Category: Global economics

Ignore the markets – or how to really defeat the economic crisis

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By Jonathan Power

What have these eleven countries in common – Finland, Norway, Canada, Japan, Poland, Turkey, Australia and, to a lesser extent, the US, Russia, Sweden and Denmark? They have not put themselves through the economic purge and their economies are growing at a reasonable rate. Not for them savage cuts in social services and public investment combined with lower wages. They have kept their economies purring. They are pro-Keynesian – a policy attributed to John Maynard Keynes, the most brilliant economist of the last century, in an age when there were many brilliant economists, both of the left, the middle and the right.Read More »

The face of the crisis – and some alternatives

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By Johan Galtung

From Madrid, Universidad Nacional de Educación a Distancia-UNED, Foro Los Nuevos Problemas Sociales, 24 Mar 2012

Here is one of the hidden faces of the economic crisis:

(¶C/¶t) + (¶C/¶S)rS + (1/2)(¶2C/¶S2)q2S2 = rC

The famous Black-Scholes equation to find the “correct price” for financial derivatives. Based on partial derivatives over time, this is classical calculus for continuous change; useful within a zone of stability, but not at the edge of that zone, the tipping points explored in René Thom’s catastrophe theory years earlier.

Black-Scholes is intellectually like calculating increasing speed of an accelerating car heading for a wall or an abyss. But, with warnings, no 1997 “Nobel Prize in Economics” (actually a Swedish State Bank’s prize honoring Alfred Nobel)? And one year later their company “Long Term Capital Management” had lost $100 billion and collapsed. The trade in derivatives is now at $1 quadrillion a year (15 zeros), ten times the industrial economy of the whole 20th century. Many got rich, but the system collapsed. Maybe prison would have been more adequate for intellectual sloppiness?Read More »

Africa’s lions are roaring

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By Jonathan Power
Abuja, Nigeria

Approximately half the people of Africa own a mobile phone. In many African countries phone technology is ahead of Europe and North America. Money can be transferred from the city to an upcountry village. Bills can be paid. In Ghana farmers can receive text messages reporting the price of yams and corn two towns away and thus find the best market without a middleman. In Kenya residents of small villages can receive texts to say when the perambulating doctor will next be coming. In parts of West Africa nurses are storing patients’ data on phones.

It may be more difficult to build up fast internet penetration on pcs but in some countries 40% of mobile owners are using phones for email and the internet. The IMF says that the telecommunication sector is adding 2% to Nigeria’s already handsome annual economic growth.

Black Africa has come late to the party but a majority of its 48 countries is leaping ahead. Read More »

Nigeria – I have seen the future and know it works

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By Jonathan Power

Did you know that Nigeria, the most populated country in black Africa, is now one of the top five fastest growing big economies in the world? (The others are China, India, Turkey and Argentina.)

The image of Nigeria is of poverty, crime, corruption, election fiddling and maladministration. Africa, I find from my family and friends, is still a continent where death stalks – war, starving children and impoverished refugees.

But the tale of progress is unsung. This wretchedness is the only news that penetrates. Only one western newspaper, the Financial Times, has a full time correspondent in Nigeria where one third of all the black people in the world live. The rest get their news from the fickle eye of television and the rest of the newspaper pack.Read More »

Japan’s spiritual crisis

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By Johan Galtung

From Kyoto, Japan: A grey, cold Sunday morning, fitting the sad theme.

The Japan Times, an excellent middle wing newspaper, came in the middle of the night, with four typical stories, for a starter.

We approach the 3/11 anniversary. The earthquake struck on 11 March 2011, followed by the tsunami and the near meltdown of Fukushima No. 1 nuke plant. On 11 March 2004, terrorism struck the Atocha train station in Madrid. A bad date; may inspire somebody.

We read: “Worker at No. 1 nuke plant died from ‘overwork’. He was dispatched by a subcontractor, a construction firm based in Shizuoka, and started working at Fukushima No. 1 on May 13. On his first day he engaged in piping and other work in a waste disposal facility at the complex, but complained of not feeling well the following morning. He was immediately taken to a hospital and died shortly afterwards–radiation still high around Fukushima No. 1–640 km off the coast of Fukushima.” A private construction firm.Read More »

Waking Up from the Nightmare

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By David R. Loy

Buddhist Reflections on Occupy Wall Street

In a Buddhist blog about Occupy Wall Street, Michael Stone quotes the philosopher Slavoj Žižek, who spoke to the New York Occupiers at Zuccotti Park on October 9, 2011:

“They tell you we are dreamers. The true dreamers are those who think things can go on indefinitely the way they are. We are not dreamers. We are awakening from a dream which is turning into a nightmare. We are not destroying anything. We are only witnessing how the system is destroying itself. We all know the classic scenes from cartoons. The cat reaches a precipice. But it goes on walking. Ignoring the fact that there is nothing beneath. Only when it looks down and notices it, it falls down. This is what we are doing here. We are telling the guys there on Wall Street – Hey, look down!”

As Slavoj and Michael emphasize, we are beginning to awaken from that dream. That’s an interesting way to put it, because the Buddha also woke up from a dream: the Buddha means “the awakened one.” What dream did he wake up from? Is it related to the nightmare we are awakening from now?Read More »

Those poor, moody credit rating agency standards

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By Johan Galtung

What are the three credit rating agencies, Standard & Poor’s, Moody’s, and Fitch – 95 percent of the rating “industry” – about? Not very transparent, yet “Standard & Poor’s: silent but deadly” (El País, 16 Jan 2012), stimulates some reflections.

The agencies are US, which goes well with the tendency of the USA to sit in judgment of other countries. It also goes well with something more dangerous: the tendency of other countries to take that judgment seriously. The new prime minister of Spain said he needed no lecturing (from the agencies) on the Spanish economy; but the downgrading shook Spain. Why does Europe not have its own agencies, rating all 50 US states, for instance, like US agencies rate EU members? Read More »

Davos: The 1% world

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By Johan Galtung

From Alfàz del Pi, Spain

We are heading for a new load of advice from the self-appointed “World Economic Forum”, still having fresh in mind their utter inability to come to grips with the September 2008 manifestation of the world economic crisis when they met three years ago. So, what are they going to talk about now?

Lee Howell, in “The failure of governance in a hyperconnected world”, International Herald Tribune, 11 Jan 2012, gives us a preview. Read More »

The 10th anniversary of the Euro – the creation of a politically united Europe?

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By Jonathan Power

Writing in 1751 Voltaire described Europe as “a kind of great republic, divided into several states, some monarchical, the others mixed but all corresponding with one another. They all have the same religious foundation, even if divided into several confessions. They all have the same principles of public law and politics unknown in other parts of the world.”
Ten years ago, this January 1st,  in a way that Charlemagne, Voltaire, William Penn and Gladstone, the early advocates of European unity, could only dream, a united Europe became a reality. A single currency was the most dramatic of the steps taken towards what surely one day will be a single political entity.Read More »

Taming the financial monster – or Rosa Parks of today

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By Jonathan Power

Every so often, but not very often, the tectonic plates in society visibly move. In the last century it was the impact of the Great Recession closely followed by a second massive war in a century that pushed both the victorious and the losers in the direction of a welfare state, albeit the Europeans, Canadians and Japanese moved at a much faster rate than the Americans.

If Chancellor Angela Merkel of Germany is right and the present financial crisis is the worst upheaval since then, perhaps we are on the cusp of a major change in the governance of not just Europe, Canada and Japan but of the semi-isolationist US as well. The occupied streets and squares of some major cities suggest it. Never before in my memory have protestors gained such support from non-demonstrators. The liberals and social democrats have supported them, but so have the centrists and even some on the right.Read More »