of Money: From Financial Crisis to Public Resource. As a taster, here is her take on the mysterious drama being played out in Greece:

'The Greek situation demonstrates the problem of an interconnected global financial system. When the new socialist government took over in October 2009 it revealed that the previous government had hidden deficits in its accounts (with the help of Goldman Sachs). This was a ‘Bear Stearns’ moment. Early action at this point could have stablilised the European monetary system pro tem (but not in the longer term without reform) but the leading European economies dithered, particularly Germany where the government was facing regional elections. Bear Stearns became Lehman Brothers. Greece is a small economy within the EU (around 3% of GDP) and around 0.5% of the world economy. Its total debt was around 300 bn euros. Its immediate needs were around 8 billion euros. By the time rescue was at hand it was facing short term interest rates of up to 38% and an immediate need of a hundred billion euros. What was needed in the early stages was an injection of euros which could have been issued by the ECB. Why did this not happen?

'Because of the ideology of money issue as a private commercial matter. The ECB is not empowered to lend to governments only to the financial system as a private entity. This makes the assumption that governments and financial systems are separate, but this is not the case. As demonstrated by the 2007-8 financial crisis the financial problems of the private sector, particularly its debt crisis became a debt crisis for states. As states poured money into the sector they were forced through their ideology of privatised money to borrow from the ‘financial market’. Who were the financial market? The banks whose debt they had just rescued. Banks made money lending to states through the front door who had just rescued them through the back door. The Greek situation is even more ludicrous. Banks have lent to the Greek government. Other governments will not provide support, so banks are facing billions in bad debt. It is rumoured some banks in France, Germany or Switzerland may be threatened. They will need to be rescued by the very same governments who would not support the Greeks in the first place.'

In the mean time, of course, huge profits have been made by the financial intermediaries - money that will be paid by the Greek workers. Tweet