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If Anne Pettifor Is Right, We're Screwed.....

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http://en.wikipedia.org/wiki/Ann_Pettifor

 

In 2003 she correctly predicted the bursting of the credit bubble ("The Credit Crunch") in a book she edited for the New Economics Foundation The Real World Economic Outlook (Palgrave, 2003)

 

Pettifor isn't alone in predicting GFC Mk II, but she seems considerably more pessimistic than many of the other doomsayers. Of course, she does have an agenda - she wants to see 3rd World debt 'restructured' (a euphemism for wiping the slate), but she does have a track record when it comes to identifying the root causes of various catastrophes - she studies Argentina in the early noughties and made the prediction that other countries would find themselves in the same position when their debts became unserviceable.

 

http://en.wikipedia.org/wiki/Argentine_economic_crisis_%281999%E2%80%932002%29

 

Its easy to dismiss her as just another crackpot economist with an axe to grind, but many of the 'crackpots' have (sadly) been proven right over the last 5-6 years. In her interview on ABC Oz last night, Pettifor made some very altruistic (Utopian might be a better word..) suggestions:

 

- governments need to lay down the law to the banking sector : the bailouts were their big chance and they blew it

- heavy taxes on any form of speculative loan

- no more bonuses for banking execs (yep, she really said that)

- wipe the slate with countries like Greece to allow their economies to get back on their feet.

 

'Utopian Socialism' ? Sure, but at least she had something to offer beyond the usual 'We're all going to hell, and I predicted it in my book 3 years ago !'. I mightn't be the sharpest tool in the shed, but carrying too much debt isnt a terribly obscure economic principle - if individuals can go bankrupt, why not entire countries ? What I find depressing about her solution is that its completely antithetical to the capitalist ideal of risk equalling reward and the cream supposedly rising to the top. What she wants would entail changing not only the culture within banking, but magically turning investors into philanthropists - instead of double-digit returns on my nestegg, I'd be revelling in the warm glow of knowing that the financial system was rock solid. Happy to hear otherwise, but I simply cant see that happening anytime soon - even after the Great Depression, how many countries embraced socialism ?

 

http://www.debtonation.org/2011/04/debtonation-why-its-still-relevant/#more-4724

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http://en.wikipedia.org/wiki/Ann_Pettifor

 

In 2003 she correctly predicted the bursting of the credit bubble ("The Credit Crunch") in a book she edited for the New Economics Foundation The Real World Economic Outlook (Palgrave, 2003)

 

Pettifor isn't alone in predicting GFC Mk II, but she seems considerably more pessimistic than many of the other doomsayers. Of course, she does have an agenda - she wants to see 3rd World debt 'restructured' (a euphemism for wiping the slate), but she does have a track record when it comes to identifying the root causes of various catastrophes - she studies Argentina in the early noughties and made the prediction that other countries would find themselves in the same position when their debts became unserviceable.

 

http://en.wikipedia.org/wiki/Argentine_economic_crisis_%281999%E2%80%932002%29

 

Its easy to dismiss her as just another crackpot economist with an axe to grind, but many of the 'crackpots' have (sadly) been proven right over the last 5-6 years. In her interview on ABC Oz last night, Pettifor made some very altruistic (Utopian might be a better word..) suggestions:

 

- governments need to lay down the law to the banking sector : the bailouts were their big chance and they blew it

- heavy taxes on any form of speculative loan

- no more bonuses for banking execs (yep, she really said that)

- wipe the slate with countries like Greece to allow their economies to get back on their feet.

 

'Utopian Socialism' ? Sure, but at least she had something to offer beyond the usual 'We're all going to hell, and I predicted it in my book 3 years ago !'. I mightn't be the sharpest tool in the shed, but carrying too much debt isnt a terribly obscure economic principle - if individuals can go bankrupt, why not entire countries ? What I find depressing about her solution is that its completely antithetical to the capitalist ideal of risk equalling reward and the cream supposedly rising to the top. What she wants would entail changing not only the culture within banking, but magically turning investors into philanthropists - instead of double-digit returns on my nestegg, I'd be revelling in the warm glow of knowing that the financial system was rock solid. Happy to hear otherwise, but I simply cant see that happening anytime soon - even after the Great Depression, how many countries embraced socialism ?

 

http://www.debtonation.org/2011/04/debtonation-why-its-still-relevant/#more-4724

 

Both systems have major issues but I would gladly choose a free market over an "ism" any day.

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Both systems have major issues but I would gladly choose a free market over an "ism" any day.

 

Fair point, but I think her suggestions for a 'fix' even go beyond that - communist countries are notoriously corrupt, and that doesnt bode well for whoever is in charge of the circus doing the 'right thing'. Somehow, Ann expects human nature to magically transform from greed to good overnight ....

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Hi,

 

I can see her point about the bailouts though. The way the financial institutions were dealt with in the US is disgusting.

 

"Yeah, you fucked up intentionally and made a shitload of money while bankrupting the company. So, here's xx Million dollars. Oh, and don't do this again, okay?"

 

All those wankers should have gone to jail, yet they get a golden handshake instead. Totally fucked up.

 

Sanuk!

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Its the Eurozone that seems to be in the biggest mess.The politicians cant accept that the single currency has been an experiment that has failed.If Greece,Ireland etc. still had their own currencies and didnt have the implicit guarantees that being in the Eurozone conveyed,would the markets have allowed them to become so indebted.I dont think so.Now,these weaker countries know they can get away with fiscal irresponsibility because they are " too big to fail " and will be subsidised by the stronger economies.

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Hi,

 

Yep, which is pretty much what a lot of us already expected when the Euro was introduced. It's no wonder that a lot of people in many of the Western European countries with strong currencies / economies did NOT want to move to the Euro. Seem to recall referendums in Germany, Denmark and France all voting against the Euro. Of course the politicians went ahead with it anyway.

 

Turning it back now is likely gonna be all but impossible, or at least a huge amount of work.

 

Sanuk!

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The saner economists seem to feel that the best approach is to allow the PIIGS countries to revert to their old currencies, with the necessary devaluation to make their exports competitive again. Tying Portugal's economy to Germany's, to my way of thinking, seemed like a pretty dumb idea to begin with.

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Well it didn't seem to do the Poms much good keeping the pound, or am I missing something here? :huh:

 

I dont think anyone in the region lives in a vacuum, but Britain seems to have had problems since they realised their 'holier-than-thou' banking system wasnt the rock they thought it was. The latest UBS scandal only proves that they still havent got it right.

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The saner economists seem to feel that the best approach is to allow the PIIGS countries to revert to their old currencies, with the necessary devaluation to make their exports competitive again. Tying Portugal's economy to Germany's, to my way of thinking, seemed like a pretty dumb idea to begin with.

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