Al Jazeera Empire: Can the International Monetary Fund recover its lost credibility and fix the world economy?
Category: Economy
Dirty Money
The lavish lifestyles enjoyed by dictators across the Middle East and North Africa have fuelled widespread anger at the way national assets have been looted for the benefit of the few. So what happens to all this wealth once it is spirited out of the country? Can it ever be recovered? And why does the international banking system make it so easy for corruption to flourish? Al Jazeera’s People & Power asked veteran financial journalist, Steve Levinson, to investigate.
See also a recent report by Global Financial Integrity, which estimates illegal capital flight from Africa at more than $1 trillion over the past four decades, “facilitated by a global shadow financial system comprising tax havens, secrecy jurisdictions, disguised corporations, anonymous trust accounts, fake foundations, trade mispricing, and money laundering techniques.”
The People vs Goldman Sachs
Matt Taibbi has just published a major new investigative piece on Goldman Sachs, “The People vs Goldman Sachs,” in the new issue of Rolling Stone. Following are some of Taibbi’s media appearances to discuss the article.
Is there a chance of another economic meltdown?
Gerald Epstein: Real message of S&P downgrade of US debt outlook is threat of another meltdown of finance sector.
Meanwhile, Goldman Sachs, the investment giant that brought you the financial crisis and world food crisis, is lobbying to weaken the Volcker rule, which is designed to limit banks from speculating with their own money.
Continue reading “Is there a chance of another economic meltdown?”
The Social Democratic Manifesto
Tony Judt’s Ill Fares The Land: A Treatise On Our Present Discontents is an elegantly crafted elegy for the postwar consensus and a concise and erudite statement by a towering public intellectual of political wisdom accumulated over a lifetime of achivement. Its intended audience is ‘youths on both sides of Atlantic,’ who are too leery of civic engagement because of their disillusionment with politics and suspicion of government. Judt aims to invigorate their interest with challenging ideas and a practical project for political transformation. He offers no utopia, but an alternative that is ‘better than anything else to hand.’ He makes a case for social democracy, a form of government that can play an enhanced role without threatening liberties.
Judt begins with a diagnosis of the present malaise, a condition JK Galbraith described as ‘private wealth and public squalor.’ Judt finds something ‘profoundly wrong’ with an age which has made ‘a virtue out of the pursuit of material self-interest.’ Like Oscar Wilde’s cynics, he laments, ‘we know what things cost but have no idea of what they are worth.’ With ‘growth’ as the only index of progress, politicians have been able to claim success even as inequality has reached grotesque proportions. The decline began with Reagan and Thatcher’s assault on the welfare state, but has proceeded apace both in Britain and the US under successive Democratic and Labour governments. The result is a society marked by extreme inequality and broken communities. Judt draws on the work of Richard Wilkinson and Kate Pickett, authors of The Spirit Level, to show a correlation between the extreme inequality of the American and British society and its adverse consequences on health, crime, and social mobility.
John Maynard Keynes: National Self-Sufficiency
“It is not intelligent, it is not beautiful, it is not just, it is not virtuous – and it doesn’t even deliver the goods.” Thus spoke the most influential economist of the 20th century John Maynard Keynes on the inter-war economic system.
Keynes had been a great believer in traditional economics, that is, until the Great Depression. Then everything changed. In the following essay Keynes explains the flaws in free market economics, his plan for the future, and the pitfalls that must be avoided.
In his argument for an expanded dialogue on economics, Tony Judt frequently references Keynes. Judt opines that we must also discuss economics in terms of justice; rather than purely in the terms of a narrow minded accountant. In this sense, Keynes’s work is the perfect antidote to the multiplied bray of the free market loudspeaker.
I was brought up, like most Englishmen, to respect free trade not only as an economic doctrine which a rational and instructed person could not doubt, but almost as a part of the moral law. I regarded ordinary departures from it as being at the same time an imbecility and an outrage. I thought England’s unshakable free trade convictions, maintained for nearly a hundred years, to be both the explanation before man and the justification before Heaven of her economic supremacy. As lately as 1923 I was writing that free trade was based on fundamental “truths” which, stated with their due qualifications, no one can dispute who is capable of understanding the meaning of the words.
Continue reading “John Maynard Keynes: National Self-Sufficiency”
Keynes, Crisis and Monopoly Capitalism
Robert Skidelsky and Paul Jay discuss Keynes, the IMF, concentration of ownership, political power and rebellion.
The Crash
On May 2, 2011, US Treasury Secretary Timothy Geithner sent his third ultimatum to Congress noting that the US is set to reach its statutory debt limit of $14.3 trillion by May 16, and unless the ceiling was raised by August 2, the country could face default. ‘The economy is still in the early stages of recovery,’ he warned, ‘and financial markets here and around the world are watching the United States closely. Delaying action risks a loss of confidence and accompanying negative economic effects.’ These will have a ‘catastrophic economic impact’ and ‘broad range of government payments would have to be stopped, limited or delayed, including military salaries, Social Security and Medicare payments, interest on debt, unemployment benefits and tax refunds.’ It will also lead to ‘sharply higher interest rates and borrowing costs, declining home values and reduced retirement savings for Americans.’ Mostly ominously, it will ‘cause a financial crisis potentially more severe than the crisis from which we are only now starting to recover.’
The situation doubtless sounds dire, but there is something mildly ironic about a Treasury Secretary warning the government against losing the trust of an industry which he only recently rescued with an extraordinary cash transfusion of $4.1 trillion in public money. The real costs of the bailout are estimated by Bloomberg at $ 12.8 trillion. But it is easy to overlook the consistency in Geithner’s assessment: the US government was a hostage to the financial industry when it faced collapse, and it is a hostage to it when its own economic future turns increasingly uncertain. The doubling of US national debt between 2004 and 2011 is merely a symptom of the problem—two wars and the bailout have both paid a part—but at its root are the regulatory failures and conflict of interests which are embodied in the person of Timothy Geithner. For over two decades the US Treasury has functioned as a de facto arm of Wall Street, eschewing its regulatory function to act as a passive enabler. Little surprise then that three years after the crisis the institutions that caused the collapse continue to evade responsibility and the price is instead paid by the taxpayer in exorbitant, lost homes and depleting employment opportunities.
How did things go so bad?
A new report by Who Profits exposes: SodaStream misleads consumers by labeling settlement products as ‘Made in Israel’
The company, based in Mishor Edomim Industrial Park, an Israeli settlement in the West Bank, markets its devices and bottles under a ‘Made in Israel’ label. By doing so, SodaStream (also known as Soda Club), world leader of home beverage carbonating devices, misleads consumers in Europe and the United States.
SodaStream misleadingly markets its devices and bottles under the Made in Israel label while in fact these products were manufactured in the Mishor Edomim Industrial Park, an illegal settlement in the occupied West Bank.
The company has recently faced a ruling by the European Court of Justice, stating that goods produced in settlements should not be considered as made in Israel and enjoys the tax exempt of the EU-Israel Association Agreement.
The report was published by Who Profits from the Occupation, a research project of the Coalition of Women for Peace. The project investigates Israeli and international corporate involvement in the Israeli occupation.
Pakistan: A Deficit of Dignity
M. Shahid Alam
Pakistan’s rulers and ruling elites may well be thinking that the wave of people’s indignation that started in Tunisia and is now working its way through Egypt, Jordan and Yemen will never reach them. Perhaps, they are telling each other, ‘We are safe: we are a democracy.’
The Arabs who are pouring into the streets of Tunisia, Egypt, Jordan and Yemen are not protesting only against their dictatorships. Simultaneously, they are also protesting against governments that have sold their dignity and bartered the honor of their country. Nearly, all the Arab rulers are self-castrated eunuchs in the courts of foreign powers, who have turned their own countries into police states, and who jail, maim, torture and kill their own people to please their masters.
The Arabs are venting their anger against elites who have stymied their energies by turning their societies into prisons. In complicity with foreign powers, these elites have ruled by fear, blocking the forward movement of their people because this movement collides with the imperialist ambitions of Israel and the United States.
It is true that Pakistan has had ‘elected’ governments alternating with military dictatorships. Increasingly, however, these governments, whether civilian or military, have differed little from each other. The priority for both is to keep their power and US-doled perks by doing the bidding of the United States and Israel.
Starting in the early 1990s, Pakistan hurriedly embraced the neoliberal paradigm that emanated from Washington. Hastily, successive ministers of finance and privatization – all of them IMF appointees – went about dismantling Pakistan’s industries, selling off for a song its state-owned enterprises, and empowering Pakistan’s elites to engage in unchecked consumerism.
P U L S E 