PRIME is an economic think-tank that promotes understanding of the nature of credit, and its role in determining macroeconomic outcomes. Fundamental to our approach is an implicit and explicit restoration of ethics in relation to money and credit.
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15th May 2012 Today’s GDP figures from Eurostat and several national ministries, following trade and (un)employment figures, show more clearly than ever the centrifugal force of the European crisis. Germany’s GDP grew by 0.5% in the first Quarter (Q1) of 2012, an export-led rebound from Q4 2011, when it declined by 0.2%. Greece, on the other hand, is still on Charon’s ferryboat (price one Greek coin) across the river Styx to the economic Underworld, as the following GDP graph from the Hellenic Statistical Authority shows… yes, graphically. Professor John Weeks has arranged for this letter to be published in the forthcoming Newsletter of the Royal Economic Society. The letter is signed by, amongst others: Ann Pettifor, Michael Burke, Geoffrey Harcourt and Ha-Joon Chang. The letter and its signees can be read below: Continue reading… › 11th May 2012 Today’s chart from the Office for National Statistics on UK construction investment tells it all – falling public investment does not “free up” the private sector. On the contrary….:  Source: Construction: Output & Employment - Office for National Statistics New Work (constant prices, seasonally adjusted); Public and Private Infrastructure In April, Ann Pettifor was interviewed by the Renegade Economist. They discussed regulating the banks, the rise of the far right in France, economists as “hired guns,” and what we as a society can do about it. Watch the video below to view the whole interview: Jörg Asmussen, German Member of the Executive Board of the European Central Bank (ECB), today (8th May) gave an interview to the business newspaper Handelsblatt in which he went out of his way to make clear that the ECB will ignore any election results which go against existing ECB policy. Prime has translated his key messages to France and Greece following Sunday’s elections, in view of their public interest. His message to President Hollande: “I expect France to transpose the Fiscal Pact unchanged. Furthermore, I assume that the new government will maintain the commitment that the government deficit will in the next year once again be brought under 3%. It must be clear to all that the Fiscal Pact – completed with a growth element – will not be weakened in its substance.” And to Greece, “Greece must be clear that there is no alternative to the agreed recovery programme if it wants to remain a member of the Eurozone.” Final real translation – European politicians and peoples – elect who you like, but you must do what your unelected and unaccountable central banker tells you. There is no acceptable alternative! Er, is that clear enough? (Previously published in SOAS CDPR Development Viewpoint Number 72, April 2012) While monetary policies have been dominated by restrictive ‘inflation targeting’ across the world over the last two decades, one of the last places to look for progressive economic policy has been a central bank. Most commentators would have assumed, in effect, that no central bank in the world was pursuing a growth-focused mandate. Yet in Argentina in March 2012, the legislature and the president approved a new Ley Organica for the central bank that incorporates an unambiguous growth mandate (See jweeks.org). This is in stark contrast to Argentina’s earlier monetary policies. During the 1990s, for instance, the government dedicated itself to a neoliberal economic regime, marked most infamously by the adoption of a ‘currency board’ monetary regime. The currency board tightly tied Argentina’s domestic money supply to the central bank’s holdings of foreign exchange. Continue reading… › 25th April 2012 While preliminary estimates of GDP can be out by a few decimal points, today’s negative figure for the first quarter of 2012 (-0.2% from Q4 2011) is bad enough news for the government. And all the more so since it shows the UK to be in ‘technical recession’ – even if the word ‘technical’ seems a little too, well, technocratic for those bearing the brunt of the consequences. If over the last two years, the ONS has sometimes seemed to be searching for ‘government-acceptable’ excuses for disappointing GDP figures (“it’s the snow, the warm weather, the Royal Wedding…”), on this occasion the worm appears to have turned. A brave note by Ms Malindi Myers of the Office for National Statistics, accompanying the GDP bulletin, pulls no punches: “Over the past year the economy has therefore not grown at all, and total output is now 0.2 per cent lower than it was six quarters ago, in the third quarter of 2010. While GDP fell by 7.1per cent from peak to trough during the recession in 2008 and 2009, it has subsequently recovered less than half that loss, and output is still 4.3 per cent below its pre-recession peak.” She also points out that 4 of the last 6 quarters have shown (horrible phrase) “negative growth”. By Jeremy Smith, 25th April 2012 Today’s “negative growth” GDP figures tell us that the economy is probably smaller today that a year ago. And we may expect that, once again, the Office for Budget Responsibility and other experts will soon have to reduce their estimates for the UK economy in 2012. But on close examination of last month’s Budget Report, we can see that the Government has sneaked in its very own – highly significant – downgrade in its outlook for the economy – as well as seeking to downplay the role played by excessive private debt – especially of the financial sector - in the UK’s economic difficulties. I’ve just received a copy of John Weeks’ new book, The Irreconcilable Inconsistencies of Neoclassical Economics: A False Paradigm (Routledge). Especially in the light of the current economic crisis, this book challenges the fundamental premises of mainstream neoclassical economics and appeals to economists to formulate an alternative based on the thinking of Marx and Keynes. We need to challenge the dominance of neoclassical economics, with its emphasis on speculation, the delusion of easy financial gain, and perpetual, unsustainable growth. The New Statesman has included a contribution by Ann Pettifor on its rolling blog, in which she warns that “The threads holding up the balance sheets of the banks are growing perilously thin.” The entire article is quoted below: The finance sector is signalling alarm, and our politicians are once again asleep at the wheel. Another “credit crunch” may be looming. The most significant evidence emerged from the ECB’s second Long Term Refinancing Operation (LTRO) on Thursday last week. |
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