Ann Pettifor

Debtonation: a new approach to the blog

5th January 2011

Dear readers.

We are entering year in which stock markets might boom, bankers and commodity traders might profit, but jobs will be lost and society will become angrier and more restless. (See this FP blog on the current uprisings in Tunisia).  The year has begun with a stark reminder that we face an increased number of extreme weather events – events of ‘biblical proportions’ – that scientists have long warned indicate climate instability caused by human action.

Our priority therefore has to be to inform and brief readers, supporters and friends on the alternatives to the economic policies that failed society so catastrophically in the 30s, and that now fails both society and the ecosystem.

Through the sheer force of the finance sector’s ‘pieces of silver’ and clout, these dysfunctional and outdated policies are once again deployed by policy-makers in the US and Europe. It is ironic that bankers and their friends in the political classes, the economics profession and the media are so hell-bent on policy orthodoxy that will, undoubtedly unravel this year, by increasing unemployment and with it, government deficits – both here and in the US. These policies for increasing unemployment (in the vain hope that Chinese consumers will take up the slack) will  ultimately hurt both big business and the banks, and will, in my view, lead to yet another financial crisis. As Simon Johnson notes in his book “Thirteen bankers: the Wall St takeover and the Next Financial Meltdown” – conditions are ripe for another banking crisis. Far from the 2007-9 crisis leading to sustainable change, Government backing for banks has been “transformed into a virtual certainty….. Incentive structures created by high leverage (shifting risk from shareholders and employees onto creditors and ultimately, taxpayers)” remains intact.

Governments have been loathe to enforce regulation that would break up the banking monopolies (on the contrary they have helped entrench those monopolies) – regulation that would protect both depositors and taxpayers. Their efforts to get banks to lend to companies undertaking productive work, have been pathetic, and has inclined these same companies to hoard their cash.  Then there are the huge bonuses  – with only Ireland’s finance minister insisting that these be dropped in return for taxpayer support. Instead government-backed subsidy from central banks in the form of guarantees against losses and very low rates of interest, has helped banks pump up bonuses and begin to repair their balance sheets, even though there is some way to go before the finance sector once again becomes fully solvent.

So the struggle intensifies: to promote ideas and policies that will serve, not ruin our fragile democracy, social fabric and ecosystem. I hope this column will be able to play a part in that.

Over the break I have been thinking about refreshing the blog, and have decided to offer my readers both commentary, but also links to relevant and interesting articles – central to our theme, or should I say more precisely, our themes. These  include above all, the financial system, monetary policy, the domestic and international financial architecture; policy goals for full employment; for financing economic activity, and in particular economic activity that addresses the range of crises facing our society. The crisis of unemployment in general – both in rich and poor countries – and youth unemployment in particular.  But perhaps one of the most urgent crises facing us all, that of climate change.

But these subjects can depress our spirits, so I will try and lighten up blogs with stories and images that lift the spirits and restore the soul. Wish me well, as I do you all.


11 thoughts on “Debtonation: a new approach to the blog”

  1. at this time of year, it’s quite natural to think about what the future holds. Myself, i have been thinking about your article regarding the uk’s likely following of ireland off the sovereign debt cliff, as well as the likely deflating of the agricultural land asset bubble, which surely must come, given there’s no money for continuing farming subsidy and an end to single farm payments in sight.

    despite what NEF and your own blog suggest, however, i was dismayed to see this article, inspired by HSBC’s proclamation of a golden future, in the telegraph: – a work of fiction, or based on fact? with this level of noise to signal, you’ll have your work cut out for you this year.

    the emperor still thinks his clothes are regal, methinks?

    good luck for the year ahead

    looking forward to your blog posts

    1. Jim, thank you for this valuable link….Its an extraordinary (and PR effective) report from HSBC…but full of holes. Note my earlier blog and the FT piece on how Japan’s no-growth model had been dismissed as it is in this report as ‘atrophy’ – but in fact the Japanese have been hanging on to their culture; to high life expectancy, and to the good life…despite low levels of growth…Also the report puts in a qualifier about ‘trade wars’….something that Brazil’s new government asert are already happening..via currency wars. So lots of wishful thinking from HSBC whose chief economist I respect…

  2. Hi Ann,
    Love your blog. One thing a blog (population sustainability blog) in Australia does is that when there is an article of interest in a newspaper we are ASAP sent the article & then a link to the newspaper to respond. This seems to work very well.

  3. Thank you, Ann, for your continuing insights and encouragements. I am sure that you, like me, are tempted to think that there is absolutely nothing we can do to avert the coming, nay present, financial crisis. But your insightful thoughts and comments on the machinations of the banks and the financial sector in general gives me hope.

    It encourages me to believe things can change, that there will come a time when sufficient people understand the futility of current financial models and policy they will demand to be heard and reason WILL prevail.

    Until that time, please keep on doing what you have been for the past few years, inform, enlighten, encourage and ammuse us with your commentary on what would otherwise be a very dry and dreary subject. I DO look forward to your posts and take every opportunity to read them at the earliest opportunity.

    Thank you!

  4. Thanks so much Ann – the links will be much appreciated and utilized. Just a small request – please don’t yield to the temptation that seduces so many other excellent blogs – bringing on more writers. The content is key, and Ann Pettifor is the source that makes the content key. Keep up the good work!

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