Philip Arestis and Malcolm Sawyer

In the immediate aftermath of the financial crisis, most European governments allowed the automatic stabilisers to kick in and implemented some mild discretionary measures, despite the strictures of the Stability and Growth Pact (SGP). But it was not long before the siren calls for “fiscal consolidation” arose, spurred on by spurious claims of “expansionary fiscal consolidation” and the now discredited claims that debt ratios threatened the economy. This has been followed by claims that it was failures to constrain budget deficits in the mid 2000s, which were to blame for the debt crisis and which placed limits on the ability of governments to respond to the Great Recession. Within the eurozone, fingers were pointed at the failures of the SGP, which had been intended to keep national budget deficits below 3% of GDP at all times, to have budgets which balanced over the business cycle, and to keep debt-to-GDP ratios below 60%. In the years 2002 to 2007, budget deficits averaged around 2% of GDP, the 3% limit was breached on numerous occasions, and, even in 2007, seven countries (of the then 12 members) had debt ratios of over 60%.

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Dario Kenner, Guest Blogger

As storms like Typhoon Haiyan shockingly reminded us, developing countries urgently need climate finance. As defined by the UN, this is the transfer of public funds from developed to developing countries to support them in reducing greenhouse gas emissions and adapt to the impact of climate change. But much of this money does not look like it is going to arrive anytime soon because the main global mechanism to manage and transfer climate finance, the Green Climate Fund (GCF), only has $7.5 million deposited in its accounts. Established at the 2010 Cancun climate change summit, the GCF is supposed to be operational from 2014 and could channel $100 billion a year from 2020. To the dismay of developing countries no major new pledges (unless you count $45 million from Sweden) were made by developed countries to the GCF at the UN climate change negotiations that ended in Poland last week.

In the GCF’s absence, one of the main mechanisms to distribute public climate finance continues to be the Climate Investment Funds (CIFs), which has deposits of $6 billion. This is for investment plans in 48 developing countries, including up to 100 projects with a focus on clean technology, resilience to climate change, reducing deforestation, and renewable energy. Housed at the World Bank, the CIFs transfer public climate finance from 14 developed countries through multilateral development banks, such as the Inter-American Development Bank and the Asian Development Bank.

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Yilmaz Akyüz

According to Triple Crisis contributor Yilmaz Akyüz, the U.S. Federal Reserve and, by extension, the entire global economy are in uncharted waters, as the Fed begins to back off the expansionary monetary policy it has followed since 2008. Dr. Akyüz’s comments in conversation with Real News Network producer Lynn Fries, were delivered after a UN workshop in Geneva. He argued that the United States’ zero interest rate policies, and China’s high-investment policies, which have buoyed up world demand, are both “unsustainable.” Meanwhile, income inequality and the declining labor share of total income has put the world economy in a serious “underconsumption” bind. “And income distribution,” he notes, “has gotten much worse during the crisis … and therefore we have [an even bigger] consumption gap.” – Eds.

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Elissa Dennis, Guest Blogger

Declaring “the world has failed us,” Ecuador’s President Rafael Correa signaled the termination of the Yasuni ITT Initiative in August 2013.

Back in 2007, Correa had presented a challenge to the world community: If governments, companies, international organizations, and individuals pledged a total of $350 million per year for 10 years, equal to half of the forgone revenues from the Ishpingo, Tambococha, and Tiputinti (ITT) wells in the Yasuni National Park, Ecuador would chip in the other half and keep the oil underground indefinitely, as its contribution to halting global climate change. Citing a meager $116 million in pledges, Correa announced the decision instead to move forward with the Plan B that was always in the background: extraction of oil from the Ishpingo, Tambococha and Tiputini fields. The drilling will only impact .1% of the parklands, Correa contends, noting that the estimated value of oil in the targeted area has increased from $7 billion to $18 billion. Despite street demonstrations in Quito and Cuenca and calls for a national referendum, the National Assembly ratified Correa’s action in October 2013.

Correa, a U.S. trained economist, has consistently ridiculed “infantile” environmentalists, and is clearly most comfortable with a pragmatic economic development model of extractivism with equitable distribution of resources. Like his Bolivian counterpart Evo Morales, Correa has run afoul of indigenous communities and the environmental Left through efforts to transform the nation from exploited exporter of raw materials into savvy user of natural resources to fuel economic growth and social programs.

“We can’t be beggars sitting on a sack of gold,” is Correa’s constant refrain. Read the rest of this entry »

Elissa Dennis, Guest Blogger

Declaring “the world has failed us,” Ecuador’s President Rafael Correa signaled the termination of the Yasuni ITT Initiative in August 2013.

Back in 2007, Correa had presented a challenge to the world community: If governments, companies, international organizations, and individuals pledged a total of $350 million per year for 10 years, equal to half of the forgone revenues from the Ishpingo, Tambococha, and Tiputinti (ITT) wells in the Yasuni National Park, Ecuador would chip in the other half and keep the oil underground indefinitely, as its contribution to halting global climate change. Citing a meager $116 million in pledges, Correa announced the decision instead to move forward with the Plan B that was always in the background: extraction of oil from the Ishpingo, Tambococha and Tiputini fields. The drilling will only impact .1% of the parklands, Correa contends, noting that the estimated value of oil in the targeted area has increased from $7 billion to $18 billion. Despite street demonstrations in Quito and Cuenca and calls for a national referendum, the National Assembly ratified Correa’s action in October 2013.

Correa, a U.S. trained economist, has consistently ridiculed “infantile” environmentalists, and is clearly most comfortable with a pragmatic economic development model of extractivism with equitable distribution of resources. Like his Bolivian counterpart Evo Morales, Correa has run afoul of indigenous communities and the environmental Left through efforts to transform the nation from exploited exporter of raw materials into savvy user of natural resources to fuel economic growth and social programs.

“We can’t be beggars sitting on a sack of gold,” is Correa’s constant refrain. Read the rest of this entry »