Would Political Integration Emerge for the Euro Area in Terms of a Banking Union?

Philip Arestis and Malcolm Sawyer

A recent report of the European Commission (2015), the Five Presidents’ report on “Completing Europe’s Economic and Monetary Union” by the year 2025, updates relevant plans that were proposed by an earlier European Council Report (2012), the Four Presidents’ report. The stated aim is to gradually achieve a “genuine economic and monetary union,” which would gradually evolve towards “Economic, Financial and Fiscal Union.” What is meant by a genuine union, and would that involve at least de facto, if not de jure, political integration?

The 2012 report proposed closer integration in four main areas: banking union, closer integration of budgetary policies, better coordination of economic policies other than fiscal policy, and a strengthening of democratic legitimating and accountability. Little has been achieved to date, with the exception of some moves towards the banking union objective. But even within the banking union driver not much emerged. The only changes in the latter respect were the agreement on a new structure for prudential supervision of banks under the ECB pinnacle of national central banks and a common approach to resolving failing banks (the single resolution mechanism).

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Banking on Climate Finance for Latin America

Kevin Gallagher

Latin American and Caribbean (LAC) countries arrived in Paris with ambitious national commitments to combat climate change.  Mexico promises to reduce peak emissions even before China’s landmark commitment; Chile has said it will introduce a carbon tax; Brazil has put forth a strategic plan on reducing emissions and deforestation; and Caribbean nations have come with a dire message, reminding the world that their livelihoods are at stake if the world sticks with more business-as-usual, as the Caribbean continues to be subject to ever increasing sea-level rise, flooding, and extreme weather events.

But these promises and plans won’t come cheap. LAC governments will need to make significant financial investments to meet their climate change commitments.  According to the Inter-American Development Bank, the region faces a $100 billion annual gap in financing for climate change mitigation and adaptation.

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What We’re Writing, What We’re Reading

What We’re Writing

Juan Antonio Montecino and Gerald Epstein, The Political Economy of QE and the Fed: Who Gained, Who Lost and Why Did it End? (See also Triple Crisis co-editor Alejandro Reuss’s interview with Gerald Epstein on the distributional impact of Quantitative Easing, here.)

Martin Khor, In the Aftermath of the Attacks

Sunita Narain, Alternative Paris

Matias Vernengo, What to Expect in Argentina (video, in Spanish) (See also Matias Vernengo’s blog posts on Argentina and the recent elections, here and here.)

What We’re Reading

Eileen Appelbaum and Rosemary Batt, Private Equity at Work: When Wall Street Manages Main Street (New book. Read the entire introduction here.)

Robert Pollin, Four Reasons Why We Can and Must Fight Terrorism and Poverty Through Climate Action

Jomo Kwame Sundaram and Vikas Rawal, Emulating the U.S. Opposed by the U.S.

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Right Wing Turn in Latin America?

Matías Vernengo

Regular Triple Crisis contributor Matias Vernengo reflects on the recent presidential election results from Argentina. See his Triple Crisis blog post about the main issues in the election, written just before the run-off round, here.

Just a brief follow up on my recent post on Argentina. By a relative small margin the right wing candidate, Mauricio Macri, won the election. As noted in the previous post the most dangerous result would be an attack on the human rights policies followed by the current government, that have led to jail more than 400 human rights violators (noted that several were acquitted by lack of proofs as it should happen in a civilized society; so this was not witch hunt).

La Nación, the main conservative daily, that benefited economically from the last dictatorship and supported it, had an editorial demanding an end to ‘revenge.’ They called the left of center militants the true terrorists of the 1970s, even though the vast majority had committed no violent crime (and even those that did commit crimes should have been prosecuted according to the law, not tortured, and summarily executed). Macri has suggested that he will not stop the judiciary system from prosecuting human rights violators. But he made it clear that this will not be part of government policy.

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German Financialization and the Eurozone Crisis

Nina Eichacker

Nina Eichacker is a lecturer in economics at Bentley University. This blog post summarizes her recent Political Economy Research Institute (PERI) working paper “German Financialization, the Global Financial Crisis, and the Eurozone Crisis.” Her previous blog post, on financial liberalization and Iceland’s financial crisis, is available here.

Many studies of the Eurozone crisis focus on peripheral European states’ current account deficits, or German neo-mercantilist policies that promoted export surpluses. However, German financialization and input on the eurozone’s financial architecture promoted deficits, increased systemic risk, and facilitated the onset of Europe’s subsequent crises.

Increasing German financial sector competition encouraged German banks’ increasing securitization and participation in global capital markets. Regional liberalization created new marketplaces for German finance and increased crisis risk as current accounts diverged between Europe’s core and periphery. After the global financial crisis of 2008, German losses on international securitized assets prompted retrenchment of lending, paving the way for the eurozone’s sovereign debt crisis. Rethinking how financial liberalization facilitated German and European financial crises may prevent the eurozone from repeating these performances in the future.

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From G20 to Labour20

Erinç Yeldan

The G20 Summit has met, convened, and dispersed for the next year after a massive show in the tourist heart of Turkey, Antalya.  The meetings had convened under the shadow of massive social exclusion and terror overrunning the global political economy. the G20 communiqué that had been released on November 15 was little more than a simple wish-list for a stable and participatory global economy—the main motto of Turkey’s presidency over 2015.

But to billions of working families across the globe, there was more than the standard wish-list of the G20 communiqué: the Labour20 (L20). The L20 was founded by the International Trade Union Confederation (ITUC) and the OECD’s Trade Union Advisory Committee (TUAC) and was convened with the call coming from Turkish hosts, the Confederation of Turkish Trade Unions (Türk-Iş), Confederation of Progressive Trade Unions of Turkey (DISK), and Confederation of Turkish Right Trade Unions (Hak-Iş).

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There’s Plenty of Money for Students—And Other Poor South Africans—If We Reprioritise

Patrick Bond

How to make good on the 0% university fee increase committed by President Jacob Zuma after such courageous student protests last week [in October 2015] at Union Buildings, ANC headquarters and parliament?

South Africa’s R1.451 trillion state budget for 2016-17 must expand or be rejigged by just 0.3%. True, in addition to the immediate R4.2 billion shortfall, much larger sums will be needed to subsidise free tertiary education for those unable to pay, as well as to end out-sourcing of university workers.

So where can the state find the funds? According to some, Zuma’s government is just too broke. As my Wits School of Governance colleague Graeme Bloch claimed last week in The Conversation (albeit without supporting data), “There are many problems for the government, including the state of the world economy, which ensures that there is not enough money” for free university education.

But if a 2012 government commission set up by Minister Blade Nzimande (and hidden away since) as well as even the conservative SA Institute for Race Relations agree that free tertiary education is affordable, why the resistance?

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The Disaster of Greek Austerity, Part 2

Evita Nolka

Evita Nolka is a Greek political scientist, holder of a MSc. in Strategic Studies and International Politics from the University of Macedonia. This is the concluding part of a two-part series. Part 1 is available here.

U-Turn by SYRIZA and Popular Disillusionment

Originally elected in January 2015 on a vehement anti-austerity platform, the Greek Prime Minister Alexis Tsipras has made an unprecedented U-turn. He has ignored the popular outcry against austerity – loudly expressed in a referendum on July 5 – and has given in to the creditors’ demands. In August a new bailout was signed and approved, including fresh austerity but also neo-colonial restrictions on national sovereignty giving the right to creditors to monitor the Greek government.

And yet, Tsipras won a new election on September 20, again forming a government. The result seemed to vindicate his capitulation. It appears that Greek voters, confronted with a narrative presenting the new agreement as inescapable, opted to give the governing party a second chance.

“This wasn’t a vote of hope but a vote for the “lesser evil” within the limits of a “nothing can really change” mentality,” says Costas from Patra.

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