Nèdeem Elmahjoub's blog

Coronavirus will require us to completely reshape the economy Will it?

Disease, debt and depression

The Debt Delusion

Greece: Financial terrorism and Tsipras' capitulation "Syriza became yet another party of the state. This was reflected, not just in the predictable results of their management of austerity (poverty continues to rise , the health system is still undergoing perpetual crisis and shortages , etc), but in the wider conservatism of the government. Though it promised to reform foreign policy, democratise the security forces, and support migrants, Syriza wet in the opposite direction on almost every front. Never before, at least since the dictatorship, has the Greek state's foreign policy been so closely aligned to the US and Israel . Tsipras referred to Jerusalem as Israel's capital before Trump did. On immigration, too, Syriza has been servile, bailing Merkel out with a  deal favouring what used to be called  'illegal pushback'. It has deployed security forces against refugee rights movements. The old security state, with its record of corruption and far-right co

Also goes by the name "the international mother fucker" It is more beautiful when it is headed by a feminist/a feminist mother.  There is no shortage of people who want to lead a criminal institution with a global reach and they are proud of it. I recommend Eric Toussaint's writings

Turkish Voters Upset Erdogan Competitive Authoritarianism Note: " Erdogan refused to take an IMF loan to bolster finances because it would mean severe austerity measures being imposed.  The net foreign assets figure, a proxy for the country’s financial defences, slumped by $9.4bn between March 6 and March 22 to $19.5bn, the lowest level on a US dollar basis since 2007. Excluding swaps, net foreign assets have stood at less than $11.5bn during the entire month of April, down from $28.7bn at the start of March on the same basis." —Michael Roberts blog

An admission that this one of the inherent aspects of capitalism In Tooze’s view,  “These crises are hard to predict or define in advance,”  and, short of more regulation, there is nothing we can do. In a way, as long as capitalism continues as the dominant mode of production globally, that is pretty much right.  That reminds me of what Greenspan said in his final summation of the crisis: “ I doubt that stability is achievable in capitalist economies, given the always turbulent competitive markets continuously being drawn toward but never quite achieving  equilibrium” . He went on,  “unless there is a societal choice to abandon dynamic markets and leverage for some form of central planning, I fear that preventing bubbles will in the end turn out to be infeasible. Assuaging the aftermath is all we can hope for.” Crashed: more the how than the why

"US imperialism continues to reveal its long-term vulnerability. The US now has a net investment liability with other economies in the world to the tune of 9.8% of world GDP.  This compares with countries which are net creditors: Japan (3.9%), Northern Europe (6.4%) and China (2.3%).  This US net liability measures the stock of investment and the amount of credit made by other countries into the US after deducting US investment and loans abroad.  US imperialism is extracting more net value from other economies to fund its growth, but at the expense of becoming more dependent on ‘tribute’ rather than trade.  The IMF forecasts that the US net liability to foreigners will reach 50% of its GDP by 2023, or 10.7% of world GDP.  That compares with the combined liability of the exploited peripheral economies of the world of 7.8%.  US imperialism gets away this because it is still the world’s largest economy, with the biggest financial sector, with the dollar as the world reserve currency

The unsevered umbilical cord that leaves large swathes of the Global South economically reliant on their old colonial powers, even after formally attaining national independence, is the  structural dependence  of these peripheral states on foreign credit and investment, which has long been provided to them by private banks, international investors and financial institutions in the advanced capitalist countries. Subjecting the nature of this structural dependence to closer theoretical and empirical scrutiny may therefore allow us to approach the problems faced by “the new debt colonies” from a somewhat different angle, enabling us to better understand the more subtle contemporary forms of financial subjugation operating at the structural and institutional level that serve to reproduce these deeply entrenched international power asymmetries over time, even in the absence of territorial control or outright military intervention. The New Debt Colonies should be read along with Imperial

"The use a loan is put to is not fundamnetal for characterizing the debt as odious. Financial support for a criminal regime, even if it happens to build a school or a hospital, amounts to consolidating the said regime. The nature of the regime aside, the use of funds should suffice to qualify debts as odious whenever these funds are used against the populations's major interests or when they directly enrich the regime's inner circle. Thus, debts incurred within the framework of structrural adjustments fall into the category of odious debts, since the destructive character of the SAP [Structural Adjustment Program] has been clearly shown, including by UN agencies." Toussaint and Millet, 2010, pp. 249-50

"Repaying the debt is an essential obstacle to satisfying basic human needs, such as access to clean water, decent food, basic health care, primary education, decent accomodation, and satisfactory infrastructure. Without any doubt, the satisfcation of basic human needs must take priority over all other considerations, be they geopolitical ot financial. From a moral point of view, the rights of creditors, shareholders, or speculators are insignificant in comparison with the fundamental rights of five billion citizens. Debt is one of the main mechanisms through which a new form of economic colonization operates to the detriment of the developing countries. It is one more brick in the edifice of historic abuses, also carried out by the rich countries: slavery, pillage of raw materials and cultural goods, extermination of indigenous populations, and colonial servitude. The time is overdue to replace the logic of domination by the logic of redistribution of wealth in the name of jus

With a few rare exceptions, "most governments [of the developing countries] have not been willing to act counter to neoliberal policy. The links between the leaders of these countries and the hub of decision making in most industrial countries are multifarious. Some of the ruling presidents, in particular in Africa, were brought to power during the Cold War, or owe their positions to it. Some are in power because they helped the elimination of or allowed the overthrow of heads of states who, like Thomas Sankara, the President of Burkina Faso and assassinated in 1987, wanted to commit their country to alternative, locally generalised development and social justice. Others simply prefer to follow the neoliberal current for fear of being destabilized or overthrown. But there is another factor of conservatism that works in favour of large debt and should not be underestimated. Most governments, both left and right wing, try to gain the goodwill of the local capitalists who have eve

"Since 1988 each debt relief scheme for the poorest countries results in another, always too late and always ill-adapted. It must not be forgotten that debt is much mroe than finnancial mechanism: it is a powerful instrument of dimination that for decades has allowed the leaders and big business of rich countries, with the complicity of the South's ruling class, to impose an economic model that serves their interests." Toussaint and Millet, Debt, the IMF, and the World Bank , 2010

"The financial crises that affected the developing countries between 1994 and 2002, resulting from the deregulation of the market and the private financial sector as recommended by the World Bank and the IMF, led to an enormous increase in internal public debt. In short, by following the Washington Consensus, governments of developing countries had to give up their currency and capital controls. This was combined with the deregulation of the banking sector in different countries. Private banks had to take more and more risks, which led to numerous crises, beginning with Mexico in December 1994. Capital was massively withdrawn from Mexico, sparking off a chain reaction of bank failures. The Mexican government supported by the World Bank an dthe IMF, transformed the banks' private debt into internal public debt. This took place in extactly the same way in countries as different as Indonesia ((in 1998) and Ecuador (1999/2000).  In addition, even in those countries whose bank

"Development" Between 1970 and 2007, the external debt of the developing countries was multiplied by twenty-nine. During this time, they repaid the equivalent of ninety-four times the amount owed in 1970. Between 1985 and 2007, developing countries sent to their creditors the equivalent of 7.5 Marshall Plans*...with the local capitalist elite taking their commission on the way. It is a well-oiled mechanism, with part of the money coming back to the South in the form of new loans to ensure that the transfers continue. Thanks to the debt, the wealth of the citizens of the South is being transferred under our very eyes to the elite of the North, with the complicity of the elite of the South. * Marshall Plan cost around $100 billion in 2010 value. Toussaint and Millet, Debt, the IMF, and the World Bank,  2010

A stock market crash?

Tunisia Excluded from the national consensus that has brought together Islamist party Ennahda and the secular Nidaa Tounes, marginalized social categories (such as unemployed youth or inhabitants of the country’s least economically advanced regions) have protested at the lack of a credible development plan after decades of underinvestment and neglect by the central authorities. Inevitably, they have been recalcitrant to acknowledge the increasingly dangerous economic situation and the price to pay for the increasingly painful adjustment. Unable to manage their expectations, post-uprising governments have chosen to try and meet these groups’ demands now, rather than present a convincing long-term plan for sustainable development, thus avoiding any confrontation. As Tunisia has become too important to fail, the international community’s implicit insurance against any risk of sociopolitical disaster has made this bargain possible. Rentierism, patronage and moral hazard

I am reading Debt, the IMF and the World Bank by Éric Toussaint and Damien Millet. It is an indictment of the IMF as an international criminal organisation of enslavement. "Following the exigencies of the governments of the richest companies, the IMF, permitted countries in crisis to borrow in order to avoid default on their repayments. Caught in the debt's downward spiral, developing countries soon had no other recourse than to take on new debt in order to repay the old debt. Before providing them with new loans, at higher interest rates, future leaders asked the IMF, to intervene with the guarantee of ulterior reimbursement, asking for a signed agreement with the said countries. The IMF  thus agreed to restart the flow of the 'finance pump' on condition that the concerned countries first use this money to reimburse banks and other private lenders, while restructuring their economy at the IMF's discretion: these were the famous conditionalities, detailed in th

Some good and valid arguments, including facts. I wonder though why investment (the engine for growth) and the rate of profit (the life blood of capitalism) are totally absent in the article. Has western-style democracy become too expensive for capitalism?

The future of universities