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Mark Carney: Bank Of England Can’t Stop UK House Price Inflation

Mark Carney: Bank Of England Can’t Stop UK House Price Inflation.

 

mark carney

Governor of the Bank of England Mark Carney speaks during the bank’s inflation report news conference in central London. | Dan Kitwood/WPA-Rota

Mark Carney has warned that the Bank of England could not directly stop wealthy foreign buyers pushing up house prices by snapping up expensive properties in the capital.

Appearing before the Treasury select committee, the Bank of England governor admitted that the central bank lacked the “tools that would directly affect” cash buyers of property, who are typically wealthy foreigners. He also warned that the rising house prices in the capital could spread to the rest of the country.

“We have to be alive to that possibility,” he said, adding that the Bank’s concerns about the standard of underwriting for mortgages remain “quite high” but “vastly improved relative to pre-crisis levels”.

Carney added: “Our concern is those standards would deteriorate, fed by general improvement in housing market. That’s a pattern of behaviour we’ve witnessed over time so we’re taking steps to ensure that doesn’t happen.”

 

However, the Bank governor refused to be drawn on the effects on the housing market of George Osborne’s Help to Buy mortgage guarantee scheme, insisting that it is “still early days” and Bank officials are “watching closely”.

 

Carney previously warned that about the limits of the Bank of England’s influence on the housing market, telling the BBC last month: “The top end of London is driven by cash buyers. It’s driven in many cases by foreign buyers. We as the central bank can’t influence that.”

 

“We change underwriting standards – it doesn’t matter, there’s not a mortgage. We change interest rates – it doesn’t matter, there’s not a mortgage, etc. But we watch the knock-on effect.”

 

Under questioning by MPs, Carney also defended his decision to change the Bank’s forward guidance from seeing policymakers consider raising interest rates if unemployment rate fell to a 7% threshold to instead considering it based on 18 indicators. Tory MP Brooks Newmark mocked the decision as a “bait-and-switch” for what he called “fuzzy” guidance over interest rates.

 

Carney said: “The key uncertainty around unemployment is the pace of recovery and productivity in economy. The unemployment rate has come down faster than we expected but we were careful to underscore that this was state dependent guidance not a promise of time.”

 

“I have absolutely no regrets that we are sitting here in March with amost half a milion people more in work and inflation at target.”

 

Mark Carney: Bank Of England Can't Stop UK House Price Inflation

Mark Carney: Bank Of England Can’t Stop UK House Price Inflation.

 

mark carney

Governor of the Bank of England Mark Carney speaks during the bank’s inflation report news conference in central London. | Dan Kitwood/WPA-Rota

Mark Carney has warned that the Bank of England could not directly stop wealthy foreign buyers pushing up house prices by snapping up expensive properties in the capital.

Appearing before the Treasury select committee, the Bank of England governor admitted that the central bank lacked the “tools that would directly affect” cash buyers of property, who are typically wealthy foreigners. He also warned that the rising house prices in the capital could spread to the rest of the country.

“We have to be alive to that possibility,” he said, adding that the Bank’s concerns about the standard of underwriting for mortgages remain “quite high” but “vastly improved relative to pre-crisis levels”.

Carney added: “Our concern is those standards would deteriorate, fed by general improvement in housing market. That’s a pattern of behaviour we’ve witnessed over time so we’re taking steps to ensure that doesn’t happen.”

 

However, the Bank governor refused to be drawn on the effects on the housing market of George Osborne’s Help to Buy mortgage guarantee scheme, insisting that it is “still early days” and Bank officials are “watching closely”.

 

Carney previously warned that about the limits of the Bank of England’s influence on the housing market, telling the BBC last month: “The top end of London is driven by cash buyers. It’s driven in many cases by foreign buyers. We as the central bank can’t influence that.”

 

“We change underwriting standards – it doesn’t matter, there’s not a mortgage. We change interest rates – it doesn’t matter, there’s not a mortgage, etc. But we watch the knock-on effect.”

 

Under questioning by MPs, Carney also defended his decision to change the Bank’s forward guidance from seeing policymakers consider raising interest rates if unemployment rate fell to a 7% threshold to instead considering it based on 18 indicators. Tory MP Brooks Newmark mocked the decision as a “bait-and-switch” for what he called “fuzzy” guidance over interest rates.

 

Carney said: “The key uncertainty around unemployment is the pace of recovery and productivity in economy. The unemployment rate has come down faster than we expected but we were careful to underscore that this was state dependent guidance not a promise of time.”

 

“I have absolutely no regrets that we are sitting here in March with amost half a milion people more in work and inflation at target.”

 

Global riot epidemic due to demise of cheap fossil fuels | Nafeez Ahmed | Environment | theguardian.com

Global riot epidemic due to demise of cheap fossil fuels | Nafeez Ahmed | Environment | theguardian.com.

From South America to South Asia, a new age of unrest is in full swing as industrial civilisation transitions to post-carbon reality
A pro-European protester swings a metal chain during riots in Kiev

A protester in Ukraine swings a metal chain during clashes – a taste of things to come? Photograph: Gleb Garanich/Reuters

If anyone had hoped that the Arab Spring and Occupy protests a few years back were one-off episodes that would soon give way to more stability, they have another thing coming. The hope was that ongoing economic recovery would return to pre-crash levels of growth, alleviating the grievances fueling the fires of civil unrest, stoked by years of recession.

But this hasn’t happened. And it won’t.

Instead the post-2008 crash era, including 2013 and early 2014, has seen a persistence and proliferation of civil unrest on a scale that has never been seen before in human history. This month alone has seen riots kick-off in VenezuelaBosniaUkraineIceland, and Thailand.

This is not a coincidence. The riots are of course rooted in common, regressive economic forces playing out across every continent of the planet – but those forces themselves are symptomatic of a deeper, protracted process of global system failure as we transition from the old industrial era of dirty fossil fuels, towards something else.

Even before the Arab Spring erupted in Tunisia in December 2010, analysts at the New England Complex Systems Institute warned of thedanger of civil unrest due to escalating food prices. If the Food & Agricultural Organisation (FAO) food price index rises above 210, they warned, it could trigger riots across large areas of the world.

Hunger games

The pattern is clear. Food price spikes in 2008 coincided with the eruption of social unrest in Tunisia, Egypt, Yemen, Somalia, Cameroon, Mozambique, Sudan, Haiti, and India, among others.

In 2011, the price spikes preceded social unrest across the Middle East and North Africa – Egypt, Syria, Iraq, Oman, Saudi Arabia, Bahrain, Libya, Uganda, Mauritania, Algeria, and so on.

Last year saw food prices reach their third highest year on record, corresponding to the latest outbreaks of street violence and protests in Argentina, Brazil, Bangladesh, China, Kyrgyzstan, Turkey and elsewhere.

Since about a decade ago, the FAO food price index has more than doubled from 91.1 in 2000 to an average of 209.8 in 2013. As Prof Yaneer Bar-Yam, founding president of the Complex Systems Institute, told Vice magazine last week:

“Our analysis says that 210 on the FAO index is the boiling point and we have been hovering there for the past 18 months… In some of the cases the link is more explicit, in others, given that we are at the boiling point, anything will trigger unrest.”

But Bar-Yam’s analysis of the causes of the global food crisis don’t go deep enough – he focuses on the impact of farmland being used for biofuels, and excessive financial speculation on food commodities. But these factors barely scratch the surface.

It’s a gas

The recent cases illustrate not just an explicit link between civil unrest and an increasingly volatile global food system, but also the root of this problem in the increasing unsustainability of our chronic civilisational addiction to fossil fuels.

In Ukraine, previous food price shocks have impacted negatively on the country’s grain exports, contributing to intensifying urban poverty in particular. Accelerating levels of domestic inflation are underestimated inofficial statistics – Ukrainians spend on average as much as 75% on household bills, and more than half their incomes on necessities such as food and non-alcoholic drinks, and as75% on household bills. Similarly, for most of last year, Venezuela suffered from ongoing food shortagesdriven by policy mismanagement along with 17 year record-high inflation due mostly to rising food prices.

While dependence on increasingly expensive food imports plays a role here, at the heart of both countries is a deepening energy crisis. Ukraine is a net energy importer, having peaked in oil and gas production way back in 1976. Despite excitement about domestic shale potential, Ukraine’s oil production has declined by over 60% over the last twenty years driven by both geological challenges and dearth of investment.

Currently, about 80% of Ukraine’s oil, and 80% of its gas, is imported from Russia. But over half of Ukraine’s energy consumption is sustained by gas. Russian natural gas prices have nearly quadrupled since 2004. The rocketing energy prices underpin the inflation that is driving excruciating poverty rates for average Ukranians, exacerbating social, ethnic, political and class divisions.

The Ukrainian government’s recent decision to dramatically slash Russian gas imports will likely worsen this as alternative cheaper energy sources are in short supply. Hopes that domestic energy sources might save the day are slim – apart from the fact that shale cannot solve the prospect of expensive liquid fuels, nuclear will not help either. A leakedEuropean Bank for Reconstruction and Development (EBRD) reportreveals that proposals to loan 300 million Euros to renovate Ukraine’s ageing infrastructure of 15 state-owned nuclear reactors will gradually double already debilitating electricity prices by 2020.

“Socialism” or Soc-oil-ism?

In Venezuela, the story is familiar. Previously, the Oil and Gas Journal reported the country’s oil reserves were 99.4 billion barrels. As of 2011, this was revised upwards to a mammoth 211 billion barrels of proven oil reserves, and more recently by the US Geological Survey to a whopping 513 billion barrels. The massive boost came from the discovery of reserves of extra heavy oil in the Orinoco belt.

The huge associated costs of production and refining this heavy oil compared to cheaper conventional oil, however, mean the new finds have contributed little to Venezuela’s escalating energy and economic challenges. Venezuela’s oil production peaked around 1999, and has declined by a quarter since then. Its gas production peaked around 2001, and has declined by about a third.

Simultaneously, as domestic oil consumption has steadily increased – in fact almost doubling since 1990 – this has eaten further into declining production, resulting in net oil exports plummeting by nearly half since 1996. As oil represents 95% of export earnings and about half of budget revenues, this decline has massively reduced the scope to sustain government social programmes, including critical subsidies.

Looming pandemic?

These local conditions are being exacerbated by global structural realities. Record high global food prices impinge on these local conditions and push them over the edge. But the food price hikes, in turn, are symptomatic of a range of overlapping problems. Globalagriculture‘s excessive dependence on fossil fuel inputs means food prices are invariably linked to oil price spikes. Naturally, biofuels and food commodity speculation pushes prices up even further – elite financiers alone benefit from this while working people from middle to lower classes bear the brunt.

Of course, the elephant in the room is climate change. According to Japanese media, a leaked draft of the UN Intergovernmental Panel onClimate Change‘s (IPCC) second major report warned that while demand for food will rise by 14%, global crop production will drop by 2% per decade due to current levels of global warming, and wreak $1.45 trillion of economic damage by the end of the century. The scenario is based on a projected rise of 2.5 degrees Celsius.

This is likely to be a very conservative estimate. Considering that the current trajectory of industrial agriculture is already seeing yield plateausin major food basket regions, the interaction of environmental, energy, and economic crises suggests that business-as-usual won’t work.

The epidemic of global riots is symptomatic of global system failure – a civilisational form that has outlasted its usefulness. We need a new paradigm.

Unfortunately, simply taking to the streets isn’t the answer. What is needed is a meaningful vision for civilisational transition – backed up with people power and ethical consistence.

It’s time that governments, corporations and the public alike woke up to the fact that we are fast entering a new post-carbon era, and that the quicker we adapt to it, the far better our chances of successfully redefining a new form of civilisation – a new form of prosperity – that is capable of living in harmony with the Earth system.

But if we continue to make like ostriches, we’ll only have ourselves to blame when the epidemic becomes a pandemic at our doorsteps.

Dr Nafeez Ahmed is executive director of the Institute for Policy Research & Development and author of A User’s Guide to the Crisis of Civilisation: And How to Save It among other books. Follow him on Twitter @nafeezahmed

Global riot epidemic due to demise of cheap fossil fuels | Nafeez Ahmed | Environment | theguardian.com

Global riot epidemic due to demise of cheap fossil fuels | Nafeez Ahmed | Environment | theguardian.com.

From South America to South Asia, a new age of unrest is in full swing as industrial civilisation transitions to post-carbon reality
A pro-European protester swings a metal chain during riots in Kiev

A protester in Ukraine swings a metal chain during clashes – a taste of things to come? Photograph: Gleb Garanich/Reuters

If anyone had hoped that the Arab Spring and Occupy protests a few years back were one-off episodes that would soon give way to more stability, they have another thing coming. The hope was that ongoing economic recovery would return to pre-crash levels of growth, alleviating the grievances fueling the fires of civil unrest, stoked by years of recession.

But this hasn’t happened. And it won’t.

Instead the post-2008 crash era, including 2013 and early 2014, has seen a persistence and proliferation of civil unrest on a scale that has never been seen before in human history. This month alone has seen riots kick-off in VenezuelaBosniaUkraineIceland, and Thailand.

This is not a coincidence. The riots are of course rooted in common, regressive economic forces playing out across every continent of the planet – but those forces themselves are symptomatic of a deeper, protracted process of global system failure as we transition from the old industrial era of dirty fossil fuels, towards something else.

Even before the Arab Spring erupted in Tunisia in December 2010, analysts at the New England Complex Systems Institute warned of thedanger of civil unrest due to escalating food prices. If the Food & Agricultural Organisation (FAO) food price index rises above 210, they warned, it could trigger riots across large areas of the world.

Hunger games

The pattern is clear. Food price spikes in 2008 coincided with the eruption of social unrest in Tunisia, Egypt, Yemen, Somalia, Cameroon, Mozambique, Sudan, Haiti, and India, among others.

In 2011, the price spikes preceded social unrest across the Middle East and North Africa – Egypt, Syria, Iraq, Oman, Saudi Arabia, Bahrain, Libya, Uganda, Mauritania, Algeria, and so on.

Last year saw food prices reach their third highest year on record, corresponding to the latest outbreaks of street violence and protests in Argentina, Brazil, Bangladesh, China, Kyrgyzstan, Turkey and elsewhere.

Since about a decade ago, the FAO food price index has more than doubled from 91.1 in 2000 to an average of 209.8 in 2013. As Prof Yaneer Bar-Yam, founding president of the Complex Systems Institute, told Vice magazine last week:

“Our analysis says that 210 on the FAO index is the boiling point and we have been hovering there for the past 18 months… In some of the cases the link is more explicit, in others, given that we are at the boiling point, anything will trigger unrest.”

But Bar-Yam’s analysis of the causes of the global food crisis don’t go deep enough – he focuses on the impact of farmland being used for biofuels, and excessive financial speculation on food commodities. But these factors barely scratch the surface.

It’s a gas

The recent cases illustrate not just an explicit link between civil unrest and an increasingly volatile global food system, but also the root of this problem in the increasing unsustainability of our chronic civilisational addiction to fossil fuels.

In Ukraine, previous food price shocks have impacted negatively on the country’s grain exports, contributing to intensifying urban poverty in particular. Accelerating levels of domestic inflation are underestimated inofficial statistics – Ukrainians spend on average as much as 75% on household bills, and more than half their incomes on necessities such as food and non-alcoholic drinks, and as75% on household bills. Similarly, for most of last year, Venezuela suffered from ongoing food shortagesdriven by policy mismanagement along with 17 year record-high inflation due mostly to rising food prices.

While dependence on increasingly expensive food imports plays a role here, at the heart of both countries is a deepening energy crisis. Ukraine is a net energy importer, having peaked in oil and gas production way back in 1976. Despite excitement about domestic shale potential, Ukraine’s oil production has declined by over 60% over the last twenty years driven by both geological challenges and dearth of investment.

Currently, about 80% of Ukraine’s oil, and 80% of its gas, is imported from Russia. But over half of Ukraine’s energy consumption is sustained by gas. Russian natural gas prices have nearly quadrupled since 2004. The rocketing energy prices underpin the inflation that is driving excruciating poverty rates for average Ukranians, exacerbating social, ethnic, political and class divisions.

The Ukrainian government’s recent decision to dramatically slash Russian gas imports will likely worsen this as alternative cheaper energy sources are in short supply. Hopes that domestic energy sources might save the day are slim – apart from the fact that shale cannot solve the prospect of expensive liquid fuels, nuclear will not help either. A leakedEuropean Bank for Reconstruction and Development (EBRD) reportreveals that proposals to loan 300 million Euros to renovate Ukraine’s ageing infrastructure of 15 state-owned nuclear reactors will gradually double already debilitating electricity prices by 2020.

“Socialism” or Soc-oil-ism?

In Venezuela, the story is familiar. Previously, the Oil and Gas Journal reported the country’s oil reserves were 99.4 billion barrels. As of 2011, this was revised upwards to a mammoth 211 billion barrels of proven oil reserves, and more recently by the US Geological Survey to a whopping 513 billion barrels. The massive boost came from the discovery of reserves of extra heavy oil in the Orinoco belt.

The huge associated costs of production and refining this heavy oil compared to cheaper conventional oil, however, mean the new finds have contributed little to Venezuela’s escalating energy and economic challenges. Venezuela’s oil production peaked around 1999, and has declined by a quarter since then. Its gas production peaked around 2001, and has declined by about a third.

Simultaneously, as domestic oil consumption has steadily increased – in fact almost doubling since 1990 – this has eaten further into declining production, resulting in net oil exports plummeting by nearly half since 1996. As oil represents 95% of export earnings and about half of budget revenues, this decline has massively reduced the scope to sustain government social programmes, including critical subsidies.

Looming pandemic?

These local conditions are being exacerbated by global structural realities. Record high global food prices impinge on these local conditions and push them over the edge. But the food price hikes, in turn, are symptomatic of a range of overlapping problems. Globalagriculture‘s excessive dependence on fossil fuel inputs means food prices are invariably linked to oil price spikes. Naturally, biofuels and food commodity speculation pushes prices up even further – elite financiers alone benefit from this while working people from middle to lower classes bear the brunt.

Of course, the elephant in the room is climate change. According to Japanese media, a leaked draft of the UN Intergovernmental Panel onClimate Change‘s (IPCC) second major report warned that while demand for food will rise by 14%, global crop production will drop by 2% per decade due to current levels of global warming, and wreak $1.45 trillion of economic damage by the end of the century. The scenario is based on a projected rise of 2.5 degrees Celsius.

This is likely to be a very conservative estimate. Considering that the current trajectory of industrial agriculture is already seeing yield plateausin major food basket regions, the interaction of environmental, energy, and economic crises suggests that business-as-usual won’t work.

The epidemic of global riots is symptomatic of global system failure – a civilisational form that has outlasted its usefulness. We need a new paradigm.

Unfortunately, simply taking to the streets isn’t the answer. What is needed is a meaningful vision for civilisational transition – backed up with people power and ethical consistence.

It’s time that governments, corporations and the public alike woke up to the fact that we are fast entering a new post-carbon era, and that the quicker we adapt to it, the far better our chances of successfully redefining a new form of civilisation – a new form of prosperity – that is capable of living in harmony with the Earth system.

But if we continue to make like ostriches, we’ll only have ourselves to blame when the epidemic becomes a pandemic at our doorsteps.

Dr Nafeez Ahmed is executive director of the Institute for Policy Research & Development and author of A User’s Guide to the Crisis of Civilisation: And How to Save It among other books. Follow him on Twitter @nafeezahmed

Real wages have been falling for longest period for at least 50 years, ONS says | Business | theguardian.com

Real wages have been falling for longest period for at least 50 years, ONS says | Business | theguardian.com.

Real wages have been falling by 2.2% a year in the longest sustained period of falling real wages in the UK on record
Average earnings growth
Average earnings growth, with RPI inflation stripped out. Source: ONS

Real wages have been falling consistently since 2010, the longest period for 50 years, according to the Office for National Statistics, which said that low productivity growth seems to be pushing wages down.

The ONS study followed a report by the Institute for Fiscal Studies (IFS)which said that while the fall in household incomes has now probably come to a halt, living standards are still “dramatically” down on what they were before the global financial crisis hit in 2008. The IFS analysis suggested “there is little reason to expect a strong recovery in living standards over the next few years”. According to the Office for Budget Responsibility, real earnings are not expected to return to their 2009-10 levels until 2018-19.

The government said last week that most British workers have seen their take-home pay rise in real terms in the past year.

Jobs website Adzuna showed in a report that salaries dropped to a 16-month low in December, equal to a real-term drop in wages of £2,136. In the year to December, salaries fell in every region of the UK aside from Wales, where salaries have risen 4.1% over the 12 months to December. Andrew Hunter, co-founder of Adzuna, said: “The recovery in the jobs market is far from over. The great news is unemployment has fallen at record levels, but wages are still stuck in a post-recession hangover – while the backlog of employees waiting for the right time to change jobs is clearing, salary levels are yet to catch up.”

Are you opposed to fracking? Then you might just be a terrorist | Nafeez Ahmed | Environment | theguardian.com

Are you opposed to fracking? Then you might just be a terrorist | Nafeez Ahmed | Environment | theguardian.com.

From North America to Europe, the ‘national security’ apparatus is being bought off by Big Oil to rout peaceful activism
Climate and anti-fracking activists blocade site

Are the hundreds of peaceful protesters who blockaded the Cuadrilla oil drilling site outside Balcombe, West Sussex, dangerous “extremists”? Photograph: Leon Neal/AFP/Getty Images

Over the last year, a mass of shocking evidence has emerged on the close ties between Western government spy agencies and giant energycompanies, and their mutual interests in criminalising anti-fracking activists.

Activists tarred with the same brush

In late 2013, official documents obtained under freedom of information showed that Canada‘s domestic spy agency, the Canadian Security Intelligence Service (CSIS), had ramped up its surveillance of activists opposed to the Northern Gateway pipeline project on ‘national security’ grounds. The CSIS also routinely passed information about such groups to the project’s corporate architect, Calgary-based energy company, Enbridge.

The Northern Gateway is an $8 billion project to transport oil from the Alberta tar sands to the British Columbia coast, where it can be shipped to global markets. According to the documents a Canadian federal agency, the National Energy Board, worked with CSIS and the Royal Canadian Mounted Police to coordinate with Enbridge, TransCanada, and other energy corporations in gathering intelligence on anti-fracking activists – despite senior police privately admitting they “could not detect a direct or specific criminal threat.”

Now it has emerged that former cabinet minister Chuck Strahl – the man appointed by Canadian prime minister Stephen Harper to head up the CSIS’ civilian oversight panel, the Security Intelligence Review Committee (SIRC) – has been lobbying for Enbridge since 2011.

But that’s not all. According to CBC News, only one member of Strahl’s spy watchdog committee “has no ties to either the current government or the oil industry.” For instance, SIRC member Denis Losier sits on the board of directors of Enbridge-subsidiary, Enbridge NB, while Yves Fortier, is a former board member of TransCanada, the company behind the proposed Keystone XL pipeline.

Counter-insurgency in the homeland

Investigative journalist Steve Horn reports that TransCanada has also worked closely with American law-enforcement and intelligence agencies in attempting to criminalise US citizens opposed to the pipeline. Files obtained under freedom of information last summer showed that in training documents for the FBI and US Department of Homeland Security (DHS), TransCanada suggested that non-violent Keystone XL protestors could be deterred using criminal and anti-terror statutes:

“… the language in some of the documents is so vague that it could also ensnare journalists, researchers and academics, as well.”

According to the Earth Island Journal, official documents show that TransCanada “has established close ties with state and federal law enforcement agencies along the proposed pipeline route.” But TransCanada is only one example of “the revolving door between state law enforcement agencies and the private sector, especially in areas where fracking and pipeline construction have become big business.”

This has had a tangible impact. In March last year, US law enforcement officials had infiltrated and spied on environmentalists attending a tar sands resistance camp in Oklahoma, leading to the successful pre-emptive disruption of their protest action.

Just last December, other activists in Oklahoma faced terror charges for draping an anti-fracking banner in the lobby of the offices housing US oil and gas company, Devon Energy. The two protestors were charged with carrying out a “terrorism hoax” for using gold glitter on their banner, some of which happened to scatter to the floor of the building – depicted by a police spokesman as a potentially “dangerous or toxic” substance in the form of a “black powder,” causing a panic.

But Suzanne Goldenberg reports a different account:

“After a few uneventful minutes, [the activists] Stephenson and Warner took down the banner and left the building – apologising to the janitor who came hurrying over with a broom. A few people, clutching coffee cups, wandered around in the lobby below, according to Stephenson. But she did not detect much of a response to the banner. There wasn’t even that much mess, she said. The pair had used just four small tubes of glitter on their two banners.”

The criminalisation of peaceful activism under the rubric of ‘anti-terrorism’ is an escalating trend linked directly to corporate co-optationof the national security apparatus. In one egregious example, thousands of pages of government records confirm how local US police departments, the FBI and the DHS monitored Occupy activists nationwide as part of public-private intelligence sharing with banks and corporations.

Anti-fracking activists in particular have come under increased FBI surveillance in recent years under an expanded definition of ‘eco-terrorism‘, although the FBI concedes that eco-terrorism is on the decline. This is consistent with US defence planning documents over the last decade which increasingly highlight the danger of domestic “insurgencies” due to the potential collapse of public order under various environmental, energy or economic crises.

Manufacturing “consensus”

In the UK, Scotland Yard’s National Domestic Extremism and Disorder Intelligence Unit (which started life as the National Extremism Tactical Co-ordination Unit and later became the National Domestic Extremism Unit), has had a long record of equating the spectre of “domestic extremism” with “single-issue protests, such as animal rights, anti-war, anti-globalisation and anti-GM crops.” Apart from animal rights, these movements have been “overwhelmingly peaceful” points out George Monbiot.

This has not prevented the police unit from monitoring almost 9,000 Britons deemed to hold “radical political views,” ranging from “anti-capitalists” to “anti-war demonstrators.” Increasingly though, according to a Guardian investigation, the unit “is known to have focused its resources on spying on environmental campaigners, particularly those engaged in direct action and civil disobedience to protest against climate change.”

Most recently, British police have gone so far as to conduct surveillance of Cambridge University students involved in social campaigns like anti-fracking, education, anti-fascism, and opposition to austerity, despite a lack of reason to suspect criminal activity.

This is no accident. Yesterday, senior Tory and ex-Cabinet minister Lord Deben, chairman of the UK government-sponsored Committee on Climate Change, characterised anyone suggesting that fracking is “devastatingly damaging” as a far-left “extremist,” holding “nonsensical” views associated with “Trotskyite” dogma. In contrast, he described “moderate” environmentalists as situated safely in the legitimate spectrum of a “broad range of consensus” across “all political parties.”

In other words, if you are disillusioned with the existing party political system and its approach to environmental issues, you are an extremist.

Deben’s comments demonstrate the regressive mindset behind the British government’s private collaboration with shale gas industry executives to “manage the British public’s hostility to fracking,” as revealed in official emails analysed by Damien Carrington.

The emails exposed the alarming extent to which government is “acting as an arm of the gas industry,” compounding earlier revelations that Department of Energy and Climate Change employees involved in drafting UK energy policy have been seconded from UK gas corporations.

Public opinion is the enemy

The latest polling data shows that some 47% of Britons “would not be happy for a gas well site using fracking to open within 10 miles of their home,” with just 14% saying they would be happy. By implication, the government views nearly half of the British public as potential extremists merely for being sceptical of shale gas.

This illustrates precisely why the trend-line of mass surveillance exemplified in the Snowden disclosures has escalated across the Western world. From North America to Europe, the twin spectres of “terrorism” and “extremism” are being disingenuously deployed by an ever more centralised nexus of corporate, state and intelligence power, to suppress widening public opposition to that very process of unaccountable centralisation.

But then, what’s new? Back in 1975, the Trilateral Commission – a network of some 300 American, European and Japanese elites drawn from business, banking, government, academia and media founded by Chase Manhattan Bank chairman David Rockerfeller – published an influential study called The Crisis of Democracy.

The report concluded that the problems of governance “stem from an excess of democracy” which makes government “less powerful and more active” due to being “overloaded with participants and demands.” This democratic excess at the time consisted of:

“… a marked upswing in other forms of citizen participation, in the form of marches, demonstrations, protest movements, and ’cause’ organizations… [including] markedly higher levels of self-consciousness on the part of blacks, Indians, Chicanos, white ethnic groups, students, and women… [and] a general challenge to existing systems of authority, public and private… People no longer felt the same compulsion to obey those whom they had previously considered superior to themselves in age, rank, status, expertise, character, or talents.”

The solution, therefore, is “to restore the prestige and authority of central government institutions,” including “hegemonic power” in the world. This requires the government to somehow “reinforce tendencies towards political passivity” and to instill “a greater degree of moderation in democracy.” This is because:

“… the effective operation of a democratic political system usually requires some measure of apathy and noninvolvement on the part of some individuals and groups… In itself, this marginality on the part of some groups is inherently undemocratic, but it has also been one of the factors which has enabled democracy to function effectively.”

Today, such official sentiments live on in the form of covert psychological operations targeted against Western publics by the CIAPentagon andMI6, invariably designed to exaggerate threats to manipulate public opinion in favour of government policy.

As the global economy continues to suffocate itself, and as publics increasingly lose faith in prevailing institutions, the spectre of ‘terror’ is an increasingly convenient tool to attempt to restore authority by whipping populations into panic-induced subordination.

Evidently, however, what the nexus of corporate, state and intelligence power fears the most is simply an “excess of democracy”: the unpalatable prospect of citizens rising up and taking power back.

Dr Nafeez Ahmed is executive director of the Institute for Policy Research & Development and author of A User’s Guide to the Crisis of Civilisation: And How to Save It among other books. Follow him on Twitter @nafeezahmed

It’s Time for Business to Earn a License to Lead | Paul Polman

It’s Time for Business to Earn a License to Lead | Paul Polman.

The acronym VUCA — Volatile, Uncertain, Complex, Ambiguous — may have its origins in the military, but it is increasingly clear that it applies to all aspects of our lives today. The fact is we operate in an age of fast-moving and increasingly unpredictable change. No one country, society, industrial sector or individual organisation is immune. We are all impacted. Navigating this new reality is made even more challenging by the increasingly interdependent nature of today’s world.

The issues and predicaments we face are linked inextricably as never before. There is no better or more dramatic illustration of this than the food, water, energy and climate nexus, so effectively highlighted over recent years by the World Economic Forum and others. How do we guarantee food security for a rapidly rising population in the face of growing water and energy constraints, many of them directly attributable to climate change? No wonder one leading scientist has warned of a ‘perfect storm’ of global events. Increasingly, business has found itself in the eye of this storm, mistrusted by large sections of society and seen, with some justification, as part of the problem and not part of the solution to many of today’s challenges. This has to change. Business can no longer afford to be a bystander, content to sit on the sidelines doing the minimum necessary to acquire its ‘licence to operate.’ The challenges require — and citizens demand — a different approach.

Permissible growth in the future has to be based on sustainable and equitable models. Having acquired a license to operate, it’s time for business to earn a license to lead. The military and defense officials who first identified the VUCA world used to speak of the need for ‘burden sharing’, for sovereign nations to spread more evenly the responsibility for defending freedoms around the world. It’s a military parallel that also has resonance today. For its part, business has to accept a much greater share of the responsibility for everything that goes on within the length and breadth of its value chain. Putting your own house in order is a necessary — but insufficient — condition for developing sustainable growth models.

This is the essence behind the Unilever Sustainable Living Plan, which gives expression to the company’s commitment to double its size while reducing its overall environmental footprint and increasing its positive social impact. It’s a plan that covers the entire value chain, from sourcing to manufacturing to the way consumers use our products.

This requires the kind of holistic, systems-based thinking that Andrea Bassi and Gilbert Probst argue needs to become mainstream, in their book Tackling Complexity: A Systemic Approach for Decision Makers. The book adopts systemic thinking to solve complex problems in socio-political as well as business environments, turning them into opportunities.

The main innovation that systemic thinking introduces — the emphasis on defining the problem-creating system, which is made up of interacting parts, rather than prioritizing events that need immediate fixing — can be used to better understand reality and its complexity. Tackling Complexity proposes a five-step technique with which to better understand problems and the context in which they arise, and tools to directly inform each step of the decision-making process. Practically, systemic thinking can be used to identify problems, analyze their boundaries, design strategies and policy interventions, forecast and measure their expected impacts, implement them, and monitor and evaluate their successes and failures.

If we get this right we can make a difference. However, the sheer size and scale of the challenges we face means that even the largest and most internationally dispersed businesses and organizations are limited in the scope of what they can achieve. System-wide changes rely on a critical mass of interested parties, all willing to enter into deep partnerships and collaborations, founded on new levels of trust and a commitment to action, not debate.

There is still a long way to go. We are far from reaching the tipping point that is needed, though the tide is certainly turning, in my view. The commitment to put an end to illegal deforestation and develop sustainable alternatives for commodities like palm oil and soy, for example, is an inspiring illustration of what can be achieved when governments and industry partners come together determined to bring about transformational market-wide changes. None of this is easy. Everything carries a risk. Taking the first step is often the most difficult. It takes courage and a willingness to focus on long-term horizons, not short-term results. Systemic changes therefore require new forms of leadership from men and women — and especially women — willing to be the vanguards of change. For them, Tackling Complexity provides an invaluable route map of what it takes to drive change and succeed in the VUCA world that is undoubtedly here to stay.

Over-financialisation – the Casino Metaphor

Over-financialisation – the Casino Metaphor.

The casino metaphor has been widely used as a part-description of the phenomenon of over-financialisation. It’s a handy pejorative tag but can it give us any real insights? This article pursues the metaphor to extremes so that we can file & forget/get back to the football or possibly graduate to next level thinking.

What is the Financialised Economy (FE) and how big is it?

The FE can be loosely described as ‘making money out of money’ as opposed to making money out of something; or ‘profiting without producing’ [1]. Its primacy derives largely from two sources – the ability of the commercial banks to create credit out of thin air and then lend it and charge and retain interest; and their ability to direct the first use of capital created in this fashion to friends of the casino as opposed to investing it in real economy (RE) businesses. So the FE has the ability to create money and direct where it is used. Given those powers it is perhaps unsurprising that it chooses to feed itself before it feeds the RE. The FE’s key legitimate roles – in insurance and banking services – have morphed into a self-serving parasite. The tail is wagging the dog.

The FE’s power over the allocation of capital has been re-exposed, for those who were perhaps unaware of it, as we see the massive liquidity injected by the central banks via QE disappearing into the depths of bank balance sheets and inflated asset values leaving mid/small RE businesses gasping for liquidity.

By giving preferential access to any capital allocated to the RE to its big business buddies the FE enables those companies to take out better run smaller competitors via leveraged buy outs. By ‘investing’ in regulators and politicians via revolving doors and backhanders, it captures the legislative process and effectively writes its own rule book.

Five years after the 2008 crisis hit, as carefully catalogued by FinanceWatch [2], economies are more financialised than ever. If the politicians and regulators ever had any balls they have been amputated by the casino managers, under the anaesthesis of perceived self-interest. They have become the casino eunuchs. An apparent early consensus on the systemic problems of over financialisation has melted away into a misconceived search for ‘business as usual’.

Derivatives

Derivatives are one of the most popular games in the casino.

Over the counter derivatives, which are essentially bets on the performance of asset prices, stocks, indices or interest rates, have a nominal value (as of December 2012 [2]) of USD 632 trillion – 6% up from 2007 levels – and 9 times world GDP. If the world decided to stop living and buy back derivatives instead of food, energy, shelter and all the stuff we currently consume, it would take nine years to spend this amount.

OK – it’s a nominal value. Many observers believe (even hope) that its real value is a minute fraction of this, but the only way we will ever find out is if the derivative contracts unwind. That is, prompted presumably by some form of crisis, parties progressively withdraw from the contracts or fold. The regulators (and the FE itself of course) will do everything they can to prevent this from happening, including grinding the population into the dust via austerity, because while no-one knows who precisely holds the unwound risk, most will certainly belong to the FE’s top tier.

Many of these derivatives started life as sensible financial products. Businesses need to insure against an uncertain harvest, or hedge against uncertain currency movements. But only a small proportion of current holders now have an insurable risk. So whereas in the past you could say we insured against our own house burning down, now they bet on their neighbour’s house burning; whereas in the past we bet on our own life expectancy, they now bet on the deaths of others; whereas in the past we insured against currency losses we experienced in our own business transactions, now they bet on currency movements in general. What might be expected when there are incentives to burn your neighbour’s house down? Organisations have even purposely set up junk asset classes, had them AAA rated, sold them to outsiders and then bet on their failure.

Government & Politicians

Politics operates as a debating society in a rented corner of the casino. The rent is high but largely invisible to the populace. The debaters are themselves well off, at least in the U.S. they are [3].

Now the strange thing is that the government actually owns the casino, but they have forgotten this. For the last 40 years or so, they have asked the casino managers to issue all the chips. The government use the same chips to spend on public services, and require us all to pay taxes in those chips. Mostly they don’t have enough chips for all the services they provide, so they ask the casino managers for loans. The casino managers are happy with this, provided the government pay interest on the loan of chips. This hidden subsidy effectively funds the casino. It’s perverse because the government pays interest on money they could issue themselves debt-free.

It’s not entirely clear why the government thinks the casino managers are better at managing chips than they would be. Arguably the government is elected to carry out a programme and they should be the arbiters of the country’s strategic priorities, so there should be some strategic guidance over the way the chips are spent.

But the government is only here for five years, and the casino managers are here permanently. So perhaps they think it’s safer just to trust the casino managers to get on with it. When asked, the casino managers explain that they allocate chips according to ‘what the market needs’ and no-one quite understands why that doesn’t seem to include much real investment. In any case the government have forgotten that they could issue the chips themselves, and although prompted (e.g. [4]), have failed to show any interest in reclaiming that power. Occasionally they create a whole new batch of chips themselves (QE) – if they think the tables are quiet – but give them straight back to the casino managers. Maybe it’s too complicated for politicians. Many of them haven’t had proper jobs. There are a few civil servants who understand what’s happening, but most of them don’t want to rock the boat – they are here permanently too and have good pensions. They research for the debaters and have lunch with the casino managers. That keeps them quite busy enough, thank you.

The Real Economy

The Real Economy also operates from a corner of the casino. It’s hard to put an exact figure on it, but perhaps 3-5% of the overall floor space depending how you measure.

It’s a very important corner of the casino, but not for the reasons it should be. It should be important because it’s the place where food is grown, houses are built, energy for warmth and work is created and so on. But these precious things are taken for granted by the casino managers. They have always had enough chips to buy whatever they need – they issue them for God’s sake – and they think food, shelter and energy will always be available to them. Crucially though, they have also managed to financialise this remaining RE corner, and this ‘support’ is trotted out as a continuing justification for the FE’s central importance .

The RE corner has always included important social and cultural, non-GDP activities. The enormous real value of these activities is now being properly articulated and is spawning citizen-led initiatives (e.g. sharing economy approaches, basic unconditional income) but they are often presented as beggars who annoyingly keep petitioning for their ‘entitlements’ and generally clutter up this remote corner of the casino.

On the finance side, individuals and businesses are exploring ways of funding their future activity without going cap-in-hand to the casino managers. They are exploring peer-to-peer finance, crowdfunding, prepayment instruments and so on. What these initiatives have in common is the disintermediation of the casino. They provide ways for people to invest more directly and take more control over their savings and investments. Of course a new breed of intermediary is surfacing to broker and risk-insure these new models, and these new intermediaries can also be captured.

With transparency and short-circuit communication via social media though, there is definitely scope to do things differently. We must hope for progress because the casino managers have little interest in what’s going on outside.

The Planet – outside the casino

The planet outside is used by the casino in two ways – as a source of materials and as a dumping ground for waste.

The materials are not essential to the core FE which is all about making money out of money and needs nothing but ideas, a few arcane mathematical models to give spurious gravitas, and credulous or naive investors. But RE activity performs a valuable role for the casino managers – it provides them with an endless stream of innovative ways of using chips. The shale gas bonanza for example is apparently grounded in the real world need for energy, and is presented as such. Its significance to the FE is as another bubble based partly at least on land-lease ‘flipping’ [5].

Without an RE-related rationale/narrative, the FE might disappear up its own waste pipe as it re-invested/sliced-and-diced/marketised its own products to itself. So materials from outside the casino are important for the managers’ big corporate proxies in the RE.

FE-favoured RE activities also create lots of waste, some of which is toxic, and may eventually prove terminal, as it builds up. This fact is of little interest to the casino managers. There is a minor interest in waste-related financialised vehicles – carbon markets for example are a relatively new casino game – and in the slight impact on some of the FE’s RE-friends like big energy companies. But mostly the casino managers are too busy with their games and their chips. Occasionally a manager will wake up to the dangers and defect to the real world where they, somewhat perversely, carry more credibility because of their casino experience. A small minority of managers stay within the casino and try to gently modify its behaviour. This is portrayed as a healthy sign of openness; the casino is secure in the knowledge that their ways cannot easily be re-engineered.

Combating the casino’s influence

Essentially there would appear to be three possible lines of response for those who believe there should be more to life than casino capitalism. Marginalise, convert or destroy……

These approaches map on to the three ‘broad strategies of emancipatory transformation’ suggested by sociologist Erik Olin Wright [6] – interstitial, symbiotic and ruptural. I have a fourth suggestion/ variation of which more in a moment.

The challenge for interstitial initiatives is the sheer pervasiveness of the FE. There are few spaces left where the effects of the FE can be ignored. They may not be well understood, but whenever we pursue dreams, they pop up in front of us, usually as obstacles. Developments that are most heavily attacked by the FE establishment perhaps merit the most attention – community scale renewable energy, crypto currencies, co-ops, the sharing economy, and so on. The more these alternative directions are attacked as utopian or uneconomic the more we can be sure they offer promising interstitial opportunities.

Symbiotic opportunities may represent the triumph of hope over experience. Armed with the power of ideas, we back our ability to persuade policy makers and business leaders to change the game. The main challenges here are the arrogance of the powerful and the danger of being captured by supping with the devil. Vested interests generally feel secure enough that they don’t need to negotiate or even to spend brain power on listening and evaluating alternatives. If enough interest is manifested that symbiotic trial projects are begun, their champions can be captured by being made comfortable.

Ruptural alternatives come in a spectrum from those that would destroy business models to those that would destroy societies. They probably share the above analysis but differ in their degree of radicalism and disconnection from the main. The impact of FE-driven globalisation is beyond the scope of this article, save to note that its effects have unnecessarily radicalised whole populations making more measured responses more difficult to promote than they might have been.

The role of the internet and social media in progressing both interstitial and ruptural initiatives is significant. Most of the space to develop and assemble communities of interest and mission-partners is here, explaining why both are likely to experience increasingly determined attempts to capture.

The nature of one’s chosen response will be a matter of personal choice. We should not be judgemental of those who don’t have the will, energy or resourcefulness to play a more active role. We all suffer from our subservience to a dysfunctional system, some much more than others. The fourth response? Perhaps there’s some mileage in judo principles [7].

References

[1]: http://rikowski.wordpress.com/2013/12/12/profiting-without-producing-how-finance-exploits-u s-all/
[2]: http://www.finance-watch.org/
[3]: http://www.bbc.co.uk/news/world-us-canada-25691066
[4]: http://www.positivemoney.org/
[5]: “It seems fairly clear at this time that the land is the play, and not the gas. The extremely high prices for land in all of these plays has produced a commodity market more attractive than the natural gas produced.” Art Berman quoted athttp://theautomaticearth.blogspot.ie/2011/07/july-8-2011-get-ready-for-north.html
[6]: http://realutopias.org/
[7]: http://judoinfo.com/unbalance.htm

Featured image: Luxor, Las Vegas. Author: David Marshall jr. Source: http://www.sxc.hu/browse.phtml?f=view&id=90604

Activist Post: Keiser Report: Capitalism 2.0

Activist Post: Keiser Report: Capitalism 2.0.

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More Evidence We’re Losing Our Freedom : Personal Liberty™

More Evidence We’re Losing Our Freedom : Personal Liberty™.

More Evidence We’re Losing Our Freedom

PHOTOS.COM

The latest Index of Economic Freedom has just come out, and the news for the United States isn’t good. The study, a joint effort of The Heritage Foundation and The Wall Street Journal, concludes that economic freedom in the United States has declined again. This is the seventh year in a row this has happened.

For more than 200 years, the United States led the world in economic freedom. For many of those years, we were also the most prosperous Nation in the world, as we demonstrated that economic abundance was one of the happy consequences of economic freedom. Now, many other nations are confirming the same thing.

But we aren’t. Now, we’re not even in the top 10 of the 178 countries the study measured. Thanks a lot, Barack Obama! And Congress. And, yes, even the U.S. Supreme Court. All have been complicit in the unrelenting assaults on free enterprise in this country.

In an opinion piece in The JournalTerry Miller, one of the study’s directors, had this to say: “It’s not hard to see why the U.S. is losing ground. Even marginal tax rates exceeding 43% cannot finance runaway government spending, which has caused the national debt to skyrocket.”

But out-of-control government spending is just one of the areas where the United States is in decline. As Miller wrote: “The Obama administration continues to shackle entire sectors of the economy with regulation, including health care, finance and energy. The intervention impedes both personal freedom and national prosperity.”

So if the U.S. is losing economic freedom, how is the rest of the world doing? Believe it or not, economic freedom is actually improving in most of the world. According to the study, 114 countries of the 178 in the study enjoyed an increase in economic freedom in the past year. And some 43 countries scored their highest ranking ever in the index’s 20-year history.

Leading the list once again is Hong Kong, which scored 90.1 on the 100-point scale. Following it in the “free” category are Singapore, Australia, Switzerland, New Zealand and our northern neighbor, Canada.

Rounding out the top 10 in the “mostly free” category are Chile, Mauritius, Ireland and Denmark. Then comes Estonia. The United States finally shows up next, at 12th on the list. Yes, it’s hard to believe, but even Estonia did better than the U.S. this time.

Maybe that shouldn’t be a surprise. It turns out that several countries in Eastern Europe that used to be dominated by the Soviet Union are thriving now that they have embraced free-market economies. According to the study, Estonia, Lithuania and the Czech Republic are the European countries that gained the most economic freedom in the past 20 years.

Congress, are you listening?

According to the study, 18 countries in Europe have reached new highs in economic freedom. They include Germany, Sweden, Poland and Georgia. On the other hand, five countries — Greece, Italy, France, the United Kingdom and Cyprus — scored lower than they did when the first index appeared 20 years ago.

No surprise on which countries are on the bottom of the list. In descending order, they are Iran, Eritrea, Venezuela, Zimbabwe, Cuba and North Korea. All are known for despotic governments, government-run economies and few, if any, property rights — oh, and one other thing: the abject poverty endured by most of their citizens.

The study measures economic freedom in 10 different categories under four broad areas, which it calls the pillars of economic freedom. They are,

  1. The Rule of Law, which includes property rights and lack of corruption;
  2. Limited Government, measured by fiscal freedom and controls on government spending;
  3. Regulatory Efficiency, such as business freedom, labor freedom and monetary freedom; and finally,
  4. Open Markets, as measured by freedom to trade, investment freedom and financial freedom.

Does it really matter how a country scores on economic freedom? Absolutely!

“Countries achieving higher levels of economic freedom consistently and measurably outperform others in economic growth, long-term prosperity and social progress,” Miller wrote.

It is an outrage that this country, whose freedom and prosperity made us an inspiration for the world, is now measurably on the decline. The report says that the U.S. has suffered “particularly large losses in… control of government spending.” But we already knew that, didn’t we?

The latest jobs report from the U.S. Bureau of Labor Statistics confirms just how shaky things have become in the U.S. economy. While forecasters expected new jobs in December to exceed 200,000, the BLS number came in at a lowly 74,000.

Yet even with that disappointing number, the unemployment rate in this country somehow dropped 3/10 of a point, from 7 percent to 6.7 percent. How is that possible?

It turns out that nearly five times more people stopped looking for work in December than found new jobs. An estimated 347,000 Americans left the labor force and are no longer counted among the unemployed.

Clearly, there’s the solution to make the unemployment numbers look good. If enough people who don’t have jobs simply give up looking for them, unemployment in this country would drop to zero. Wouldn’t that give the Obamaites something to crow about?

The sad truth is that the actual number of people with jobs in this country — the so-called “labor participation rate” – is at a measly 62.8 percent. That’s the lowest number since 1978.

“[T]his year’s index demonstrates that the U.S. needs a drastic change in direction,” Miller wrote.

Indeed it does. But as long as Harry Reid holds the reins as Senate Majority Leader, we’re not going to get it. Happily, that could change in a big way this November, when he could receive a well-deserved demotion to Minority Leader.

I’ll have a lot more to say in coming days on the key elections that could make that happen. In the meantime, keep reminding your friends that Ronald Reagan got it right when he said: “Government is not the solution to our problem; government is the problem.”

The latest Index of Economic Freedom confirms the wisdom of the former President’s remark. The more government gets out of the way, the more a country will prosper. The results of five years of Obama prove that the opposite is true, too.

Until next time, keep some powder dry.

–Chip Wood

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