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America’s Largest Pension Fund Pulls Out of Hedge Funds September 16, 2014

Posted by Garibaldy in International Finance, United States.
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Fascinating story from gawker. Here’s the first paragraph

CALPERS is America’s largest pension fund, with $300 billion in assets. It just announced that it is pulling all of its money out of hedge funds. Why? Because everyone knows that hedge funds are a ripoff.

Le Monde Diplomatique: “The corporation invasion” December 21, 2013

Posted by Tomboktu in Capitalism, Economy, Environment, Inequality, International Finance, The Far Right.
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Readers might be interested in this article in Le Monde Diplomatique

Imagine what would happen if foreign companies could sue governments directly for cash compensation over earnings lost because of strict labour or environmental legislation. This may sound far-fetched, but it was a provision of the Multilateral Agreement on Investment (MAI), a projected treaty negotiated in secret between 1995 and 1997 by the then 29 member states of the OECD (Organisation for Economic Cooperation and Development) (1). News about it got out just in time, causing an unprecedented wave of protests and derailing negotiations.

Now the agenda is back. Since July the European Union and the United States have been negotiating the Transatlantic Trade and Investment Partnership (TTIP) or Transatlantic Free Trade Agreement (TAFTA), a modified version of the MAI under which existing legislation on both sides of the Atlantic will have to conform to the free trade norms established by and for large US and EU corporations, with failure to do so punishable by trade sanctions or the payment of millions of dollars in compensation to corporations.

(1) See Lori M Wallach, “A dangerous new manifesto for global capitalism”, Le Monde diplomatique, English edition, February 1998.

And why haven’t you heard of it?

The TTIP/TAFTA negotiations are taking place behind closed doors. The US delegations have more than 600 corporate trade advisers, who have unlimited access to the preparatory documents and to representatives of the US administration. Draft texts will not be released, and instructions have been given to keep the public and press in the dark until a final deal is signed. By then, it will be too late to change.

The full article is available here: http://mondediplo.com/2013/12/02tafta

Profits Before Pay February 20, 2012

Posted by Tomboktu in Business, Economy, Employment Rights, Inequality, International Finance.
2 comments

This evening I listened to an interesting and informative programme in BBC Radio 4’s Analysis series, ‘Profits Before Pay’. The audio is available here.

The programme blurb from the BBC web site
It may come as no great surprise that many of us have experienced a wage squeeze, while the cost of living has gone the other way, since the financial crisis of 2008. However, as Duncan Weldon, a senior economist at the Trades Union Congress, points out, wages for most people in the UK began stagnating years before the crisis.

We tend to think of the early 2000s as a time of relative wealth: house prices were rising, credit flowed easily, the government introduced a generous tax credit scheme and people generally felt better off. But Duncan Weldon argues these masked the reality of what was going on.

Work done by the think tank The Resolution Foundation, which focuses on those on low and modest incomes, shows that there was almost no wage growth in the middle and below during the five years leading up to 2008 and yet the economy grew by 11% in that period. Others also point out that the share of the national income which goes into wages, as opposed to profits, has been decreasing since the mid-1970s. The argument is that less of the economic pie is going into the pockets of ordinary workers.

What is also clear is that a disproportionate amount of the economic wealth has been going to those at the top. The earnings of the richest few per cent have increased rapidly in the UK since the 1980s and that pattern accelerated in the last ten years. In the United States that process began earlier and has been more extreme.

Some economists argue that this is not a problem in itself as taxation, for example, helps to re-distribute the money to the less well off or those with disadvantages.

In Analysis Duncan Weldon asks why wages stopped rising in the years before the crash and what was the driving force for the squeeze?

And a feature item posted by the BBC based on the programme
(more…)

“I, for one, welcome our new …”: Stephen Collins and the euro crisis December 7, 2011

Posted by Wu Ming in Capitalism, European Union, International Finance, Media and Journalism.
11 comments

As we approach one of the most significant European Council meetings in recent memory, no one quite knows what the nature of the plan to resolve the euro crisis once and for all is likely to be.  Will it involve new EU institutions with a specific remit to oversee national budgets, or will this role be assigned the the European Council (or Council of Ministers)?  Will it involve substantial Treaty change, or an additional Protocol to the Treaty? Will it apply to the EU-27 or just to Eurozone members?  And to what depths will the proposed fiscal unity extend?

Whatever deal is agreed, one thing is clear: it will be a good one.  Well, at least according to Stephen Collins in Saturday’s Irish Times.  Whatever price ‘we’ pay to save the euro, according to Collins will be worth it.  This is rather shocking, even by the standards of the Times.  They usually have the discretion to wait until a proposal is on the table before agreeing to it.  But Collins’ broad sentiment is echoed across the mainstream Irish media.  There is debate, of course, on what the likely outcome will be, with a wearied acceptance that whatever it is, we’ll have to suck it up, or end up scavenging for tins of dog food in a post-apocalyptic economic future.  However, there’s little or no attempt to engage with the fundamental democratic deficit not just within the EU, but at the heart of the international financial system more generally.

Collins hints at this when he writes:

Irish politicians and the media are already focusing on the threat to Ireland’s 12.5 per cent corporation tax rate as if it is the only important issue for debate. While President Nicolas Sarkozy has certainly targeted low corporate tax rates, Germany has taken a very different view, while the UK and the countries on the eastern side of the EU will all block the French threat from their own perspectives.

Whatever treaty changes emerge, harmonisation of tax rates is unlikely to be one of them. What Irish negotiators need to focus on is not just what we want to block but what kind of treaty changes we favour. EU institutions’ loss of power to the governments of the big powers is a trend that we should work to have reversed.

However, what is missing here is a real understanding of what has been demonstrated over the past year.  What we have seen has not just been the larger EU member states (Germany and France in particular) getting a little big for their boots, the solution being to reign them back in under the happy familial embrace of the EU, with the Commission acting as the warm benevolent Daddy.  No, it is now clear that when it comes to a genuine threat to the interests of international capital, the institutions – even the principles – of the Union are essentially irrelevant.  Nice to have during the good times, when we’re all friends, but when things get tough, best to leave the hard work to the grown ups.

Where was the European Commission, the supposedly defender of small countries against the dominance of large Member States when Papandreou was summoned to Cannes to answer to Merkel and Sarkozy for the impertinence of acting as the Greek head of government without their prior approval (not that this should be taken as any defense of Papandreou?.  The answer is nowhere, because the Commission – the EU qua EU – had no role to play.  Where was the principle of solidarity when Sócrates’ administration in Portugal was forced into requesting a bailout under pressure from national banks under the direction of the ECB (thanks to Donagh at Irish Left Review for the link – both pieces well worth reading) which led to the collapse of the government (again, not to be taken as a defense of Sócrates himself)?

At the risk of hyperbole, it could be argued that one way of looking at what we are witnessing has been the overthrow of last vestiges of democratic government by the forces of international capital, where national administrations which threaten financial markets must be removed, and replaced by more friendly regimes.  Like Chile in 1973 without the massacres.  Or perhaps that’s naive, and what we’re seeing is simply a more blatant, more naked display of the power of the markets over nation states, even over the European Union as an institution.

It was certainly the case that the run-up of the IMF/EU ‘bailout’ of Ireland last year was less an example of pan-European solidarity with a partner which found itself in difficulty, and more a shakedown reminiscent of a Sopranos plot.  Ireland was forced into accepting an extortionate loan to cover the liabilities of those who had irresponsibly thrown money at Irish banks over the past decade (and, needless to say, didn’t do it out of the goodness of their hearts).  Ireland was like the hapless store-owner forced to sell off the business to repay gambling debts owed to the mafia.  Or, to be more accurate, we’re like the family of the gambler, watching our home sold from under us to cover the costs incurred by one idiotic member of the household.

But what must be borne in mind is that the gangsters in this analogy aren’t France, or the Netherlands or even Germany (although maybe they’re the enforcers).  It’s the system of global capital itself, where a Prime Minister, even one as odious as Berlusconi, can be removed from office on the basis of the judgment of a private credit agency.

And, at a time when neoliberalism is finally genuinely in crisis (wishful thinking on the part of some over the past twenty years aside), we are likely to be faced with an agreement to enshrine the Goldman Sachs consensus into European law, binding on Member State governments in perpetuity.  This kind of blinkered thinking is exemplified in Collins’ piece where he writes:

Over the next few months, if all goes well, there will be agreement at EU level to a series of binding budgetary disciplines. This will probably require treaty change and, even though that may result in a bitter referendum, it is very much in Ireland’s interest that it happens. In the long run, such a development will ensure the Irish people will be saved from a repeat of the economic indiscipline and political incompetence that characterised the Bertie Ahern years.

as if the current dire budgetary situation in Ireland was caused by marginal increases in social welfare rates rather than the suicidal decision to guarantee bank debt (and to socialize the private losses).

In a sense, it doesn’t really matter whether the final deal envisages control over Member States’ budgets ceded to the Council of Ministers or to an independent body within the EU.  Once the principle of enshrining the failed policies of fiscal austerity into EU law is agreed, the battle is already lost.  The immediate challenge is to prevent this, and to imagine a Union founded on genuine democratic governance, one with the power to act as bulwark against the power of international markets.  The longer-term goal, of course, must be a meaningful challenge to the neoliberal consensus itself.

Of course, with cheerleaders like Collins declaring the fight over before the opening bell has sounded, this will be  anything but easy.

A debt write-off? October 10, 2011

Posted by Tomboktu in Economy, International Finance.
5 comments

Can this be true?

This website presents the results of a simulation conducted by students at ESCP Europe Business School. The aim was to uncover the amount of interlinked debt between Portugal, Ireland, Italy, Greece, Spain, Britain, France, and Germany; and then see what would happen if they attempted to cross cancel obligations.
The results were astounding:

  • The countries can reduce their total debt by 64% through cross cancellation of interlinked debt, taking total debt from 40.47% of GDP to 14.58%
  • Six countries – Ireland, Italy, Spain, Britain, France and Germany – can write off more than 50% of their outstanding debt
  • Three countries – Ireland, Italy, and Germany – can reduce their obligations such that they owe more than €1bn to only 2 other countries
  • Ireland can reduce its debt from almost 130% of GDP to under 20% of GDP
  • France can virtually eliminate its debt – reducing it to just 0.06% of GDP

http://www.eudebtwriteoff.com/

Portuguese Communist Party Statement on Forthcoming Election April 7, 2011

Posted by Garibaldy in Communism, European Politics, International Finance.
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Seeing as the people of Portugal are now going to be bailing out the bankers as well, I thought it was worth putting up this statement from April 4th on the forthcoming elections, which I spotted on the Meath WP’s twitter account.

At its meeting today, the Central Committee analysed the country’s economic and social situation, as well as the recent developments arising out of the Prime-Minister’s resignation and the dissolution of the Assembly of the Republic [parliament]. Among other matters, it debated and established general guidelines for the Party’s participation in the early general election called for 5 June, having decided to run as part of the CDU [coalition].

It considered that the current political crisis is both an expression and a direct consequence of the economic and social crisis into which the PS [Socialist Party], PSD [Social-Democratic Party] and CDS-PP [Democratic-Social Centre – People’s Party] – with sponsorship from the President of the Republic – have led the country. This crisis is inseparable from the capitalist integration path taken by the European Union, and from crisis of the capitalist system itself.

The political crisis is, first of all, the outcome of a deliberate setup by those who – while being responsible for the serious situation the country is in – are now seeking to shirk the blame, and to hide the fact that they have taken identical stances on all the key actions that have led to this national decline. This situation is also inseparable from the increasingly acute contradictions generated by the anti-people character of current policies, and from the government’s growing isolation as a result of broader struggles by working people and local communities.

The Central Committee considers that the early general election set for 5 June is, in this context, both an opportunity and a responsibility for Portugal’s workers and people. It is an opportunity to make their voices heard, and to assert – by voting CDU – that it is necessary and essential to break with the path of decline, injustice and impoverishment for Portugal.

The seriousness and extent of the problems Portugal is facing today has its causes and its causers. They are not just the result of a set of circumstances, or of fate, but are rather the result of year upon year of right-wing policies that have generated a mountain of injustices, shrunk productive capacity, alienated strategic resources and assets, pawned national sovereignty, and impoverished the democratic regime.

The outcome is out there for all to see: a country subordinated to domination by national and foreign capital. Through pressures and blackmail, national and foreign capital is plundering the wealth produced in the country – through a process of subordination of political institutions to their class interests. Portugal is poorer, less developed and more dependent, on a path whereby year after year problems pile up and become more serious and where, while new sacrifices and injustices are being imposed on people there are less and less prospects of a way out and a solution.

The beginning of 2011 is there to prove it: the PECs (Stability and Growth Programmes) and the State Budget, that were presented and justified as being a necessary evil in order to overcome difficulties, have in fact themselves become factors that deepen the crisis and the recession, that increase unemployment, that heighten foreign dependence, where private debt is larger than public debt, and that raise the public accounts deficit they purport to be fighting.
From one PEC to the next, from one Budget to the next, the unacceptable dilemma into which the PS, PSD and CDS-PP want to place Portugal, is to either become a hostage of finance capital speculation in the “markets” or to spend decades in the stranglehold of speculative interest rates designed to favour that same finance capital – as defined by the European Union and the IMF, and with unacceptable and ruinous conditions attached.
The PEC-4 put forward by the Government sought to continue even more determinedly on that path. It did not include any measure for economic growth, greater national production, or fairer distribution of wealth and lower unemployment, nor did it seek to reduce inequalities.
While maintaining absurd deficit-reduction goals, it advanced a package of measures that brutally affected working people, the country’s people and development, while at the same time seeking to allocate more financial support for banks and the financial sector.
The PCP rejected the Government’s and the PS’s political blackmail, and we proposed and obtained the rejection of this PEC-4. We pointed out the seriousness of its content, we exposed its intentions and the blackmail involved, and we outlined a different path with alternative proposals and guidelines. In effect what happened was that when the PS Government and [prime-minister] José Socrates threatened to resign, they were actually trying to divert attention from the content and specific measures that they were advancing.
It has been proved that the new anti-social and austerity package’s nature and content were established in coordination with the new and intolerable steps being taken at the recent European Council – the one that adopted the Euro Pact and took decisions on so-called European Governance. These steps take the process of political domination by big international capital and the powers and institutions that serve it, to a whole new level. They constitute a whole new agenda, with attacks against working people’s rights, more exploitation, social retrogression, and usurpation of national sovereignty. And the PS. PSD, CDS-PP, and the President of the Republic, all bow and submit to it.
The PCP Central Committee states that it is only possible to embark on the path toward solving Portugal’s problems with an alternative based on patriotic left-wing policies, that can courageously break with current policies of big business domination and of surrender of national interests.
Adopting patriotic left-wing policies and establishing a Government to implement them, is something that is not only becoming increasingly necessary, it is imperative and cannot be postponed. There is an alternative policy, and it can be implemented. Its key directions and goals are: economic development, improving workers’ and people’s living conditions, protecting and promoting the public interest and citizens’ rights, and recovering and asserting national sovereignty – these are the four pillars and key goals of a patriotic and left-wing policy that can open the road to economic development, social progress, and sovereign assertion of the national interest.
It is a policy that can also immediately tackle the ongoing plunder of national resources being effected through growing foreign endebtedness, spiralling speculation based on interest rates on public debt, and the threat of (direct or indirect) IMF involvement.
It is a different policy: One that will seek convergent stands together with other countries that are being targeted by the same offensive; One that will ensure that the Portuguese state is financed under conditions that do not place a stranglehold on the national economy or worsen people’s living standards, conditions that diversify sources of financing and foster mutually advantageous economic relations.
The PCP states that to implement the policies needed to solve Portugal’s problems, a patriotic and left-wing government needs to be formed, one able to take Portugal to a new stage – with development, justice and social progress.

It is a government to save the country – and not a so-called national salvation government merely seeking to pursue right-wing policies while in one way or another bringing together PS, PSD and CDS-PP, precisely those who have been burying and want to continue burying Portugal.
It is a government based on political forces and areas, on democrats and other independents, who identify with patriotic and left-wing policies, and is supported by mass movements and organisations from the anti-monopolist sections of society.

Such a government’s feasibility and political and institutional support depends on Portugal’s people – with their stand, their struggles and their votes. It is a necessary and urgent political solution, that must be viewed as an unavoidable goal for Portugal’s future, and that can only be implemented if the PCP’s influence, and that of its CDU allies, is significantly strengthened.

Considering the upcoming election, the Central Committee has decided to convene, on 17 April, a PCP National Meeting on the General Election, as well as to launch a major national initiative to directly contact workers and all the people: “one million contacts for a patriotic and left-wing alternative”.

Convinced that the strength to impose a change of direction for national politics lies within the PCP and in the struggle of working people and local communities, the Central Committee calls for massive participation in the upcoming 25 April and 1 May celebrations, that will also constitute occasions to demand a new direction for Portugal.

Another Thinktank …… March 15, 2011

Posted by irishelectionliterature in International Finance.
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From the front page of Todays Irish Times

A GROUP of 17 leading business and public figures has submitted a wide-ranging report to the Government with ideas that they believe will lead to economic recovery……

So who are this band of The Great and The Good?

The group, which is chaired by businessman Philip Lynch and the chief executive of the Rehab Group, Angela Kerins, submitted the 38-page report to the Department of the Taoiseach last week.
The authors of the report include: Michael Berkery, former chief executive of the Irish Farmers’ Association; former taoiseach John Bruton; businessman Leslie Buckley; former European Parliament president Pat Cox; financier Dermot Desmond; and Fine Gael strategist Frank Flannery.
The other participants are: former Fianna Fáil minister for finance Ray MacSharry; businessman Denis O’Brien; Seán O’Driscoll, chief executive of Glen Dimplex; property developer Michael O’Flynn; former Bank of Ireland chief executive Mike Soden; former National Treasury Management Agency chief executive Michael Somers; former Labour tánaiste Dick Spring; chairman of Goldman Sachs International and formerly of BP Peter Sutherland; and the former secretary general of the Department of Communications Brendan Tuohy.

So it’s the Great and the Good including Tax Exiles, failed Developers, Bankers and of course stalwarts of Labour and Fine Gael in Frank Flannery, Dick Spring and John Bruton. The report is top secret but some details have emerged….

The group recommends that the Government go further than the cuts in public spending suggested by economist Colm McCarthy in his “Bord Snip Nua” report.

The public sector should be reduced by about 30,000 jobs and the social welfare system should also be reformed, the report says.

 

So cuts to the public sector and cuts to social welfare appear the order of the day. The article mentions the sales of AIB and Bank Of Ireland but fails to mention their debts and the other banking debts, nor indeed what type of ‘Burden sharing’ would be involved. That said, given the positions of a number of the participants, I somehow doubt repudiating the debt was one of the options discussed.

A chance to push for a Tobin tax (sort of) February 24, 2011

Posted by Tomboktu in Capitalism, European Politics, International Finance, Trade Unions, Uncategorized, Workers Rights.
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The suggestion of a tax on financial certain financial transactions (primarily on short-term currency trades) in order to put some “grit” in the system and generate a social benefit from the transaction was proposed by the Nobel prize-winner James Tobin in 1972. More recently, many have suggested that other aspects of the financial industry — the bonuses paid to traders and executives in the banks, for instance.

The EU has taken some action — baby steps, but potentially useful — in bringing some control to the sector and reigning in its madness. Last November, the EU amended the law on capital requirements for banks and on remuneration policies in the sector. Some of the provisions were to be implemented (or, in EU-speak, ‘transposed’) by 1 January of this year, all of the rest by 31 December. There are twenty new characteristics set out for the pay policies of financial institutions in the amending law, and you won’t be surprised to know that none of them would set a leftie’s heart aflutter with excitement. (I do think it interesting that one of the new points required by the directive is the following:

(m) payments related to the early termination of a contract [should] reflect performance achieved over time and are designed in a way that does not reward failure.

I suppose we might see a glimmer of a possibility in the staandards set for remuneration committees that large instiutions are required to establish, if they don’t already have one:

When preparing such decisions [i.e. decisions regarding remuneration], the remuneration committee shall take into account the long-term interests of shareholders, investors and other stakeholders in the credit institution.

A nice start would be to make sure that “other stakeholders” is defined to include customers and non-trading staff.

The next stage of dealing with banks at an EU level is under way. The European Commission is conducting a public consultation on taxation of the financial services sector. The Commission has identified three reasons for “addressing the issue”, as they put it:

  • Substantial public financing support during the crisis, need for fiscal consolidation and possible under-taxation of the financial sector.
  • Undesirable behaviours for the society as a whole (systemic risks), e.g. excessive risk taking.
  • Uncoordinated patch-work of national measures may:
    1. create incentives for tax-driven relocation either within the EU or outside the EU and distortion of competition;
    2. create situations of unrelieved juridical double taxation

    The second bullet point has to be of interest to those of us on the Left.

    The Commission is being both thorough and focused in its consultation. They are asking that responses deal with 57 questions, and they do ask for each of those you respond to that you provide evidence if you have any.

    Questions 10 to 21 deal with the core idea of a Tobin tax (although the Commission’s possibilities are not restricted to the specific type of trading/speculation that James Tobin had proposed be taxed). The level of thinking that is going into this can be gauged by the final question in that set: “What do you think of the effect on small and medium enterprises (SMEs) from broadbased [financial transaction tax]?” Questions 22 to 37 deal with the question of taxes on wages and profits in the sector. And, again, they are thinking of the broader picture. For example, they ask: “Do you think that the tax incidence of the tax will fall of the financial sector, or it will be shifted to the customers?“.

    I’ve no doubt that the technical details of the consultation will mean it will pass most of us by, although we can be sure that the industry and the businesses in it will contribute their views. (On that, I wonder will the Department of Finance and the current or new Minister use the golden shares acquired as part of the bailout to make sure any Irish companies the State has rescued do not make submissions reflecting the interests of those who couldn’t run them properly, but the public which is now propping them up).

    The consultation does provide us, simply as citizens, to make our views known, and I hope that both citizens and bodies like TASC, unions, the parties of the Left, and the MEPs (both ongoing and soon to be former :)) make submissions. Consultations close on 19 April, and all submissions will be made public (along with the identities of those making submissions unless there is a good reason not to reveal that information — see the consultation documents for an explanation of how that operates).

    No. 2 in a series of /n/ November 24, 2010

    Posted by Tomboktu in Fianna Fáil, International Finance, Ireland.
    1 comment so far

    [By special request of our Webmaster]

    Dáil Debates, Thursday 18 November 2010. Brian Lenihan:

    The job of Government is to protect the taxpayer. That is what we have been doing and what we are now doing.

    Not, I note, in the interests of its citizens (or its residents).

    NAMA: The Cheque’s in the Post July 6, 2010

    Posted by Garibaldy in Capitalism, Inequality, International Finance, Ireland.
    3 comments

    We’re still going to make a profit honest. Err, or maybe not.

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