Thursday, January 30, 2014

Plan A or Plan B spell misery for Scots

Currency unions between sovereign states are a dangerous business for ordinary people as Greeks under the hammer of Troika-imposed austerity will confirm. Or Italians, whose grand coalition of all the parties is systematically destroying living standards and pensions in the name of the euro. Or Spanish people living in poverty as unemployment climbs above 26%.

So when Bank of England governor Mark Carney, addressing business people in Edinburgh yesterday, stressed the dangers of a currency union that doesn't impose shared fiscal policies on all its members he was only stating the obvious. But at least he was bluntly honest.

 "The euro area is now beginning to rectify its institutional shortcomings, but further, very significant steps must be taken to expand the sharing of risks and pooling of fiscal resources. In short, a durable, successful currency union requires some ceding of national sovereignty," he said before delivering his real message.

Carney then confirmed that if this year's referendum vote goes in favour of independence, the   Treasury in London will want a major say in Scotland's tax and spend plans before it agrees to any sterling currency union.

As a Treasury spokesman explained: "Governor Carney today highlights the principled difficulties of entering a currency union: losing national sovereignty, practical risks of financial instability and having to provide fiscal support to bail out another country. This is why the UK government have consistently said that, in the event of independence, a currency union is highly unlikely to be agreed. The Scottish government needs a Plan B."

Scotland’s first minister Alex Salmond’s response is that he does indeed have a plan B. It is to simply go on using the pound without any currency union agreement – a kind of self-supporting Scottish pound. So we are talking about a globally tradable currency, with no reserves behind it, in a country where the banks are amongst the ropiest on earth - what a recipe for disaster!

The 2008 bailout of RBS cost the taxpayers £45.2 billion. Scotland's annual output is just £216bn. At present, RBS has loans and investments of £1.3 trillion, equivalent to more than six times that. It also has £36bn of toxic loans in its “bad bank account” and faces fines for wrongdoing that could be as much as £1 trillion. And we haven't even mentioned the Bank of Scotland, which posted an £8bn loss last year. What price would Scotland's population have to pay to bail that lot out?

The economic choices for ordinary Scots are not looking good, either way. Inside the union it's austerity for generations and misery for the poorest. In an independent capitalist Scotland the choice is either a currency union where key decisions on spending are still imposed by the   Treasury or a level of fiscal uncertainty as a new currency tries to find its feet in a market that is descending into turmoil. Just look at what happened to the Turkish, South African and other currencies this week.

But there is another way to resolve the currency question and the political and economic issues too. We need to move away from a nationalist agenda for a capitalist Scotland to one where we have a say on what kind democracy, what kind of constitution, what kind of economy, what kind of currency ordinary people want.

With that as the focus of a campaign for a “Yes” vote, we could turn the referendum away from narrow nationalism into a debate about what real self-determination means. The message should go out loud and clear: we don’t want the rule of the banks and corporations wherever we live or a political system that leaves the elites firmly in control.

And that would undoubtedly inspire people in England, Wales and the north of Ireland to find their own route to challenging and defeating the power of the common enemy.
Penny Cole



Wednesday, January 29, 2014

Osborne's 'recovery' built on sand

Just as the ConDem coalition is trumpeting a “return to growth” – one that is more apparent than real – their hopes for a sustained economic recovery have been shattered by the eruption of new phase of the global crisis.

Late last night Turkey’s central bank joined India’s in emergency measures designed to stem the flight of capital from their countries as investors continue to withdraw funds from “emerging” economies around the world.

In attempting to reverse the collapse of its currency, the lira, and against opposition from prime minister Tayyip Erdogan, who is in the midst of a corruption scandal and desperate to maintain growth in the run-up to an election, Turkey’s central bank raised interest rates to levels which shocked economists, more than doubling its overnight borrowing rate from 3.5 percent to 8 percent.

The Reserve Bank of India’s rate rise of 0.25%, small by comparison, is the third since September. But the country is struggling with 10% inflation, a halving of its projected growth rate to 5% and the value of the rupee falling 11% last year as investors moved their money out of the country. The Congress party government of Manmohan Singh, also battered by a corruption scandal, faces an uphill battle in elections due by May.

These are just two of the countries whose problems were dramatically accentuated by the US Federal Reserve’s decision last month to slow the creation of credit by way of “quantitative easing”, aka printing of money.

The flight of capital was already underway long before the Fed’s decision. Just suggesting the possibility of reducing the $75 billion a month programme of money creation in June 2013 was enough to start the ball rolling. Now it shows all the signs of turning into a rout, a panic.

So-called “emerging” countries are those willing and able to provide global investment funds with favourable high-profit conditions – including cheap labour, low taxes, and government-funded infrastructure. They became the home for trillions of dollars of the new credit, invented in the desperate attempts to resuscitate the world economy following the 2007-8 crash.

Ironically, throughout the half-century leading up to the crash, global corporations had taken advantage of cheap labour by the transfer of manufacturing from the relatively high-wage, richer, “developed” economies to the ultra-low wage economies. In doing so they reversed the competitive drive for productivity which tends to increase the ratio of fixed capital investment to the quantity of labour. The rate of growth of productivity – the quantity of value produced per hour of labour – slowed as a result.

So, globalisation of manufacturing and finance led to two significant results – a slowing in the rate of productivity growth, and far more volatile markets for finance capital, which was invested in easily tradable emerging countries’ bonds and currencies rather than in factories, roads and other infrastructure.
 
In the wake of the crash, capital investment to replace ageing facilities, let alone new manufacturing, came to a virtual standstill. As a result, in 2009, productivity growth turned negative. The emergency rescue measures managed a reversal. A temporary reversal.  The trend has continued downward ever since.

That, in brief is the back-story to the Financial Times’ warning for the ConDem’s absurdly euphoric chancellor Osborne. “Scratch beneath the surface, however,” says the FT’s economics editor “and Britain’s deepest economic challenge just got deeper.

“The problem is that the trend the Bank of England, the Treasury and economists want to see most – an end to productivity stagnation – appears to be absent. In the latest labour market figures… total hours worked grew 1.1%, indicating that output per hour worked fell again in the final quarter.

“Unless Britain’s productivity performance improves, the economy can catch up its lost ground with people working longer and unemployment falling. But once this is done, prosperity will stagnate, as it has for the past six years.”

To say that the dynamism of capital is waning is to put it mildly. Add in the flight of capital from India et al and you have the recipe for another global crash. Whatever the ConDems’ fantasies, capitalism isn’t working and the so-called upturn is built on sand.

Gerry Gold

Economics editor

Tuesday, January 28, 2014

Jobcentre sanctions used to meet targets

Lest anyone is under the illusion that job centres are there principally to help the unemployed find work, a quick read of a new report by a parliamentary committee will prove salutary. What shines through is a harsh sanctions regime enforced by management under government orders to make life hard for claimants.

While the House of Commons work and pensions committee is not opposed to benefit sanctions, its report exposes their arbitrary nature. The MPs were also concerned that initial interviews with claimants by Jobcentre Plus staff were superficial and geared towards benefit eligibility rather than re-employment.  

Under new rules introduced by the ConDems at the end of 2012, the number of sanctions has increased rapidly. Now some 5% of all Jobseekers Allowance claimants are sanctioned every month. Some 860,000 Jobseekers Allowance claimants were sanctioned in the year to June 2013, the highest number in any 12-month period since at least April
2000.

The committee’s report insists: “Our evidence suggests that many claimants have been referred for a sanction inappropriately or in circumstances in which common sense would suggest that discretion should have been applied by Jobcentre staff.”

The committee was given evidence about the consequences for  the unemployed people when they suddenly losing their benefits. Church Action on Poverty (CAOP) and Oxfam reported that financial hardship due to sanctioning was a significant factor in a
recent rise in referrals to food banks. The Trussell Trust, a charitable organisation which runs the largest chain of food banks, has published statistics which show that changes to benefit payments are the third most commonly reported reason for referral to food aid.

Most Jobcentre Plus staff are in the Public and Commercial Services Union, which says it is opposed to sanctions. The PCS is scathing about the way the role of the Jobcentres has changed under successive governments, and describes them as “a sign posting outfit” with advisers used “as compliance officers”.

The union’s evidence to the committee rejects the idea that the sanctions regime increases the likelihood of someone getting a job. “Instead it seems to be more of a political measure to satisfy the anti-welfare lobby rather than a constructive measure to help people into work.”

While the Department for Work and Pensions denies that Jobcentre Plus staff have targets to meet, it is clear from this report that they exist by another name. Performance is measured primarily against the proportion of claimants coming off benefit, known by the jargon “offlow”. Even the MPs are forced to concede that sanctioning could be seen by staff as a “a route to achieving offflow performance targets”. 

According to the PCS, there are “expectations” for sanctioning claimants and staff who fail to measure up can be placed on an “improvement plan” by management, potentially leading to disciplinary action and even dismissal.

The union’s evidence adds: “We have also had reports that some offices are operating what has become known as ‘botherability’. This involves asking claimants to come in to appointments in their Jobcentre at weekends, and if they miss these appointments they will be sanctioned or their claim closed. In local offices where ‘botherability’ is being used, the clear intention is to ‘bother claimants off JSA’.”

So when you read headlines about falling unemployment, dig deeper. And when you do, you’ll find the figures have fallen in part because many people have been driven into low-paid jobs or workfare schemes as a result of sanctions or the threat of them. With all the major parties trying to be more macho than each other over targeting claimants, things are not going to improve any time soon.

Paul Feldman

Communications editor

Monday, January 27, 2014

Blair fans the flames of intolerance

Still smarting from an attempt at a citizen’s arrest earlier this month for war crimes over the illegal invasion of Iraq, Tony Blair is now recycling noxious neo-con, pseudo-theories in telling us that modern wars are predominantly the result of religious conflicts.

Blair, who is thought to be worth around £45m, was given space in The Observer to provide us with some amazing new wisdoms. The ex-New Labour prime minister – now a Middle East “peace envoy” and head of the Faith Foundation – says:
  
"The battles of this century are less likely to be the product of extreme political ideology, like those of the 20th century – but they could easily be fought around the questions of cultural or religious difference."

Pointing to the many places around the planet where violence has erupted between people of different faiths, Blair notes that this is a growing phenomenon and that acts of terrorism are motivated by an “abuse of religion”.

So has Blair introduced any new insights into an understanding of the undoubtedly traumatic conflicts that are taking place around the globe?
Well, no.

He’s reprocessing discredited idea from the American right-wing, with whom he is so well connected. Leaving aside for one moment that religion IS actually a form of ideology, the notion of cultural or religious clash as the driving force behind conflict is in no way a brain wave conceived in the mind of the ex-PM.

The “theory” of cultural clash goes back to the hey-day of colonialism. It was revived in the 1990s by the conservative US magazine, Atlantic Monthly, whose owner David Bradley was "dead certain about the rightness" of invading Iraq.

Its best-known advocate was political scientist Samuel P. Huntingdon, who in 1992 proposed his “clash of civilisations” thesis, a year after the first Gulf War.

He wrote: “... the fundamental source of conflict in this new world will not be primarily ideological or primarily economic. The great divisions among humankind and the dominating source of conflict will be cultural. ... The clash of civilisations will dominate global politics. The fault lines between civilisations will be the battle lines of the future.”

Huntingdon’s thesis was countered by many distinguished scholars, including Amartya Sen, Naom Chomsky and Paul Berman. The most incisive critic was the late Palestinian scholar, Edward Said. In The Clash of Ignorance, written in 2001 he argued that Huntingdon’s theory was an example of "the purest invidious racism, a sort of parody of Hitlerian science directed today against Arabs and Muslims".

Blair does not mention Islam by name. But his references to sectarian and terror attacks are to areas where mainly Islamic-inspired groups have been at work. And by remaining silent about results of the post-Anglo-American invasions of Iraq and Afghanistan, he conveniently leaves out his own role in stoking the flames of conflict.

In Iraq, for example, while the Saddam regime undoubtedly suppressed the Shia population, sectarian violence was non-existent. Thanks to the “regime change” policies pursued after the invasion, inter-communal killings are a daily occurrence.

But getting back to Blair’s claim. Were the two main wars of the 20th century in which some 100 million soldiers and civilians died really caused by a clash of “political ideologies”? Of course not. In 1914, the world’s big imperialist powers went to war over a division of the world’s resources. And behind World War II were the clashing economic and political interests of the ruling classes of Europe, America and Asia.

Could Blair’s latest ignorant spouting be an attempt at resurrection in advance of the publication of the Chilcot inquiry into the run-up to the invasion of Iraq? He and many others are said to be nervous about its potential findings.

Finding scapegoats is the name of the game and not only for Blair. Bigotry of any kind – religious, nationalist or racist – is indeed on the rise, fanned by the reactionary policies of the mainstream parties. The reasons are not hard to fathom. Their purpose is to divert attention and energy from the inability of the system to satisfy the peoples of the world’s deepest needs and aspirations.

Corinna Lotz
A World to Win secretary














Friday, January 24, 2014

ConDem con trick can't disguise inequality growth

The ConDems claim that pay for most rose faster than prices in the year to April 2013 is a con trick that cannot disguise a rapid growth in inequality of household incomes since 2008. And with another credit-fuelled frenzy under way, a second crash is much more likely than a “sustainable recovery”.   

First, while the figures rolled out by the government take account of tax cuts for those in work, they omit the benefit reductions suffered by millions of people as a result of austerity attacks on welfare. Secondly, since April last year, energy and transport costs have soared while incomes have remained static.

All in all, most people are much worse off than they were before the recession kicked in after the banks went belly up.

More potent and revealing figures are those relating to crime, which were published yesterday. Police records show a 4% rise in shoplifting and a 7% rise in “theft from the person”, such as snatching expensive mobile phones from passers-by. Nick Gargan, chief constable of Avon and Somerset Constabulary, told the Financial Times that police leaders were starting to talk about an “austerity bulge” in crime figures.

“We are seeing a ramping-up effect as the cuts take hold,” Gargan said. The rise in shoplifting came in more than two-thirds of the UK’s 43 police force areas, with the biggest increases in the West Midlands, Merseyside, and West Yorkshire. The British Retail Consortium said thefts from shops were 26% higher than the annual average.

The numbers arrested are overwhelming local forces. Chris Mould, executive chairman of the Trussell Trust, which last year handed out more than 700,000 food parcels from its network of foodbanks across the country, said that in Islington police had given vouchers to some shoplifters who were obviously not criminals, just in desperate need.  

In the last three months police in Byker, east Newcastle, stopped 26 first-time offenders, compared with five the previous year. Twenty of the first-time shoplifters were female and 11 of the 26 incidents were low-value, food-related thefts. Another indication of growing desperation was shown by scuffles this week between shoppers and police at a 99p store in North Wales when it scrapped its half-price sale

Lancashire chief constable, Steve Finnigan, said there was a rise in the theft of basic food items, such as bread, milk and cheese. "The offenders are first-time offenders and, when you talk to them, they are not stealing food to sell on; they say they are stealing to feed themselves" he says. "In my own force we have seen an increase in shoplifters who are first-time offenders and say they are doing it to put some food on the table."

“People are struggling for all sorts of reasons,” Mould said. “Hunger in Britain is a really serious problem and it’s affecting large numbers of people. Thirteen million people at least are in poverty, according to the government’s own statistics, which is defined as people on 60 per cent or less of the average income. And that average income is getting lower, so it’s 60 per cent of something that’s getting worse, while the cost of basics such as food, ­power and, increasingly, housing is rising.”

All sorts of people are warning about a coming social explosion. The police themselves are getting tooled up. This week they asked home secretary Theresa May to authorise the use of water cannon arising from “ongoing and potential future austerity measures”. The sinister Association of Chief Police Officers, as guardians of state power, are pressing their case. May has yet to respond.

Even in Davos, at the annual meeting of the transnational capitalist class, there was talk of the “wealth divide” as the elites acknowledged the fact that any “recovery” in output is founded on the vast quantities of money printed by the central banks since 2008. 

As the Observer’s Will Hutton, notes, the “inequality that drove the last crash is even greater now and, ominously, the same forces are abroad again”. While it’s not apparent to Hutton, creating a more equal Britain now patently requires a more equal, democratic society beyond capitalism, where resources are held socially and used for the common good.

Paul Feldman
Communications editor



Thursday, January 23, 2014

EU ditches climate change action for growth

New climate change targets announced by the European Union are a major step backwards and virtually end any chance of keeping global warming below 2ºC. They are the result of pressure from governments desperate for growth, whatever the cost environmentally.

Naturally, that’s not how the EU is putting it but the reaction from business on the one hand and climate change campaigners on the other says it all. EU officials talked up the agreement to cut greenhouse gas emissions by 40% below the 1990 level by 2030, claiming this puts Europe at the forefront of action on global warming.

But they are not fooling anyone. The Financial Times reports the announcement as a major step back from the "ambitious environmental agenda that made the EU a global green leader" adding that it is all about "the need for economic growth and industrial competitiveness".

Officials spoke excitably about a binding agreement to produce 27% of European energy from renewables by 2030. But Europe already reached 22% renewables in 2012. They are saying that in the next 17 years, Europe will achieve the same percentage increase in renewable energy that was reached in the five years from 2007 to 2011. Germany could practically reach that on its own, with its current programme of replacing nuclear with renewables.

Britain's energy and climate change minister Ed Davey fought hard to prevent even that weak ambition. He didn't want any binding agreements at all because his ConDem government has withdrawn support for renewables in favour of fracking for gas. He got his way because each country is left to work out its own renewables target.

Just to reinforce what the energy commissioner called the need for “mainstream competitiveness”, the EU – under UK pressure – has backed off from any regulation of fracking. As the Financial Times noted, the announcement “in effect gives the green light for shale exploration throughout the region”.

The Climate Action Network (CAN), a coalition of more than 120 environmental groups, said the agreement "could lock the EU into such a low level of climate action it would make keeping the EU's international pledge to stay below 2 degrees of global warming all but unattainable".

The most disgraceful response came from the UK's energy generators who want the government to use it as a basis for reducing the UK's own internal emissions target from its current 50% by 2030 level.

The industry’s trade body stated: "It has been clear for a while that others in Europe have little appetite to match the UK’s binding 50% target and this announcement merely serves as confirmation. Government must ...bring the UK back in line with Europe and send a clear signal that it is committed to ensuring the UK will remain a competitive place to invest through the 2020s."

These targets have nothing to do with climate science. They reflect life in the bubble of unreality where corporations and states live, and where nothing matters except growth, competition and profits. Governments will not act to halt climate change because the corporations will not allow them to even if the political will existed (which it doesn’t).

Today's deal is what Europe will put on the table at international climate talks in Paris in 2015. Connie Hedegaard, the European Commissioner for climate action, claimed: "We have made it possible for EU to play its role to the full..."

Europe's weak targets and failure to consider energy saving or even the regulation of fracking, sets the tone for a summit that will - like the previous summits - fail to act. It will become a game of "how low can you go" in capitalism’s race to the bottom on climate action.

Penny Cole
Environment editor





Wednesday, January 22, 2014

Spectre of deflation haunts global economy

For the first time since 2009 the UK rate of inflation has fallen to the Bank of England’s target of 2%. For most people, whose real incomes have been falling, a slowing in the rate at which prices increase is surely a welcome relief. But alarm bells are ringing for the capitalist economy as the spectre of deflation looms large.

Despite the pre-Xmas furore over energy prices, fruit and meat price increases slowed at the end of last year in the UK. The prices of toys and computer games fell at a faster rate last month than a year ago. Supermarkets are reducing the amount they charge for petrol and diesel.

There’s a similar story in the major economies of the United States and Europe where the threat of inflation has receded.

Conversely, in Japan, after two decades of deflationary slump, an increase in inflation has been welcomed. But this measure of the success of the attempt to shock its economy back to growth through devaluation and credit looks like being short-lived.

Whilst continuing to promote an optimistic tone on prospects for growth (what else could she do?) Christine Lagarde, managing director of the International Monetary Fund, is leading the charge against the newly emerging menace of deflation.

“The growing danger of deflation threatens to derail the global economic recovery,” she says.  “If inflation is the genie then deflation is the ogre that must be fought decisively.”

So what’s the problem?

Falling prices tend to induce their own downward spiral. People put off buying decisions as long as possible as they wait for prices to drop, reducing demand. A reduction in demand leaves markets oversupplied and prices drop further and faster.

Good for consumers, at least in the short term. But bad, very bad for producers, and especially the hedge funds who own the giant global corporations and see profits dropping like a stone if the trend continues.

So employers are forced to take action – reducing real wages which in turn further reduces demand, driving up productivity and cutting production by shutting factories, taking capital out of circulation.   

No wonder they’re worried. The long-term impact of chasing short-term profit by transferring production to “emerging economies” where labour has been relatively cheap, has had long-term unwelcome side-effects.

A newly published analysis by Marxist economist Michael Roberts digs into 50 years of data to explain why productivity growth has declined and the dynamism of global capitalism is waning as a result.

Roberts begins with a report from the US Conference Board (a business research body), which says: “Emerging markets, and especially China, account for the bulk of world’s productivity growth. But the years of rapid, easy improvement appear to be over. Since these countries remain significantly less productive than mature economies in US dollar terms, the ongoing shift of economic activity away from the latter adds to the global productivity slowdown.”

Now the rate of growth in China is dropping fast to an official 7.7% - a 14 year low. The slowdown is accentuated by its government’s attempts to rein in the effects of its monstrous post-2008 crash credit expansion. And that’s really bad news all round for the global economy.

A slowdown in China – which some analysts suggest has reduced real growth to as low as 3% - contributes to driving the self-feeding spiral of decline into a global depression.

Roberts sums up the analysis of the Conference Board thus: “This slowdown seems to me another signal that the world economy (or at least the advanced capitalist economies) is struggling with a depression.  It also shows that increasingly world capitalism is failing to provide dynamic growth.”

With demand from emerging economies slowing, prices on the global commodities exchanges are dropping. The price of an ounce of gold – the universal measure of the value of commodities – dropped last year from $1,900 to $1,200.

Deflation has another damaging result. The real value and cost of debt actually increases. Highly indebted countries, corporations and individuals around the world had better take note. Talk of a “recovery” is not only premature but entirely ignores what’s really happening in the global economy.

Gerry Gold
Economics editor





Tuesday, January 21, 2014

Geldof hits the political nail on the head

Has Bob Geldof joined Russell Brand in seeing the political light? For more than 30 years, Geldof has thrown himself into numerous humanitarian projects, starting with his famous Band Aid single in 1984 and the subsequent Live Aid concert to draw attention to famine in Africa. Poverty, hunger and inequality haven’t gone away despite the best efforts of Geldof and countless others.

Given an honorary knighthood in 1986, Irish-born rock star Geldof has been feted and courted by leading politicians and the CEOs of the major corporations. He achieved the status of a one-man NGO, gaining entry into major summits. Geldof is a member of numerous charitable commissions and a very rich man from his days with the Boomtown Rats.

Often dismissive of those who criticised his work on the inside track for lending the global establishment credibility, Geldof now seems to acknowledge that the political system itself is holding back solutions to pressing problems. In doing so, he has joined comedian Russell Brand’s recent call for a political revolution.

In an interview with the Huffington Post, Geldof agrees with Brand’s point of view and warns that the current system of democracy "may not be viable for much longer". He praised Brand for his "articulacy and expressing the anger of the moment". Brand caused a storm during an interview with Jeremy Paxman on BBC Newsnight. His call for a revolution has had nearly 10 million views on YouTube. Leading up to his interview, in an essay in the New Statesman, Brand called for the “overthrow of the current political system”.

In his interview, Geldof denounced the banks as a form of “outright international global gangsterism”, giving themselves money through fraud. He said:

"That's what it was. Mispricing of products, fraud. Mis-selling of products, fraud. Fixing the interbank lending rate. Fraud. It was fraud on an unprecedented scale! They sucked billions out of the world economy, destroying individuals, companies and countries.

"Russell [Brand] is completely right. That model cannot sustain us as we saw, it bankrupted Greece, almost Italy, almost France and almost Ireland. It just can't work. When you have these supposed masters of the universe averaging more than 248 times the average worker's pay, you have a serious problem of inequality. Inequality stops a society functioning and so it has to stop.

"I do think the version of democracy that we have been living with just may not be viable for very much longer. We will have something where we have proper freedom and elected representation. "We all co-operate in the knowing lie, which is that everybody promises more and that the economy will inevitably grow. what does that mean? It means more, more of what? That's not viable in an unsustainable and finite world.

"Nor can you in a four-year electoral cycle put into place programmes that would help to ameliorate the effects of that. If the economy is affected in that way by definition politics are so that the politics that we've grown up with in a different economy cannot work in a new one, there has to be a newer type of politics. You will see a change in the type of politics. It'll still be our government, it needs to be otherwise you'll have problems and it still needs to be a more coherent economy."

Geldof and Brand express what millions more sense, not just in Britain but around the world, but are denied the chance to articulate. Our limited capitalist democracy cannot deliver on its commitments to its citizens while it openly favours business and financial interests.

Geldof may not have gone quite as far as Brand, but he knows the old game is up and his forthright remarks about the failure of the present system are important. Developing new forms of real democracy based on a charter of social, human and political rights is the priority for 2014. So support the Agreement of the People and other projects aiming to break out of our current political cul-de-sac.

Paul Feldman
Communications editor


Monday, January 20, 2014

Putin's £31 billion nightmare

Vladimir Putin says that he is not anti-gay. And adds that he’s even in favour of the right to self-determination. For the macho Russian president, black is white and white is black.

Replying to the BBC’s Andrew Marr’s softly-softly questioning, Putin said that no harm would come to gays at the Winter Olympics in Sochi. But in bigoted remarks, Putin had already casually linked gays to paedophilia and warned athletes to say away from children.

As to self-determination, this astonishing claim is made by the man who oversaw a reign of terror in the republic of Chechnya when he first came to power, reflecting the Great Russian chauvinism so beloved of Kremlin leaders.

The release of Pussy Riot singers and oil billionaire Mikhail Khodorkovsky at the end of December (scheduled in any case) are being promoted as a signal that Putin’s dictatorship is easing up.

But the Russian state has set its propaganda machine into overdrive to hoodwink the world and its media that Putin’s authoritarian state has suddenly dropped its persecution of gays, journalists, ethnic minorities and political opponents.

He is backed in this by a motley crew of apologists, starting with the president of FIFA, Sepp Blatter. Blatter was not long ago denounced by David Beckham, Rio Ferdinand and Sol Campbell for condoning racism.

Blatter’s anti-boycott stance is echoed by CNN writer Frida Ghitis who wants Sochi to be made “the gayest ever event”. She is favour of “engagement”, saying a boycott is wrong and that gay rights activists should brave Putin’s police. But Ghitis recently defended former Israeli prime minister Ariel Sharon’s record in Lebanon, so perhaps her advice is a bit suspect.

The sustained propaganda campaign is entirely in aid of achieving the Russian president’s cherished aim of hosting the Olympics – a project he has been promoting since 2007.

After the Olympic dust settles, the true cost of Sochi will be borne by all but the super-rich. In other words, the citizens of Sochi, of Russia and the entire ecology of the once stunningly beautiful Black Sea resort.

The wrath of the Russian state will descend on anyone who challenges the authorities and their backward anti-gay laws. Further anti-gay legislation is being prepared which could remove parenting rights from gay people.  

Spending on the Games is astronomical, with cost running at an estimated £31 billion, three times the cost of London 2012 and even more than even the Beijing Olympics.

A 30-mile road transport link between Sochi and a skiing venue is estimated to have cost £5bn, more than the whole budget for the 2010 Vancouver winter Olympics. For that kind of money, the entire road could have been paved with a six-centimetre layer of black truffles, says author Marc Bennetts.

Critics estimate that one third of the budget has gone into the pockets of Putin’s cronies. One old friend, Arkady Rotenberg, has received construction orders worth £4.5 billion – beating the entire cost of the Vancouver 2010 Olympics.

Added to construction costs and kickbacks is security. Putin is terrified of a terror attack by groups opposed to rule from Moscow. So to prevent this, 40,000 security forces are supposed to enforce a ring of steel.

Local residents are being forcibly thrown out of their homes which have been bulldozed. No compensation is paid. Fisherman are losing their livelihoods due to pollution. Ecologists are warning that construction could lead to disaster due to poisoned drinking water and flooding while migrating birds who used to stop in Sochi will now find the area turned into venues for the Games..  

Environmental activists like Yulia Naberezhnaya, spokeswoman for the Russian Geographical Society in Sochi, who have warned about pollution of water supplies, are being harassed. Some have had criminal cases opened against them.

Are any more reasons needed for boycotting these Games?

Corinna Lotz
A World to Win secretary






Friday, January 17, 2014

Miliband's dream of a new, improved capitalism

Ed Miliband’s half-baked proposals to increase competition between high street banks – not exactly a burning issue for most working people – just about sums up the Labour leader’s vision of the “responsible capitalism” he champions.

In this Miliband dream world, the top five avaricious banks that regularly fleece their customers with all sorts of charges – when they are not busy precipitating a financial collapse that is – will be made to sell some of their branches.

Somehow these will be bought by a new entrant into the banking sector and, lo and behold, competition will increase and bring a better deal for customers. And this is One Nation Labour’s outlook: better markets, more competition, new and improved capitalism.

Who can fail to be swept off their feet with the excitement of it all! The intellectual power of this argument is too stunning for words. So don’t think about it – get out there and vote for responsible capitalism as soon as you have the chance. You know it makes sense.  

Don’t fret about the fact that last year Lloyds tried to sell hundreds of branches and couldn’t find a buyer. Ignore the fact that it’s increasingly hard to find a fully-functioning bank branch in the high street in any case because many have already been shut down.

This is all typical Miliband. Ignore the fundamentals of the system and go for the froth. When he says that the problem is that the market is dominated by a handful of banks, he is totally wrong.

While there is a concentration of power, the real issue is that banks are run for profit and will do whatever it takes to increase their shareholders’ wealth. When the previous Labour government completely deregulated them, they racked up enormous profits which produced handy tax revenues. All seemed well until the financial collapse of 2007-8 exposed their operations.

Miliband thinks he can put the genie back in the bottle and create an imaginary economy of regulated corporations that put their customers first. In the real world, the opposite is happening. For example, the Transatlantic Trade and Investment Partnership being negotiated between the United States and the European Union is setting out to abolish whole areas of regulation in the name of competition.

Existing (and even improved) regulations are simply subverted, as with the supposed limits on bankers’ bonuses. Traders will simply get their bonuses in another form and the show will roll on.

Miliband’s appeal now is almost entirely to the middle-class, whose votes disproportionately affect the outcome of general elections. He said as much in his article in the right-wing Daily Telegraph where he promised to “rebuild our middle class”, while the notorious shadow education secretary Tristram Hunt laid into the teaching profession.

Just to round things off, Miliband is planning further steps to substantially weaken the historic relationship between the trade unions and the party they founded. In March, a half-day conference is scheduled to ratify plans that are aimed at appeasing anti-union sentiment.

Miliband plans to end the electoral college system for electing a Labour leader under which the trade unions have a third of the votes. In addition, the present arrangements whereby members of affiliated unions have part of their subs paid over to Labour will be scrapped in favour of individual membership.

Some union leaders, most notably Paul Kenny, right-wing general secretary of the GMB, have baulked at these plans and suspended funding to Labour. But when push comes to shove, the majority will fall into line on the grounds that a revolt could damage Labour’s chances at the 2015 election.

Yet if they were really intent on fighting for their members, union leaders would be questioning the point of achieving Labour success at the polls? What benefit would it be to their members to have Labour-style austerity over that of the ConDems, or state hand-outs to firms to subsidise a “living wage”, or attacks on teachers and other workers?

That union leaders would rather bury their heads in the sand than raise these issues is testimony to the crisis of political representation that ordinary working people are presented with. No one speaks or fights for their interests any longer.

Paul Feldman
Communications editor


Thursday, January 16, 2014

Cameron's fracking big lies

Prime minister David Cameron is the snake oil salesman for the fracking companies, making claims about jobs and he knows are false while attempting to bribe councils to speed up controversial planning applications that local people oppose.

Visiting a drill site in Lincolnshire this week, he claimed that a fracking boom would create 74,000 jobs and bring investment of £3.7 billion a year to local areas. But those are figures from the crazy free marketeers at the Institute of Directors.

Why is the government using these figures, instead of the more measured claims from research commissioned by its own environment department?

Energy consultants and engineers Amec have said even if the UK goes all out for fracking, the number of new full-time jobs at the absolute peak would be between 16,000 to 32,000. Indeed, the very same figures are quoted in a government press release published only last month!

Amec’s forecast amount to just 7% of the total number of people already employed in the gas industry; the government could achieve that increase just by making a modest investment in helping people replace out of date gas boilers!

Yet, incredibly, the government’s own web page carrying Cameron’s speech sends you to the IoD research, rather than its own!

Cameron knows fracking will not cut energy bills, because energy secretary Ed Davey told him so. “North Sea gas didn’t significantly move UK prices – so we can’t expect UK shale production alone to have any effect,” Davey said in a speech last September.

As economist Lord Stern explained, fracked gas will simply be hurled on to the world energy market. “I do think it’s a bit odd to say you know that it will bring the price of gas down. That doesn’t look like sound economics to me. It’s baseless economics,” he told The Independent.

Cameron is slavering over the US fracking boom, but gas prices there are rising. At the boom's peak they were $2 per million thermal units in 2012 but a year later doubled to $4 per million thermal units. In 2013, US power companies switched back to coal, and for the first time in eight years the country’s CO2 emissions rose, by 2%.

The volume of gas in a shale is very different from the volume that can be profitably extracted. Wells become unproductive rapidly, so more and more must be drilled to keep production up. It costs more to produce less; profits fall and investors pull out. The shale gas bubble in the US is already bursting.

The point is that whatever the fracking companies do – drill, not drill, profit, not profit – the consumer is always at the mercy of the world energy market and that never operates in their interests.

Cameron announced a series of desperate bribes aimed at overcoming local opposition. All the business rates from fracking will go to the local council, and communities will get pay offs from the frackers. Along with that paltry carrot goes a big stick. The time between application and decision will be cut to just two weeks, giving communities no time to organise opposition.

The government boasts it has created the most competitive tax regime in Europe for shale gas, even lower than in the US, so the Treasury will get very little from frackers to put towards paying off the deficit.

So why is the government going down this road? They are desperate to find new areas to attract speculators with even a sniff of profit-driven growth. But in reality they are simply pushing another asset bubble, as we wrote in Fracking Capitalism:

"The insatiable global demand for energy drives speculation in shares of the fracking companies, causing an asset price bubble that, like all bubbles, will burst. When over-optimistic production goals are not met, and it becomes impossible to go on producing the gas at the prevailing low market price, the massive debts of the fracking companies will be another phase of sub-prime junk debt."

Still, when growth at any cost is the only game in town fracking looks worth a punt. But whatever Cameron says, there is absolutely nothing in it for us. Get your copy of Fracking Capitalism and join the debate about alternatives.   

Penny Cole
Environment editor



Wednesday, January 15, 2014

When a return to 'normal' spells crisis

Gamblers, speculators and investors on the world’s capital markets are watching and wondering what is going to happen now, in the wake of the US Federal Reserves’ decision to begin slowing the growth of credit.

There is widespread concern that the relatively minor reduction of $10bn per month in the US quantitative easing programme - from $85bn to $75bn – will trigger a new, much greater period of volatility than occurred last year, when the proposal for “tapering” was mooted.

The latest World Bank report is couched in terms which attempt to calm and limit precipitate action by the people who manage the world’s capital whilst preserving what they claim are “healthy signs” for the masters of the global economy, if not for the 99%.

Nevertheless the Bank warned that “a severely negative response to the return of monetary policy to normal might lead to capital flows to emerging markets falling by up to 80% for several months.”

Despite its professed humanitarian objectives for eradicating extreme poverty, reducing inequality, improving health and promoting environmental sustainability, in practice the World Bank is a key agency for promoting global capital.

In the 1980s it used a policy of so-called “structural adjustment”, drawing countries hit by crisis into debt dependency in exchange for a damaging involvement in labour-intensive production of commodities for export to the globalising economy. The result was impoverishment for millions.

The Bank became increasingly subject to the demands of corporations which were busy growing into transnational behemoths. In the 1990s it was instrumental in the adoption of the “Washington Consensus”. This involved the dismantling of international controls on capital flows, deregulation of markets, privatisation of public utilities and reducing the independence of national governments.

Now the Bank is attempting to assess the likely consequences of the slowing and ending of five-year post-crash, loose-money global hysteria and to prepare countries for what is to come. Its attempt at being encouraging is hardly convincing, predicting a modest “acceleration” in global growth.

Its assessment of risks and uncertainties provides a more sobering view. In the eurozone area things are particularly gloomy, with the report admitting that there “is still a long road ahead before all of the problems that the global financial crisis laid bare are fully resolved”.

The World Bank acknowledges that the “drivers” of the growth required to come out of recession “remain unclear” and adds: “Moreover with the banking sector still weak and details on a fully fledged banking union still being worked out, the currency bloc remains susceptible to shocks, including a tightening of policy in the United States.”
 
It expresses concern about “significant amounts of spare capacity” that have opened up and “a permanent deterioration in job skills and employability of the jobless”. The report adds: “At the same time, continued sharp credit contractions raise the spectre of deflation, which could exacerbate debt overhang problems and result in a much more muted recovery than considered in the baseline.”

And in China where extreme volumes of credit have limited the slowing of growth since the crash, the Bank warns that “abrupt unwinding of investment in China [there] remains a possibility, which if realised could sharply reduce GDP by 3% or more with significant knock on effects in the region and other economies with close trading linkages”.

Today’s news direct from China won’t be encouraging for the calm, measured approach the World Bank would like to see. The uncontrolled shadow banking sector now accounts for more than 30% of total finance in the world’s second biggest economy, up from 23% a year ago.

There’s a recipe for global volatility, if ever there was one.

Gerry Gold

Economics editor

Tuesday, January 14, 2014

Egypt's sham referendum

Referendums by themselves are not necessarily a sign of democracy at work. In fact, the one taking place in Egypt today is precisely the opposite because it is aimed at creating an autocracy with the country’s notorious army leadership firmly in control.

Not only is the draft constitution anti-democratic in its nature; people trying to campaign against the proposals have been arrested and the opposition effectively banned from the referendum process.

So where are the howls of protest from Washington and the European Union, from London and Paris about a  fake referendum that effectively legitimises the army coup d’état that removed the country’s first elected president in July?

Hypocrisy rules supreme in Western capitals when it comes to real democracy, as we are all too aware. So EU foreign policy chief Catherine Ashton could issue a statement backing the referendum. Unbelievably she claimed that it could lead to “democratic elections” and “accountability for the government and state institutions”.

Yet the constitution contains nothing of the sort. The new constitution exempts the army, police and intelligence services from civilian control and allows them to prosecute in military courts anyone they deem threatening. Workers rights are curtailed at a time when frequent strikes are taking place as living standards fall.

Little wonder that General Abdel Fatah al-Sissi, who led the coup against the Islamist government of Mohamed Morsi – who is currently in jail awaiting trial for a litany of “offences” - has hinted that he will take a “Yes” vote as a mandate to become Egypt’s next president.

Egypt remains Washington’s key ally in the region and the Obama administration performed linguistic somersaults to avoid labelling the overthrow of Morsi and the banning of his Muslim Brotherhood party a coup. Now its getting ready to resume large-scale aid once the referendum is out of the way.

Hidden in the massive budget bill heading for Congress is a measure that would exempt Egypt from a law requiring a cut off in aid in the event of a military coup. It would allow $1 billion in annual aid to resume if the administration certifies that Egypt “has held a constitutional referendum and is supporting a democratic transition.” More money is promised once the country implements “economic reforms”.

Yet an authoritarian regime now rules Egypt and the referendum won’t change that one jot. Activists who have tried to campaign for a no vote have been arrested and prosecuted on absurd charges. Public demonstrations are banned, and police have killed 27 people and arrested 703 who tried to protest on the past three Fridays, according to Human Rights Watch.

Four of the most famous secular leaders of the 2011 revolution against the Mubarak regime have been jailed on charges of participating in unauthorised demonstrations. Opposition media have been shut down, and journalists from Al Jazeera  imprisoned without charge.

Hundreds of Muslim Brotherhood members have been killed in protests and most of the group’s leaders have been arrested. Last month, the army-backed cabinet designated it as a terror group and said anyone who “promotes it by speech, writing or any other means and all who fund its activities” would be prosecuted.

The three years since the revolution that overthrew Mubarak, and placed Egypt firmly in the centre of the Arab Spring, have seen increasingly desperate attempts by the ruling class to hold on to power. The army, which owns and controls a large part of the economy, is historically an integral part of these capitalist structures and kept Mubarak in power.

When that façade was broken by the 2011 revolution, the Muslim Brotherhood, with its deep roots amongst the downtrodden masses, stepped into the breach. When it began to threaten the military’s privileges, and failed to deliver on promises to improve living standards, it too was removed in order to head off a popular uprising.  

The anger expressed in the Arab Spring has not disappeared. But what has been found wanting is a secular vision and organisation to complete the revolutionary process and transform the existing state. So let’s support those in jail in Egypt who have courageously opposed military rule and the millions who will boycott today’s referendum.

Paul Feldman
Communications editor











Monday, January 13, 2014

Let us not mourn the 'Butcher of Beirut'

For every leader such as Tony Blair, Barack Obama, Vladimir Putin and Benjamin Netanyahu who are praising the life of Ariel Sharon, there are countless ordinary people for whom his name is synonymous with ruthless, brutal anti-Palestinian policies.

The story of Sharon, who died on Saturday aged 85, was in many ways, the story of the state of Israel itself. During the British Mandate, Sharon was a member of the paramilitary Haganah group along with other Israeli leaders to come, including Yitzhak Rabin, Moshe Dayan and Yigal Allon.

The Haganah was instrumental in the 1948 catastrophe, or Nakba, which forced a million Palestinians into refugee camps. It was later re-packaged as an “underground resistance movement” when in fact it carried out a terror programme. It was aimed at both the British and the indigenous Arab inhabitants of Palestine, as Abdel Bari Atwan has noted.

After the Haganah was integrated into the Israel Defence Forces, Sharon headed up its infamous Unit 101, which instigated a rule of terror against Palestinian villagers. In 1953 Sharon led a massacre of 69 Palestinian civilians in the village of Qibya.

During the 1960s when the Palestine Liberation Organisation emerged as a major force, he viewed its leader Yasser Arafat as his nemesis and continued on his mission to destroy any Arab opposition to the state of Israel.

He sent bulldozers into the Gaza strip, uprooting 16,000 people. Hundreds were executed and hundreds more deported. But it was Sharon’s role as defence minister under prime minister Menachem Begin that saw him commit the greatest atrocity of his career.

Expelled from Jordan, thousands of Palestinian refugees and their PLO leadership lived in south Lebanon where they had set up a mini-state. Sharon ordered the invasion of Lebanon in 1982 and a massive bombardment of Beirut in which 20,000 Palestinian and Lebanese lost their lives.

Sharon now masterminded the encirclement of the Sabra and Shatila refugee camps in Beirut, fully aware that the fascist Lebanese Phalangist movement would massacre their residents. Some 3,500 Palestinians were slaughtered. For some, Sharon was henceforth known as the “Butcher of Beirut”.
 A year later, amidst international outrage, an Israeli tribunal set up investigate the crime found him “indirectly” guilty of being responsible for the massacre and he was forced to resign his post.

But the words “indirectly” were a whitewash since during the Phalangist attack, BBC monitors picked up an IDF Radio broadcast which said: "The intention is that the IDF will not operate tonight to purge the areas of Sabra and Shatila and the nearby refugee camps. It was decided to entrust the Phalange with the mission to carry out these purging operations."

It would have been impossible for the IDF leaders not to have become aware quickly that the intended “purge” of a small part of Beirut had turned into an indiscriminate massacre. It is documented that the IDF fired flares to help the Phalangists identify their targets.

Sharon was also responsible for assassinations by Israeli security organisation Shin Bet of Palestinian leaders, which he termed Israel’s "continuing war of independence".

By 1996, he had managed to rehabilitate himself, becoming foreign minister under Benjamin Netanyahu. He was elected as prime minister in 1999 and made a provocative visit to the Al Aqsa mosque in occupied Jerusalem, sparking the second Intifada of 2000.

Sharon never disguised his desire to see Arafat dead. He was responsible for surrounding Arafat's compound in Ramallah with Israeli armour. As we know, the PLO leader later died in suspicious circumstances, with plutonium poisoning a strong possibility.

Sharon performed a surprising U-turn and pulled Israeli troops out of Gaza, But rather than any “peace making”, his vision was, as one Palestinian writer notes, of a “total surrender on the Palestinian side and its submission to the dictates of a militarily stronger Israel”.  It thus has the effect of making real peace impossible by perpetuating the crimes of past occupation.

Occupied Palestinian land is now criss-crossed with Jewish settlers – over 350,000 in the West Bank while another 300,000 Israelis live in East Jerusalem. The Zionist dream of a Greater Israel has become a Palestinian nightmare. Along with the Palestinians, we do not mourn Sharon’s passing.  

Corinna Lotz
A World to Win secretary



Friday, January 10, 2014

Vote Balls get Clegg. Why bother?

In 2010, Labour joined in the general vilification of Lib Dem leader Nick Clegg for choosing the Tories over them after the general election produced a hung parliament. Now, with the next election on the horizon, Labour’s tune is changing.

It’s not hard to work out why Ed Balls, the shadow chancellor, is courting Clegg through the columns of the New Statesman. Apart from the fact that the incompetent and tarnished Balls needs all the friends he can get, is the reality that another electoral stalemate is entirely possible.

Although most polls give Labour a lead over the Tories, it continues to narrow. Throw in the wild card known as Ukip, mass abstentions by a disillusioned electorate and a revival of the economic fortunes of sections of the middle class and you can see why Ed Miliband is nervous.

With policies that for the most part are indistinguishable from those of the Tories, Labour is keeping its options open. So Balls has made overtures to Clegg, whose party is responsible for propping up the most reactionary government of modern times.

Balls, part of the negotiating team that failed to woo the Lib Dems in May 2010, now says: “I understand totally why Nick Clegg made the decision that he made to go into coalition with the Conservatives at the time. I may not have liked it at the time, but I understood it. I also understood totally his decision to support a credible deficit reduction plan, because it was necessary in 2010.”

Balls’ adds that “I’ve no reason to doubt his integrity”. This is a conscious attempt to rehabilitate Clegg and his party in the eyes of the voters who abandoned the Lib Dems after they joined the coalition and then broke their pledge by voting for a tripling of university tuition fees a few months later.

As to a future coalition with the Lib Dems, Balls left the door wide open by replying: “I think what you always have to do is deal with politics as you find it . . . I saw that subsequently he made a further statement to one of the newspapers that these things weren’t about personalities, and I think he’s right about that.”

So the chances are that if you vote for Ed Miliband’s party in May 2015 you’ll get a Lab-Lib coalition – carrying on more or less where the present government leaves off. Labour is committed to the Tories’ spending cuts programme, free schools, academies, benefit cuts, workfare for young unemployed and scapegoating immigrants.

Even though a European Union commissioner has attacked David Cameron for “peddling myths” about an invasion of migrant workers, this has not stopped shadow business secretary Chuka Umunna from joining the blame game. Speaking on BBC One’s Question Times, Umunna played his own nationalist card, saying: “I think on low-skill immigration we believe there was too much of it from the European Union.”

He was against the “free movement of jobseekers” and was seeking talks with “our European partners” on the issue. Umunna is, of course, only the latest in a long line of Labour leaders to go down this road, including Yvette Cooper, Tristram Hunt and David Blunkett.

We don’t have to wait 16 months to discover that the general election will be a mass fraud perpetrated on unwilling voters by parties that more or less agree with each other on crucial issues. Better to hang on to your vote and work for a democratic alternative where it will mean something again because your ballot counts for very little now.

Paul Feldman

Communications editor

Thursday, January 09, 2014

Protection from extreme weather is a democratic question

The main impact of climate change on the UK will be more frequent and extensive floods. That is the conclusion of every single report and study for the last decade, including the government's own major risk assessment published by the Environment Agency (EA) in 2012

So why is the key agency responsible for flood planning being cut? And how come the ConDems are lying about the amount being spent on flood prevention?

The EA is to lose 1700 jobs to cuts this year, on top of 1150 lost since 2009 – 23% of its workforce – and more than 300 flood defence schemes have been halted to save money.

Research by Friends of the Earth shows ministers are including estimated spending by local authorities and businesses in their totals. And the amount they are claiming has been spent by businesses is just an over-optimistic guess.

Prime Minister David Cameron admitted (to boos and hisses from Conservative climate change sceptics – and abuse from The Sun) that global warming is the underlying cause of the current floods.

But the EA has calculated that because of climate change, the government needs to spend an extra £20m per year every year up to 2035 on flood defences to have any chance of mitigating the impact on people, land, water supplies and wildlife.

Coastal erosion has speeded up and could make some areas uninhabitable, or at the very least, uninsurable. But some people in the worst affected areas have not even had time to recover from the last major floods in 2012. Insurers estimate paying out £400m so far. Even the lesser floods of 2012 cost the country £600m.

However, a new insurance scheme agreed between government and the insurance industry to help people in the areas most at risk to get some cover, takes no account of the impact of climate change. It is going to be capped at 500,000 properties even though the EA has estimated that between 1.7 and 3.6 million people will be affected by floods by 2050.

Given that there are currently 360 flood warnings in place across the UK, the lower end of that figure must have been reached already, if all impacts are taken into account.

The same jet stream fluctuation that has trapped the UK in a persistent low pressure area, is causing extreme cold and snow in the United states, where temperatures as low as -50 have been recorded. Winter in Ontario is always cold but even Canadians struggle to cope with -30C. It was -17C (-33C with wind chill) in the town of Hell, Michigan, prompting online jokes that Hell had frozen over.

Hell will certainly freeze over before governments take action to halt these frightening climate transformations. The truth is that even when leaders like David Cameron and Barack Obama accept the existence of climate change, capitalist states will do nothing to halt the rise in greenhouse gas emissions (up again by 2.1% in 2013). And it seems that in this time of austerity, they will do little or nothing to help people cope with the disastrous results.

Most greenhouse gas emissions, are due to - in order of impact - land use change (clearing forest and wilderness for agriculture or building on formerly agricultural land); burning coal, oil, gas, cement making and gas flaring.

And just 90 entities are responsible for 63% of all emissions:
- 50 investor-owned companies such as Chevron, Peabody, Shell, and BHP Billiton
- 31 state-owned companies such as Saudi Aramco and Statoil
- 9 state-run industries in China, Poland and the former Soviet Union.



The positive message for 2014, therefore, must be that the area for action is actually well defined and relatively narrow.  To halt climate change we need to take political, social and economic action to slow these  specific activities and then stop some of them entirely.

But to achieve that we need to find ways to replace our hollowed out democracies, operating only in the interests of those 90 entities, with a popular decision-making process that defends the interests of the 99% and their life on planet earth.

Penny Cole
Environment editor

Wednesday, January 08, 2014

Global economy faces turbulent 2014

Chancellor George Osborne believes he has found a way to secure continued support from the Tories’ corporate backers while embarrassing Labour sufficiently enough to keep Ed Miliband’s party backing austerity policies into the distant future.

His announcement that another £25 billion of cuts are needed to balance the government’s books and that welfare claimants are the target was a calculated move. His aim, says Osborne, is a smaller state.

Sounding very much like the Tea Party reactionaries in the Republican Party in Washington, Osborne managed to frighten some in his own party who know that
claimants account for a small fraction of welfare spending and wonder where the cuts are going to come from.

But it was music to the ears of the bankers and international moneylenders who finance the UK government’s debt. It provides a guarantee to business that the UK will continue to be a good place to make profits. And it had the desired effect of sending Labour into another spin as they clearly have no alternatives to austerity and support the attack on claimants.

The government also says it intends protect pensions, which is an obvious and cynical attempt at attracting support from the last segment of the population still casting votes. The “triple lock” purports to preserve the value of pension payments by ensuring they rise annually by whichever is the higher of 2.5%, the rate of inflation or average earnings

But the faked appearance of kind-hearted, caring generosity supposedly providing protection from the effects of a further five years of austerity won’t cut much ice amongst the rapidly growing numbers who fare worst amongst all pensioners in the European Union. 

The basic UK state pension of £87.30 a week is equivalent to just 17% of the average wage. Average income for UK pensioners rises to 30% once payments related to earnings are taken into account. But this is still only half the EU average of 60%. The rate is 32.5% in Ireland, 40% in Germany and over 51% in France.

Conditions for pensioners are certain to worsen should the Tories remain in power after the 2015 election, as they ramp up the savage assault on the health and social services so many of the elderly increasingly depend upon and which form a crucial part of their real income.

But whichever flavour of government is in power will be subject to the dramatic changes now beginning to unfold in the global economy. 

The repercussions from the pre-Christmas US Federal Reserve decision to begin a reduction in the rate of credit creation through quantitative easing (QE) will become clearer as the weeks unfold. But the implications are enormous.

The benefits of QE and associated measures in the US have been astonishing for the wealthy but have failed to generate the economic recovery that the Obama administration has been banking on.

The stock market ended 2013 at an all-time high — giving shareholders their biggest annual gain in almost two decades. Corporate profits are at an all-time record peak and expected to grow in 2014. This was achieved by using extreme levels of unemployment to force wages down.

Corporate earnings now represent the largest share of the gross domestic product — and wages the smallest share of GDP — than at any time since records have been kept. And fewer Americans are working than at any time in the past three decades.

The five year post-crash orgy of credit saw $4 trillion dollars pouring into and pumping up stock and property bubbles in the so-called “emerging economies” like the Philippines, Malaysia, Indonesia and Thailand where ultra-cheap labour attracted hot-money investors. 

Watch closely and you could see them burst. Add in the credit chaos engulfing China and you have the makings of a stormy 2014 for the global economy.

Gerry Gold

Economics editor