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Policy news & blueprints for the transition to a new Sustainable and Social Economy
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Things Are Unraveling At An Accelerating Rate

Things Are Unraveling At An Accelerating Rate | The Great Transition | Scoop.it
This vast expansion of debt on the backs of marginal borrowers and the expansion of risky investments has greatly increased the systemic risk of losses from defaults arising from over-extended borrowers.

No wonder every attempt to further expand debt-based consumption is yielding diminishing returns: net income is stagnant virtually everywhere in the bottom 95% of the populace, and further declines in interest rates are increasingly marginal as rates are near-zero everywhere that isn’t suffering a collapse in its currency.

The diminishing returns manifest in three ways: the gains from each round of central-bank tricks are declining, the periods of stability following the latest “save” are shrinking and the amplitude of each episode of debt crisis is expanding
Willy De Backer's insight:

How the growth of global debt is fueling the zero-growth economy - good article from Peak Prosperity

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A new theory of energy and the economy - Part 1 - Generating economic growth

A new theory of energy and the economy - Part 1 - Generating economic growth | The Great Transition | Scoop.it
How does the economy really work? In my view, there are many erroneous theories in published literature. I have been investigating this topic and have come to the conclusion that both energy and de...
Willy De Backer's insight:

Brillliant must-read analysis by Gail Tverberg of the link between economic growth, energy and debt.

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Nuno Gaspar de Oliveira's curator insight, January 24, 2015 1:48 PM

"In order for economic growth to occur, the wages of workers need to go farther and farther in buying goods and services. Low-priced energy products are far more effective in producing this situation than high-priced energy products. Substituting high-priced energy products for low-priced energy products can be expected to lead to lower economic growth."

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Monetarism is the living dead of economic theory – let's kill it off

Monetarism is the living dead of economic theory – let's kill it off | The Great Transition | Scoop.it
Philip Pilkington: The Bank of England suddenly looks capable of doing what the government can't: consigning monetarism to the past
Willy De Backer's insight:

Some mandatory reading for the 'experts' at the ECB and the European Commission.

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Degrowth in Slovenia

Degrowth in Slovenia | The Great Transition | Scoop.it
We need a no-growth development model as an alternative to an austerity model which will do nothing except bring ordinary people hardship and misery – offering them no hope and no way of coping with their problems.
Willy De Backer's insight:

Very inspiring article by Feasta's Brian Davey on the need to go beyond the sterile austerity versus new Keynesianism solutions to the growth and debt crisis of the EU.

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What is the Chicago Plan and can it save the global economy?

What is the Chicago Plan and can it save the global economy? | The Great Transition | Scoop.it
An IMF study has proposed a 1930s plan that would magic away government debt and end 'boom and bust' for good...

 

Why does this IMF paper not get more media attention? Because it would increase the power of government and tame the banks?

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Degrowth, expensive oil, and the new economics of energy

"Expensive oil ... does appear to be suffocating the debt-ridden, global economy, just as it is trying to recover ...

 

Unfortunately, mainstream economists, including those in government, seem oblivious to the close relationship between energy, debt, and economy, and this means they are unable to see that expensive oil is one of the primary underlying causes of today’s economic problems. Consequently, they craft their intended solutions (e.g. stimulus packages, quantitative easing, low interest rates to encourage borrowing, etc) based on flawed, growth-based thinking, not recognising that the new economics of energy means that the growth model, which assumes cheap energy inputs, is now dangerously out-dated. When growth-based economies do not grow, household, firms, and nations struggle to repay their debts, and quickly things begin to unravel in undesirable ways."

 

Excellent analysis by Dr Samuel Alexander of the links between global energy descent, rising commodity prices, the end of growth and the Great Depression.

 

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Eurobonds: what they are, and why they won’t work

Eurobonds: what they are, and why they won’t work | The Great Transition | Scoop.it
The Eurobond scheme only works effectively if taxation and spending powers are transferred to a central authority – “fiscal union”. But bar a series of truly extraordinary backflips by Europe’s divided rulers, spontaneously agreeing to settle their deep differences, this will not happen. Should anything resembling a “Eurobond” eventually be summoned up, it is liable only to be a feeble stop-gap measure. The underlying causes of Europe’s financial crisis will not have been addressed.

 

Very good analysis by senior economist James Meadway on the New Economics Foundation blog.

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Report: Green taxes key to tackling European deficits

Report: Green taxes key to tackling European deficits | The Great Transition | Scoop.it
Green taxes should play a crucial role in tackling Europe's spiralling deficits, according to a major new report backed by some of the continent's political heavyweights.
The 160-page report from NGOs the European Climate Foundation and Green Budget Europe and consultancy Vivid Economics argues that carbon and energy taxes present an effective means of tackling greenhouse gas emissions and raising much-needed revenue, while having less of a negative impact on growth than conventional fiscal measure such as income taxes and VAT.

 

Interesting report sponsored by the European Climate Foundation. But what will the new revenues be spent on? The report also seems to skip to easily over the challenge of the regressive nature of such taxes (impact on poor households).

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Question the Euro Crisis

Question the Euro Crisis | The Great Transition | Scoop.it
After more than 18 months, a dozen and a half summits, multiple rounds of austerity, a trillion dollars of liquidity, and now elections in Greece and France that threaten to overturn the fragile policy consensus in Europe, the Euro-crisis rumbles on.

 

Good critical analysis of the Eurocrisis in Harvard Business Review Blog. Why Europe's elites are trying to save the Euro and will end up losing the European project and, in several countries, democracy.

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Europe’s Austerity Mirage

European governments are following the same path Asian countries pursued in the late 1990s — austerity and competitiveness — but they are less likely to succeed.

 

Good article on the eurozone debt crisis by French economist Jean-Paul Fitoussi in the NY Times.

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James Rickards: Paper, Gold or Chaos?

James Rickards: Paper, Gold or Chaos? | The Great Transition | Scoop.it
History is replete with the carcasses of failed currencies destroyed through misguided intentional debasement by governments looking for an easy escape from piling up too much debt.

 

Listen to this Chris Martenson blog podcast interview with James Rickards on how some governments (including the US) have started to get out of the debt crisis by cheapening their currencies. End result: currency collapse.

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How the Banks Broke the Social Compact, Promoting their Own Special Interests

In The Market Oracle, economist Michael Hudson provides a brilliant analysis of the perverse role of banking in our current casino capitalism.

 

This is a must-read for anyone concerned about Europe's debt crisis.

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Monetary Heroin? Central Banks are printing money like there is no tomorrow

This provocative article from the Financial Sense blog highlights the risks and "opportunities" of "Quantative Easing"

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It's not just Greece and Spain that need their debt restructuring | Jonathan Glennie

It's not just Greece and Spain that need their debt restructuring | Jonathan Glennie | The Great Transition | Scoop.it
That Europeans have finally been hit hard by the politics of austerity and debt repayments at all cost is regrettable, but it could have positive consequences if they wake up to the need to change things globally. Perhaps this Greek crisis will spur the world into action, now that Europeans not just Africans, Latin Americans and Asians are under the cosh.
Willy De Backer's insight:

Great article by Jonathan Glennie in the Guardian. We need an international debt restructuring conference.

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Ex-Treasury adviser: no real recovery - growth 'hype' masks crash risk

Ex-Treasury adviser: no real recovery - growth 'hype' masks crash risk | The Great Transition | Scoop.it
Nafeez Ahmed: GDP stats reveal same brand of unsustainable debt-led growth behind worst financial crisis since Great Depression
Willy De Backer's insight:

The reality behind the so-called economic 'recovery' - the 'economists' are still not getting it, Your Highness.

"The misnamed 'recovery' is merely "a return to the debt-led and consumption-driven growth of the pre-crisis era…"

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Eli Levine's curator insight, May 1, 2014 8:11 AM

When people don't have money to spend, debt naturally increases.  When debt increases without having compensation to cover for the debt, you're set up for a situation where people will be called for their money, not have money available to pay up, and thus, all planned profits and growth forecasts go down the tubes.  A tall, ever-growing building cannot be supported without a deep foundation beneath it.  Even then, the environment and technological limitations will prevent the building from growing larger than both the environment and the technology can support it.

 

Think about it.

 

Because this isn't some trumped up "government debt" argument that's being used here while the deficeit is decreasing.  This is debt at the root microlevels of the economy: individual households and the like.

 

If the UK falls, everywhere else is going to fall as well.  We're so interconnected that a failure in one node will lead to critical losses everywhere else.  All for the sake of the rich people's delusion that money is worth something beyond a means of exchange.  All for the sake of conservatives' ideological belief that government presence anywhere is an inherently bad thing.

 

And they won't learn a thing from these mistakes.

 

Think about it.

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Robert Skidelsky: Four fallacies of the second Great Depression

Robert Skidelsky: Four fallacies of the second Great Depression | The Great Transition | Scoop.it
The period since 2008 has produced a plentiful crop of recycled economic fallacies, mostly falling from the lips of political leaders. Four such arguments have been the most important – and the most damaging – in terms of guiding economic policy.
Willy De Backer's insight:

Brilliant critique of four established but false stories of the austerity narrative.

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Ignoring natural capital could see countries' credit ratings downgraded

"A report by the UN Environment Programme's Finance Initiative (UNEP FI) says loss of soils, forests, and fisheries, as well as rising resource costs, are likely to become increasingly important to a nation's economic health – and may therefore affect its ability to repay or refinance sovereign debt."

 

This excellent report makes the link between the world's financial debt crisis and the global ecological debt crisis. The debate on austerity gets a completely different dimension if you look at this double challenge.

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We can't grow ourselves out of debt

We can't grow ourselves out of debt | The Great Transition | Scoop.it
Charles Eisenstein: Let's replace our fixation on growth with a steady-state economy focusing on lower consumption, leisure and ecological health...

 

Very good analysis by Charles Eisenstein (author of "Sacred Economics") on the absurdity of rightist and leftist hopes to re-invent economic growth.

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The Twilight of Investment

"It’s one of the mordant ironies of contemporary history that Europe fought two of the world’s most savage wars in the firt half of the twentieth century to deny Germany a European empire, then spent the second half of the same century allowing Germany to attain peacefully nearly every one of its war aims short of overseas colonies and a victory parade down the Champs Élysées."

 

Brilliant analysis by John Michael Greer of Europe's debt crisis and the global context of failing economic growth. Must-read.

 

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Is Greece the Lehman of 2012?

Is Greece the Lehman of 2012? | The Great Transition | Scoop.it
The jury is still out on whether Greece will leave the euro and what that would mean. But even if it's not 2008 again, investors may be underestimating the potential pain ahead.

 

Will "Grexit" be "the second coming of 2008"?

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Paul Krugman’s Economic Blinders | Michael Hudson

Paul Krugman’s Economic Blinders | Michael Hudson | The Great Transition | Scoop.it

"Mr. Krugman’s failure to see today’s economic problem as one of debt deflation reflects his failure (suffered by most economists, to be sure) to recognize the need for debt writedowns, for restructuring the banking and financial system, and for shifting taxes off labor back onto property, economic rent and asset-price (“capital”) gains. The effect of his narrow set of recommendations is to defend the status quo – and for my money, despite his reputation as a liberal, that makes Mr. Krugman a conservative. I see little in his logic that would oppose Rubinomics, which has remained the Democratic Party’s program under the Obama administration."

 

This interesting review by US economist Michael Hudson of Pauk Krugman's latest book "End this depression now" should be mandatory reading for all Krugman's neo-Keynesian followers in Europe.

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Shareable: Greek Town Taps Bartering for a More Shareable City

Shareable: Greek Town Taps Bartering for a More Shareable City | The Great Transition | Scoop.it

"As Greece continues to search for solutions to its national economic crisis, the port town of Volos has adopted an old-school barter system to help its citizens muddle through. Five years into their recession with 21 percent unemployment, some Volos residents who were short on Euros but long on other resources created a local currency (called TEMs in Greek) that is traded based on non-monetary contributions into the online system."

 

Are alternative currencies the better response to the current debt crisis?

 

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Greece should reject the Troika and default on its own terms

Greece should reject the Troika and default on its own terms | The Great Transition | Scoop.it
It's national debt is unpayable - why tear apart the country in a futile attempt to repay?

 

Excellent alternative analysis of the Eurozone crisis by the New Economics Foundation.

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Open-market sustainability: the alternative to failing austerity policies

Open-market sustainability: the alternative to failing austerity policies | The Great Transition | Scoop.it

"America has a pathway for leading a transition to global sustainability marked by widespread economic success and a reduction in strategic threats and friction. Pent-up demand and stranded capital can underwrite the economic engine of open-market sustainability, shifting from sprawl to smart growth, from industrial to regenerative agriculture, and from taxing income to taxing waste." (Source: Solutions Journal).

 

Brilliant analysis in Solutions Magazine by Patrick Doherty, director of the Smart Strategy Initiative at New America Foundation.An excellent effort to define a realistic policy blueprint beyond our unsustainable and unjust austerity policies.

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Davos policymakers are playing Global Apocalypse – and running out of lives

Davos policymakers are playing Global Apocalypse – and running out of lives | The Great Transition | Scoop.it
If the world economy was a video game, policymakers have been struggling to master the controls – and stuck on the first level, writes Larry Elliott...

 

Global Apocalypse Game has two versions: the economic debt crisis and the ecological debt crisis. You cannot win one without winning the other.

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