Transcript HOW TO SOLVE THE CRISIS?

HOW TO SOLVE THE CRISIS?
Dr. Zoltan Pogatsa
V or W shaped?
L-shaped:
• Corporate capitalism
• Corporate party financing
• State capture
• Unsustainable corporate, household and state
finances
• Crisis
Rate of profit
Marx: falling
Reality: growing
Question: WHO WILL BUY THE PRODUCTS?
Answers
1. Mediatised consumerism
2. Borrowing from the future (debt)
3. Ridding the state of resources (tax cuts,
offshore)
4. Geographical expansion (CEE, China, BRICS)
5. Environmental degradation
6. War
Mediatised consumerism
RIDDING THE STATE OF
RESOURCES
EVER SMALLER STATE
Because it is „too large”
Financial deregulation
(Johnson & Kwak „13 Bankers”)
Banking compensation
Securitization
Offshore (Shaxton: Treasure Island)
Tax Justice Network Financial Secrecy Index:
1. US
2. Luxemburg
3. Switzerland
4. Cayman Islands
5. UK
• Rich individuals in offshore: a complete yearly
US GDP
• Corporations: Vodafone, Google, Enron, Wizzair,
CBA….
War
Sovereign indebtedness
Household indebtedness
Geographical expansion
• CEE, BRIC, etc.
• New consumers for corporations
• Cheap labour offshoring for corporations
ENVIRONMENTAL
DEGRADATION
Responses so far
•
•
•
•
•
Anticyclical fiscal expansion
Monetary easying (QE1&2, ECB)
Austerity (Stiglitz, Soros, etc.)
No regulation
No sustainability
Why don’t politicians act?
Finance
Chris Dodd, Chair of Senate Banking Committe received $2.9mn from
securities industry in 2007-2009, more than three times any senator who
was not a presidential candidate. („13 Bankers”)
Defense
Lockheed Martin is the biggest campaign sponsor of Buck McKeon (chair,
Congress Military Forces Commitee) and Daniel Inouye (chair, Senate
Military Procurement Committe).(Hartung „Prophets of War”)
Offshore
Lord Ashcroft, Chairman of UK Conservative Party is a tax citizen of Belize.
Revolving door
Robert Rubin (Goldman>Glass-Stegall>Citi), Dick Cheney (Halliburton)
How to solve the crisis?
Cut the nexus between
corporations and government.
GREECE
Greek state not big!
Revenue side problem!
Greece
• 3-5% of GDP in Offshore (mainly Cyprus)
• Military expenditure: EU countries sold €1bn
worth of military to Greece in 2010
• Would need 6-8% growth to get out of
sovereign debt trap
• Will not happen with 5th wave of austerity
Cheap lending in €uro
€urozone not an optimal currency area
Not a productivity issue!
But a wage issue!
Germany benefitted from €z
Greece had deindustrialised in free
trade
THANK YOU!
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