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 »

What Should Syriza Do: A Latin American Perspective

Matías Vernengo

The election in Greece this weekend, and the possible victory of Syriza, the left of center party that is against the austerity measures that are attached to the bail-out program negotiated with the troika of the European Union (EU), the European Central Bank (ECB), and the International Monetary Fund (IMF), but wants to remain within the euro, has prompted fears of a final collapse of the euro. Let me say that irrespective of whether Greece will be forced out of the euro, policies to reverse the austerity imposed so far will be needed. Latin America has extensive experience with external crises, and with defaults and devaluation, the Argentinean crisis of 2001-2 being the most recent and dramatic example. Here are some lessons and a short proposal based on these experiences.

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Tired of Waiting for a 21st Century Trade Agreement: Developing Countries, the TPP, and Regulating Cross Border Finance

Kevin P. Gallagher

Early on in his term, US President Barack Obama pledged that the Trans-Pacific Partnership Agreement (TPP) would be a 21st Century trade treaty.  This week a copy of the proposed investment chapter of the deal was leaked, only to reveal that the US still remains behind the times.

In these turbulent economic times for the world economy, what is among the most egregious aspects of the US proposal is that it would limit the ability of TPP members to regulate global finance.  Yet emerging market negotiating partners have proposed bold alternatives that are a big step in the right direction.

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The shape of the new state to come

Ali Kadri

When colonialist forces created states in their own images, they re-founded institutions that organise social structures in line with their strategies. When, after decolonisation, many of these states in Africa and the Middle East weakened under military or neoliberal assaults, they were dubbed ill-governed or ‘overdeveloped.’ The ‘or’ between military and neoliberal is inclusive. The neoliberal bent is imposed by shifting national class structures to accept the imperialist terms of surrender via neoliberal policies by power structures, foremost in which, is actual or potential military power.

As for the overdeveloped, it is said that ex-colonies borrowed over-fitted systems of government and administration from their Western patrons. More recently, many of these ex-colonies have failed and many others teeter on the brink of failure. Libya, Yemen and Syria can now be added to Lebanon, Afghanistan, Somalia and Iraq. However, these failures are not a one-time occurrence after which states resurrect in better shape or form. They have become states that exist in a continual condition of violence and collapse.

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Africa Specializing in Capital Exodus?

Léonce Ndikumana

Even as Africa faces severe shortages of skilled labor at home, it experiences large and increasing outflows of highly-skilled labor migration to industrialized economies in search of better job opportunities. The investments made in the training of these professionals are losses to African countries but translate into hefty gains for receiving countries.  Thus resource-starved African nations are subsidizing developed countries’ industries and social services.

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EU Austerity Measures Constitute Sheer Catastrophe

Philip Arestis and Malcolm Sawyer

The months of April and May have been tumultuous on the European political scene – the French elections have seen the return of the first Socialist President in 17 years on elements of a pro-growth, anti-austerity agenda, the Greek elections with the poor showing of the previous dominant parties associated with the severe austerity agenda being imposed on Greece, the fall of the Dutch government over budget measures, the poor showing of the Christian Democrats in German Federal elections.

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New Central Bank Mandate in Argentina: A Bold Initiative to Restore Central Banks as Agents of Economic Development

Gerald Epstein

Prevailing ideology has held that the only legitimate task for central banks is to control inflation, which often comes at the expense of broader goals such as employment creation, financial stability or economic growth. Now, in a bold and important move, the government of Argentina has fought against this neo-liberal “conventional wisdom” and broadened the mandate of the Argentine Central Bank to include economic growth and financial stability, and empowered it to use more tools to support credit allocation to promote productive investment and job creation (see Weeks).

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Waiting for the Third Industrial Revolution

Edward B. Barbier

A recent cover article of The Economist proclaimed that the world economy, and especially the United States, is on the verge of a “Third Industrial Revolution”.  The First Industrial Revolution occurred in the late 18th century in Great Britain, with the mechanization of the textile industry and the birth of factory production.  The Second Industrial Revolution began in the early 20th century, when Henry Ford introduced mass production through assembly line manufacturing.

According to The Economist, the Third Industrial Revolution is already happening, again principally in the US, through the rise of digital manufacturing.  This process essentially involves de-centralizing the factory system and replacing mass production with mass customization.  The key to this latest wave in manufacturing innovation is the convergence of a number of sophisticated technologies, including advanced software and computing capabilities, web-based services, new and more lightweight materials, nanotechnologies and robotics, and above all, three-dimensional (3-D) printing.

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Crisis in Europe affects all of us

Martin Khor

The economic situation in Europe has worsened considerably in the past week, giving rise to a very worrisome situation.  The ramifications of a full-blown crisis are serious not only for Europe but also the rest of the world.

The recent Greek elections saw the citizens proclaiming their anger towards the austerity policies tied to the European-IMF bail-out package, by repudiating the two major parties and giving the small anti-austerity Syriza party second place.

The elections came in the midst of a greatly deteriorating condition. Greece has 22% unemployment, 50% youth unemployment, GNP is falling steeply, and public debt will remain high at 160% of GDP next year despite the recent bailout and debt-restructuring measures.

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