HOW TO SOLVE THE CRISIS?

Dr. Zoltan Pogatsa

V or W shaped?

L-shaped:• Corporate capitalism• Corporate party financing• State capture• Unsustainable corporate, household and state

finances• Crisis

Rate of profit

Marx: falling

Reality: growing

Question: WHO WILL BUY THE PRODUCTS?

Answers

1. Mediatised consumerism2. Borrowing from the future (debt)3. Ridding the state of resources (tax cuts,

offshore)4. Geographical expansion (CEE, China, BRICS)5. Environmental degradation6. War

Mediatised consumerism

RIDDING THE STATE OF RESOURCES

EVER SMALLER STATEBecause it is „too large”

Financial deregulation (Johnson & Kwak „13 Bankers”)

Banking compensation

Securitization

Offshore (Shaxton: Treasure Island)

Tax Justice Network Financial Secrecy Index:1. US2. Luxemburg3. Switzerland4. Cayman Islands5. UK• Rich individuals in offshore: a complete yearly US GDP• Corporations: Vodafone, Google, Enron, Wizzair, CBA….

War

Sovereign indebtedness

Household indebtedness

Geographical expansion

• CEE, BRIC, etc.• New consumers for corporations• Cheap labour offshoring for corporations

ENVIRONMENTAL DEGRADATION

Responses so far

• Anticyclical fiscal expansion• Monetary easying (QE1&2, ECB)• Austerity (Stiglitz, Soros, etc.)• No regulation• No sustainability

Why don’t politicians act?FinanceChris Dodd, Chair of Senate Banking Committe received $2.9mn from securities

industry in 2007-2009, more than three times any senator who was not a presidential candidate. („13 Bankers”)

DefenseLockheed Martin is the biggest campaign sponsor of Buck McKeon (chair, Congress

Military Forces Commitee) and Daniel Inouye (chair, Senate Military Procurement Committe).(Hartung „Prophets of War”)

OffshoreLord Ashcroft, Chairman of UK Conservative Party is a tax citizen of Belize.

Revolving doorRobert Rubin (Goldman>Glass-Stegall>Citi), Dick Cheney (Halliburton)

How to solve the crisis?

Cut the nexus between corporations and government.

GREECE

Greek state not big!

Revenue side problem!

Greece

• 3-5% of GDP in Offshore (mainly Cyprus)• Military expenditure: EU countries sold €1bn

worth of military to Greece in 2010• Would need 6-8% growth to get out of

sovereign debt trap• Will not happen with 5th wave of austerity

Cheap lending in €uro

€urozone not an optimal currency area

Not a productivity issue!

But a wage issue!

Germany benefitted from €z

Greece had deindustrialised in free trade

THANK YOU!pogatsa@gmail.com