Wednesday, October 13, 2010

McWilliams on economic sovereignty

It is very rare that I would take something from the Irish Indepdent (a right-wing rag of a newspaper) however the below article by critical economist (but pro-capitalist) David Mc Williams does well in highlighting our contiuing loss of any semblance of economic sovereignty as rhis crisis deepens.

David McWilliams: Elite is preparing to sell country down the river
By David McWilliams
Wednesday October 06 2010

The last time I checked there was a harp on the front of my passport, not a picture of Michael Fingleton

The other day I met a German radio presenter from ARD, the German public radio station. I've known her for quite a while -- since a brief spell
working on the German economy in the 1990s for an investment bank. She, like many other foreign correspondents, has been sent to Ireland to see
what is going on here.

After a while, I wondered why she hadn't asked me anything about the Government, or the prospect of an election or what new political
constellation might emerge here. She joked and in an exaggerated German accent laughed: "David, it doesn't matter who your next prime minister is,
he will have no power -- we own you now, and he will do what we tell him."

The problem is that the joke is on us. She touched on the nub of the issue: the Irish elite is prepared to sell the sovereignty of this country to
protect the likes of Roman Abramovich and other vulture investors who bought up third-rate Irish banking debt at a discount and are hoping to get
paid in full.

In the world of debt, these people are referred to as 'rogue creditors'. Typically, they are treated as rogues. They are nothing to us and should be
treated as nothing. As the clever economist Karl Whelan observed, if we are happy that our tax is used to pay Frank Lampard's wages, then that's more
of a reflection on us.

People such as Abramovich, like the other creditors, can be told to line up in an orderly queue and wait for the liquidator to give them the morsels
that might remain from the broken Irish banking system. The crud Abramovich owns -- an IOU from Irish Nationwide Building Society (INBS) -- is not the
same thing as Irish government debt.

The last time I checked there was a harp on the front of my passport, not a picture of Michael Fingleton.

Any political party that fights the election on that premise of protecting the Irish taxpayer from vulture investors will get my vote. Not only will
that party be doing the right thing, but it will begin the process of giving back to the people the country that we built. This country and our
future income needs to be ripped from the grip of the 'political elite' (a group the governor of the Central Bank identified the other day) who are
selling us to the lowest, not highest, bidder.

My German friend was amazed when she saw Abramovich's caper and she observed that the Irish parliament kept genuflecting to some crowd called
bondholders. She asked me one of the most insightful questions I have heard throughout this long saga: "Do you Irish need to be loved so much that you
will stand up for nothing?"

With Germanic precision and with the benefit of distance, she touched a nerve. The Irish weakness for not causing any trouble (bar a few
theatrically drunken songs for the audience late at night) has led us to a situation where we are embarrassed to admit that we messed up. We don't
want to stand out. We don't want to draw attention to ourselves for serious reasons. Is it because we want to impress the foreigner and above all make
life easy for him?

Is it fair to say that over the years the language of resistance has been replaced by the language of compliance?

What is clear is that some countries fight, some make nuisances of themselves, but the default position of Ireland, or at least the Irish
elite, is to comply -- no matter what the cost.

So take the example of euro membership. Denmark and Sweden -- two great European countries whose bona fides as EU members was never in doubt --
decided to keep their own currencies because they were perfectly happy with them and the euro's case wasn't compelling enough.

Meanwhile, what did our elite do? They went along for the ride -- one which the evidence would suggest was an extremely ill-advised ride. Ireland had
much greater cause for concern about joining the euro, but we hardly made a noise. Why?

Could it be -- to follow my German friend's line of enquiry -- that we didn't have the self-confidence to stand on our own two feet and do some
hard analysis about the consequences of this currency or any other decision?

Did we just want to be a mute member of the club -- unlike the pesky Danes, Swedes or, God forbid, Brits?

It is difficult to answer these questions. They are fraught and can lead to lots of heat and sometimes not too much light, but you don't have to be a
conspiracy theorist to see a pattern.

Take, for example, Abramovich owning a huge amount of INBS debt. How did he get his hands on it? Who sold it to him? Would it be too much to conclude
that whoever -- whichever broker -- sold the debt to him, also sold it to some other mega-rich clients elsewhere?

That would stand to reason. If so, could it be that the mega-rich who are closer to home find themselves in the same position as Abramovich?

Could it be that the only people benefiting from the Government's blind rush to impale the small guy with the debts of Fingleton et al are our own
"high net worth" individuals? Could they be pulling the strings?

In all this haze, allegation and counter-allegation, can the "cui bono" question help us at all?

A clear domestic banking resolution law would clear all this up. But we have no such law. So the people are left in the lurch wondering who to

We do know that, for example, the EU Commission gave its opinion on Friday at the wind-up of a Danish bank where it enthusiastically supported the
principle of burden sharing.

Here's the quotation from the EU Commission regarding bust Danish banks: "Moreover, burden sharing is ensured by excluding shareholders and
subordinated debt holders of the failed bank from any benefit from the aid."

There you have it in black and white. This is what the EU has advised Denmark to do. It clearly states that they won't give any state money to
the troubled bank until the subordinated debt holders are burnt.

So let's get back to my German friend's observation: is it because we need to be loved or are we protecting someone big?

The EU says burn them and move on. Logic says don't sacrifice your sovereignty to bail out the hyper-rich, democracy says it is unfair to
penalise the poor for the mistakes of the rich. What do you think?

David McWilliams will teach an economics diploma called 'Economics without boundaries', enrolling now; see

- David McWilliams

Does Social Democracy have a future?

"Does Social-Democracy Have a Future?"

This past month, two important events marked the world of Social-Democratic parties. In Sweden, on September 19, the party lost the election badly. It received 30.9% of the vote, its worst showing since 1914. Since 1932, it has governed the country 80% of the time, and this is the first time since then that a center-right party won re-election. And to compound the bad showing, a far right, anti-immigrant party entered the Swedish parliament for the first time.

Why is this so dramatic? In 1936, Marquis Childs wrote a famous book, entitled Sweden: The Middle Way. Childs presented Sweden under its Social-Democratic regime as the virtuous middle way between the two extremes represented by the United States and the Soviet Union. Sweden was a country that effectively combined egalitarian redistribution with internal democratic politics. Sweden has been, at least since the 1930s, the world poster child of Social-Democracy, its true success story. And so it seemed to remain until rather recently. It is a poster child no more.

Meanwhile, in Great Britain on Sept. 25, Ed Miliband came from far behind to win the leadership of the Labour Party.

The Labour Party under Tony Blair had engaged in a radical remaking of the party under the label "the new Labour." Blair had argued that the party should also be a middle way - one not between capitalism and communism but between what used to be the social-democratic program of nationalization of the key sectors of the economy and the unbridled dominance of the market. This was quite a different middle way than that of Sweden in the 1930s and afterwards.

The choice by the Labour Party of Ed Miliband over his older brother David Miliband, a key associate of Tony Blair, was interpreted in Great Britain and elsewhere as a repudiation of Blair and a return to a somewhat more "social-democratic" (more Swedish?) Labour Party. Still, in his first speech to the Labour conference a few days later, Ed Miliband went out of his way to reassert a "centrist" position. He did however lace his statements with allusions to the importance of "fairness" and "solidarity." And he said: "We must shed old thinking and stand up for those who believe there is more to life than the bottom line."

What do these two elections tell us about the future of social-democracy? Social-democracy - as a movement and an ideology - is conventionally (and probably correctly) traced to the "revisionism" of Eduard Bernstein in late nineteenth-century Germany. Bernstein argued essentially that, once they obtained universal suffrage (by which he meant male suffrage), the "workers" could use elections to win office for their party, the Social-Democratic Party (SPD), and take over the government. Once they won parliamentary power, the SPD could then "enact" socialism. And therefore, he concluded, talk of insurrection as the road to power was unnecessary and indeed foolish.

What Bernstein was defining as socialism was in many ways unclear but still seemed at the time to include the nationalization of the key sectors of the economy. The history of Social-Democracy as a movement since then has been that of a slow but continuous shift away from a radical politics to a very centrist orientation.

The parties repudiated their theoretical internationalism in 1914 by lining up to support their governments during the First World War. After the Second World War, the parties algined themselves with the United States in the Cold War against the Soviet Union. And in 1959, at its Bad Godesburg conference, the German SPD officially repudiated Marxism entirely. It stated that "from a party of the working class, the Social-Democratic Party has become a party of the people."

What the German SPD and other social-democratic parties came to stand for at that time was the social compromise called the "welfare state." In this objective, in the period of the great expansion of the world-economy during the 1950s and 1960s, it was quite successful. And at that time, it remained a "movement" in the sense that these parties commanded the active support and allegiance of very large numbers of persons in their country.

When, however, the world-economy entered into its long stagnation beginning in the 1970s, and the world entered the period dominated by neo-liberal "globalization," the social-democratic parties began to go further. They dropped the emphasis on the welfare state to become the advocates merely of a softer version of the primacy of the market. This was what Blair's "new Labour" was all about. The Swedish party resisted this shift longer than others, but it too finally succumbed.

The consequence of this, however, was that Social-Democracy ceased to be a "movement" that could rally the strong allegiance and support of large numbers of persons. It became an electoral machine that lacked the passion of yesteryear.

If however social-democracy is no longer a movement, it is still a cultural preference. Voters still want the fading benefits of a welfare state. They regularly protest when they lose still another of these benefits, which is happening with some regularity today.

Finally a word about the entry of the far right, anti-immigrant party into the Swedish parliament. Social-democrats have never been very strong on the rights of ethnic or other "minorities" - still less on the rights of immigrants.

Social-democratic parties have tended to be parties of the ethnic majority in each country, defending their turf against other workers whom they saw as undercutting their wages and employment. Solidarity and internationalism were slogans that were useful when there was no competition in sight. Sweden didn't have to face this issue seriously until recently. And when it did,a segment of social-democratic voters simply moved to the far right.

Does social-democracy have a future? As cultural preference, yes; as movement, no.

by Immanuel Wallerstein

[Copyright by Immanuel Wallerstein, distributed by Agence Global. For rights and permissions, including translations and posting to non-commercial sites, and contact:, 1.336.686.9002 or 1.336.286.6606. Permission is granted to download, forward electronically, or e-mail to others, provided the essay remains intact and the copyright note is displayed. To contact author, write:

Protests in Greece - More News

24 hour strike of PAME in the public sector

“No more games, capitalism cannot become humane” and “Education, Health, Work for everyone, the plutocracy must pay for the crisis.”!

These were the slogans that striking workers in the public sector shouted at the massive demonstrations which the class-oriented forces organized in dozens of cities allover Greece. The workers demonstrated that in order to repel the anti-worker assault they need to rally militantly and organize with PAME. They came together with the generation of their children, students and school students who were demonstrating under the banners of the students´ militant front and the students’ coordination board of Athens. Their aim was to show altogether that joint struggles against the policies which attack workers and the popular strata on the one hand and on the other utilize the schools to educate the workers of tomorrow to be submissive, are absolutely necessary.

It should be noted that the strike took place at a time when the government is preparing a new budget, new cuts and new taxes for the people, as well as tax-exemptions for capital (while hypocritically claiming that there will be no new measures). A characteristic example of this is that the taxation of business consortia will be reduced from 24% to 20%, with even greater privileges for direct foreign investors (e.g. for Chinese and Arab capital, recently) to ensure their profitability. And of course the social democrat D Strauss Kahn , head of the IMF, has stated that new measures might have to be taken.

Lamprini Christogianni, a public sector worker and PAME cadre in her speech at the rally stressed that it is not enough “ to talk about the effects of these policies and not go beyond a description of the situation … What is most important is for us to understand that we can find a way out of this anti-worker nightmare… In order to confront this generalized and wholesale assault on the part of capital we must reject not only the memorandum but capitalist production itself, which gives birth to these crises.” In this direction,it is necessary “that the government of PASOK, as well as ND and LAOS who consent to and support these policies be politically condemned, as well as all the parties of the “EU one-way road” who sow illusions.” This condemnation must be expressed in the upcoming local elections. In addition she noted that it is also necessary that the compromised trade union leaderships in GSEE and ADEDY be condemned (who at an international level take their lead from the equally compromised ITUC) who support these policies, but were compelled by the pressure of the class-oriented forces to call this strike.

There followed speeches on behalf of the students´ militant front, the General Federation of the Parents of Schools Students of Greece, the students’ coordination board of Athens.

Monday, October 11, 2010

Raymond Crotty Lecture

People's Movement

Public Lecture

Ireland in Crisis: Radical Alternatives

Professor Lars Mjoset, University of Oslo

Saturday, 16 October 2010, 3.00pm

The Pearse Centre, 27 Pearse Street, Dublin 2

Professor Lars Mjøset of the University of Oslo will deliver the Inaugural Raymond Crotty Lecture, 'Ireland in crisis, radical alternatives' in Butler House, 16 Patrick Street, Kilkenny on Friday 15th October at 7.30 p.m.
He will also speak the next day 16th October in the Ireland Institute, 27 Pearse Street, Dublin at 3.00 p.m..
Both events are organised by the National Committee of the People's Movement.
For further information contact Kevin McCorry - 086 3150301

Notes for Editors on Raymond Crotty and Lars Mjøset

Raymond Crotty. Farmer, economist, development theorist, historian, and political activist, Raymond Crotty (1925-94) was one of the most original thinkers to come out of modern Ireland.

He made history with his successful constitutional action in 1987 against the Government's attempt to ratify the EU's Single European Act Treaty by simple Dail majority vote instead of by popular referendum.

Holding strong radical views, his advocacy of a land tax as a means of putting pressure on Irish landowners to use their land more productively pitted him against powerful vested interests.

In 1974 he wrote, “Recent developments highlight the remarkable contrast which has existed for almost a century-and-a-half between the fortunes of the Irish banking system and of Irish society. Few banking systems in the world have enjoyed such protracted, unbroken prosperity as the Irish banking system. By contrast no country in the world can match Ireland’s record of political and social decay-with its population less than half what it was 130 years ago, and its workforce 30% less than it was when the State was founded fifty years ago. The Irish banking system has grown rich and powerful as Irish society has shrunk and decayed” (Crotty, The cattle crisis and the small farmer 1974)

Irish Agricultural Production (1962), his first book, was described by Professor Joe Lee as 'a monument of the Irish intellect.'.

His posthumously published book, When Histories Collide: the Development and Impact of Individualistic Capitalism explored the role of Indo-European pastoralist peoples in the creation of the modern world.

All through his active life, he highlighted the fact that his study of the Third World had brought home to him that Ireland's traditional economic problem of high unemployment and emigration had analogies in most former colonies of the European powers.

Professor Lars Mjøset, who will deliver the Inaugural Raymond Crotty Lecture is Professor of Sociology at The Department of Sociology and Human Geography, University of Oslo, Norway.

He is no stranger to Ireland and both knew and respected Raymond Crotty and his work.

His 1992 Report for the National Economic and Social Council, The Irish Economy in a Comparative Institutional Perspective, compared Ireland’s socio-economic development with that of five European similar sized contrast countries.

The Report showed that Ireland’s model of development was not only different from that of five contrast countries but the country had the dubious distinction of being one of the few countries in the world whose population was in decline.

Population decline through emigration, together with a weak national system of innovation form what the Report calls the “vicious circle” of Irish development.

Emigration is on the rise again.

Ignored during the so-called Celtic Tiger, the lack of an Irish culture of entrepreneurship continues to be very evident and the historic failure to develop indigenous industry capable of providing work for most of the labour force, is central to the obvious shortcomings of the Irish model of socio-economic development.

Professor Mjøset was born in 1954. He works mainly on comparisons of economic development and economic policies in small and large Western European countries.

Banks will be paud no matter what!

The Irish Government has and continues to recapitalise a number of Banks in the process creating billions of Irish Government Debt.

This debt is sold in the form of Government Bonds thatr mature at a particular date and with a particular interest rate attached to them. Investors by the debt and upon maturity receive payment for it.

In the case of two of Ireland's biggest banks, AIB and BOI, who have received millions in state aid they have gone off and purchased the debt they have created so that when it matures they will receive even more money from the State!

At best Lenihan believes of the 50 billion we spend bailing out the banks we will get back 16 billion. But how much will we have to pay out to the Bank

Below are the biggest Bank holder of Irish Government Debt.

Royal bank of Scotland £4.3 billion
Allied Irish banks €4.1 billion
Bank of Ireland €1.2 billion
Credit Agricole €929 million
HSBC €816 million
Danske Bank €655 million
BNP Paribas €571 million
Groupe BPCE €491 million
Societe Generale €453 million
Banco BP1 €408 million