In 1963, 50 years ago to the day, the poet who has touched me more then any other commited suicide at the age of just 30.
Sylvia Plath. A voice unique:
This was published a Left Foot Forward here
In the US, commentators are now warning of the next group of loans that seem reckless and ready to collapse that could lead to the “the next financial crisis”.
Here are the figures:
• The size of this groups of loans is about to top $1 trillion ($1,000 billion) – it is a larger debt than credit cards in the US ($704 billion);
• The debt burden an American has taken onhas more than doubled in the last five years, when credit card debt has actually dropped;
The loans for this group are completely unsecured and are only based on the promise of future earnings.
So what is this latest consumerist throwaway good these profligate Americans are gorging themselves on at the risk of destroying not only their own, but their country’s future? An education.
The mix of federal and private student loans in the US have created “a bewildering maze of programs and options” (see Archibald, Robert B, 2002: Redesigning the Financial Aid System: Why Colleges and Universities Should Switch Roles with the Federal Government; Baltimore, MD: The Johns Hopkins University Press) whose combined debt has created a generation of “wage slaves”.
It has become a major matter of social strife as shown by it being a major grievance for the US Occupy Wall Street protestors with President Obama last October having to step in with promises of relief. However, if as widely suggested the interest rate on the federal provided loans is doubled by Congress on the July 1st, the fear is the system may go into a default meltdown.
Now, wondering what the implications of the above are for our own education system here in the UK, well the comparision is truly frightening: the student loan burden now smothering the US student is calculated on average to be $25,250. With the changes the UK Coalition government has implementedit is estimated the average student in the UK will leave with a debt of £53,000 or$85,000 – three times as much.
It is not often we are given a window into the future, but the US education crisis gives us just that: if a country with a higher GDP per capita sees the student loans on its young as being unsustainable, how can we in the UK expect our young to carry potentially three times the load?
The cross party principles enshrined in the 1963 Robbins Report that government was to provide the structure so that university places “should be available to all who were qualified for them by ability and attainment” is being broken with the paradigm shift of education being seen simply as a personal commodity to be brought and is something we can regret at leisure.
That we pawned our (not perfect, but envied) university system for a commoditised education culture that will create unsustainable debt will be an educational lesson from the US that may reach us just a little too late.
This was published in Left Foot Forward here
Last Friday we found out the US economy had created 227,000 more jobs in February, with the number created in January revised up to 281,000, meaning a total of more than half a million jobs created in the first two months of 2012.
This was just the latest in a string of positive news stories regarding the US economy; earlier in the week came the news (£) US GDP growth was revised up for the last quarter of 2011 to +3%, meaning talk of a double-dip recession was receding quickly as the markets now were asking ‘how strong will the US recovery be?’
For the UK, thoughts of a recovery are receding fast with market talk firmly still on a ‘double dip’ recession.
The comparison with the US, not Europe, is the most telling for the UK. Both countries have large financial sectors, meaning the damage done after the financial crash was similarly devastating.
Both have their own currencies and central banks who have used policies such as interest rate cuts and quantitative easing to independently try to boost their respective economies, these in turn being the main factors leading to the low borrowing cost for government.
Indeed, they had similar policy reactions to the crash, with both countries engaging in stimulus packages with initial positive growth in GDP and confidence in the second half of 2009 and early 2010, yet, as Graph 1 shows, UK Q4 2010 saw negative growth, with growth yet to return to the levels of Q1-Q3 2010 – a stark contrast to the US.
The fundamental divergence from 2010 onwards was how to achieve growth.
The Obama presidency held resisted pressure from an increasingly militant Congress and kept to a solid economic strategy that while the private sector was weak it would be irresponsible for the government to cut public spending drastically; indeed it was the job of government to provide continuing stimulus to the economy. The UK coalition government took different view, believing that cutting spending would reassure business and lead to an investor-led recovery.
This UK policy was marketed as a populist shift from government to the private sector, that slashing 25% to 40% from bloated government departments and allowing the free market to take the slack would produce growth and jobs. The curious logic being that somehow the cuts made in welfare spending and government projects would trickle down and across to the private sector and boost spending there.
This is not a new refrain – it was a similar theory that underlay the supply-side ‘Reaganomics’ policies in the 1980s, that government and business were diametrically opposed and that government needed to just ‘get the Hell out of the way’ to allow the trickle down/across effect of the market to work.
Now, as then, the result is the same: the magical leap didn’t happen; now, as then, the deficit as a percentage of GDP has risen not fallen (£).
In contrast to this, through all the unpopularity Obama has suffered in the US over the last few years he stuck to the sometimes unfashionable idea that the US government did have a central role, with government and businesses having a symbiotic not combative relationship, that:
“…as a nation, we have always come together, through our government, to help create the conditions where both workers and businesses can succeed.”
The US government through stimulus and investment created a tangible bridge back from the abyss allowing the private sector to motor back to strong growth; our own bridge was kicked away by an ideologically-driven assault on government by the Conservative-led coalition just when it was needed most – the facts on growth and jobs are unfortunately now staring at us in black and white.
We in the UK are paying for our choice to turn away from sensible economic thinking to espouse the fear and loathing of government driven by George Osbourne’s own misguided version of Voodoo Economics.
The article was published in Left Foot Forward here
This morning when discussing the extra £75 billion quantitative easing taken by the Bank of England and its effect on the commercial property market, Nick Leslau, the manager of Max Property Group Plc, made the interesting observation(22 minutes in) that there is two countries in the United Kingdom: London and the rest.
In the rest of the UK commercial property prices fall, but in “country London” commercial property prices are not just ok, but are acting “robustly”.
Wow! We are living through a double-cycle world crisis which is mostly due to the banks over-leveraging on sub-prime loans and now government debt and one of the world’s financial capitals is confident enough to have a “robust” commercial property market? Not a sniff of a commercial property crash or housing price crisis?
The question has to be asked: How could an area whose main industry was not just near the precipice, but has had both feet hanging off the cliff, be so different to the everyday world of industry, where when the steel yard, coal mine, factory collapses it is followed by a ghost town, boarded up properties, an area in strife?
The plain fact is that the “country London” institutions had not simply been “bailed-out”; regardless of the benefits on the economy, it can be argued that quantitative easing has meant that the Bank of England has watered down every pound in our pockets – wages, pensions and savings – by increasing the money supply so that financial institutions could have an extra £275 billion pounds to prop up the markets and increase profits.
Wondering how the banks made record profits a year after the crash? It was almost impossible for the banks not to make money after the first “windfall” of quantitative easing, expect record banking profits next year again.
Lets get the figures into context; if we cut out the middleman, the Bank of England has created enough extra money through QE to purchase from the banks an extra £4,600 worth of government bonds and shares for every man, women and child in this country. Putting it into an alternative context the bank could have “guaranteed” every year since 2009 the £76 billion they now have targeted commercial banks to loan to small and medium size businesses under “Project Merlin” without commercial banks ever getting involved.
These are astronomical amounts which make it even more unbelievable that we still don’t know whether quantitative easing does really make a positive effect on the economy, how much it will actually cost the government, let alone what/if there is a “trickle down” benefit to the economy or simply eaten up by de-leveraging banks and profit taking- all moot points.
If the two banking crisis since 2008 have taught us anything it is that we must not be put off by the mesmerizing smokescreen of complex financial jargon and a Kafka-esque banking system not to question why £275 billion was needed to be given so freely to the banks in an obligation free way. The Bank of England has not just magicked up £75 billion of money yesterday, but is creating it on the back of and at the risk of our whole countries’ wealth.
We should have the right to demand to know whether it is a wise choice or if the Bank of England is acting as an anti-Robin Hood stealing the value of everyones’ pound and throwing a sack of gold to the financial sheriffs of country London.
An out-of-focus picture, a breaking-up phone call, two seconds of video, these are few fragments of information that we are getting from Libya, where allegedly fighter planes and artillery are being used on its own people, emphasizing how helpless we are in this Libyan crisis.
We will never know whether if we had had access to more footage it would have made a difference in forcing our governments into quicker actions on Libya, but the difference with Egypt and Bahrain is clear. That the Egyptian army knew the world was watching Tahrir Square was an important factor in their restraint, as was the outrage at the horrendous videos of soldiers shooting people in Bahrain caused it’s govenment to back track, both knowing they would be world outcasts if they continued. Yes, in Libya we are dealing with a despot, but two month ago would anyone had said differently about Mubarak?
The everyman nature of the internet’s citizen to citizen provision of information is so important. We should never underestimate this extra pressure on our own governments to act decisively when they know the public are seeing the atrocities happening unfettered and therefore uncontrolled by goverments: When asked if he knew where Gaddafi was the Libyan UN deputy ambassador in New York, who just asked for the world’s support in toppling him, with more than a hint of frustration said “You have your technology and satellites….you should help us know”.
After the Green Revolution in Iran it was debated whether the internet had been really of importance, these uprising show now not only how important it is in co-ordinating revolutions, but also in preventing the bloodshed.
We must try to destroy this information curtain that drapes across countries at such times that allows those oppressing to be without fear of being seen and therefore accountable by the world. We must do all we can to allow the citizen journalism that has become such a fosterer of liberation against totalitarianism to exist. The internet has given those who were usually disenfranchised a voice when they need it most, knowing that it will be heard.
To state that open access to the internet be enshrined as a human right would be a great start. We can be hopeful as Hillary Clinton was supportive recently as she;
“reaffirm US support for a free and open Internet and underscore the importance of safeguarding liberty and security, transparency and confidentiality, and freedom of expression and tolerance.l
Although we can scoff at the US when putting this in the context of the Wiki-leaks, lets be thankful to live in a part of the world where a Wiki-leak can take place.
Need we stop there? Lets me honest: Do we really think that the US is not sending planes and satellites over Libya every second right now, scanning and picturing everything with the accuracy they so gleefully showed off in the press conferences of the Iraq war? Following on, would it really be beyond a country that could guide a thousand missiles through any front door in Libya in 10 seconds to make sure that there was an open internet network for Libyans to access right now? Surely not.
The world has changed. We are more connected and the electronic pen is showing it’s might against the repressive sword of dictators. Would it not be right for us to be the enablers of the former rather than just dealers to the later?
An edited version was published at Liberal Conspiracy here.
The sights and sounds of Tahrir Square of the last fourteen days were a humbling reminder of what freedom and democracy can mean to people who have been deprived it. Let us, however, not for a second forget what a struggle it will be for these fledging democracies-the economic instability that was the background to the uprisings will arise again once the joy has given way to the cold light of day, history has also taught us that the Egyptian people will be impatient and when this impatience grows the opportunity for extremism will also.
The democratic tidal wave coupled with economic instability means that most of the dictators in the region will be focusing on looking after their own patches rather then meddling with others, but there is one which has the history and financial backing to cause damage to the new democracies: Saudi Arabia.
Wikileaks confirmed what was an open secret that individuals from Saudi Arabia are responsible for the majority of funding for the Sunni terrorist organisations in the region, including Al Qaeda. However, there was an insight into the Saudi government’s approach when it is alleged on the 29th of January that the Saudi King Abdullah told President Obama that they would bankroll Mubarak’s Egypt if the US withdrew its aid program despite the public uprising.
What must be recognised is that the Saudi Arabian government is fanatical in spreading it’s branch of Islam at the expense of all others; Wahhabism which is considered extremist by most Sunni and Shia muslims. It is not afraid to throw money to those governments who follow its lead donating $49 billion by 2006 . We can be sure that when the financial problems appear in Egypt, Saudi Arabia will be there ready to use its cheque book to spread it brand of religious extremism.
Unfortunately, it would be highly unlikely that the democratic movement in the middle east could effect the totalitarianism of the Saudi government itself (we can hope!): As an absolute monarchy executive, judicial and legislative powers all sit squarely with the King with all financial and political power being exercised by the 7,000 strong royal family. It is also considered one of the most authoritarian governments in the world - a country were political organisations are banned and religious freedom is not recognized. As much as 30% of its population is migrated foreign national, the majority of which are from Southern Asia. With no legal protection they are often treated no more than slaves- last year doctors removed 13 nails and five needles from a Sri Lankian housemaid who stated they were hammered into her as punishment , Amensity’s International list of abuse for is depressingly long
That we have been supportive of such a regime is a shame that we in the west have to carry and history will judge us on. But, one thing we are duty bound is to try to prevent this most corrosive of countries interfering with the likes of Tunisia and Egypt. Like the oil that has made us kowtow to this monarchy, it will try to seep its influence through any cracks appearing in these fledgling democracies- we need to stand guard to mop it up before it poisons the burgeoning flower democracy that is arising in the middle east.
This article was published in Labour Uncut here:
What is really happening in Egypt? And why? The country was close to collapse before the people took to the streets. Inflation has risen over 40% in the last three years, unemployment is rising, and the world food programme reports that almost 20% of its population live under the poverty line. Egypt was cracking under the weight of rocketing food prices, people were angry and Mubarak was the legitimate target.
But simply to remove Mubarak and “leave Egypt alone”, as Simon Jenkins argued this week would be as much a dereliction of duty as neglecting to rebuild Iraq after the tanks had removed Saddam Hussein. What has history taught us, if not that the way to provide a stable democratic government is not to leave a country on its knees, but to stretch out our hand and help it to its feet?
The connection has been often been made with the 1989 uprisings in Eastern Europe, but this is misleading. No matter how paranoid our vision of Islam may be, countries such as Tunisia, Egypt, Jordan are separate entities that have no overarching common idealogical enemy as the Soviet Union was.
Rather, we should be looking at how another recession started in the US (in 1929) affected the world. Then, unstable countries suffocated on their debt, were powerless to act as banks collapsed, unemployment rose and food prices rose, leading to the instability and helplessness that laid the grounds for extremism to rise in 1933. The similarities are striking. If the geographical focus has shifted from central Europe to southern Europe and the Middle East.
The historical exemplar should be the Marshall Plan, and the government and relief in occupied areas (GARIOA) that freely gave Europe and Japan the means to get back to their feet. This altruism after the second world war is the one of the few examples of intervention leading to stable government and the flourishing of democracy.
After so much blood on our hands from pushing the region from one post to another, walking away from the Middle East may seem like a logical step; but it would also be the cowardly one. Let’s be brave enough to swallow our pride, accept our mistakes and, instead of providing the gun, offer the real tangible support of a friend.
The question is: with our own wealth being squeezed, will we realise that the only way to provide long term stability to the Middle East is to put into place the structural and industrial practices that will ultimately lead to long term self reliance of these soon to be emerging democracies?
In the legend Faust promises his soul to the devil to taste power and looking at the Liberal Democratic party currently the question is pertinent; who are the Liberal Democrats right now and what is the soul of the party?
This morning Nick Clegg stated that if he had his way he “would not be increasing tuition fees” so is this a necessary deal with the devil?
The Liberal Democrats has long been known as supporting social liberalism. Its core being strong on individual rights, consititutional and civil reform, but also strong in providing backing of the welfare state to provide a fair level playing field for the individual. The coalition with David Cameron’s “Big Society” Conservatives has lead to the liberal individual becoming the ideological glue that joins the parties.
Nick Clegg is fond of stating the coalition is about compromise, it would seem the compromise here is selling of the Liberal’s Democrat’s backing of social welfare at the promise of Liberal constitutional reforms, the key being electoral reform. The point could not be clearer made by the portfolio Nick Clegg took on; Constitutional reform, not social justice, but political justice.
By selling the previous promises the Liberal Democrats may in the short run gain, but as the legend reminds there is a always a higher cost. For the Liberal Democrats this faustian pact could gain them electoral reform but the cost will be more intangible values of trust, integrity and half it’s ideological soul