What type of growth and austerity, that is the question

Roberto Sansón Mizrahi, guest blogger

Since the outbreak of the crisis, false choices have been imposed on us. First, we were led to believe that we must bail out large, troubled financial institutions using public resources or let the world collapse, such as happened in 1930.  Then, when the crisis spread throughout Europe, the decision was to deal with fiscal deficits and sovereign over-indebtedness by imposing brutal adjustments that affected large majorities; otherwise, the collapse would sweep the European Union and the euro.

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After a Chinese Visit, Questions about the G20: One Circumstance and Two Problems

Eduardo Gudynas, Guest Blogger

Until a few days ago, I had planned on contributing to the Spotlight G20 series by analyzing the visit of the Chinese Prime Minister Wen Jiabao to several South American countries. During the Rio +20 Conference, he met Dilma Rousseff from Brazil, and then he traveled to Uruguay, Argentina and Chile. In every capital city, Prime Minister Jiabao negotiated and signed many agreements. He was interested in buying minerals, hydrocarbon and agri-food products, as well as financing transport infrastructure, such as harbors and railroads, to ensure access to such resources.

China has become one of the major commercial partners of Argentina, Brazil and Uruguay (all of them members of the Common Market of the South – Mercosur). In these close relationships, agreements are no longer as eye-catching as silences are. For example, everybody shuts up when the huge financial assistance from Beijing does not include the “annoying” social and environmental safeguards. In exchange, South American progressive governments say nothing about human rights.
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Inside the Greek State: Breaking the Doom Loop

Robert H. Wade, Guest Blogger

It is hardly surprising that many Greeks blame Germans for their imploding economy, and see a German plot to turn Greece into a modern-day dependency. After  all, German banks willingly lent vast sums to the Greek government and private companies – as imprudently as Greeks borrowed. Their suspicions play into the memories of German atrocities in Greece during the Second World War, when troops requisitioned all the food and inflicted severe famine on urban populations in 1941-42. Corpses littered the streets of Athens.

But talk to ordinary people about their lives and you soon hear of their perennial frustrations with the state, to the point where the big surprise is that Greece became as prosperous as it is with such dysfunctionality. Indeed, a Pew Research Center poll in March-April 2012 found that 87% of Greek respondents agreed that the crisis was generated primarily by the “manipulations” of the Greek government.
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Spain Is Now Making Ireland’s Mistakes

Mark Blyth and Stephen Kinsella, guest blogger

Spain is now heading down the same path that bankrupted Ireland. It doesn’t have to be this way; and indeed, it shouldn’t be this way. Ireland is not a role model for austerity policies, but rather a cautionary tale.

The parallels between Spain and Ireland are striking. Just like Ireland, Spain had a credit boom financed mostly with external debt, which meant that the balance sheets of their banks are now stuffed with bad debts as asset values collapse. Both governments have now injected billions into these ailing banks, to the detriment of their respective debt profiles. The Spanish Prime Minister has become preoccupied with creating market confidence, as was the Irish Prime Minister in the run up to the EU/IMF bailout. Confidence talk may buy some time, but ultimately it doesn’t make the problem go away. Read the rest of this entry »

Spain Is Now Making Ireland's Mistakes

Mark Blyth and Stephen Kinsella, guest blogger

Spain is now heading down the same path that bankrupted Ireland. It doesn’t have to be this way; and indeed, it shouldn’t be this way. Ireland is not a role model for austerity policies, but rather a cautionary tale.

The parallels between Spain and Ireland are striking. Just like Ireland, Spain had a credit boom financed mostly with external debt, which meant that the balance sheets of their banks are now stuffed with bad debts as asset values collapse. Both governments have now injected billions into these ailing banks, to the detriment of their respective debt profiles. The Spanish Prime Minister has become preoccupied with creating market confidence, as was the Irish Prime Minister in the run up to the EU/IMF bailout. Confidence talk may buy some time, but ultimately it doesn’t make the problem go away. Read the rest of this entry »

India’s Economic Slowdown: The marvel of services-led growth?

Suranjana Nabar-Bhaduri, guest blogger

Recent months have seen public concerns being voiced about the incipient slowdown in the Indian economy. Manufacturing output grew at only 0.1 per cent in April; the Indian rupee has been on a downward spiral since late 2011; exports have fallen; and capital inflows have been inadequate relative to India’s current account deficits. India’s GDP growth has declined to a nine-year low of 6.5 per cent in the financial year 2011-12.

The current situation draws attention to issues surrounding India’s services-led growth development strategy, and its persistent trade and current account deficits. It will hopefully provide a much-needed wake-up call to Indian policy-makers to undertake policies beyond “reforms”. A recent paper emphasizes that India’s services-led growth entails questions of long-run sustainability with respect to its balance of payments (BOP) and has a limited ability to raise the living standards of the population as a whole.

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Today’s Trivia Quiz: How Global Mining Corporations Are Able to Undermine Democracy

Robin Broad, guest blogger

Today’s trivia category is how global mining corporations undermine democracy.

First a bit of background. The way licensing for mining works is that a company first gets an “exploration license.” With that license, that company gets the right to explore – or test – the area to get a better sense of the extent of the gold or whatever the relevant mineral is. After that, the company can move on to apply for an “exploitation” or “extraction” license — that is, an actual mining license. Different countries have different requirements for both licenses but typically a company would be asked to present an environmental impact assessment and a feasibility assessment among other things.

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Stimulating Europe

Stephany Griffith-Jones and Matthias Kollatz-Ahnen, guest blogger

Strategies to overcome the European crisis only focused on collective austerity are not working; they are bad arithmetic, worse economics and ignore the lessons of history. A key missing ingredient is the urgent restoration of growth, which European citizens demand and several leaders are increasingly stressing. However, meaningful actions on a sufficient scale have not yet been taken.

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Spotlight Rio+20: Green from the Grassroots

Elinor Ostrom, guest blogger

Part of the Triple Crisis Spotlight Rio+20 series.

Elinor Ostrom, a Nobel laureate in economics, was Chief Scientific Adviser to the Planet Under Pressure conference and Professor of Political Science and Senior Co-Research Director of the Workshop in Political Theory and Policy Analysis at Indiana University. She passed away on June 12, 2012. This article was published that day by Project Syndicate.

Much is riding on the United Nations Rio+20 summit. Many are billing it as Plan A for Planet Earth and want leaders bound to a single international agreement to protect our life-support system and prevent a global humanitarian crisis.

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Spotlight Rio+20: From Top-Down to Bottom-Up: New Directions for Climate at Rio+20

Kristen Sheeran, guest blogger

Part of the Triple Crisis Spotlight Rio+20 series.

In 2009, I published a book with Graciela Chichilnisky, Saving Kyoto (New Holland 2009), that argued passionately for preserving the economic and political architecture of the only international treaty on climate change the world has known – the Kyoto Protocol. The book was timely: the countdown to compliance with Kyoto’s mandated emissions targets had begun; the international community was gathering that year in Copenhagen to negotiate the next round of climate commitments; and there was hope that the Obama administration could usher the U.S. back to the negotiating table in earnest. More importantly from my perspective, however, was the growing realization that the window of opportunity for stabilizing the earth’s climate system was rapidly coming to a close. The urgency of the crisis demanded immediate, extensive emissions reductions. And I firmly believed that a coordinated international effort that mandated reductions from world’s largest emitters was the fairest and most efficient way to stave off climate disaster.

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