Transcript Power and instability of the financial sphere Hersel ESU2008

Forum 3 “Power and instability of the
financial spere”
South-East-Asian Crisis and the
current Subprime-Crisis –
Different Crises, same solution?
European Attac Summer University
Saarbrücken, 5th August 2008
Philipp Hersel
Financial Crisis then and now – Differences:
Who is affected?
• Periphery (“emerging markets”) vs. Center (“heart of
the beast”)
Who manages?
• IMF vs. governments and central banks of the
affected countries
Is it systemic?
• Both were, but todays crisis seems to be far more
difficult to judge
Who bears the brunt?
• Poor and middle-class people in the South vs.
investors, poor house owners AND ?????
Differences and its implications for today:
• Far more difficult to mobilise solidarity and activism
• No comparable spill-over (so far !!!) to the real
economy
• The managers are really committed to limit the spillovers  far more difficult to attack them (e.g. no
simple “Bad Guy” like the IMF)
• Concessions at least on rhetoric level
• Some willingness on the investors’ side to limit risks
Similar analysis , but we should refocus
Joint analysis:
• Liberalised financial markets cause major risk
• Capital mobility undermines social and workers rights
and causes reckless competition at the expense of
financial stability, human dignity and justice
 Our Focus in South-East-Asian Crisis:
Excessive CAPITAL FLOWS are at the heart of the
problem
 Today we should refocus our analysis:
Excessive CAPITAL is at the heart of the problem
Distribution, stability and justice
Increasing unequal distribution puts economic stability
at risk:
• The gap between investment seeking money and
profitable real invest widens, because lack of demand
• Investment seeking money goes into the secondary
market and derivatives of the existing stock of real
capital (I.e. profitable corporations, real estate etc.)
periodic BUBBLES and CRISES, frequency rises with
unequal distribution
This can only be prevented by fundamental
redistribution
Lets start on the European Level:
Our message: The world we advocate for is not just
about more justice, but also about more economic
stability and prosperity
• Stop the ECB Focus on monetary stability but and
widen it with employment and growth
• Higher wages in Europe, particularly for the lower
income groups, are a necessary prerequisite to ask
them to buy environmentally, socially and fair traded
goods
• Advocate a concrete Alternative European Policy
Framework , e.g. Clearing Union-type of BoPRegulation instead of EMU Stability pact.
Imbalances today: Germany and the EU
Quelle: Statistisches Bundesamt 2007
Germany and Developing Countries
Quelle: Statistisches Bundesamt 2007
Current Account Balances today
Anteile an Entwicklungsländern mit positiven und
negativen Leistungsbilanzen
100%
80%
60%
negative LB
40%
positive LB
20%
Quelle: IMF Direction of Trade Statistics 2007
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