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Policy news & blueprints for the transition to a new Sustainable and Social Economy
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In Spain, financial crisis feeds expansion of a parallel, euro-free economy

In Spain, financial crisis feeds expansion of a parallel, euro-free economy | The Great Transition | Scoop.it
At a time when the future of the currency is in doubt and millions are unemployed or underemployed, an alternative, euro-free economy is springing up in Spain and elsewhere.

 

The Washington Post has this interesting article on how people in the Eurocrisis countries are finding ways to defeat the austerity attacks of their governments.

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Suddenly, quantitative easing for the people seems possible

Suddenly, quantitative easing for the people seems possible | The Great Transition | Scoop.it
As some of the world’s top central bankers start to admit that standard quantitative easing is failing to generate growth, previously taboo ideas can be mentioned, including QE for the People, discussed here last week.

 

Interesting and provocative ideas from financial economist Anatole Kaletsky (author of "Capitalism 4.0"). Give the new money created by central banks to the people instead of the banksters.

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The Upside of Default

"... in any given year, maybe one per cent of the financial economy has anything to do with the production of real, nonfinancial goods and services.

 

The rest? It consists of ways to make money from money. That seems innocuous enough, until you remember what money actually is. Money is not wealth; it’s a system of abstract, culturally contrived tokens that we use to manage the distribution of real goods and services. A money system can simplify the process of putting energy, raw materials, labor, and other goods and services to work in productive ways; that’s the reason we have money, or rather the reason most of us are prepared to discuss in public. That’s not what the other 99% of the world’s financial assets are doing, though. They are there to ensure that the people who own them have disproportionate, unearned access to real, nonfinancial goods and services."

 

John Michael Greer's brilliant analysis of the current financial crisis with some very valid lessons and predictions for the Eurozone. Must-read.

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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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Europe proposes banking union to ease debt crisis

As Europe's debt crisis intensifies, top officials say the continent urgently needs a central authority with the financial muscle to fix its broken banks.

 

The flight forward for EU leaders: a "banking union". Finally full recognition that THIS European "Union" has always been a Europe for capital, never for labour and citizens. As long as things went well, we got the crumbs from the tables of the rich, now they send us back to the poor houses and debtors' prisons.

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Book review: Jeff Rubin's "The End of Growth"

Book review: Jeff Rubin's "The End of Growth" | The Great Transition | Scoop.it
The former CIBC chief economist's lively new book also suggests that a slow economy might save the planet from Climate Armageddon.

 

Good review of economist Jeff Rubin's latest book "The End of Growth". It is interesting to look at the European austerity versus growth debate from this perspective of the future of growth.

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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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Now it is Ireland's turn to reject the austerity fantasy

Now it is Ireland's turn to reject the austerity fantasy | The Great Transition | Scoop.it
That neoliberal retrenchment through cuts and market-oriented "reforms" would push recession towards depression has long been obvious, but official strategy has been to place austerity in a realm beyond politics as a shared sacrifice necessary to restore investor "confidence"

 

The European backlash against austerity policies continues. There are alternatives.

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The deep structure of the European crisis

"Instead of offering an alternative model of regional integration to the unregulated system of the global economy and its discredited ideology of market fundamentalism, Europe remained exposed to and entrapped by financial market players and neo-liberal economic policies. As a result, it de facto turned against its own aspiration to implement the European Social Model and equal up regional disparities. The East-West divide as well as the North-South divide is stronger or at least more obvious today than before 2004/2005. The new phase of peripheralisation conducted by German-led ordoliberalism ↑ has provoked national resistance and led to a further and sharp decline of public trust in both national and European institutions."

 

Interesting article in OpenDemocracy about the deeper reasons behind Europe's crisis. Excellent on analysis of what has gone wrong but less convincing on remedies.

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‘EU must stick with austerity’

‘EU must stick with austerity’ | The Great Transition | Scoop.it

"The European Union's fresh push for growth must not compromise its drive for austerity, Italian Prime Minister Mario Monti said Thursday, as he joined leading EU politicians in defending the bloc's sometimes unpopular belt-tightening measures." (Source The Independent Online)

 

For all the new lip service to growth we now hear from Draghi, Monti, Van Rompuy and other EU leaders, one thing is sure: the austerity leopard will not change its spots. What is meant by "putting growth centre-stage" will be nothing more or less than more labour deregulation. What we really need is a debate on prosperity and how to protect it, social redistribution and radical reform of the financial sector.

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Videos - Michael Hudson: Austerity Doesn\'t Work

Michael Hudson, Distinguished Research Professor of Economics, University of Missouri, Kansas City speaking in Berlin at the Paradigm Lost conference organised by George Soros' Institute for New Economic Thinking.

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A Centerless Euro Cannot Hold

A Centerless Euro Cannot Hold | The Great Transition | Scoop.it
Europe may never be an optimum currency area by any standard. But, without further profound political and economic integration – which may end up excluding some current eurozone members – the euro may not make it even to the end of this decade.

 

Good analysis by economics professor Kenneth Rogoff of the eurocrisis but lacking ideas on what kind of political and economic union will be needed to win back political legitimacy. An Austerity Union with more political and economic integration will be a failed project.

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Michael Hudson's new must-read book: The Bubble and Beyond

Michael Hudson's new must-read book: The Bubble and Beyond | The Great Transition | Scoop.it

"The finance, insurance and real estate (FIRE) sector has emerged to create “balance sheet wealth” not by new tangible investment and employment, but financially in the form of debt leveraging and rent-extraction. This rentier overhead is overpowering the economy’s ability to produce a large enough surplus to carry its debts. As in a radioactive decay process, we are passing through a short-lived and unstable phase of “casino capitalism,” which now threatens to settle into leaden austerity and debt deflation."

 

The new book by economist Michael Hudson should be mandatory reading for anyone seriously dealing with the global and European crisis.

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The end of the European dream

The end of the European dream | The Great Transition | Scoop.it

"Nations states will have to do it, therefore, either together in some grand conference, or more probably alone, after the crisis has put some radical into power. When this will happen, the European Union will simply vanish as the USSR did after the August Coup and the Belavezha Accords. Those who still nurture the dream of a political Europe, whether it be the Europe of Regions of my own political family or the Europe as civilization of the volkish far right will have to accept, as I did, that Europe has become an hollow shell and that time has run out. It is around nation states, not necessarily the ones we know by the way, that Europe will have to face the long descent, until they too dissolve."

 

Pessimistic analysis by French blogger Damien Perrotin explaining why the end of growth will also mean the end of the European Union.Worth reading.

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Save the Euro - who for?

"Our present crisis is one of democracy even more than it is of finance. It is about a lack of honesty as much as it is a lack of growth. Debt and dishonesty are together strangling European democracy.

We should rid ourselves of both."

 

This article in Open Democracy is like a drop of wisdom in the oceans of economic idiocy.

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"Neither a borrower nor a lender be"

"The EMU will eventually (that is, within the next few months) either have to endure a monumentally costly break-up, or forge a tighter fiscal union with “debt-pooling,” joint budgets and tax systems, and guarantees against default. The domestic political resistance to the latter would be prohibitive in several nations—and even a single country might be able to torpedo collective efforts to centralize and shore up the euro system. It’s just remotely possible that European political and financial leaders might be able to cobble together one short-term fix after another until some sort of workable long-term solution can be agreed upon—but that’s only possible if there is enough economic growth in the interim to keep all wheels on the tracks. Without growth, it’s difficult to see how a train wreck can be averted."

 

Richard Heinberg provides a different and much more convincing narrative of the European debt crisis from the perspective of Europe being the first continent to taste the bitter pil of a post-growth society.

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Credit is What Credit Does: Finance and Economic Growth Uncoupled

Credit is What Credit Does: Finance and Economic Growth Uncoupled | The Great Transition | Scoop.it

“Most of our credit system does not support economic growth in the sense of supporting transactions in goods and services,” he explains. “Most of our finance system, most bank loans, support increased asset prices, which have a number of detrimental effects on the economy.”

 

"The threat to growth today is not a shrinking of the financial sector, but it enormous size.”

 

Must-read article on the web site of the Institute for New Economic Thinking.

 

 

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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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Talking about my generation

"Spaniards in their thirties have grown up in enviable circumstances: democracy, a generous state, material wellbeing. Now the crisis has returned them to a cruel reality: that they may have to live with less than their parents did. Whether they alter their expectations or try to stop the clock will be decisive, writes Ramón González Férriz."

 

Brilliant analysis in Eurozine about the Spanish crisis but with lessons for all European societies.

 

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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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Krugman on the "austerians": Death of a Fairy Tale

Krugman on the "austerians": Death of a Fairy Tale | The Great Transition | Scoop.it
The good news first: people are finally admitting that austerity measures are not working. Now the bad news: there seems to be little prospect of a near-term course change.

 

Good analysis by Paul Krugman of the slow demise of the austerity religion 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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Is Europe's left ready to govern?

Is Europe's left ready to govern? | The Great Transition | Scoop.it
The central question of the crisis is not whether it will rejuvenate nation-state social democracy, but whether it can stimulate new strategies on which a revived platform of egalitarian prosperity and social welfare might be built. The task is to frame a response so that social democracy can benefit from a new openness to ideas in domestic and world politics – against a residual neoliberalism that would frame the global financial crisis as one of the overbearing state.

 

In the Guardian, two progressive political thinkers question social-democracy's answers to the crisis of our global economic system.

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