Economics | The Guardian

The Global Minotaur of neoliberal capitalism centred on Wall Street held the world to ransom from 1971 to 2008. Now Europe’s surplus countries are trying to prop up its corpseBankruptocracy is as much a European predicament as it is an American “invention”. The difference between the experience of the two continents is that at least Americans did not have to labour under the enormous design faults of the eurozone. Imagine their chagrin if the citizens of hard-hit states (eg Nevada or Ohio) had to worry about a death embrace between the debt of their state and the losses of the banks who happened to operate within the state.Europe's architecture was not sound enough to sustain the shock waves from the death throes of neoliberal capitalismThe Minotaur’s surplus recycling was essential to the maintenance of the eurozone’s faulty edifice Continue reading...

Mining investment has shrunk rapidly and the transition from the boom relies heavily on housing investment – that’s a rather large concernThe biggest issue in the Australian economy remains the transition from the mining boom. Figures out late last week showed how quickly mining investment has shrunk, and how greatly the transition is dependent upon investment in dwellings. That’s a rather large concern, given worries about a housing bubble.One graph can often convey what is going on with amazing clarity. This is the one that demonstrates why the end of the mining boom is a problem for Australia’s economy: Continue reading...

The last week has seen many extraordinary things, from stiff limits at cashpoints to cross-border meddling in national democracy. Europe has not handled it well. It urgently needs to do better in picking up the piecesKicking the can down the road has been the cliche of choice over a slow euro crisis that has steadily strangled the life out of the Greek economy. But at some point Europe was bound to run out of road. That happened on Sunday night, when it emerged that the Greek people had said no to continuing to engage with their creditors on the same suffocating terms.Just over a week ago, Alexis Tsipras staked his future on forcing this denouement. The eight days that followed his midnight declaration of a plebiscite, to accept or reject the creditors’ terms for the latest slug of overdraft, have witnessed many extraordinary things. The Greek parliament licensed a hasty referendum on a question that had already been overtaken by events. A ballot paper written in jargon posed a ludicrously technical question, opening up a void for emotion to fill. Mixing talk of “terror” from their partners with haze about what would happen after a no, Mr Tsipras and his finance minister, Yanis Varoufakis, aimed squarely for the heart rather than the head. Meanwhile, Greeks faced the fiercest financial controls ever seen in modern Europe: bank doors were shut, supplies disrupted, and citizens queued at every cashpoint for their ration of notes. In countries such as Germany, where history engenders suspicion of referendums, it may have looked like a paradigm case of how not to do democracy. Continue reading...

Holding up the threat of financial meltdown is a gift for chancellor whose budget on Wednesday will contain significant spending cutsIt is almost 20 years since Ken Clarke delivered the last purely Conservative budget in the dog days of John Major’s government. A lot has happened since the Cool Britannia year of 1996: the economy has boomed and gone bust; the euro has arrived; an independent Bank of England sets interest rates; and the gap between the super rich and the rest has widened.All these developments will shape the package of measures George Osborne is to announce on Wednesday. In 1996, Clarke realised his party was going down to defeat. Knowing it was his swansong, he included spending cuts in his last budget, little thinking that Gordon Brown would stick to them. Osborne, by contrast, has the assurance of the victor, of a chancellor who knows that he can plan for a whole parliament and is already thinking about how to win again in 2020. Continue reading...

The deficit fetishists of Brussels and Berlin must cut Greece some fiscal slack and work to promote growthOn Sunday the Greeks vote while the rest of Europe holds its breath. No matter how clunky the wording on the ballot paper, everyone knows what’s at stake. This is a moment of great peril, not only for the euro but for the European project itself.If Greece votes no, it’s hard to see how it can stay in the euro, which will represent the most grievous blow in the 16-year history of a currency whose momentum was always meant to be irreversible.Related: Greek referendum: how voters interpret unclear question will decide outcomeI’m told plenty of European leaders are ready to do it – but not for Alexis Tsipras. That relationship is too broken Continue reading...