Africa’s capital losses from illicit financial flows far outweigh inflows from aid or direct foreign investment. But what can be done? Guest edited by Triple Crisis bloggers Léonce Ndikumana and James Boyce, the latest bulletin from the Association of Concerned African Scholars tackles the issue head on, with contributions from a wide variety of leading scholars.
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ACAS Bulletin 87 – Africa's Capital Losses: What Can Be Done?
Africa’s capital losses from illicit financial flows far outweigh inflows from aid or direct foreign investment. But what can be done? Guest edited by Triple Crisis bloggers Léonce Ndikumana and James Boyce, the latest bulletin from the Association of Concerned African Scholars tackles the issue head on, with contributions from a wide variety of leading scholars.
Read the rest of this entry »
Financial Instability as a Threat to Sustainable Development
As seen over and again during recurrent financial crises in both developing and advanced economies (DEs and AEs), financial instability and boom-bust cycles undermine all three ingredients of sustainable development – economic development, social development and environmental protection.
Financial bubbles generate excessive investment, which remains unutilized for an extended period even after full recovery from the ensuing financial crisis. This includes investment in industry, as in Japan in the late 1980s and early 1990s, as well as in property, as seen during the current crisis in the US and Europe. This is the main reason why recoveries from financial crises see little investment.
Have You Heard About The “Rolling Jubilee”?
Barry Herman, Guest Blogger
As of 2:00 pm on Friday, November 16, 2012, individual Americans have contributed over $290,000 to an Occupy project called “Strike Debt” that will cancel $5.8 million of defaulted debt owed by US residents to hospitals and doctors in this country, and the amount donated is still growing.
This sentence must make little sense to readers outside the United States, so let me explain.
First, medical debt: in this country, many people have medical insurance through their employers or buy it individually. If they are over 65, they have it through a federal government program called Medicare, or if they are poor through a joint federal and state program called Medicaid. Some insurance, however, covers only part of the cost of medical care or it excludes some illnesses (for example, if you have a “pre-existing” condition when you start the insurance, it may not be covered), and some 44 million Americans have no insurance at all. The situation will be improved—if only partly— after the start of “Obamacare,” the medical insurance reform that the Obama Administration managed to get through the US Congress in 2010 (formally, the Patient Protection and Affordable Care Act). In the meantime, millions of Americans owe large amounts of money to hospitals and doctors. Anyone coming to a hospital in the United States has to be treated, whether they have insurance or not, but hospitals have a rather mixed record when it comes to getting paid by those who are not insured. Medical bills are a main reason for personal bankruptcy in this country.
What About NYC That Doesn’t Make it To Postcards?
Anna Lekas-Miller, Guest Blogger
A woman walks up and down the dark hallway, holding a cheap transistor radio up to her ear, pressing it closer as it keeps cutting in and out.
“They’re saying that it could be anywhere between two and seven weeks before we get power,” she says, shaking her head. “So who even knows?”
I’m a volunteer with Occupy Sandy—a community relief effort that used the Occupy Wall Street network to coordinate hurricane relief in New York City’s hardest hit areas. I’mon the fifteenth floor of 711 Seagirt Boulevard, a twenty-five story housing complex in Far Rockaway—a neighborhood on the Rockaway Peninsula in Queens, New York that was one of the most devastated by Hurricane “Superstorm” Sandy. Though the building itself is secure, and suffered only a few inches of water during the storm itself, it has been without power and running water for almost two weeks. In a twenty-five story housing complex where many of the residents are elderly and disabled and the elevators no longer work, many of the residents have been trapped in their apartments since the storm.
Growth in the South: Resilience, Decoupling, Recoupling
Rapid acceleration of growth in developing countries (DCs) and the widening of their growth gap with advanced economies (AEs) before the outbreak of the global financial crisis were widely interpreted as decoupling of the South from the North. In the early days of the crisis, there were also widespread expectations that growth in the South would be little affected by the difficulties facing AEs. In fact, DCs slowed considerably in 2009 as a result of contraction of exports to AEs and financial contagion. However, they recovered rapidly, with growth rates in 2010-11 matching or exceeding the levels seen before the crisis, while recovery in the US has remained weak and erratic, and Europe has gone into a second dip. This has again revived the decoupling thesis, notwithstanding the sharp slowdown in many major DCs over the course of the current year.
This change of sentiment about decoupling reflects lack of sound knowledge and understanding of the evolution of growth fundamentals in DCs and their global linkages. In an earlier IMF Working Paper Kose, Otrok and Prasad (2008) analysed global business cycles and found decoupling between DCs and AEs, but increased coupling within each group. Wälti (2009) challenged this and argued that assessment of decoupling should not be based on actual growth rates but deviations from trend (or potential output). On that basis there is no decrease in the synchronicity between DCs and AEs. Rose (2009) came to broadly the same conclusion, while Yeyati (2009) showed that in fact the 2000s witnessed an increase in the correlations of DCs and G7 cycles.
Putin Expands State's Role In Energy Policy
Michael Klare, Guest Blogger
Ever since he first assumed the presidency in 2000, Vladimir Putin has sought to bring Russian energy production under state control, reversing the effort made by his predecessor, Boris Yeltsin, to transfer state assets into private hands. Putin made considerable progress in implementing this goal during his first two terms, when the Kremlin employed questionable tax litigation to seize the assets of privately-owned Yukos (then the largest oil company in Russia) and transferred them to state-controlled Rosneft, and has continued with renewed vigor after he regained the presidency in May. Already, Putin’s quest has been rewarded by Rosneft’s acquisition of BP-TNK, Russia’s third-largest oil firm, bringing more than half of the country’s oil production under state control for the first time since the 1990s. But while applauded by some in Moscow, this effort has caused increasing concern in Europe, which relies to a considerable degree on Russian oil and gas and so fears the implications of Putin’s growing sway over Russian energy policy. The Kremlin’s growing control over energy policy also raises questions about the depth of Russia’s commitment, made at the November 2011 G-20 Summit in Cannes, to increase transparency in international energy markets – questions made all the more salient as Russia assumes the G-20 presidency in 2013.
Even before he assumed the presidency, Putin indicated that state control over oil and other natural resources was essential to the restoration of Russia’s status as a great power. In the years immediately following the disintegration of the Soviet Union, when Russia’s power was at its lowest ebb, Putin – then a functionary in the St. Petersburg municipal government – began arguing against the selloff of state-owned oil and natural gas fields to private firms and wealthy individuals (the so-called oligarchs). Such sales, he claimed, were depriving Russia of the resources it needed to fuel its comeback as a major world contender; only by renationalizing these assets could Russia acquire the wherewithal to command respect on the international stage.
Putin Expands State’s Role In Energy Policy
Michael Klare, Guest Blogger
Ever since he first assumed the presidency in 2000, Vladimir Putin has sought to bring Russian energy production under state control, reversing the effort made by his predecessor, Boris Yeltsin, to transfer state assets into private hands. Putin made considerable progress in implementing this goal during his first two terms, when the Kremlin employed questionable tax litigation to seize the assets of privately-owned Yukos (then the largest oil company in Russia) and transferred them to state-controlled Rosneft, and has continued with renewed vigor after he regained the presidency in May. Already, Putin’s quest has been rewarded by Rosneft’s acquisition of BP-TNK, Russia’s third-largest oil firm, bringing more than half of the country’s oil production under state control for the first time since the 1990s. But while applauded by some in Moscow, this effort has caused increasing concern in Europe, which relies to a considerable degree on Russian oil and gas and so fears the implications of Putin’s growing sway over Russian energy policy. The Kremlin’s growing control over energy policy also raises questions about the depth of Russia’s commitment, made at the November 2011 G-20 Summit in Cannes, to increase transparency in international energy markets – questions made all the more salient as Russia assumes the G-20 presidency in 2013.
Even before he assumed the presidency, Putin indicated that state control over oil and other natural resources was essential to the restoration of Russia’s status as a great power. In the years immediately following the disintegration of the Soviet Union, when Russia’s power was at its lowest ebb, Putin – then a functionary in the St. Petersburg municipal government – began arguing against the selloff of state-owned oil and natural gas fields to private firms and wealthy individuals (the so-called oligarchs). Such sales, he claimed, were depriving Russia of the resources it needed to fuel its comeback as a major world contender; only by renationalizing these assets could Russia acquire the wherewithal to command respect on the international stage.
Hurricane Sandy and the Global Coastal Crisis
In the deadly and destructive aftermath of Hurricane Sandy, the Northeastern United States is rethinking its strategy to reduce coastal vulnerability to future storms and natural disasters. This should become a global discussion, given the recent, large-scale disasters that have occurred worldwide: the December 2004 Indian Ocean Tsunami, the 2005 Hurricanes Katrina and Rita in the US Gulf Coast, the 2011 earthquake, tsunami and Fukushima nuclear disaster in Japan, and of course, last month’s Hurricane Sandy.
When major coastal storms strike, often the first question asked is whether global climate change is increasing the severity and frequency of such storms. With respect to Hurricane Sandy, that issue was raised just days after the event.
From Argentina to Greece: A Global Roller-coaster
In October 2012, a Cayman Islands-based fund, NML Capital Limited, controlled by Elliot Management (EM) won a court order in Ghana to seize the Argentine teaching ship Libertad . The fund claimed that Argentina owed it $350 million, and offered to let the ship leave if Argentina’s government put up a $20 million bond to be forfeited. EM´s CEO is Paul Elliot Singer, who specializes in piling up insolvent country debt. Singer is a major donor to the Republican Party.
If the court order goes into effect, Argentina would be prevented from discriminating between restructured bondholders and holdouts, thus potentially preventing the next payment due in December and leading to a technical default. Everyone who had accepted restructuring would be entitled to better terms if the funds’ demands are met. If the EM demands are accepted, the ruling will be a tipping point in the financial order.