The Euro crisis could set back the left for more than a generation


10:20 am - November 10th 2011

by Sunny Hundal    


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It now looks more likely than not that the Euro will collapse in some form or another. Italy’s debt is unsustainable and they still haven’t solved the Greece problem yet.

Martin Wolf at the FT says we have to start ‘thinking through the unthinkable‘. Paul Krugman isn’t hopeful of the Euro surviving either.

Put aside the technical questions of how all this might play out and let’s focus on the political ramifications, for this exercise.

Assume the Eurozone explodes under the weight of its own problems. The scale of bankruptcies and jump in unemployment across Europe would be unprecedented. The UK would be hurt badly because Europe is our biggest trading partner. And worse…

In such circumstances, it is impossible to think that sterling assets could maintain the “safe haven” status they enjoy today, with sovereign bond yields at a record low. A collapsing economy would comprehensively destroy the Government’s deficit reduction strategy, and even in the event of further austerity measures, cause the debt to GDP ratio to rise to unsustainable levels. As the risk of default rose, so too would bond yields. The UK would soon find itself in the same vicious cycle of economic decline and rising debt as Italy.

Unfortunately, it’s likely that under these circumstances the Conservatives would benefit from the fallout.

Firstly because history points in that direction. As I said earlier: in times of financial crisis Britons have elected Conservatives to steer them through. Labour gets elected when people yearn for positive change, not when they’re feeling fearful of the future.

Secondly because the Tory narrative will be simple: ‘we didn’t cause the financial crisis so don’t blame us for the economy’, and most potently: ‘All these crashes were caused by excessive debt, only we can be relied upon to maintain discipline’.

And what do you think their response would be?

Even deeper cuts and austerity; a brutal attack on workers rights to ‘create jobs’; savage cuts to pensions and benefits. The current round of austerity will look like a picnic in comparison.

My aim isn’t to depress everyone (though I suspect I have) but to point to the massive warning signs. There are far too many people squabbling, or behaving like they’re on the brink of a massive victory thanks to #occupy. This could all be a depressing waste-land within two years.

There are two challenges here, I think:

First, to point out that the UK’s economic recovery started faltering before the Eurozone problems. This will require lots of graphs and easily accessible info in one place, and a sustained attempt to point this out to the media.

Second, it will require the left (and more importantly Labour) to have a strong counter-narrative that works, can unite everyone, and works in their favour. Something like: ‘This crisis shows our financial institutions have stopped working for ordinary people – they are being hurt by a crisis they didn’t create. It’s time to reform the world’s financial system and make it work. The Conservatives won’t do that.’

Get the narrative wrong and we’ve effectively lost this entire generation.

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Sunny Hundal is editor of LC. Also: on Twitter, at Pickled Politics and Guardian CIF.
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Reader comments


1. Teller of the truth

We never should have joined the EU.

We saved Europe and we lost everything doing it, we saved Europe from the Nazis and Wurope then spent the next decades shitting on us.

Fuck them all.

The Uk is the Uk and we should look after ourselves first, and that includes stopping the Islamification of the uk and the cultural genocide taking place against its people.

I don’t believe that markets are efficient in the sense that the prices are always “right”, and it might be the case that bond market participants haven’t yet come round to working through all the implications, but if it really is ” it is impossible to think that sterling assets could maintain the “safe haven” status” then why aren’t UK bond prices falling already? Why are people holding on to bonds when it is so obvious their price is going to fall?

which is a long winded way of saying that things might not be quite as bad as this post suggests

The weakness of Labour’s response isn’t encouraging. However I wonder whether there could be an outcome more appealing to the left? There is only so much austerity that governments can force upon their citizens. The prospect of “strong medicine” for the duration of a parliament may be accepted by voters, but a decade or more? I doubt it.

Will the Greeks have to declare martial law to conform with the excessive requirements of France & Germany as some commentators have suggested? Hardly a recipe for stability and terrifying for other Eurozone countries.

Defaults and bank collapses could force governments to nationalise banks. Pension fund collapses could also put pressure on governments to improve welfare. If the populace will not accept the current with-profits-for-the-rich austerity then surely the 99% meme will take hold and governments will have to take a left turn?

I’m not sure I agree really. You mention that in times of uncertainty, people turn to the Conservatives, but did that happen in the 2010 election? Not really. They could only scrape into power with the help of the Lib Dems. And that was after the end of a technical recession when people will have been feeling particularly vulnerable.

Furthermore, the collapse of the Euro (if it does happen, which I’m not sure it will), would represent an extension of the 2008 financial crisis. And if that’s the case, then that’s not going to play well for the Conservatives, who are essentially the UK banks spokespeople on Earth.

The only threat to the left is that we are too timid and don’t seize the opportunity to reform the entire banking system. That’s why we’ll get punished. People are tired beyond imagining of weak-willed politicians allowing the status quo to be maintained whilst they work harder and harder for less and less. Sadly, I doubt we’re gonna get that from the current incarnation of Labour.

The Euro crisis could set back the left for more than a generation

I think it’s worse than that.

In terms of the big picture, the tremors you are hearing are precursors of an earthquake that will bring down the whole, social democratic European experiment.

It is becoming clear that we have been building on quicksand for the last thirty years at least.

oh – and is the obvious left wing response to raise taxes, perhaps a temporary small wealth tax or something? appeal to national unity in emergency, ask the rich to pitch in to help save the nation.

Either that or if you want to avoid further cuts to public expenditure, campaign for more QE as a backdoor means of monetizing government debt via permanent expansion of BoE balance sheet, tolerate some inflation and depreciate sterling (which will hurt because import prices go up, but compensate by trying to get unemployment down faster. Start campaigning around “rebuilding Britain” and big jump in public infrastructure investment).

I think you are wrong about the implications of a Eurozone collapse.

In such circumstances sterling would almost certainly strengthen as a safe haven. Seeing as 50% of UK imports come from Europe then our inflation would fall significantly. Thus, despite the deficit reduction strategy failing in the face of weaker economic growth, there is every possibility UK bond yields wouldn’t rise significantly.

The primary driver of bond yields, assuming that the issuer isn’t going bust, is inflation (not growth).

First, to point out that the UK’s economic recovery started faltering before the Eurozone problems.

A tough one to prove this, given that the Eurozone problems began before the 2010 UK election. Remember that while there was uncertainty as to the actual outcome of our election, pictures were showing tanks on the streets of Athens. Greece’s debt was downgraded to junk in April 2010, and the first Greek bailout was in May 2010.

“And if that’s the case, then that’s not going to play well for the Conservatives, who are essentially the UK banks spokespeople on Earth.”

Do the facts back this up ?

Under Labour banks were given lax regulation, ludicrously low tax rates for private equity, knighthoods for Sir Fred Goodwin and when the banking crisis hit they were generously bailed out with no strings attached.

Under Tories taxes on banks have gone up, the Vickers Commission is splitting banks up, and greater regulation (higher capital requirements) is forcing down bank profitability (and thus bonuses).

So the EU an institution that the tory party tried to take us into in 1963,and failed. And then did take us into under Heath in the 70s, without giving the people a vote,and who signed the EU single act under Thatcher, who then rammed it trough parliament on a friday afternoon. And Major who had to use a no confidenc vote to ram through the Maastricht treaty has failed?

Sounds like 50 years of tory failure to me. The left of the labour party was right about the EU. It was a stich up by European fascists who wanted to destroy democrqcy and impose free markets on Everybody. We would be run by bankers loyal to the elites. Can’t wait to see the tory eurosceptics when the free market bit goes up in smoke, like the single currency.

Anything that gormless undemocratic moron Leon Britain was involved with was always going to be poison.

When looking at how well the UK economy has done compared to the eurozone economies then this article captures things brilliantly.

http://ablog.typepad.com/keytrendsinglobalisation/2011/10/uk_worse_than_eurozone.html

A brilliant comparison of the UK and eurozone economies before the shit really started hitting the fan.

http://ablog.typepad.com/keytrendsinglobalisation/2011/10/uk_worse_than_eurozone.html

14. Leon Wolfson

@5 – Absolutely. Thatcher is to blame!

(What?)

Sally is bang on the money. Why are some people on the Left so hooked on the EU grand project?

Actual, existing European federalism is clearly an attempt to entrench the market economy by limiting democracy. Instead of arguing for socialism, mutuality and equality, too many progressives get spooked by the prospect of hard Right and free market hegemony into signing up to the kind of economic and political ‘discipline’ being pushed by European conservatives like Merkel and Sarkozy.

Are we so blinded by the little Englander anti-European nonsense of the Tory/UKIP nutters that we can’t oppose the undemocratic Capitalist superstate that is being built?

8. Tim J.

How can we blame the eurozone for problems in the UK economy when the eurozone economy has performed better than the UK economy? see link in 12. Surely if the eurozone economies are outperforming the UK economy then they can’t be holding back the UK economy.

Kevin

17. Leon Wolfson

@15 – If the EU is undemocratic, then we have a tyranny.

And free market | capitalist.

18. Charles Wheeler

Nothing like a bit of defeatism to get the fightback energised!

19. Luis Enrique

I know about as much about political strategy and “narratives” as Sunny knows about economics, but the correspondence between this “‘This crisis shows our financial institutions have stopped working for ordinary people” and reality looks pretty thin to me. The Euro crisis is more about the fiscal behaviour of governments, the European political structure and the nature of the ECB (which is a “financial institution” so that bit fits). But it doesn’t have anything to do, for example, with UK banks “not working for ordinary people” and its not obvious to me what reform UK banks the Euro crisis calls for.

If governments want to borrow, they need lenders. If sovereign debt is rated as zero risk by regulation, those lenders will be banks. If borrowers will not repay, banks will need bailing out. If you favour sovereign default, you favour bank bailouts. Banks need bailing out when their assets do not cover their liabilities, their liabilities are our savings. I know the idea is very firmly entrenched that bailing out banks is about protecting elites, but if European banks go under, non-elite Europeans lose their savings (unless protected by deposit guarantee schemes, which are a variety of tax-payer funded bailout) and firms lose access to credit.

If you think banks are restricting credit to businesses (lending to businesses is something “ordinary people” need banks to do) that should increase your support of bailouts, because if anything is restricting credit, it’s banks trying to deleverage and injections of new capital would address that.

Remember the most anti European manifesto was from the Labour Party in 1983 where it advocated pulling out. It was Labour and the Left who had to come to terms with the fact that the UK was in and can not really pull out.

If anything the problems we are seeing is the democratic deficit that the people of Europe have and where the markets and globalisation has rid anyone elected by the people of any meaningful powers. The terms that the market and globalisation is run on comes from the right. It is this that the left need to fight now and make the world run on the lefts aims. The Left and especially Labour need to be very brave and radical as much as the right was in the late 70s and 80s.

15 Colin, the labour party bought into the EU because they liked being against the tory right wing knuckle draggers. Nothing wrong with that, but they did not see the dangers of a fascit plot to impose a political free market on everybody. It is why so many tories signed up to the project.

As one tory once said if it was not for the social policy we would not have a problem with it. Tories have always been prepared to hand over sovereignty if it advances their agenda. One of the reasons I have never taken tory lectures on national sovereignty with a large pinch of salt.

“If you think banks are restricting credit to businesses (lending to businesses is something “ordinary people” need banks to do) that should increase your support of bailouts, because if anything is restricting credit, it’s banks trying to deleverage and injections of new capital would address that.”

Luis, there is a technical question here for you: which scenario increases the amount that gets lent to SME?

1. Banks in trouble get bailouts and thus spend a few years re-ajdusting their balance sheets to become solvent again.

2. Banks go bust, but governments guarentee deposits up to X and remove barriers to entry for new entrants into the banking sector who are attracted by lost of people looking for new homes for their deposits?

@ Luis

I know the idea is very firmly entrenched that bailing out banks is about protecting elites, but if European banks go under, non-elite Europeans lose their savings

Of course, if they knew there was no deposit guarantee scheme and could not rely on the state to bail out their bank, non-elite Europeans would be a little more circumspect about where they put their savings………..

Disagree with the OP. Think we’re heading into ‘overshock’ territory. There comes a point when the status quo is so utterly discredited that policies to maintain it become non-starters with the public. No doubt the government will try to abolish sundry employment rights (it’s already hell bent on privatising everything). But do you think people will stand for that? Especially if the crisis leads to another bank bailout? People have had enough of this shit. Everyone outside Westminster can see the system’s bankrupt, even if no-one has any idea what to do about it.

Of course, whether the Left can make itself relevant to public disillusionment is another matter. I take it as read that Labour won’t; anything else on that front is a bonus.

25. Leon Wolfson

@20 – Labour…Left…very different things these days.

@21: “the labour party bought into the EU because they liked being against the tory right wing knuckle draggers. Nothing wrong with that, but they did not see the dangers of a fascit plot to impose a political free market on everybody”

But they did – which is why Labour’s 1983 election manifesto would have commited an incoming Labour government to negotiate withdrawal from the “European Common Market”.

Thatcher won that election with a majority of 140 seats and (successfully) set about pushing for the Single European Act in what was then the EC, partly or even mostly, to gain better access to European markets for Britain’s service industries in which we have a strong competitive advantage – Britain is the second largest exporter of services after America.

The facts are that the Single Market Project is still incomplete and that there are endless attempts to get financial services away from the City of London. Those are compelling considerations for remaining part of the EU, which won’t disappear if Britain leaves.

23 Probably one of the stupidest comments ever from a butler troll. How the fuck are ordinary people going to know what banks are safe? Govts, local govts, shareholders had no idea, so how is the average Joe?
It is part of the Randian nonsense that has taken over tory elite that everybody can be an expert in every aspect of life. It is idiocy espoused by home county cretins whos only skill is propping up bars, and quoting Jeremy Clarkson.

@ 25 – Labour after 1983 had to accept many of the terms set out by the Tories because they was no alternative, apparently. It looks like Tony Benn with regard to Europe has been right all along.

The Euro crisis could set back the left for more than a generation ~ Shame.

The Warner article does not seem very plausible to me. The one thing we have learned about gilt yields over the last three years is no matter how low they go does not mean they can’t go lower. Where does he think the money exiting the gilt market is going to go if the economy is so shit? More capital will flow into gilts the worse things get in the EZ economy and by extension the UK economy. For example, the UK sold £15 billion of gilts in September and overseas buyers fleeing the EZ snapped up £12 billion of them.

The UK can’t avoid being badly harmed by the fallout of the EZ. However, a lot depends how it breaks and what replaces it. A disorderly collapse is in no ones interest. The weaker members exiting to my mind strengthens the euro-core, they have the resources to backstop their economies. Everyone exiting at the same time and going back to their old currencies is highly unlikely. A smaller coherent EZ is more likely. UK equities just enjoyed their best October in 37 years. Does Mr Warner really believe that investors buying shares anticipating forward profits can’t work out likely scenarios? It seems to me that the MSM get more apocalyptic to pander to what they believe an audience wants to hear. Yes, it is going to be shit and forward thinkers discount that in the price. However, it will not be the end of the world.

31. Leon Wolfson

@23 – In cash, under their beds.

I agree with Sally, you’re sounding like a Randroid.

32. Luis Enrique

Planeshift,

I don’t think bailed-out banks necessarily take years to adjust their balance sheets, a bailout can be an instant hit. For example a healthy bank might look like assets 100, and on the liability side creditors 80 and equity 20. Say its assets fall to 80, it is (only just) bust and equity holders are wiped out. If that bank is then bailed out with 20, we are back to assets 100, creditors 80 and equity 20, adjustment is complete.[*] Moreover, if the new equity holder is the state (i.e nationalization) we have an opportunity to command the banks SME lending policy.

Encouraging new entrants sounds like a good idea to me, but don’t you also have a period of adjustment there? If a bank goes down, that’s one large providing of credit to businesses no longer providing new loans and trying to crystallise existing debts, meanwhile will the new entrants have the capacity to fill the gap? I don’t have a firm answer, these are just thoughts.

[*] I wouldn’t be surprised if there’s more to it than that, so perhaps there is still a period of adjustment, but that’s the basics I think. I think banks today are still adjusting because although they were bailed out, the bailout didn’t take them all the way to the level of capital buffer regulators are expected to demand in the future, so they are still busy deleveraging.

What has Europe got to do with “the left”?

What nonsense.

The left would oppose Capitalism, therefore monetary union on top of Capitalism is still Capitalism.

I think the socialists are getting confused – what a surprise. A crisis comes and they’re all at sea because they backed popular horses and not followed their ideology.

This is why socialism will never work – a revolution is required, not reformation.

The collapse of the EU is irrelevant – it’s being used as a distraction from the financial crisis – the root cause being Capitalism.

The xenophobic Europhobes are jumping up and down claiming they were right all along.

All they have done is predicted the patient would die – they cannot explain the reasons why it died. They attribute death to the sores on the body – not what caused those sores.

Capitalism is the root – it always was, and always will be.

32 We have had plenty of new entrants, but thanks to capitalist take over laws they just get bought out by the big boys. Of coursewe did have a mutual group of building societies,but we can thank John Major for letting them turn themselves into banks for short term gain.

Most of them are owned by the taxpayer now. Halifax, C& g, Northern rock, etc etc.

33 some truth in that. But the tory eurosceptics are in no position to say ” I told you so” they voted for the eu all the way. The most shocking was when Major called a confidence motion on the Maastricht treaty and they voted for it, one day after voting against it.

Worst type of hypocites going. When Bill Cash and his bnd of merry men voted for it, you knew he was a man of straw.

1. Teller of the truth

Do you start frothing at the mouth about the ‘islamification of the UK’ because…

a) Like a good Christian, you must eliminate all other religions as there is only room for your own?

b) Because Islam bans ursury – which Jesus also tried to do (and failed) and this doesn’t fit in with the ‘earnings for no effort’ ideology you have?

c) You read the phrase in the Daily Mail and it sounded like a good thing to say?

Please let us know – I’m intrigued.

35. Sally

The problem with the left is when the opportunity comes to make headway into the true cause of crisis – it starts bickering about insignificant details which won’t matter until much later.

The right show solidarity – only because their arguments are ‘simple’ and easily engage with their target audience.

The left shoudl unite around the fact that Capitalism is bad, and it’s going to get worse. Not this press ganging of people into buying the socialist worker – but by organising to attend each and every protest or action directed at Captialist greed.

…otherwise it will be ‘divide and conquer’ and once again the right will sieze power – just like they did after the last major crisis (1930’s)

Bob B- The entire ruling class were entirely well aware of the imposture of the supposed referendum right form the start. Some Conservative MPs expressed disgust after the event at the outright lies they were obliged to tell about it being just a matter if a nip and tuck here and there but basically a simple free trade zone. Wilson and his clan were just as complicit.
As Labour drifted left the anti free marketeers gained power and wrote what was then a suicide note. Centre right opinion was strongly pro EEC ( was it the EEC by then?) I was myself . Left opinion in Labour did not object to the democratic deficit they objected to the threat to unionised Labour pre supply side reforms. Labour began to realise they could impose progressive nostrums and social democracy without electoral support via the EU and Conservatives began to find the loss of sovereignty unacceptable. They switched sides during the Thatcher period, she personally grasped the problem very early indeed.
At no stage have Labour had any objection whatsoever to the EU on democratic or national lines and unlike the Conservative Party they mostly failed to grasp the lunacy of a single currency imposed disparate Nations some even after the ERM debacle which was a warning ( at least Brown got that one )

On Sunnys prescription that will fool no-one .The world`s economy is growing at around 3% and our slip from a manufactured electoral boom on top of previous irresponsible spending does not show it was wrong to adopt a moderately cautious approach to borrowing. It is yet more evidence that New Labour are unelectable on the issue of economic confidence and that has not budged one inch.

39. Charles Wheeler

So, 30 years of escalating inequality necessitating papered over by massive injections of debt creating a banking collapse resulting in a massive transfer of private debt onto the public accounts (pace #19, this is not a ‘sovereign debt crisis’ it is a banking bailout taken on by national governments – but the debts are no more serviceable on the public accounts than they were in the private sector).

What we have seen is the complete collapse of free market ideology – and it can‘t recover because it is based on a series of complete fallacies (Efficient Market Hypothesis, RATEX, Laffer, etc.)

Yet, Sunny sees this as likely to lead to a move to the right?

It’s worth recalling that, notwithstanding the implosion of New Labour and the excoriation of Gordon Brown from both right and left, David Cameron’s Tories managed to scrape together the votes of just 1 in 4 of the electorate (i.e. mainly the hard-core Tories), garnering fewer votes than Michael Foot’s ‘longest political suicide note in history’ Labour Party, and has only been able to force through its agenda with the connivance of a LibDem leadership who have reneged on just about every substantive ‘promise’ in their manifesto – from ‘saving the NHS, to their ‘pledge’ on tuition fees.

Even so, the Tory cuts have yet to feed through into a society still benefiting from the afterglow of a period of social democracy which still assumes educational opportunity as a given, access to universal healthcare as sacrosanct and protection of the most vulnerable as an obligation rather than a luxury we can no longer afford.

As the cuts feed through and the poor are turfed out of their homes, the young denied education, the elderly denied healthcare, and the severely disabled forced back into institutions, sentiment may begin to change. Margaret Thatcher was able to push the Poll Tax through parliament, it was only when it was implemented that the proverbial hit the fan and, at least in part, forced her resignation.

The lesson of the current debacle seems to be that politicians are seeking to avoid any opportunity for democratic accountability. The ideology of the right lies in tatters everywhere but in the mainstream media – largely owned by the same oligarchs that have benefited from the market-based approach of hosing income up to those at the top, while slashing their tax rates.

It’s true that the Labour Party are too faint-hearted to make much headway – and too infected by the neo-liberal mind-set, but where is the evidence of a thirst for a shift to the right?

Interesting solutions suggested by Sunny:

First, to point out that the UK’s economic recovery started faltering before the Eurozone problems. This will require lots of graphs and easily accessible info in one place, and a sustained attempt to point this out to the media.

Even if this is true, and we manage to ignore that the (relatively) left had been in power since 1997 in the UK, up to the Eurozone problems (and that many predictions actually had a double-dip regardless of policy…), I doubt that lots of graphs are going to be much use in convincing the electorate. They are smart enough, but not interested enough, so you need to change the actual discourse. And presenting it in terms of austerity versus growth won’t work – because the alternative discourse of wastful spending versus living within means will trump this.

Second, it will require the left (and more importantly Labour) to have a strong counter-narrative that works, can unite everyone, and works in their favour. Something like: ‘This crisis shows our financial institutions have stopped working for ordinary people – they are being hurt by a crisis they didn’t create. It’s time to reform the world’s financial system and make it work. The Conservatives won’t do that.’

Not the right narrative: focussing on the world, when people’s interests are at home leaves you wide open to being potrayed as out of touch.

As an alternative, how about a left-wing small-state solution perhaps? Or even a narrative about why Europe still has the answers. I don’t think the left has nothing to offer in recessions, but the current set up of Labour or the hard left is all ‘luxury’ – they will only attract mass support when people feel well-enough off to pay for them.

41. Leon Wolfson

@39 – The free market’s failed? Okay, we’re all screwed then. Except the fact the market’s fine, it’s capitalism which has failed.

And of course we’re moving right. Labour keeps on striking right, not left, fighting for the Tory fringe. The Tories don’t get that many votes, but that’s because the left stayed at home (or voted for the libdems, and won’t be voting again…) – and are now rigging the system to ensure they stay in power.

Shit, I’ve already caught several “repriorisitations” of funding to Tory-voting areas this week…

The whole pojnt of the social clensing scheme with housing benefit, as well, is to dispossess Labour majorities and ensure further vote rigging…not to mention the little fact that if you’re homeless, you can’t register…

We ARE moving, fast, to the right. And Labour is nodding and agreeing to it. One day it looks like that Miliband was onto something with his refined talk of predators, but the next he’s back to immigrant-bashing (again, setting the stage for the “worth” of humans to be variable, which plays into Tory hands!).

The lies of the AV campaign show how “free and fair” future elections will be.

“All they have done is predicted the patient would die – they cannot explain the reasons why it died. They attribute death to the sores on the body – not what caused those sores.

Capitalism is the root – it always was, and always will be.”

The current issues can be explained in great detail, its not some mystical event that apeared out the blue, the consequences of the ez experiment were explained and ignored years ago and now we face the results of that…but no capitlism bad no one can explain why…you people are nuts.

43. Leon Wolfson

@42 – No, the problems of the EuroZone were CAUSED. Fiat Currency is faith-based, people forget that.

Of course it’s possible to explain the flaws of capitalism. Of course you’ve never read any of them because you’ve pre-chosen an ideology and read to support it rather than the other way round.

The Free market has not failed the world`s Economy is growing, a social democratic cake and eat it experiment has failed which leaves the old enemies opposed . The Free world on one hand and the socialists / Communists on the other…
Still not to panic there is a lot of failing in a country think of the USSR I expect we will be hearing about how you can have it all for a while yet .

David Cameron’s Tories managed to scrape together the votes of just 1 in 4 of the electorate (i.e. mainly the hard-core Tories), garnering fewer votes than Michael Foot’s ‘longest political suicide note in history’ Labour Party

Have a word with yourself chief.

Foot 1983: 8.5 million votes, 28% of the vote share
Cameron 2010: 10.7 million votes, 36% of the vote share

46. gastro george

@19 Luis

“If governments want to borrow, they need lenders.”

Monetary sovereign governments never “need” to borrow.

@39 Charles

“What we have seen is the complete collapse of free market ideology”

Let me re-phrase that for you. What we have seen is the complete collapse of mainstream (neo-liberal) economics.

Recent history has seen, under neo-liberal influence, the abandonment of all of the tools of economic management. Which Tory Chancellor was it that was derided for being a one-club Chancellor? The one club came down to interest rates. Orthodoxy said that this was all a government should use. And now we find that this doesn’t work, nor does any other policy that they care to try.

@6 Luis

“and is the obvious left wing response to raise taxes, perhaps a temporary small wealth tax or something?”

The obvious left wing response is fiscal stimulus.

47. Leon Wolfson

@44 – Revisionism.

Corporatism and the right on one hand, which have failed, against the successful socialist nations with proper controls on corporations – the Nordic States, Canada, Australia on the other. The right took control, imposed austerity…and have caused this crisis out of what was only a problem.

Putin’s on YOUR side, not ours.

It was getting bad, sure, but that’s because of inequality. The last times things were this unequal we had problems too, but learning from history is anathema to the right!

The UK is doing worse than government-less Belgium. That places your Tories, right there.

disagree with most of this.
the problem is labour aren’t any kind of opposition and havent been for a long time. They agree with and would carry out 75% of the tory policies, even if they’d couch it in different terms. That is the heart of the problem. We have a severe democratic deficit, especially with the cataclysmic fall from grace of the lib dems. There is no credible alternative in place that could conceivably get near power, and there will be every effort made to ensure it stays that way, in a system designed expressly to make sure that goal is extremely straightforward.

We have a rocky road ahead but despite their generally extremely servile and timid nature by world standards, the UK people aren’t completely stupid. When it comes to seeing their living standards drop year in year out whilst not failing to notice that a few are doing better than ever thank you very much, even they’ll start thinking about things a bit, and the divide and rule propaganda which will inevitably only increase in the years to come can only go so far, especially with the declining power of the traditional media.

South America’s recent history may be instructive. I am not saying we are ripe for a Chavez type figure any time soon, but the current disaster area that is the Western economy is not that dissimilar to the experiments that were forced on poorer countries, especially in South America, by the IMF and World Bank in the latter part of the twentieth century, with catastrophic results, and the full and willing collaboration of local political parties of both nominal stripes (most of whom were of the comprador class of global wealthy who owe their allegiance to the world of high finance and socialism for the rich rather than their own countrymen).

Usually there would be two main political parties, one supposedly centre left and one centre right, both would have very similar policies in most regards and identical ones when it came to neoliberal orthodoxy. They would swap every few years as the people got increasingly pissed off but the inexorable onward march of neoliberalism would continue whatever the outcome, with perpetual financial crisis, endless privatisation of public goods and general impoverishment the inevitable result.

Sound familiar?

Eventually, of course, by the turn of the century the groundswell of discontent was strong enough to propel new movements and figures from outside the zone of political stitch-up into the limelight, and into positions where power seemed possible, politicians who actually started to keep some of their promises and who took their orders from the electorate and not the mystical ‘markets’. Mass demonisation, from the people own the media and happen to like the power of the ‘markets’ very much, followed, like night follows day or a tory butler troll follows his master’s bidding.

Now, the only full-blooded neoliberals and US best friends forever in the whole continent are Chile, which suffered perhaps the worst insults from the whole experiment in rule-by-market thing and has still not recovered, and boasts the least popular president in the hemisphere and almost continuous protests, and Colombia which is still wrapped up in a brutal civil war eagerly egged on by the yanks who are desperately hanging on to their last toehold on the continent (not uncoincidentally the bloodiest, most massacre/rape happy corner of the continent where deciding to become a trade unionist or journalist is tantamount to shooting yourself in the face on the spot.)

Just a thought.

“@42 – No, the problems of the EuroZone were CAUSED. Fiat Currency is faith-based, people forget that.”

Well yea as I just said in the very post you are responding to the consequences of the ez experiment, meaning the out come it would cause, were explained and ignored years ago and now we face the results of that, results caused by idiots who ignored fundemental rules and instead placed ideology and political dreams before all else.

“Of course it’s possible to explain the flaws of capitalism. Of course you’ve never read any of them because you’ve pre-chosen an ideology and read to support it rather than the other way round”

Yet when it comes to the EZ we arent dealing with the floors of capitlism..are we…as for me and my pre-chosen ideology, I just work with what life local to me has to offer, it would apear its you who needs to brush up on the reading, maybe you can come back when you understand the current situation…

@Sendar
I’m afraid you might just as well piss in the wind than point out that it’s the fault of capitalism, as the root cause of our current ills.
Even the so-called anti-capitalist protests, I’m told, are no such thing, apparantly if it quacks like a duck and walks like a duck it is, in fact, a sparrow-hawk
We are now being told that it is regulation and state intervention which is the real cause of the problems and, naturally, the answer is regulation and interventionism.
Abandon all hope etc etc.

“We are now being told that it is regulation and state intervention which is the real cause of the problems and, naturally, the answer is regulation and interventionism.
Abandon all hope etc etc”

Do you know what would happen if italy and greece had control of there own currencys? If the Euro was never formed? Do you understand anything about this freaking crisis?

You hook up the eletric mains to the bath tube and blame eletronics for your shock…..

“Corporatism and the right on one hand, which have failed, against the successful socialist nations with proper controls on corporations – the Nordic States, Canada, Australia on the other.”

Canada and Australia are socialist. Are you really sure ?

53. Paul Krishnamurty

Sunny, I think your last paragraph about steps forward are absolutely correct, but I don’t share your negativity about a shift to the Right.

Rather, I think the whole ‘economic competance’ narrative is due an upgrade. Present voting patterns reveal a distinct age divide, with over-60s strongly pro-Tory, every other age group strongly against.

Its easy to see why. People who grew up in the 60s-80s saw the principle ideas of socialism unravel worldwide. They saw excess union power. Critically, Thatcherism made a key segment of the working-class richer, albeit at the expense of others. It was very easy to con these people into thinking our troubles are due to ‘Labour overspending’, and almost impossible to convince them otherwise.

None of that applies this time. Right-wing economics are at the core of this crisis, and the Right have no answers. That similar segment of the population – ‘hard-working ordinary families’ for want of a soundbite – are being made poorer. The Tories simply don’t realise how important things like tax credits, Sure Start, childcare allowance, available credit were to this group, or how they struggled with high rents/mortgages. Plus at the same time, a vast generation of previously apathetic young, even middle-aged, are suddenly becoming politicised, and aware that the right-wing has no hope to offer them, or apparently even concern for their troubles. It is quite possible that the Tories/Republicans simply become an irrelevant minority, for the rich, religious fundamentalists and a base slowly dying out.

As for Europe, well the Euro is hardly a Leftist idea. The solutions to save it seem extremely reactionary, bailing out the rich and in return demanding brutal austerity for the mass. Globalisation, at least the neo-liberal model, has tied the hands of leftist thinkers and politicians for generations. Thinking through an alternative won’t be easy, but we have an opportunity.

51
Not really sure what point you’re trying to make. I’ll guess that you’re inferring that the economic crisis in the UK is something to do with the EU, if so, perhaps you could explain why the US is also in crisis.

“Not really sure what point you’re trying to make. I’ll guess that you’re inferring that the economic crisis in the UK is something to do with the EU, if so, perhaps you could explain why the US is also in crisis.”

Many developed western nations are in crisis because they over leveraged with cheap debt during the boom years. The result is that they have obligations (public services and expensive wars) that they can’t afford on a reduced tax base.

This affects the USA, UK and EU.

The reason why the UK is more particularly affected by EU crisis than USA is because more of our trade is with the EU.

Leon @ 47:

“The right took control, imposed austerity…and have caused this crisis out of what was only a problem.”

I seem to recall that the American president is quite big on stimulus spending as opposed to austerity. How’s that going, BTW?

57. Man on Clapham Omnibus

I dont think any one regards the occupy movement as having any significant impact when the euro (and by implication sterling) falters. Unfortunately, for the indefatigably Hegelian Hundal he still labours under the illusion that if the story is right somehow the great British public will suddenly take on board the data, the graphs and the simulations and in doing so transcend their world veiw to arrive at his. This proven technique has of course been used by Jehova’s witnesses to great effect over the years as we all know.

@ 53. Paul Krishnamurty

Is that Golfjudge?

Last night a C4 News reporter felt that there was no leadership in Europe. In times of crisis the guy who can understand the problem and find A way out (of the many), no matter how good, will lead the the way out of the crisis. This could mean the new Greek PM or it could mean the PM of an ex Eastern Bloc country. It could even mean Sarco or Merkel – even though their interest is plainly to hold the Eurozone together (to the last).

That is the situation the Eurozone needs. A guy who has an idea, can bring the team together by communicating simply and succinctly to the rest of those in crisis, and lead.

I’ll look to the recent Yes referendum campaign. It lacked a coherent leader giving a simple message that would hold sway over the electorate.

The last guy who could understand the reams of bollocks going on in the Credit Crunch was actually Vince Cable. Gordon Brown was mired in detail, and Georgey Osborne was too worried about his own business interests going down the toilet to notice any need for leadership.

In times of crisis, never mind trends and past records in a specific arena, the ideas man who can communicate simply and effectively with conviction has always held sway. That is why Khomenei took power in Iran and Lenin in Russia. It doesn’t matter who you are, if you can pull the crowds you’ll do it.

Even from another party I look to Labour to deliver that leadership and understanding in this crisis. Cameron and his vested interest buddies aren’t going to do it as they’ll lose personally unless they do nothing.

Get your heads round it and get in the limelight, and communicate a better way than the rest of them. You’ll win if everyone understands you.

“This crisis shows our financial institutions have stopped working for ordinary people – they are being hurt by a crisis they didn’t create. It’s time to reform the world’s financial system and make it work. The Conservatives won’t do that.’

What reforms would you make to the system Sunny in order to make it work and why is it you focus on the entire world?

“This crisis shows our financial institutions have stopped working for ordinary people – they are being hurt by a crisis they didn’t create.”

True, but there is another way of looking at this issue.

For the last ten years ordinary people benefited from the higher growth and taxes that the financial institutions created during the boom.

Now that that growth and its taxes have been shown as illusory the country has to make do with less.

Labour must abandon its timidity towards the banks. One essential step is to say clearly and firmly that the nationalised banks will never, ever be sold back to the private sector, but will instead be subject to permanent democratic control.

55
Well yes I agree, but the point I was inferring is that the UK and US are in crisis because the financial institutions gave people money to spend which they could not afford to pay back, which you address @61.
The UK is not in crisis because of membership with the EU, doing the same thing as a non-member would have resulted in exactly the same consequences.

@56

I seem to recall that the American president is quite big on stimulus spending as opposed to austerity. How’s that going, BTW?

Thats WAS quite big on stimulus spending, however he’s now an austerity peddler like everyone else. More votes in it, sadly.

And what does democratic control of a bank actually mean? It still functions as a bank…whats the big issue with democratic control that will make a difference here?

66. Teller of all to all

Sender the fool:

I don’t believe in any supernatural sky fairy religious shit.
So wrong again!

You’re all worthless cunts!

“And what does democratic control of a bank actually mean? It still functions as a bank…whats the big issue with democratic control that will make a difference here?”

I guess most people would say they wanted banks to be run more prudently and not take stupid risks so that they need bailed out.

However people aren’t so keen on prudence when the bank refuses them a mortgage as they don’t want to lend on 4x income with only a 5% deposit.

Or they complain when banks don’t lend £300m to Sheffield Forgemasters.

The only way to stop the Tories from hijacking the wasteland of discontent that will overwhelm this country when the fan is well and truly clogged is to radicalise the Labour Party and champion candidates who will take on the banks head on. For it is they and the system they operate in that lies at the root of ALL the problems the world is facing right now.

Anyone with a bit of foresight,with history as a guide, can see what’s coming.We are on the doorstep of the end of civilisation as we know it and,blighted by ignorance, in danger of misplacing the swell of anger that is already on the boil everywhere. See post 1. to see the likely manifestations of the disconnect between people and political parties when disorientated by apathy and lack of understanding.

The Labour party under Ed Miliband will swim this revolution like a spastic poof on a banana tree log unless we first recognise that its time to subvert the artificial notions of left right absolutism and reconstruct a new left under the absolute purview of free market justice.There is no way out of this crisis without pain but mitigating this pain, if we so desired, is achievable and done with an easy swipe of a pen. Miliband et al however, will never surrender to such acts of treason.Treason, only because they have been pounded and gagged by the banking lobby over the years to believe, with a gun to the head, that removing a banks licence to print money as debt and instead have the government control the whole money supply will have the banks unleash acts of financial terrorism that will crush the country. Banks issue 97% of this supply and have had free reign to systematically enslave every citizen from the day of his/her birth under the diseased variant of ‘Capitalism’ this system has promoted over the past 200 years.
.
I may sound like an ideologue whose into camping but anyone with any serious interest will see that the throttling of this debate, about repealing banks money licence by the mainstream, has been persistent for very good and understandable reasons.

The Labour party under the yellow belly splooge that is Ed Miliband will preen itself to irrelevance while the Tories look on licking their lips knowing they have them exactly where they want them.

Wake me up when someone steps forward and wants to overhaul the banking system, allow banks to fail, abolish corporate lobbying, impose regulation on media ownership,repatriate trillions in stolen money hoarded in Switzerland and other criminal banking sanctuaries and end the stranglehold of military contractors.

69. So Much For Subtlety

There are two challenges here, I think:

First, to point out that the UK’s economic recovery started faltering before the Eurozone problems. This will require lots of graphs and easily accessible info in one place, and a sustained attempt to point this out to the media.

So the plan is to blame someone else….

Second, it will require the left (and more importantly Labour) to have a strong counter-narrative that works, can unite everyone, and works in their favour. Something like: ‘This crisis shows our financial institutions have stopped working for ordinary people – they are being hurt by a crisis they didn’t create. It’s time to reform the world’s financial system and make it work. The Conservatives won’t do that.’

And spin like crazy?

You know, I remember when the Left had some ideas and some policies. When they had some goals. When they were clearly the wave of the future. They knew what was wrong, they knew where Britain was going and they knew how to get us there. Sure they were wrong, but they had some substance. Now what is being offered here? Spin and blame avoidance? Come on. The BNP has a better thought out, more ideologically credible plan than this. And that is not meant as praise for the BNP.

I have said before, the Left is intellectually bankrupt. It needs to stop being so.

Get the narrative wrong and we’ve effectively lost this entire generation.

Offer them nothing of substance and it doesn’t matter. Winning elections is not about being in office and getting nice secretaries and flash cars. It is about changing Britain for the better. What improvements are being offered here?

@Faisal:

“Wake me up when someone steps forward and wants to overhaul the banking system, allow banks to fail, abolish corporate lobbying, impose regulation on media ownership,repatriate trillions in stolen money hoarded in Switzerland and other criminal banking sanctuaries and end the stranglehold of military contractors.”

You should wake up now then.

Major overhaul of the banks is underway. The aim is certainly to allow them to fail. Inv banking divisions separated from retail. Much larger capital buffers required. A whole host of new regulations from Basle 3 onwards.

There are restrictions on media ownership.

Military contractors make up about 1% of GDP. Hardly significant.

Switzerland gradually but certainly being got to grips with. The recent UK treaty isn’t perfect but a decent step forward. And look at the threats from USA to Swiss banks to prosecute if they don’t give up US citizens bank details.

Wake up and cheer up.

71. So Much For Subtlety

53. Paul Krishnamurty

None of that applies this time. Right-wing economics are at the core of this crisis, and the Right have no answers.

Sorry but how is over spending money we did not have on social security entitlements a right wing economic policy?

Globalisation, at least the neo-liberal model, has tied the hands of leftist thinkers and politicians for generations. Thinking through an alternative won’t be easy, but we have an opportunity.

Especially tough as the Left likes globalisation and it is not going away.

Richard Shrubb

Last night a C4 News reporter felt that there was no leadership in Europe. In times of crisis the guy who can understand the problem and find A way out (of the many), no matter how good, will lead the the way out of the crisis. …. That is the situation the Eurozone needs. A guy who has an idea, can bring the team together by communicating simply and succinctly to the rest of those in crisis, and lead.

Well traditionally such a man rode on a White Horse. Or these days his soldiers tend to ride on World War Two surplus tanks. But I will admit that these sort of gentlemen do tend to sort out the economic problems of their countries. Greece had a much stronger economy at the end of the Colonel’s rule than it does now. Franco and Salazar left Spain and Portugal on solid ground.

It is odd to be hearing someone on LC calling for military dictatorship though. Or even a Churchill-type figure. Or, God help us, someone like Lenin or Khomeini.

Richard P

Labour must abandon its timidity towards the banks. One essential step is to say clearly and firmly that the nationalised banks will never, ever be sold back to the private sector, but will instead be subject to permanent democratic control.

Permanent democratic control? You mean like Lenin after all? The Left needs to stop abusing language. Having my bank run by some twats with sociology degrees from Sussex University who couldn’t get a real job and so went into “public service” is neither democratic nor an improvement.

“Permanent democratic control? You mean like Lenin after all? The Left needs to stop abusing language. Having my bank run by some twats with sociology degrees from Sussex University who couldn’t get a real job and so went into “public service” is neither democratic nor an improvement.”

Stick the end of boom and bust in, I see a job for him on the gold and asset sales desk – with a computer and megaphone he will show us how a democratic bank is run..

Yep, that just about sums it up.

Many forget that the original europhile party in the UK was the Conservative party. Labour were sceptical for many years about the whole Common Market – later the EU – game. Many old lefties still are sceptical – if you want to hear the most eurosceptic views you can find, then look no further than Tony Benn.

Sadly though, many trendy lefty types bought into the whole EU game – just as many on the Conservative right started to get cold feet.

One of the big problems for the left, and especially the Labour left, is that they, like the generals of legend, always seem to think they are fighting the last war, not realising that it’s no longer about trenches, but that now the game has shifted on to blitzkrieg, or human wave, jungle guerrilla, or asymmetric warfare.

So, for the last decade and a half, we’ve had europhile trendies telling us all that the EU is the only game in town.

Maybe Labour shouldn’t worry about the next election, they probably lost that one several years ago. I reckon that it makes a lot more sense to think about what’s going to be relevant to people once the whole Euro-edifice has been shot up. What’s going to matter to voters then? I know this takes some imagination – a skill lacking in many politicians, but it needs to be done.

Oh yeah, it might be a good idea to get rid of most of the Labour front bench too – they’re not only tarred, but covered with feathers.

74. Paul Krishnamurty

@ 58 Hi Richard, yes its golfjudge

Do I know you from BF?

75. Paul Krishnamurty

71 I wasn’t aware that welfare spending was responsible for the financial crisis, or the anarchic derivatives trade for that matter, that turns mini-domestic crises like sub-prime into global disasters.

Although given that Thatcher ramped up welfare spending and Major left us with 2.8M on Incapacity Benefit, I can see why some might consider it to be ‘right-wing’.

76. So Much For Subtlety

48. Joe

I am not saying we are ripe for a Chavez type figure any time soon, but the current disaster area that is the Western economy is not that dissimilar to the experiments that were forced on poorer countries, especially in South America, by the IMF and World Bank in the latter part of the twentieth century, with catastrophic results

Actually South America largely resisted IMF reforms and have mostly reversed them. Their economies are not doing so well. Africa, China and India, on the other hand, have to varying degrees embraced them. China and India have seen the largest number of poor people lifted out of poverty since humans first crawled out of the ooze while Africa is achieving fairly strong and steady economic growth. The Washington Consensus works. We would do a lot worse by ignoring it ourselves.

Now, the only full-blooded neoliberals and US best friends forever in the whole continent are Chile, which suffered perhaps the worst insults from the whole experiment in rule-by-market thing and has still not recovered, and boasts the least popular president in the hemisphere and almost continuous protests

It is also the best performing economy in Latin America with the highest GDP per capita in Latin America. That is not nothing. In fact it is quite a lot.

and Colombia which is still wrapped up in a brutal civil war eagerly egged on by the yanks

Funny, some of us would have thought the Guardian’s friends in the FARC had something to do with that.

Not that Colombia is neo-liberal.

I think a reasonable model for democratic control could involve the majority of the directors being elected by the customers. Some others could be appointed by the government. Of course, you’d want talented people in charge and people will say that democracy avoids that – but I don’t think it need do, if we do it well (indeed, we have building societies already). And it’s not as the old system’s bankers have covered themselves in glory.

If you think im going to bother with yet another one of your mindless sub-par ‘fiskings’ MoveAnyMountain/SMFS, you’re sadly mistaken. For dawkins sake switch your game up man, you come across like a cretinous android gone wrong. I will deign to respond to one point though – i know you are a pinochet fanatic but im afraid chile was one of the richest countries south of the rio grande before that scumbag came with his dogs a-raping the country’s pregnant trade union members, crashing the economy in the process. The fact that it has since recovered from his depredations due to its fairly modest population and huge, valuable array of natural resources is not neoliberalism’s victory, though the fact that this extracted wealth has ended up in so few pockets definitely is.

The Rights economic plan……

Austerity.………which leads to lower growth..………..which then leads to more austerity.…………which leads (in a death cycle) to lower growth.…………..which leads to more austerity………….rinse repeat.

Eventually the debt is paid off, but most people are suffering and huge sways have been laid to waste. But the elites have no problem with sacrifice as long as it is the little people that are sacrificing.

@ 74. Paul Krishnamurty

Yes, Paul. Nice to see you on here.

What one can say about the whole sorry mess of the EZ story is that it was a politicians vanity project. It was not left or right. Vanity was to blame. Robert Mundell is rightish and he helped set it up. Friedman accurately predicted everything that would go wrong. Krugman is on the left and accurately predicted its failings. Nouriel Roubini is leftish and predicted five years ago what would happen in Italy.
http://www.economonitor.com/nouriel/2006/01/28/italys-tremontis-temper-tantrums-on-emu-in-davosa-sad-embarrassing-episode-for-italy/#idc-container

There was no economics left-right split on the subject. The sound economics suggested that the set up would lead to a balance of payments crisis. We have a B-O-P crisis. In this country the left allowed themselves to believe that the only arguments against the EZ were from the xenophobic right. In that case, they thought the left must be in favour of the monetary union.

Ireland who were a Cato Institute poster boy could be described as neo-liberal. However, that does not describe Greece or Italy. On most measures Greece is the least neo-liberal nation in the developed world. Italy and Greece did not get themselves in trouble through being neo-liberal. They are where they are through being sclerotic, vested interest patronage states. Buying support from the vested interests worked so long as others were providing the funding. The EU are telling them to now do the things that the left call neo-liberal, they are telling them or ordering them because they were not doing it previously. Moreover, they are telling them to stop spending so much on some of the things that the left do support. Maybe an indication where they were going wrong?

I am pessimistic that any of the sticking plaster solutions will work. Effectively, Germany wants the south to be more German. They want the Greeks to stop being Greek, Italians to stop being Italian and the Spanish to stop being Spanish. The Merkozy vision for Europe is not for right-wing or left-wing economics. Their vision is for the south to be just like the north. I don’t think it is going to work.

The left in the UK have more to fear than most with the way I think Europe is going to develop in future. The European authorities want a veto over national budgets. A Conservative government are not going to be too worried about Europe ordering the UK to cut their public spending. That would be a convenient scapegoat. How are the left going to react when the EU tells a Labour government to cut public spending?

81. So Much For Subtlety

77. Richard P

I think a reasonable model for democratic control could involve the majority of the directors being elected by the customers.

So the new owners would just vote themselves all the money in the bank through low interest rates. What borrower is going to vote for the market rate? What incentives do the customers have not to drive the bank into the ground?

Some others could be appointed by the government.

And so they would be lending to marginal constituencies. We have tried that. It does not work.

And it’s not as the old system’s bankers have covered themselves in glory.

I disagree. Look at how wealthy Britain is. Mainly due to our bankers. And it was precisely the Old School Bankers that had no problems. The people who went down were the Thatcher generation of former Building Societies, not the established banks. Coutts did not have a problem. Northern Rock did.

Joe

If you think im going to bother with yet another one of your mindless sub-par ‘fiskings’ MoveAnyMountain/SMFS, you’re sadly mistaken.

I don’t think I am. You will. Naturally.

im afraid chile was one of the richest countries south of the rio grande before that scumbag came with his dogs a-raping the country’s pregnant trade union members, crashing the economy in the process.

No it was not. In 1973 Chile was slightly below the Latin American average. It is now the richest country in the region. Allende’s policies brought ruin. Pinochet’s brought wealth.

The fact that it has since recovered from his depredations due to its fairly modest population and huge, valuable array of natural resources is not neoliberalism’s victory, though the fact that this extracted wealth has ended up in so few pockets definitely is.

Chile is a middle ranking country in terms of wealth distribution. Not particularly good but not particularly bad either. Modest population? That is an interesting thing to blame.

By the way, Brazil is also a poster-child for neo-liberal reform. Not a modest population there.

82. Leon Wolfson

@56 – 1% higher growth than the UK in the last quarter. Despite far higher debt levels.

I’m sorry, you had a point?

@49 – No, the people you so love set out to undermine the Eurozone. And need to answer for it.

Coutts is owned by RBS, SMFS.

84. So Much For Subtlety

80. Richard W

What one can say about the whole sorry mess of the EZ story is that it was a politicians vanity project. It was not left or right. Vanity was to blame.

I sort of agree except I think it was more serious than that – Baby Boomers, our most over indulged and cossetted generation, thought that they could ignore the laws of economics and create facts on the ground through sheer will. They were wrong. As most Baby Boomers are of the general Left, I suspect that this is more of a Leftist project than a Right Wing one.

There was no economics left-right split on the subject. The sound economics suggested that the set up would lead to a balance of payments crisis.

There was in Britain. The Right objected on many grounds but had a clear economic case against the Euro. Which has been shown to be right. Some of the Left also objected (and it would be nice to have a table of Tony Benn’s various positions on Europe so I could work out if he endorsed the Euro or not) but not really on economic grounds. As with much of the Left, more moral grounds dressed up as economic argument. That it is a free trade club etc etc. I would not say all of those arguments have been shown to be wrong, but they have not been shown to be right in the way that the Right’s have been.

I am pessimistic that any of the sticking plaster solutions will work. Effectively, Germany wants the south to be more German. They want the Greeks to stop being Greek, Italians to stop being Italian and the Spanish to stop being Spanish. The Merkozy vision for Europe is not for right-wing or left-wing economics. Their vision is for the south to be just like the north. I don’t think it is going to work.

I read Keith Drum on Mother Jones yesterday. While he is an incurable optimist about the causes he supports, he argues that the Germans know what they have to do, they are just holding out as long as possible to get the best possible terms from the Greeks and Italians. In other words, the plan is to force them between bankruptcy and German control of their fiscal policies. But to do that, they need to teeter on the abyss.

I would like to think he is right. I hope he is. But I doubt it.

How are the left going to react when the EU tells a Labour government to cut public spending?

No one liked it when the IMF did. But given Europe, perhaps the bigger danger is that the EU will tell a Tory government to spend more?

Leon @ 82:

And also higher unemployment and a downgraded credit rating.

86. Leon Wolfson

@85 – And the Tories want Right to Fire here. Oh, and the actual American bond rate has…no, actually it hasn’t changed.

And?

This is a great column by Megan McArdle.

Covers why the irrational moralisers are making us repeat all the mistakes of the past in the EZ and elsewhere.
http://www.theatlantic.com/business/archive/2011/11/the-financial-folly-of-fairness/248216/#

Paul K: None of that applies this time. Right-wing economics are at the core of this crisis, and the Right have no answers.

But ordinary voters don’t think in terms of left or right. They might not like Tories much etc but they’ll still vote for them if they think the alternative can’t get the economy sorted. They have done so in the past.

89. Paul Krishnamurty

@ 88 Sunny

Maybe not specifically left/right, but there is still a distinction where Tories represent the competent if uncaring head, Lib/Lab the caring but naive heart. We hear it every day in popular culture, ‘bleeding heart Libs’ ‘Can’t spend money we haven’t got’ etc. The whole ‘PC brigade’ myth is related – part of the Tories phoney differentiation strategy when in opposition.

I just don’t think the Tory spiel on this can survive now voters are feeling the pain. Right now its easy to blame Labour, but in time, people might consider the NL era as a relatively prosperous one, when they bought their first house or had a steady job, when there were public services etc. Equally, the effect of the neocon economy alienated vast numbers of ‘Reagan Democrats’ that earlier backed Bush due to culture wars/Iraq. The same could happen here.

“@49 – No, the people you so love set out to undermine the Eurozone. And need to answer for it”

Judging by your past ramblings you mean speculators?

“But ordinary voters don’t think in terms of left or right”

No they think in terms of every day life something the political class is entirely disconnected from – politics needs the biggest reform much more so than financial institutions how ever if you are going to focus on institutions focus on Britain’s institutions, you know…about the only ones there’s any chance of having control over?

You just look like another political nob with a big mouth, mouthing off about reforming the world when the parties of this country cant even deliver a real democratic process to its own people..

91. Leon Wolfson

@87 – What a load of moronic corporatist whining that article is. Oh, let’s bail out bankers who make “mistakes” and cost people billions!

MoveAnyMountain/SMFS

As I say, I find it heartening that your pathologically attention seeking, fact-free sub-par fiskings get very short shrift around here generally and I have no wish to draw greater attention to them, but if there’s one thing I can’t shy away from it’s a Pinochet fanatic, it is just too offensive to brush off.
Chile saw two horrendous recessions during Pinochet’s reign of terror, and over the whole period per capita GDP rose by a poor 1.5% a year, much lower than the pre-Pinochet period – and most of this meagre growth went into the pockets of Pinochet’s big business buddies – and the only thing that kept the economy going during this period was the only thing that was still largely state owned, the huge copper mines.

Since democracy returned to that unhappy country, it has recovered and gone on to grow at a reasonable pace, but the inequality has remained in place due to the weak civil institutions left in place by the departing Pinochet gang.

Of course almost all of that recovery has come from mass exploitation of natural resources at a time when global demand has risen like never before (have you seen the copper prices?), including the one-time only devastation of the unique and ancient valdivian rainforest for pulp, hydro power and cheap salmon farms.

And if you can’t work out why a low population and huge natural resources being exploited at unsustainable rates during a globalised commodity boom will give you a high headline PER-CAPITA gdp then I’m afraid I can’t help you. Chile has an appalling Gini coefficient for a country at its level of development, on par with Bolivia and Brazil which have the very different history of being infamously exploited slave states that still has fallout today.

Brazil is no posterchild for neoliberalism, it very much was in the 80s and 90s when unsurprisingly its growth was embarrassingly low depsite massive resources, and while under the Workers Party it’s been no Venezuela under the PSUV, it has taken a much more social democratic route than before and has done well as a result.

@88 – then don’t call it ‘right wing economics’, call it ‘conservative policies’, or if you want to drive at the big picture stuff, ‘conservative free market masochism’ or some such

Though unless Labour sorts itself out, nothing they call it will make much difference

@ 91

Reading comprehension problems again, Leon?

I thought you would like this report. It is about the Nordic Model and why it works so well. Although, they do say that the Scandinavians are similar, but there is no such thing as an actual Nordic Model.

http://www.li.com/attachments/Economics_Scandinavia_2011_WEB.pdf

Sunny: “The Euro crisis could set back the left for more than a generation”

I think it could easily set both the left and right back for more than a generation, to be honest. What is looming here is huge, unprecedented, an international event of the sort of scale which will throw long-established political movements around like toys.

96. So Much For Subtlety

92. Joe

if there’s one thing I can’t shy away from it’s a Pinochet fanatic, it is just too offensive to brush off.

As I said, you just can’t help yourself. I guess I am right again.

Chile saw two horrendous recessions during Pinochet’s reign of terror

A “reign of terror” some thirty times smaller than the death toll in Cuba. That paradise beloved by the Guardian-reading Left.

and over the whole period per capita GDP rose by a poor 1.5% a year, much lower than the pre-Pinochet period

Ignoring the fact that the economy was shrinking under Allende.

Since democracy returned to that unhappy country, it has recovered and gone on to grow at a reasonable pace, but the inequality has remained in place due to the weak civil institutions left in place by the departing Pinochet gang.

So you’re trying to claim all the good things for democracy and all the bad for Pinochet? In reality Pinochet’s economic legacy has been so successful that the subsequent democratic regimes have not challenged them. Chile is growing well enough now because of the reforms from the Pinochet years.

Chile has an appalling Gini coefficient for a country at its level of development, on par with Bolivia and Brazil which have the very different history of being infamously exploited slave states that still has fallout today.

On par with much of Latin America. Although I fail to see what is appalling about it.

Brazil is no posterchild for neoliberalism, it very much was in the 80s and 90s when unsurprisingly its growth was embarrassingly low depsite massive resources, and while under the Workers Party it’s been no Venezuela under the PSUV, it has taken a much more social democratic route than before and has done well as a result.

Keep up with the denial. Brazil is a good example of what happens when you follow the IMF’s advice. Since the Plan Real they have been doing all the right things. Embarrassingly low? Their economy was growing at about 5-6% last I heard. Which is not as good as the early years of military dictatorship but is better than the 1980s at any rate. It has taken a more social democratic route but it has taken a liberal one. Lula did not turn out to be the disaster he showed every sign of being. Instead he continued with the neo-liberal economic reforms – and he showed he had learnt from John Stewart Mill. He did not get in the way of the neo-liberal economy, but he ran welfare programmes using the revenue from the success of those reforms in parallel, not competing with, the real economy. Brazil has been an enormous success. One we could learn from.

96
They used to throw Christians to the lions, which on your terms makes any subsequent evil actions justifiable.
The feudal system worked well for hundreds of years so it must be okay forever, right?

98. Luis Enrique
99. Leon Wolfson

@94 – Problems with your typical defamatory, moronic trolling to disrupt the conversation? Why yes.
I wish a tax audit onto you.

And I can find a “report” that this is the fault of the ZOG. Frankly, they’re more credible than the backers of that report. The usual banker suspects. They’re doing well. So are Australia and Canada.

But no, you cry, we need to keep pushing Plan A for idioticy.


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  1. Liberal Conspiracy

    The Euro crisis could set back the left for more than a generation http://t.co/eKIF3GiT

  2. Martin Coxall

    The Euro crisis could set back the left for more than a generation http://t.co/eKIF3GiT

  3. Danny Leigh

    The Euro crisis could set back the left for more than a generation http://t.co/eKIF3GiT

  4. Michael Bater

  5. sunny hundal

    Why I think the Euro crisis could set back the left for more than a generation http://t.co/GwhWnoZG

  6. Lily Banyard-Fox

    Why I think the Euro crisis could set back the left for more than a generation http://t.co/GwhWnoZG

  7. Christopher Jennings

    Why I think the Euro crisis could set back the left for more than a generation http://t.co/GwhWnoZG

  8. Alistair Duncan

    The Euro crisis could set back the left for more than a generation http://t.co/eKIF3GiT

  9. David Taylor

    The Euro crisis could set back the left for more than a generation http://t.co/eKIF3GiT

  10. Roger Thornhill

    RT @sunny_hundal: Why I think the Euro crisis could set back the left for more than a generation http://t.co/LklqUP9M // century, please.

  11. Oxford Kevin

    The Euro crisis could set back the left http://t.co/39e0sNdW @libcon << UK economy has performed worse than eurozone: http://t.co/39e0sNdW

  12. Beautyon

    RT @sunny_hundal: Why I think the Euro crisis could set back the left for more than a generation http://t.co/LklqUP9M // century, please.

  13. Mehdi Hasan

    Now the Murdoch spectacle is over, my warning > The Euro crisis could set back the left for more than a generation http://t.co/GwhWnoZG

  14. MustBeRead

    From @Sunny_Hundal on @LibCon: The Euro crisis could set back the left for more than a generation http://t.co/W6PqSLF0

  15. Anti-LiberalDemocrat

    The Euro crisis could set back the left for more … – Liberal Conspiracy: Remember the most anti European manif… http://t.co/z33LHGIl

  16. sunny hundal

    (and I accept I'm not tweeting enough on Euro either, but you lot get bored and I did RT my article on it! http://t.co/GwhWnoZG )

  17. Pam

    The Euro crisis could set back the left for more than a generation | Liberal Conspiracy http://t.co/5pEnjt6F via @libcon

  18. Renee Ahlstedt

    The Euro crisis could set back the left for more than a generation, cos thats the big issue here Sunny ?http://t.co/ESTo7QWg via @libcon

  19. Finola Robinson

    The Euro crisis could set back the left for more than a generation http://t.co/eKIF3GiT

  20. Michael Weatherburn

    The Euro crisis could set back the left for more than a generation | Liberal Conspiracy http://t.co/NLy1bdHn via @libcon

  21. Richard Shrubb

    The Euro crisis could set back the left for more than a generation | Liberal Conspiracy http://t.co/devbJafA via @libcon

  22. Owen Blacker

    (and I accept I'm not tweeting enough on Euro either, but you lot get bored and I did RT my article on it! http://t.co/GwhWnoZG )

  23. Diane Lawrence

    The Euro crisis could set back the left for more than a generation | Liberal Conspiracy http://t.co/Dx6nZeEK via @libcon

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    […] Labour must now find its roots again. Labour politicians need to re-find their integrity and speak up and lead like Aneurin Bevan once did so admirably. We need modern day politicians to represent us, like he did and not to follow the neo-liberalists like the Pied Piper led the children to their own extinction. Now is the time for mankind to remember what it is to breathe, to live and to hope.  Sunny Hundal Liberal Conspiracy writes: […]

  25. Govind Nair

    #euro crisis could spell serious dangers for unprepared #Occupy movement http://t.co/j2zBv1W6 #ows #youth #unemployment #jobs

  26. Sienna Marla R

    The Euro crisis could set back the left for more than a generation | Liberal Conspiracy http://t.co/d47SYNsE via @libcon

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    RT @libcon: The Euro crisis could set back the left for more than a generation http://t.co/Ln9mTm0H

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    […] Hell, even I’ve given up trying to terrify people – I’m now worried about how this will play out politically. I said earlier that the Euro crisis could set back the left for more than a generation. […]

  29. Mutation or Mutiny? | Brummy Gems

    […] Labour must now find its roots again. Labour politicians need to re-find their integrity and speak up and lead like Aneurin Bevan once did so admirably. We need modern day politicians to represent us, like he did and not to follow the neo-liberalists like the Pied Piper led the children to their own extinction. Now is the time for mankind to remember what it is to breathe, to live and to hope.  Sunny Hundal Liberal Conspiracy writes: […]





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