Posts Tagged ‘protests’

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Euphemisms

February 24, 2010

The Governor of the Bank of England, on euphemistic form:

“I’m sure the rating agencies and the markets will be looking… for a more detailed explanation of how the structural fiscal deficit will be brought down over the lifetime of the next parliament,” said Mr King.

“…more detailed explanation”: also known as spending cuts, post-election. Big ones. Note, incidentally, who appears to be really running Britain’s economic policy.

For the time being, however, it would appear Darling’s cuts-tomorrow strategy retains the markets’ confidence; the projected growth figures may be hokey, but the Cabinet behind them looks a better bet for the City than the chancers on the benches opposite.

Whether that confidence will hold until the general election is an open question. A single bad day’s trading could focus minds on the UK’s ropey public finances, sparking a speculative attack.

And in Greece, the protests are hotting up as the full, miserable extent of the austerity package there becomes clear. The question of a political alternative to the bankers’ diktat is going to be posed sharply: either we break the grip of the financial markets, or they will break us.

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No money, but plenty of fudge

February 13, 2010

I honestly expected that they would come up with something a little more solid than this:

Following talks between the Greek prime minister, George Papandreou, Merkel, President Nicolas Sarkozy of France, and Jose Manuel Barroso and Herman Van Rompuy, the European commission and European council presidents, the leaders issued a statement aimed at restoring calm and voicing political support for Papandreou’s programme of swingeing budget cuts and structural reforms.

The statement said the 16 EU countries who use the single currency, including Greece, “will take determined and co-ordinated action, if needed, to safeguard financial stability in the euro area as a whole.” That was seen as a strong political signal to speculators that the big euro economies such as Germany and France would act persuasively to restore confidence in the currency.

But there were no promises of funds for Greece and the statement emphasised that “the Greek government has not requested any financial support”.

The crisis has exposed the weakness at the heart of the Euro project: monetary union without fiscal and political union lacks credibility. Some in the European institutions want to exploit the current chaos to push Europe towards the latter two (see monetary affairs commissioner Oli Rehn’s comments on “surveillance”) but if the major powers can’t get the Euro through this difficulty in good shape, that’s not a likely prospect.

A bailout would be expensive. The more fervent believers in the free market’s virtues worry, too, about the bad precedent it could set for other afflicted states. But this verbal fudge carries its own risks: presumably, the expectation is that “oversight” from assorted international bodies would be enough to force the Greek government to get its house in order to the satisfaction of the markets.

That will mean cracking down and breaking the protest movement domestically. At present, Papendreou’s new administration appears to have persuaded a fair chunk of its population that, to use David Cameron’s charmless phrase, the cupboard is bare. On the other side, the strikes, blockades, and demonstrations continue. The battle lines could not be drawn more sharply.

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European contagion

February 9, 2010

It took them a surprisingly long time to move, but as of this morning the speculators have seriously latched onto the Euro:

Traders and hedge funds have bet nearly $8bn (€5.9bn) against the euro, amassing the biggest ever short position in the single currency on fears of a eurozone debt crisis.

As the FT suggests, they’re betting on both the Greek government’s inability to avoid default – or at least devaluation and exit from the Euro – and the subsequent inability of other Euro currencies to withstand ‘contagion’: financial instability spreading from one economy to the next, with country after country pulled into the maelstrom.

Other Euro economies are exposed to Greek upsets through the substantial investments various European financial institutions now hold there. French investors are the biggest, holding $58bn worth of Greek debt at the end of 2008 (on the IMF’s most recent figures), with German investors next on $32.3bn.

UK holdings are more modest, but still very substantial, covering $14.4bn worth of loans. Around a third of Greek government debt, meanwhile, is held by Greek investors. All will take a hit from substantial fiscal turmoil in Greece. And all the big exposures are in Europe.

Major financial institutions can try to get rid of some of this risk by adjusting their portfolio of assets. The real danger is that, in doing so, they will look to dispose of debt securities held in other, smaller Euro economies with weak fiscal positions – Portugal, Ireland and Spain, in particular.

It’s these three that are now causing additional grief for the Euro. A quick glance at the combination of high public debt, and wobbly governments, tells you why the short-sellers are licking their chops. The betting is on one of the PIGS, so-called – Portugal, Ireland, Greece, Spain – going belly-up some time soon.

But it’s Greece that remains the biggest single risk. Revisions to the public debt figures have rattled markets, while the deep spending cuts offered in sacrifice by the newly-elected PASOK government have failed to calm jangled nerves.

If the big banks and the institutional investors pull out of Greece, they can spread financial instability elsewhere – with speculators adding to the chaos, moving colossal volumes of hot money at fantastic speed across national borders. The whole Eurozone – potentially even the Euro project itself – could suddenly appear unstable.

The decade has been generous to the Euro. A benign economic environment, floating atop a giant property-and-finance bubble, kept the show on the road. Those days are long gone.

The deciding factor here, however, is political. Either the Greek government can keep the markets reaonably sweet, holding firm to bigger and bigger promises attacks public services and wages; or the markets will be unconvinced, dragging Greece out of the Euro.

That’s where the EU steps in. The risks of contagion, and the damage to the Euro’s credibility, will no doubt concentrate European finance ministers minds on arranging a bailout. It’s the prospect of a rescue package, rather than some sudden belief in the Greek government’s firm grasp of the axe-handle, that has led to some improvement in the Euro’s position.

The planned cuts are already meeting resistance. Farmers are blockading roads, and thousands of public sector workers are expected to strike tomorrow against the wage freeze.

Serious opposition in Greece to the EU’s austerity package could open the path for resistance across Europe. But successfully fighting off the cuts will also mean building a credible, political opposition to the rule of finance.

(hat-tip to Eugenia for the figures)

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‘Blair’s Judgement Day’

January 27, 2010

The timetable’s sorted for the protests outside Blair’s much-anticipated appearance at the Chilcott Inquiry. Details on the Stop the War Coalition site here. The police are currently trying to shove any demonstrators out of sight of the media – and indeed Blair himself – around the corner, citing the risk that we might ‘damage the grass’ opposite the Queen Elizabeth II conference centre: an eerily familiar excuse. If there’s enough of us there, they won’t be able to do that. Stop the War are asking people to get down to Westminster from 8am to greet Blair’s arrival in appropriate fashion.

The day before, Brown’s Afghanistan PR exercise opens at Lancaster House.

Brown’s international conference on 28 January is nothing more than a public relations exercise aimed at turning the tide of public opinion, running so strongly against a war which is clearly futile and unwinnable. In truth the warmongers are gathering for a war council masquerading as a peace conference.

This why the Stop the War has called for a blockade of Lancaster House, where the conference is being held, giving voice to the majority of people in US, Britain, Germany, France and most of the 43 countries in the “coalition”, who do not want more war, but all foreign troops to be brought home.

Protests start at 8.30am, Lancaster House – down The Mall from Trafalgar Square.

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Eyewitness report from Stoke UAF protests…

January 23, 2010

…against the English Defence League, over at A Very Public Sociologist.

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A Very British self-pity

June 29, 2009

Chris Mullin, MP for Sunderland South, author of A Very British Coup, writing in the London Review of Books, myopically unable to conceive any (Labour) MP had done anything much wrong in the expenses scandal:

The damage is incalculable. Not just to us, but to the entire parliamentary system. We are sinking in a great swamp of derision and loathing. No matter that the guardians of public morality at the Telegraph appear to have paid a large – and so far undisclosed – sum of money for discs that seem to have been stolen, open season has been declared on we wretched, despised servants of the people.

Self-pitying whinging aside, the sheer blinkeredness of Mullin – and close to every other MP asked to comment on the issue – reminds me of the standard Labour Party reaction to the Iraq protests.

Opposition to the war on Iraq, we were told, was just a problem of communication on this one issue; that voters were otherwise happy; that the Parliamentary system was fundamentally sound. New Labour loyalists either could not or would not grasp that the ferocity of the opposition to the invasion was the bubbling to the surface of many, other, much deeper-rooted discontents: with Labour’s steady abandonment of its core support; with the ill-concealed contempt Westminster held for opinions in the rest of the country; and with the casual, blase attitude to the truth Blair and Campbell evinced, in particular. All these separate complaints and irritations fuelled the anger. Underneath it all was a withering of political legitimacy in this country – as noted by the unjustly (if predictably) ignored Power Inquiry.

That withering has become a near-collapse, in the wake of economic crisis. Scarcely an institution exists  that has not been damaged in the last eight months: the police, the City of London, Parliament, the Treasury: either directly, or indirectly, the economic crisis has had extraordinary political effects.

(The last of the above, for many reasons, interests me especially: from secretly running the country under Brown, the Treasury  has been pushed into a  position of  what must be almost unprecedented weakness – certainly nothing like this has been seen since the war. Take Mervyn King’s continued insubordination, for example, unthinkable even a few years ago, “independent” central bank or not; whilst Darling and his mandarins have been wholly unable to prevent Mandelson creating a new super-department overseeing key economic functions.)