Wednesday, December 24, 2008

A Happy Soviet Christmas To One and All !

'A bit of fun for the time of year thats in it, and of course wishing all the regular readers of Unrepentant' a Merry Christmas and a Happy New Year in 2009, thanks also to those who nominated this blog into the top 100 political blogs here , I have no idea who ran the chart and was unaware of its existence until someone told me about it, but thanks anyway. The blog is regularly attracting a goodly amount of traffic from around the globe, and thanks for all those of you have commented on the variety of postings put up by my angelic self over the year.

Its sometimes forgotten that in the USSR there was a whole festive period focussed around the New Year, this is further complicated by the fact the Russian Orthodox 'Christmas' is of course celebrated later than the western worlds.But this is not simply a product of official atheism under of Soviet times -- even in tsarist times, New Year's was the day associated with decorated trees, ''Santa,'' and the exchanging of gifts, because Christmas was not a festive holy day for Russian Orthodox Christianity. (Which, of course, observes Christmas in early January, since Eastern Orthodoxy never switched from the Julian to the Gregorian calendar.)

I'm not sure when the "New Year's Tree" custom developed in Russia, though it wouldn't surprise me if, like most non-Germans, they got the idea via Queen Victoria, who popularized what had been a strictly German custom in honor of her German husband.

I did receive quite a few Soviet Christmas/New year cards in the 1980's, but I like most other people I suppose dumped them. I was interested to find that there is now a band of Soviet christmas memorabilia collectors, who make a hobby of collecting the old Soviet Christmas cards of the past. I can understand why, they were always well designed, beautifully coloured and were as full of christmassy kitsch as anything on offer in the West. One such collector is Boris Glazer lives in Ekaterinburg, Russia. When asked how he began his soviet christmas card collection he said

"As always, it began in childhood. New Year in the Soviet Union was the only official holiday not connected with communist ideology. In those days, it was the main winter holiday--a mix of Christmas and New Year. The Christmas Tree was substituted with New Year Tree. The star on its top was considered as the small sister of the Kremlin stars. But it did not spoil an atmosphere of a holiday, fun, kindness, and hope. In those days, when even telephone was not in each family, people congratulated each other with postcards. My grandmother had a lot of relatives in all corners of the USSR and they actively exchanged congratulations. When she passed away, there were few hundreds cards left after her which gave a start to my collection. The collection gradually grew and replenished, and later, when I was engaged in graphic design and programming, one of my projects consist in creation of a mosaic from New Year's cards. The part from these scanned cards can be seen on my site....My favorite cards are from '50s. It is the time of blossoming of socialist realism in the USSR. I very much like these detailed realistic images. And my wife loves cards from '60s when images became more abstract and flat. These were the times of the Iron Curtain and the first space flights. The postcards of that period combine a nice (sometimes "international" looking) drawing style with Russian national fairytale characters and impudent Soviet propaganda. Good old soviet kitsch!..."
Interesting to see that the New Year was a time for children and families greeting each other in the USSR too , fulfilling a similar role as Christmas in the western world today, also interesting to observe that as was the case with many many aspects of Soviet life, there was space given for fun and festivities in contrast to the image of unremitting gloom which is the stereotypical image of Soviet life we are all expected to believe to this day....

Have a Wonderful Christmas and a Peaceful 2009 !

Saturday, December 13, 2008

Brian Cowen Does NOT Respect the Irish Peoples Choice on Lisbon

Taoiseach Brian Cowen's hypocrisy in pretending to "respect" the people's referendum vote on Lisbon is now evident, for not a jot or tittle of Lisbon will be altered when he forces the people to vote on it a second time next year.
Political Declarations or promises regarding future Treaties that are not yet even drafted will not alter a comma of the Lisbon Treaty.If people vote Yes in Lisbon Two to exactly the same Treaty which they voted No to last June they will be changing the Irish Constitution so as to recognise the supremacy of the law of the new Union which Lisbon would establish over anything contrary, whether in the Irish Constitution or in political Declarations and promises that might be tacked on to Lisbon.

No political Declarations or promises about commitments and even Protocols in future EU Treaties can change Lisbon or the supremacy of the EU Court of Justice in interpreting that Treaty's provisions. These will have come into force well before any further EU Treaty or Treaties will even be negotiated.

If the Irish media and public opinion allow themselves to be taken in by the kind of presentational trickery Taoiseach Cowen and his Government are now planning, they could be making themselves the laughing stock of Europe.

A promise by the 27 EU Governments that each Member State can keep a Commissioner permanently under Lisbon is valueless in the light of that Treaty's provision that from 2014 Member States will lose their right to decide who their national commissioner will be.

For under Lisbon (Article 17.7, amended Treaty on European Union) a Government's present right to decide would be replaced by a right to make "suggestions" only, for the incoming Commission President to decide (See notes below elaborating on this point).

Under the present Nice Treaty arrangements Member States would retain permanently their right to decide who their national Commissioner is - a right which they would lose under Lisbon.

The Nice Treaty requires that the number of Commissioners should be fewer than the number of Member States from 2009, but by an unspecified number to be agreed unanimously.

This requirement of the present Nice-based Treaties can be abided by, and Ireland and the other States can keep a national Commissioner permanently, by the simple expedient of reducing the number of Commissioners from 27 to 26 and permitting whoever holds the job of "High Representative for EU Foreign and Security Policy" - currently Spain's Javier Solana - to attend Commission meetings instead of being formally titled a Commissioner from that State.

This can and should be done under the Nice Treaty. This would mean that the Commission arrangements would continue virtually unchanged from the present. Ireland woud retain a Commissoner permanently except in the unlikely event of an Irish person being given the even more important job of High Representative.

Taoiseach Cowen and his Government have deliberately sought to isolate and put pressure on their own people by failing to say after the Lisbon referendum last June that Ireland would not ratify Lisbon in view of the people's No vote.

If the Taoiseach had done that, continued ratification by the other EU States would have been pointless, for Lisbon requires ratification by all 27 States before it can come into force for anyone.

Such a stand would have led to the Lisbon Treaty being opened and a chance created for a more democratic rather than less democratic EU through a better Treaty.

The prudent stand now for the Government and for the EU is to wait for the UK general election and the likely advent to office in Britain of a Conservative Government which will be committed to holding a referendum on Lisbon in the UK and recommending a No vote to it, as long as we Irish do not alter our No vote before then.

That would put paid to the attempted isolation of Ireland, which its own Government has connived at.

It would also give our fellow countrymen and women in Northern Ireland a chance to vote on this Treaty-cum-Constitution which would make them real citizens for the first time of an EU that would have the constitutional form of a supranational Federal State run on most undemocratic lines under Franco-German hegemony.

Saturday, December 6, 2008

Understanding the Roots of the Great Slump of 2008

The capitalist system has proved very adaptable since Marx described in details its workings in the mid-19th century, not least because the state has become critical to ensuring the survival of capitalism at critical points in recent economic history. Now in 2008, we see the state being rehabilitated once again by the apologists for the free market system, the very people who denounced the role of the state in the economy a few years back. since in many cases throughout the world today, the state is being deployed using tax payers money to bail out the busted financial system.
The thirty years after 1945, saw the dominance of Keynesian economics in the western world, whenever the western economies slowed the state could intervene with an injection of liquidity. For thirty years the business cycle was smoothed and business grew in scope and scale, a process known now as globalisation. With the oil crisis of the 1970's, prompted by the assertion of some control over production by oil producing states, and a huge growth in inflation driven largely by organised labour in the western world seeking a more eqitable share in the wealth created , we see Keynesianism becoming discredited and elbowed aside as the ruling economic orthodoxy by the aggressively right-wing pro-big business approach of monetarism/neo liberal economics.
The advent of neo-liberalism was characterised by FOUR key features,

Firstly;- a direct attack on the bargaining power of organised labour through the demoralisation and fear that arose from mass unemployment. This was expressed by increased legal controls on trade unionism, and the parallel creation of a 'flexible' casualised labour force.

Secondly:- the privatisation of utilities and public services, creating a new and certain stream of income to private corporations.

Thirdly:-the freeing up of capital movements globally, allowing capital to be directed to areas of the world with the most profitable rates of exploitation.The City of London became the primary world centre for currency and commodity speculation, while the UK economy was steadily de-industrialised.

Fourthly:- workers savings for pensions, insurance and housing were transferred into the private sector. With mutuals such as building societies being transformed into plc's.

This 'financialisation' provided a new and critically important mechanism for the extraction of super-normal profit. The bulk of capital in public companies and high street banks now derives from the pension funds and and the savings of both employees and the greatly reduced non-monopoly strata . These funds earn a low and sometimes negative rate of real interest. However, around them lay clustered a complex array of financial vehicles for the very wealthy. Merchant Banks in the 1980's, hedge funds in the 1990's, and private equity and commodity index investors in the 2000's. These operate off-shore, do not pay tax, and secure immense profits. Hedge funds had ana average annual return of 19% throughout the 1990's, and they used our savings for leverage.
This system w as no more immune to capitalisms contradictions than its predecessors. The accelerated accumulation of capital placed pressure on average profit, and the export of capital to countries such as India and China generated huge imbalances in trade and currency reserves . Fatally the system fell prey to the inequality and poverty that itself had created. Workers could no longer afford to buy all the goods produced .
So to keep the casino wheels spinning, governments and banks between themselves colluded in the creation of massive levels of sanctioned debt, above all in mortgages. In the hands of finace capitals investment specialists this became the credit required for one last round of leveraged speculationin property, commodities, and private equity buy-outs.
Then the bubble burst, leaving working people the world over facing unemployment and repossession.
So this current, rapidly deepening world recession, is not about bonuses or the "culture of greed". It is all about recognising that the state for the past 30 years and more has been utilised throughout the western world to facilitate an increased rate of exploitation. Now the state must be rescued from being the handmaid of capital, to being a servant of all the people. For this it is essential that instead of being a sugar-daddy to the corporate sector, the state must take control of savings, pensions, and insurance. When this is achieved it will be possible to direct investment towards the truly productive economy and away from the parasitic economy of the financial sector. Speculative capital transactions must be stopped, tax havens scrapped, and wealth taxed.

When all this is understood, it becomes clear that once again the role of the state in the modern economy is up for serious discussion , and for that reason, the hegemony of neo-liberalism is drawing rapidly to an end, since it is the champions of unregulated capitalism, red in tooth and claw, who are looking increasingly out of touch with the new zeit-geist sweeping all before it.

Wednesday, November 26, 2008


Perhaps we all need a bit of cheering up...

You have 2 cows.
You give one to your neighbour.

You have 2 cows.
The State takes both and gives you some milk.

You have 2 cows.
The State takes both and sells you some milk.

You have 2 cows.
The State takes both and shoots you.

You have 2 cows.
The State takes both, shoots one, milks the other, and then throws the milk away…

You have two cows.
You sell one and buy a bull.
Your herd multiplies.
You then employ someone else to do the work and you grab
all future profits to fund your indolent lifestyle.

You have two giraffes.
The government requires you to take harmonica lessons

You have two cows.
You sell one, and force the other to produce the milk of four cows.
Later, you hire a consultant to analyse why the cow has dropped dead.

You have two cows.
You sell three of them to your publicly listed company, using 20 letters of credit opened by your brother-in-law at the bank, then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows.
The milk rights of the six cows are transferred via an intermediary to a Cayman Island Company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company.
The annual report says the company owns eight cows, with an option on one more.
You sell one cow to buy a new president of the United States , leaving you with nine cows.
No balance sheet provided with the release.
The public then buys your bull.

You have two cows.
You go on strike, organise a riot, and block the roads, because you want three cows.

You have two cows.
You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.
You then create a clever cow cartoon image called 'Cowkimon' and market it worldwide.

You have two cows.
You re-eng ineer them so they live for 100 years, eat once a month, and milk themselves.

You have two cows, but you don't know where they are.
You decide to have lunch.

You have two cows.
You count them and learn you have five cows.
You count them again and learn you have 42 cows.
You count them again and learn you have 2 cows.
You stop counting cows and open another bottle of vodka.

You have 5000 cows. None of them belong to you.
You charge the owners for storing them.

You have two cows.
You have 300 people milking them.
You claim that you have full employment, and high bovine productivity.
You arrest the newsman who reported the real situation.

You have two cows.
You worship them.

You have two cows.
Both are mad.

Everyone thinks you have lots of cows.
You tell them that you have none.
No-one believes you, so they bomb the **** out of you and invade your country.
You still have no cows, but at least now you are part of Democracy….

You have two cows.
Business seems pretty good.
You close the office and go for a few beers to celebrate.

You have two cows.
The one on the left looks very attractive.

Wednesday, November 19, 2008

The Morning Star....a constant source of hope and pride.

Readers of this blog will no doubt know that I spent many years in the UK, where as member of the Communist Party of Great Britain (CPGB) , I received a grounding in political activity, internationalism, and marxism that I still find very useful to this day. I was privileged in the CPGB to meet some outstanding communist intellectuals, who were variously academics, trade union leaders, community activists, raconteurs, anti-racist fighters, anti-fascists, and internationalists, and often all of these at once. I prefaced that list by stating that it was the intellectual life of the CPGB that I found most stimulating. Whether self -taught auto-didacts with rows of literary or political classics on their shelves, or leading academics in their various fields, the fellow comrades of the 'Party' as it was always referred to provided a rich and varied forum for discussion. It was a party that cherished discussion and debate amongst its members, sometimes tedious and tendentious, but usually notable for its relatively high level. I have never encountered the likes of it since the demise of the CPGB in any political organisation I have subsequently been involved with. Even though my period of involvement with the CP was in its latter stages I met some notable figures, some of who had derived their political education in the 1920's and 1930's where the intellectual ferment of the Left in the UK was arguably at its most influential in terms of the intellectual life of the country. For a small party the CPGB undoubtedly punched well above its weight in intellectual terms. Through my membership of this, what on looking back on it, was an extraordinary disciplined and committed organisation, as a young man, I was privileged to derive cross generational discussions and opportunities to learn from people, that the vast majority of my age group would never have the chance to encounter. I recollect meeting people such as the legendary George Thomson, the classical scholar, Alan Bush the composer, James Klugmann, Charlie Woods, Peter Jobe, Monty Johnson, Maurice Levitas, Edward Upward the poet and novelist and close friend of Auden and Isherwood, Max Morris, the late great working class leader Frank Watters, Johnny Tarver, Charles Godden a talented drama critic and inspiring enthusiast for all things Shakespearean, and last but by no means least the great historian and analyst of Irish political history C D Greaves. I could fill the page with other equally remarkable names.
Perhaps from this rich treasury of past experiences, which went a great way to enriching my life, I retain an affection for the newspaper that put me in touch with all this in the first place, the Morning Star, formerly the Daily Worker had long since ceased to be the 'organ' of the CPGB when I first read it in 1977, but it was nevertheless a newspaper that pretty dutifully reflected the politics of the CP at the time. I think the first time that I started to read the paper on a regular basis was when I worked for a time in the Fords Dagenham plant before I went away to University. Like many young people in the late 1970's I had come across various Trotskyist publications, notably the ubiquitous "Socialist Worker" which seemed to be a sort of Trot version of the Daily Mirror, although it must be said that the weekly writings of the late Paul Foot and its breathless and irreverent news content was exciting. I noticed that the Socialist Worker and a number of other 'trot' papers were being sold at the gates of the Foundry where I was working every Thursday, all well and good I suppose. But working in the Foundry I was even more impressed to discover that the Morning Star the organ of the so called 'dead' CP was found in many places inside the factory. I was offered it one morning in the canteen by a steward, who looked as though he had been transferred directly from the Ealing Comedy 'I'm Alright Jack', in fact the character Peter Sellers played in the 1960's film could have been based on him, or even more bizarrely perhaps he had based hiimself on the character from the film.... He had short hair, a dust jacket adorned with a small soviet Lenin lapel badge, and approached the table with a quire of Morning Stars (thats 25 to the uninitiated) , and just said 'Star anyone?' I think he sold about 8 that I saw in the canteen, but I remember thinking, 'this lot are inside the factory', not standing at the gates. I know now that it was probably an unusual occurrence since even then the CPGB's industrial strength was in decline, but nevertheless it was evident after I joined the CP, and I was not given a card until I had attended a good few meetings and activities, that working class radicals of all sorts were far far more numerous in this strange almost family like cum quasi-religious organisation than were evident in all the Trot groups I had come across.
Its very very scary indeed to think that I am 31 years older than those days, ( I was 18 then, so go figure if your curious) and I still get the 'good old Star' as I have taken to calling it, by post now from across the water....So I am delighted to report that it has been announced by John Haylett, the editor of the paper ( see left) that the paper will be sigificantly expanding its coverage from January, thanks it would seem to a consortium of reasonably wealthy supporters providing much needed investment funding. This injection of funds will see the paper go from 12 to 16 pages from Monday to Friday, and 20 pages instead of 16 on Saturdays, great news. The most exciting development in my opinion is the decision to open up the content of the paper to a much larger reading public by putting its entire content daily online free to the online community from january 2009, samples of the content of this can be found here

I want to extend my congratulations and thanks to all at the Morning Star, its a great newspaper, going now continuously since 1930, apart from a period when it was banned in World War II. It was sometimes referred to as the 'Daily Miracle' well I for one am delighted that the age of miracles seems to be far from over...Good Luck Comrades....

Thursday, October 30, 2008

Greenspan See's the Error of his Ways...(a bit)

This is an excerpt from the NY TIMES about former Fed chief Alan Greenspan’s grilling by lawmakers in Washingon:
Mr. Greenspan conceded a serious flaw in his own philosophy that unfettered free markets sit at the root of a superior economy.
“I made a mistake in presuming that the self-interests of organizations, specifically banks and others, were such as that they were best capable of protecting their own shareholders and their equity in the firms,” Mr. Greenspan said.
Referring to his free-market ideology, Mr. Greenspan added: “I have found a flaw. I don’t know how significant or permanent it is. But I have been very distressed by that fact.”
Mr. Waxman pressed the former Fed chair to clarify his words. “In other words, you found that your view of the world, your ideology, was not right, it was not working,” Mr. Waxman said.
“Absolutely, precisely,” Mr. Greenspan replied. “You know, that’s precisely the reason I was shocked, because I have been going for 40 years or more with very considerable evidence that it was working exceptionally well.”
Am I alone in deriving a little grim satisfaction from hearing Greenspan recanting his monetarist neo-liberal weltanschaung? However it is certainly the case that capitalism will now begin to absorb the facts and adapt to the situation, bringing a neo-Keynesian perspective back into vogue, a little reminiscent of those tag wrestling bouts when the wrestler losing could somehow stretch out from a prone and utterly defeated position to bring onto the mat his partner, thus relieving himself from his impending defeat, well capitalism has a ready line of tag partners, fascism has stepped in on more than one occasion, I suppose that neo-keynesian ideas will be employed to justify the state and its resources( the taxes we all pay), now being employed to ensure capitalist property relations are preserved, whereas the current crisis should really be tackled from asking the really fundamental question, namely how can something as important as global economic development and prosperity be left in the hands of such a patently illogical system.

The main question here is how finance capital, yes dust off your Lenin, the controllers ultimately of both the banks and industry have been able to shift the political balance of forces in their favour over the past 30 years, destroying the restrictions on capitalism's power globally which had been wrested from the worlds ruling class over the previous 50 years.

Communist Party of the USA Chairman Sam Webb traces the crisis back to the political offensive of the Reagan administration against American organised Labour, and the USSR and the role that it played in supporting anti-imperialism across the globe, especially in the Middle East, Africa, and Latin America.
"While financialisation was an outgrowth of the systematic weakness of US capitalism, it was also the leading edge of a neo-liberal model of capital accumulation designed to restore US capitalism's momentum, profitability, and dominant position in domestic and world affairs"

But Webb goes on to argue,financialization is a two-edged sword, not all peaches and cream. Indeed, its very successes opened up new fault lines in the U.S. and global economy, making it, as we so graphically see, unsustainable.

While it stimulated the domestic and global economy, it also left the USA with an astronomical pileup of household, government and corporate debt which can’t be unwound overnight.While it gave an impulse to economic growth, it also introduced enormous instability into the arteries of the U.S. and world economy, evidenced by the frequent financial contagions at home and globally over the past two decades.
While it prolonged the upward cyclical movements of capitalism, it has also set the stage for a hard economic landing and a much deeper crisis eventually, which is what we are experiencing now.While it created wealth on a substantial scale, it also successfully engineered the biggest transfer of wealth in US and European history from wealth creators — the world’s working people — to wealth appropriators, the upper crust of U.S. and European finance capital.
While attracting mobile capital the worlds financial markets, it also has made the economies of the western world dependent on the willingness of foreign investors to absorb massive amounts of debt, something that they are increasingly less inclined to do, as the dollar fell in value on international currency markets and markets collapse.While the debt-driven purchasing power of western consumers bolstered global demand, it also tied the world’s economy to the apron strings of a very heavily financialized, indebted, and unstable US economy.
As this year's financial woes spread beyond Wall Street to engulf much of the world's economy, the contours of debate over the crisis have also broadened. First narrowly defined around loans and bailouts, the debate has morphed into a wholesale reconsideration of the capitalist model and free-market economic orthodoxy. ""Laissez-faire is finished,"" said French President Nicolas Sarkozy in a recent speech. ""The all-powerful market that always knows best is finished."
The spectacle of a crisis of confidence in capitalism, largely unthinkable just a few years ago, has prompted a rethink of some of the most established aspects of modern economic theory. It has renewed the prominence of John Maynard Keynes, a Depression-era British economist who argued that free markets would not ""self-correct"" and that government involvement would always be needed to guarantee that market gains translated to improved living standards across society. Keynes wasn't an anti-capitalist--rather, he hoped government intervention would buttress the capitalist system against excesses and thereby preserve the positive aspects of the system. Keynesian theory stands in contrast to that of Friedrich Hayek, whose argument for a more hands-off approach to free markets won significant support in recent decades. An analysis from the FT says Keynes' renewed influence is now visible ""everywhere"": in Sen. Barack Obama's economic plans, for example, but also in recent comments from President Bush that U.S. bank takeovers were "not intended to take over the free market, but to preserve it.""
The policy implications of this ideological shift remain unclear, but could go on display in mid-November when world leaders will meet to discuss the future of international market regulation. Some analysts say the summit, convened jointly by Bush and Sarkozy, could produce a framework for managing the future order of financial and commercial relations akin to the 1944 Bretton Woods Agreements, which many economists now criticize as obsolete.
Some economists are also ringing a note of caution about systemic changes. In a new editorial, the Economist ""hopes profoundly"" that a move toward regulation takes into consideration the beneficial aspects of capitalism and the fact that no other system has proven better at creating wealth and preventing poverty--points made by Keynes himself. Regulators should work to manage the system better, the piece says, but not to scuttle it altogether. Doing this won't be easy. Martin Wolf, the FT's chief economics commentator, says that the effort to preserve liberalized capital markets faces a major intellectual challenge, given the severity of the crisis. ""We're going to have to do a very credible job of explaining that we're going to do better in the future, managing the global adjustment on macroeconomics,"" Wolf says. ""It's going to be very hard."... I know...I know....sadly the forces of progress and socialism had their most powerful wrestler in their tag team taken out of existence by the other side, so despite all the arguments in favour of its demise, capitalism is likely to survive even this crisis, and the best we can hope for is that the forces of democracy will be able to wrest a 'new deal' style approach to this slump, and it looks like its going to be one humdinger of a slump.

Tuesday, October 14, 2008

Barclays ...Amongst Others to End Up in the Dock??

Barclays is being sued in a New York court over claims it moved loss-making investments from its own accounts to those held by outside investors.

The losses to investors are alleged to total hundreds of millions of dollars.

The case is being brought by a French company which claims it was told these investments - known as "SIV-lites" - were super-safe and offered a AAA or AA rating.

But Barclays denies the allegations and told BBC File On 4, that the action has "no merit."

The case against Barclays centres on two complex investments - one called Golden Key and the other called Mainsail - which the bank created to sell to outside investors.


The company alleges that in the summer of 2007, at a time when the sub-prime crisis was growing, Barclays arranged for hundreds of millions of dollars worth of mortgage-based securities to be transferred from its own accounts to the two SIV-lites.

The French company's US lawyer Geoffrey C Jarvis said that Barclays should have known in June 2007 that such mortgage-based investments were "substantially impaired."

He added: "I can't say what Barclays knew because they haven't told me but if they didn't know they were certainly reckless in not knowing."

Barclays refused to discuss the case with the BBC but in a short statement said: "This action has no merit and we will contest it vigorously."

listen to the fascinating programme here

Sunday, October 5, 2008

Ten Reasons Why the Fed's Bailout Won't Work

It has been heralded as the answer to the world financial crisis, I have my doubts, when you consider these ten reasons why the US bailout won't work, it becomes very clear why the majority of serious economic commentators share my scepticism....

1.Buying toxic assets will do nothing to restore the balance sheets of troubled firms, says John Hussman, the portfolio manager of the Hussman Strategic Growth Fund and the Hussman Strategic Total Return Fund, and chairman of Hussman Econometrics Advisors . Such action would improve the balance sheet, he said, but it doesn't add capital to stressed firms, which is what they need.

2.Edmund Phelps, the winner of the 2006 Nobel Prize in economics and director of the Center on Capitalism and Society at Columbia University in New York, made parallel arguments in an opinion piece in a recent Wall Street Journal. Mr. Phelps said the main prong of a rescue plan must include “cash transfusions in return for warrants,” as with the Federal Deposit Insurance Corp.’s rescue of Wachovia Corp. of Charlotte, North Carolina.

3.LIBOR, the rate at which banks lend to each other, since the bailout was passed is in fact higher. The 3-month Treasury yield has dropped again. And the DOW dropped 300+ points.So the Bailout news hasn't done it (and if the market thought the bailout would work, the markets would have reflected that.) This suggests that the US government will have to do even more. Which it has already started to do. Fed and 9 other central banks responded by announcing another MASSIVE liquidity injection. The market rallied modestly on this news, but not much.

4.Part of the problem is that the crisis has now spread to Europe (Fortis, etc.). The economies of UK, Germany, etc., were already following the same path as the USA. More bank failures won't help.

5.Paul Krugman Professor of Economics and International affairs at Princeton University,says “For the fact is that the plan on offer is a stinker — and inexcusably so. The financial system has been under severe stress for more than a year, and there should have been carefully thought-out contingency plans ready to roll out in case the markets melted down. Obviously, there weren’t: the Paulson plan was clearly drawn up in haste and confusion. And Treasury officials have yet to offer any clear explanation of how the plan is supposed to work, probably because they themselves have no idea what they’re doing."

6.The much vaunted bailout does not address the prices/valuation of US property, stocks and risky bonds; all of which will continue plummeting; further compromising the asset side of the US balance sheet while the liability side remains – and drives hundreds of billions more in net loan losses. The asset side will be further undermined by the collapse of commodity prices in the face of plunging global demand.

7.It stratospherically increases US government liability at a time of plunging tax revenue from all sources, destruction of loanable capital, and growing liability to fund unemployment claims and the like. This liability can only be met by borrowing, taxing or fiat money creation – each of which has major negative consequences.

8.Kenneth Rogoff Professor of Economics and Public Policy at Harvard University believes that “The plan’s central conceit is that government ingenuity can disentangle the trillion-dollar “subprime” mortgage loan market, even though Wall Street’s own rocket scientists...(who shared more than $36bn dollars in bonuses last year, thanks to the huge profits these institutions “earned” on their risky and aggressive business strategies)….have utterly failed to do so. Let’s ponder this. Investment bankers have been losing their cushy jobs because they could not figure out any convincing way to price distressed mortgage debt. Otherwise, their firms would have been able to tap the trillions of dollars now sitting on the sidelines, held by sovereign wealth funds, private equity groups, hedge funds, and others. Now, working for the taxpayer, these same investment bankers will suddenly come up with the magic pricing formula that has eluded them until now.”

9.It costs $700 billion dollars, which is as much money as the combined annual budgets of the Departments of Defense, Education and Health and Human Services. It amounts to $2,300 for every man, woman, and child in America. This $700 billion will all be borrowed money. The plan raises the national debt ceiling to $11.3 trillion. That is $11,300,000,000,000.

10.It gives Sec. Henry Paulson, formerly the head of Goldman Sachs, the power to buy assets from his former firm with no court or administrative oversight. Goldman Sachs, like many Wall Street firms, gave its CEO a $67.9 million bonus last year. That is more than 1,400 times what the average American earns. Yet the plan has no provision to cap salaries or reduce bonuses at Wall Street banks that take taxpayer money.

Monday, September 29, 2008

'Tales from Europe' and Das Singende Klingende Baumchen

I was chatting the other day with one of my old school mates from my early years in London, and as people in their forties are wont to do, we started remembering the old TV programmes that were broadcast on childrens TV back in our childhood ....amongst mention of the inevitable Blue Peter vs Magpie divide, we both almost simultaneously remembered that there was something really very weird that British children were served up before their tea's sometime in the early 1970's. That was of course the strangest of times when the BBC seemed to be importing some pretty well made fairy-tale dramatisations mainly from Eastern Europe. We both remembered that the series was called 'Tales from Europe', and we both remembered one of the the Soviet contributions, 'The Snow Queen' below which I recall was pretty scary,

But best of all was when we both exploded in a laughter born of mutual recognition as our memories located the weirdest of them all...'The Singing Ringing Tree' (or to afficionados TSRT) ...or in its original German title Das Singende Klingende Baumchen. This surreal fairy tale came out of the Babelsberg studio in Potsdam and was produced by DEFA films and featured a nasty haughty princess, a handsome prince who is later turned into a bear, an evil dwarf, a magical singing ringing tree, some comic soldiery, and a talking fish (full story here) .

As I remember it everyone of us in our class could not get over how wonderful it was, and as I recall it was repeated a good few times, because I remember watching it at least twice. What made these tales from Europe so watchable was the fact that it transported us to another land, in so many ways, a land of fairy tales and of course the unknown lands of Europe. The fact that they came from behind the Iron Curtain did not either register with us, or if it did it certainly did not matter. Curious I found that my old school mate and I were not alone in remembering with warm affection this whole series, and the Singing Ringing Tree in particular. I listened with some fascination the BBC Radio 4 documentary about the innovative and at times absolutely terrifying fairy tale from the DDR and the USSR . By clicking on the hypertext link you can still listen to that documentary about the cult DDR childrens film
I went on to some discussion boards and discovered that this programme was stuck in other peoples minds as much as mine, one poster described his feelings thus,

"I still have flashbacks in the form of a barely-remembered, glorious,visually sensual,surreal,sinister and to me,somehow erotic dream. The princess was the first woman I ever loved. I remember I may have been about eight or nine years of age at the time and I found this woman utterly bewitching. I would gawp in complete enrapture at her - to me she was the most beautiful, other worldly and exquisite thing I had ever seen! Seeing pictures of her now still makes me feel 'all funny'! Throughout my life I have always had an interest in the unusual,sinister,bizarre and erotic and I would say that TSRT most probably laid the foundations for this, along with other European children's programmes. A huge thankyou to all those individuals responsible for helping us to relive a small part of our innocent childhoods again "

There are literally dozens and dozens of other comments like this about TSRT on

guest book of ‘your Favourite TV memories’

If you want to be a complete anorak about this a full listing of what was on Tales from Europe and when is available here .

Seeing that there is obviously a lot of us who were mesmerised by the whole 'Tales from Europe' experience I have decided that 'Unrepentant Communist' will repeat the role of the socialist countries and provide a little bit of access to some clips from the best loved of these 'Tales from Europe', this is part of a series of 7 TSRT tracks available now on You Tube

but perhaps the visuals will bring back a few memories, apologies to those readers who did not see these in their childhood since you were in other countries, but I hope you will indulge this exercise in blatant nostalgia on this one teeny weeny occasion :) ....

Saturday, September 20, 2008

Socialism For The Rich.OR How Roubini WAS Right...

Gore Vidal writing in the 1980's made the observation that Reagonomics was nothing more than the expression in policy terms of the fact that

"The US government prefers that public money go not to the people but to big business. The result is a unique society in which we have free enterprise for the poor and socialism for the rich."

This insight has been impossible not to recollect this week following the nationalisation of American International Group, the world's biggest insurer, immediately following the dramatic rescue of the Fannie Mae and Freddie Mac housing companies and of the Bear Stearns bank.Robert Reich's described the process as 'socialised capitalism' . It has reached an astonishing new height with the announcement by the Fed, hurriedly backed by a thoroughly spooked Congress, and White House, that it would in effect underwrite the entire creaking US financial system to a tune of $1 trillion, thats a $1000 billion to you and me, courtesy of an increase in the US national debt, which of course is ultimately serviced by the US taxpayer.
"Gains privatised and losses socialised" was the more pointed comment by Nouriel Roubini Professor of economics at the Stern School in New York University. Professor Roubini is known in the economics trade as a "permabear" because of his repeated claims over the last six years that a financial system based on self-regulation, non-deposits, highly leveraged subprime housing debts and globalised derivatives trading was unsustainable and would collapse.

Roubini argues that the AIG should have been bankrupted rather than nationalised, and the $85 billion of taxpayers' money loaned to the firm could have been used instead for debtor-in-possession financing. This would have allowed for a more fair process for allocating losses between shareholders and short-term and long-term creditors of the firm. Nationalisations like this are prejudiced in favour of those responsible for the trouble in the first place.He is scathing about the Bush administration's actions. In RGE (Roubini Global Economics) Monitor, he wrote: "Fanatic zealots of any religion are always pests that cause havoc and destruction with their inflexible fanaticism; but they usually don't run the biggest economy in the world. But these laissez-faire voodoo-economics zealots in charge of the USA have now caused the biggest financial crisis since the Great Depression and the nastiest economic crisis in decades.

"So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage."

Roubini appears to be underwhelmed by the Feds bail out however, writing on the 19/9/08 in RGE Monitor he said

""At this point a severe recession is unavoidable; the only question is how severe and protracted it will be. Debt reduction and public recapitalization of banks will not instantly resolve every problem and will not prevent a painful recession that – at this point – will last at least 18 month."

NB Roubini predicted this crisis as long ago as September 2006- See here-

Tuesday, September 16, 2008

AIG May Be Bailed Out- But the World Financial Crisis Will Remain Profound

As I write there has been a last minute deal to save huge American Insurance giant AIG..but whether or not this lifebelt is thrown will rely on whether the Fed considers AIG to be of such systemic significance that it can not be allowed to go to the wall, unlike the unfortunate Lehman Bros. Its interesting how what would probably be the home of the most wide eyed fanatical adherents of the all powerful 'invisible hand of the market' are now having their bacon saved by the intervention of the much derided US state. The same state that is viciously derided for its interference in free market forces by the right wing media pundits and talking heads representing the 'investing community' or the financial services sector when it regulates and controls the excesses of greed which capitalism seems inevitably drawn to. The same state is now cast in the role of hero as it spends tax payers money to save the hides of the formerly much vaunted 'masters of the universe'.
This impressive analysis by Ann Pettifor of Open democracy provides an insightful examination of what are the roots of this crisis and goes beyond the immediate hoo-hah surrounding Lehmans or AIG, it is well worth taking time to read...

"The collapse of Lehman Brothers and the forced sale of Merrill Lynch which took shape over the weekend of 13-14 September 2008 have confirmed the scale and gravity of the global financial crisis. The difficulties at the insurance company AIG are a glimpse that there is more to come. But the extent of the wreckage makes it ever more important to analyse correctly what has gone wrong. For just as a faulty medical diagnosis can harm the patient, so a flawed economic diagnosis can lead to wrong conclusions and bad solutions.
Ann Pettifor is executive director of Advocacy International. In the 1990s she helped design and lead the international campaign Jubilee 2000. She is editor of The Real World Economic Outlook (Palgrave, 2003) and author of The Coming First World Debt Crisis (Palgrave, 2006)Also by Ann Pettifor on openDemocracy: "The coming first world debt crisis" (1 September 2003)"Ethiopia: the price of indifference" (19 February 2004)"Gleneagles, 7/7 and Africa" (4 July 2006)"Debtonation: how globalisation dies" (15 August 2007)"Globalisation: sleepwalking to disaster" (11 December 2007)"The G8 in a global mess: 1920s and 1980s lessons" (7 July 2008)In this respect, orthodox economists continue to be part of the problem that Lehman Brothers and Merrill Lynch (and, before them, Northern Rock, Bear Stearns, and Fannie Mae and Freddie Mac) represent. For so long they turned a blind eye to the finance sector, to privatised credit-creation and its role in fuelling asset-bubbles. In so doing they revealed their inability to predict, understand or offer solutions to a consuming crisis.
This article looks at how such failures took hold in the context of the deregulated global financial system of the 2000s, and why the predicted collapse of this system begins in the United States.
The deregulated economy
The former chairman of the
Federal Reserve in the United States, Alan Greenspan, has himself said that what is happening to Lehman Brothers and Merrill Lynch is a "once-in-a-century" event. Yet the way many orthodox economists characterise Greenspan's own role in the global "debtonation" of the post-9 August 2007 era reveals how far they remain trapped in the rituals of evasion (see "Debtonation: how globalisation dies", 15 August 2007).
The key argument these economists make here is that the current crisis has been caused by the low interest-rate monetary policy Greenspan presided over after 2001. This case permits a twofold diversion - for it pins the blame for the crisis on interest rates (not deregulation of credit-creation) and on central bankers (not the private-finance sector). The policy implications of this focus neatly avoid proposals for what is clearly and urgently required: re-regulation of the finance sector.
But the argument that makes interest-rates a fundamental cause of the crisis is wrong even in its own terms - not least as it can lead to a recommendation that higher interest-rates are a way out of the mess. The crisis facing banks and individuals - indeed whole economies - buried under mountains of
debt and threatened by an intractable deflation makes this a truly deranged proposal.
The phenomenon of "deleveraging" as a way of managing these mountains of debt helps explain why.
Deleveraging means paying off (or more accurately writing off) the crazy amounts borrowed on the back of tiny amounts of real money - say the $1 million borrowed (or leveraged) on the back of $1,000 of sound collateral; deleveraging that debt would entail paying off / writing off $999,000. The inevitable result in many cases is bankruptcy, part of a wider deflationary momentum in the economy.
Debtors of all kinds - official, corporate, individual - are already struggling to repay at the current high real rates of interest. That is the core element of the debt crisis (or "credit-crunch"). To prescribe higher interest-rates would turn
crisis for many individuals, companies and banks into catastrophe.
Also in openDemocracy on the global financial crisis of 2007-08:Saskia Sassen, "
Globalisation, the state and the democratic deficit" (18 July 2007)Christopher Harvie, "Gordon Brown vs Scotland: the balance-sheet" (17 September 2007)Tony Curzon Price, "Gordon Brown: between rock and hard place" (18 September 2007)Robert Wade, "The financial crisis: burst bubble, frayed model" (1 October 2007)Avinash D Persaud, "The dollar standard: (only the) beginning of the end" (5 December 2007)Fred Halliday, "Sovereign Wealth Funds: power vs principle" (5 March 2008)Tony Curzon Price, "Lehman: technocrats' endgame" (15 September 2008)Here, the context of Alan Greenspan's post-2001 role is relevant in understanding the global economy then and now. For his policy of lowering interest-rates was a reaction to the bursting of the - which, like the property-bubble which burst in 2007, was fuelled and inflated by easy, unregulated and privatised credit-creation. Moreover, these low interest-rates in the early years of the 21st century were more a function of the new global capital markets than of the powers of central bankers to set low rates.
The result of deregulation (i.e. "globalisation") in the 2000s was and is that capital can flow free and untrammelled around the world. The accompanying collapse of the
Bretton Woods system (which contained mechanisms for curtailing the growth of imbalances between nations) meant also the growth of large balance-sheet contrasts (massive deficits in the United States and Britain, huge surpluses in China and Japan, for example). The countries in surplus - China most of all - exported their excess capital to the US.
This flood of capital lowered rates of interest in the US - to the chagrin of Alan Greenspan, who by this time was trying to raise rates. Greenspan could have done this by erecting barriers to the movement of capital - capital controls - thereby preventing China's surplus capital from having an impact on US interest-rates. Instead, he preferred to pretend that he was impotent in the face of a mysterious "conundrum".
Alan Greenspan or any other central banker armed with controls over the movement of capital would be able to switch a key lever of the economy: the rate of interest. That is, not just the "policy rate" or the "official rate" (often known as the "bank rate") but all rates - safe and risky, short and long. Where central bankers abandon such controls, and delegate powers over interest-rates to private bankers, they are impotent in the face of capital movements that affect the yields on bonds, and therefore of interest-rates within their domains.
The sharecropper society
The momentous news of the collapse of
Lehman Brothers and the sale of Merrill Lynch - part of the larger process unfolding since "debtonation day", 9 August 2007 - brings all the failings of the seven years that preceded it into even sharper focus.
In 2003, as part of a team at the
new economics foundation, I edited a book intended to "shadow" the International Monetary Fund's "world economic outlook", which we believed was based on the delusions of orthodox economics (see The Real World Economic Outlook, Palgrave, 2003). An article in openDemocracy at that time - five years ago almost to the day - heralded the "provocative new research ... which argues that the ‘first world' is approaching a major debt crisis... The reckless financial policies of leading western powers in the last two decades make it likely that the next seismic debt crisis will be in America, not Argentina" (see "The coming first world debt crisis", 1 September 2008).
The book and article explained that the current, post-Bretton Woods international financial architecture ("globalisation") was so structured as to enable the United States to "hoover up" money from the rest of the world, and use these resources to live beyond its means. I wrote
then: "It is this financial system which makes US financiers so confident that the rest of the world will continue to finance their nation's extravagant spending binge. In the words of David Goldman, head of debt research at Bank of America Securities: ‘America is at little risk for the foreseeable future, simply because the world's capital has nowhere else to go' (Wall Street Journal, 13 August 2003)".
The fall of Lehman Brothers is final confirmation that the world's capital does now have somewhere else to go. This event thus marks the beginning of the collapse of today's international financial architecture, which has rested on very shaky foundations since Richard Nixon's administration unilaterally dismantled the Bretton Woods system in 1971 and began to shape the new.
The reason why the Lehman Brothers collapse is historic is that this institution expected until a very late stage to be saved by the state-run Korea Development Bank (
KDP). But Seoul looked at the books and had other ideas: on 9 September 2008 - to the astonishment of Lehman's shareholders and investors - this ever-so-reliable ally of Washington refused to fund a bail-out.
The fact that such
sovereign wealth funds as the KDP are no longer willing to finance reckless US institutions is of itself of the greatest significance. It implies a lack of confidence in the solvency of US financial institutions, and indeed of the United States as a whole. This will lead to a fall in the dollar, which will have profound economic implications for the global economy, and for globalisation as a whole.
The billionaire investor
Warren Buffett wrote a letter to shareholders in March 2005, in which he predicted that by 2015 the net ownership of the US by outsiders would amount to $11 trillion. "Americans ... would chafe at the idea of perpetually paying tribute to their creditors and owners abroad. A country that is now aspiring to an ‘ownership society' will not find happiness in - and I'll use hyperbole here for emphasis - a 'sharecropper's society'."
was and is right. The collapse of banks and investment funds, and of the international financial system - a consequence of the unpardonable folly of the powerful - is serious and dangerous enough. But what is even more to be feared is the emergence of a sharecropper society, angry at its downfall. Thus will America's problem become the world's. "

Wednesday, September 10, 2008

Lenin was 100...And Other Secrets of the Forest...

An intriguing story has come my way, concerning a visual relic of the Soviet era which can be seen by all now in 2008 courtesy of google earth.
Thirty eight years ago, in 1970 there was the hundreth anniversary of the birth of Vladimir Ilyich Lenin, the leader of the Bolsheviks and the founder of the USSR after the revolution in 1917. In Siberia foresters decided to celebrate this anniversary by cutting all the trees on a plain leaving only those that would form a really huge message “Lenin is 100 ”. This was before the era of Google Earth, and there were certainly no satellite photos in the media.
So what inspired this bizarre tribute to the memory of Lenin? The real reasons are no doubt lost in the smoky haze of some long forgotten Communist Party committee meeting in the region at the time, when people were devising ways to commemorate the anniversary,.
Some have speculated that it may have been a defiant two fingers to any passing American spy satellites, or perhaps it was an act of personal whimsy by a collective of bored managers and workers.
I wonder, whether, given the amount of trees involved that there were good deal of trees not cut, presumably an act approved for the purposes of this stunt, could this in itself have provided a conveniently grey accounting area in terms of other amounts of lumber that were not cut and may, instead of participating in this unique arborial tribute to Lenin, have ended up being sold for private gain on the black market?
I know that this is purely speculative on my part, but it does seem rather an elaborate wheeze for something that very few could possibly have ever seen. If this was true, could it be the real irony of this discovery 38 years later ? That it was in fact all part of an elaborate black market lumber scam?
On the other hand the lads might just have thought it would be a good way of not having to cut down those trees. Whatever way one looks at it, if it was the idea of some keen young Party apparatchik eager to make an impression, one can only guess what the workers who had to cut around the elaborate template required to make it visible from the lower stratosphere would have thought of their management, and possibly the whole Soviet leadership. You can examine the evidence of this piece of super topiary by following this link,

Friday, September 5, 2008

Sub-Prime Crisis Explained...

The 'sub-prime crisis' as brilliantly explained by Bird and Fortune, whats scary about this sketch is that basically its pretty much factually accurate....and very very funny.

Wednesday, August 27, 2008

Unrepentant....Because a Better World is Possible.

Its been over a year since I started this blog, as I stated at its inception I was always dubious about the value of the blogosphere, but since the blog seems to have attracted a fairly consisitent readership and at times provoked some interesting discussions I felt it was time to clarify what I now believe is the point of this modest addition to the vast outpourings of writing and opinions which deluge the internet minute by minute.

In some respects the title is probably misleading, although it has the advantage of being memorable. I am not however some kind of unrecontructed stalinist who takes pleasure late at night drooling over youtube clips of Stalin and the Red Army triumphantly entering Berlin. I am not a nostalgia freak.

Quite simply I am really just a person that believes, that for all its very many faults, and the totalitarian tendencies which caem to the fore , brought about to a very large extent by concerted efforts to strangle existing socialism at birth, that there was something very significant indeed in an attempt to break away from a system based on class exploitation. Socialism for all its many faults did attempt to establish a system whose founding principles were eqality and an attempt to see if it was at all possible to create an advanced society without some minority strata of the population who did very little to create the wealth of the world , but yet garnered the vast bulk of it.

For a variety of reasons, too numerous to discuss here, the socialist experiment that was commenced in the USSR failed. In the course of its existence many many crimes were committed and numerous atrocities were countenenanced all in the name of an ideology.Yet any fair observer would concede that this bold social experiment met unrelenting and violent opposition from the system which its very existence challenged, that is capitalism and its most extreme variant fascism . To what extent this hostility, sabotage, invasion, and economic isolation distorted the nature of socialism itself is again a subject that has been discussed ad nauseam, but I suspect that socialism was in many respects fatally damaged by the wars both economic, political, and ,military, that were visited upon it from its birth. Its birth after all did represent the most fundamental challenge that capitalism had ever faced, and the class who derive their wealth, power, and privilege were terrified at the prospect that their system would be superceded, and stopped at nothing to ensure that it failed.

So this blog, does not attempt to turn back time, it instead attempts in a very modest way to express some of the positive values that socialism bequeathed the world, an admiration for the concept of equality, a rational system of production where the products of work are shared fairly amongst those who create the wealth, an aspiration towards high and edifying art and literature which ennobles the human spirit and celelebrates the beauty of the world we are so fortunate to experience.

We can see the culture that capitalism is creating, the banality of shows like 'Big Brother', the commercialisation of all forms of sport, the endless incessant 24-7 drive to consume. A consumer culture that seeks to fill the spiritual void so many are experiencing with yet more and more things that we are persuaded by incessant advertising that we need, but in fact do not actually 'need' at all.

Capitalism , will not be able to reverse the damage being done to our environment, its raison d'etre is consumption. Capitalism driven by the need for consumption will destroy our planet, and all the evidence is , that despite much hand wringing the destruction of our environment under the auspices of the market system is is accelerating not slowing.

Communism, perhaps rightly has a bad name, its failings were huge and in many cases unforgiveable.However, the system we live under today, a system with an ideology and as strong a set of values as Communism, the sytem of 'capitalism', masquerades as the 'natural' way that things have to be.

But I remain unrepentant in my belief that a system that condemns two thirds of the worlds population to abject poverty and subsequent malnutrion , whilst one third struggle with the health problems of obesity is obscene. I am unrepentant in my belief that if the USA dedicated just one fifth of its expenditure on arms to aid and world development then global poverty would be eradicated.

Lastly I am unrepentant in my belief that a better world is possible because I refuse to accept that the soul-less mediocrity of the world we live in today, as its climate degenerates, as the bulk of its people live lives of grinding meaningless poverty and illiteracy is the best that we as human beings can achieve.

I remain a beiever in the ideals of communism, because I believe that what fundamentally prevents the world progressing is a system based on exploitation and injustice. As long as that fundamental barrier to progress remains, I will persist in continuing to describe myself as an 'Unrepentant Communist' since for me that is identical to persisting in describing myself as a human being who believes that we can create a better world than the one we are sadly destroying today.