London Calling

What's behind the London riots, started at Tottenham, and that appear to spread?

The immediate answer is the killing of Mark Duggan, in apparently strange circumstances. A second answer is that there is a criminal element in the Tottenham/London riots.

And it's clear those are part of the answer.

But I'll suggest the relevant question is not that. The relevant question is: are those the only things behind those riots?

"Unemployment jumped by 44,000 in the final three months of 2010 to just under 2.5 million, meaning that 7.9 per cent of workers were out of a job. But the youth unemployment rate hit 20.5 per cent, following a 66,000 increase to 965,000, the highest figures since records began in 1992.(...)
"There were 75,000 people aged 18 to 24 who have not had a job for two years, the figures said. This was an increase of 43 per cent on a year ago.(...)
"Liam Byrne, the shadow Work and Pensions minister, said young people were being hit by a 'triple whammy' as the Government scrapped Education Maintenance Allowances, which allowed some students to stay in education; introduced increased university tuition fees and abolished the Future Jobs Fund - which Labour claim would have created 200,000 jobs." (See here)

I don't know for sure what the answer could be. However, given the figures above, I'll answer as The Guardian's Dave Hill, in his own opinion piece, reproduced locally by the SMH:

"I don't know what the answers are, but feel grimly confident that such a perfect storm of rumour, resentment and criminality could break in a dozen other parts of inner city London any day. These are nervous times."

London is calling and someone is bound to take the call.

Two Sides of a Coin

Chung-Kuo

How to evaluate what happened this week? The answer, I guess, lies somewhere between these two extremes:

1. We (especially we Aussies) are going bananas for no good reason (see here).
2. We (that is, all of us, regardless of place of residence) are potentially in deep shit, through a possible renewed credit crunch (see here).

The first view (which one could call "Aussie-centric") sustains that in Australia, unlike the US and Europe, an essentially benign internal situation could deteriorate because of undue pessimism, due to outside events.

Although Mr. Ross Gittins (the first piece's author) does not mention it explicitly, in a nutshell his idea is that Australia has decoupled from the American and European real economies. That is, the US and Europe are largely irrelevant for Australia's economic performance.

The mining boom ensures Australia that Aussie exports, largely destined to Asia (China and India), prop up our GDP [=C+I+G+(X-M)], through increased exports (X).

Apart from this international trade item, Mr. Gittins focuses his analysis entirely on Australia; he does not stop to consider the US and the Eurozone (perhaps because he considers them largely irrelevant for the purposes of his piece); maybe less understandably, Mr. Gittins does not seem to consider Asia in any apparent detail.

The second view, by Mr. Paul Mason (which one could call "Euro-centric") coincides with Mr. Gittins' views, in that the US, the Eurozone and Asia need be considered separately, but focuses on the US and the Eurozone, leaving Asia to a large extent outside of consideration.

Unlike Mr. Gittins, Mr. Mason considers international trade, but emphasizes on international finance potential linkages, which is where Mr. Mason appears to consider the global risk lies.

I can find rather apparent weaknesses in both views. For one, are there internal political constraints on national governments? Or, I haven't heard much about China lately; have the readers any precise information about it? (Mr. Mason says that Asia is important, but does not offer too many details about it: perhaps his Eurocentric perspective justifies his overlooking this point; however, in Mr. Gittins' view this should be a highly sensitive matter, although it goes unmentioned in his analysis).

In any case, I do not intend to argue for or against any of these views and I certainly don't want to influence the readers: you are free to make your own mind.

(Pre-publication!?)-Update:

As I finish this I've read that Standard & Poors cut the US credit rating.

Image credit:
Wikipedia

Capitalism Hits the Fan... Again

Deutsche Welle (Germany):

"Markets Fall After Barroso Raises Specter of Further EU Debt Contagion

"In a letter to EU heads of state, European Commission President José Manuel Barroso has warned that the eurozone debt crisis was still spreading despite agreement over a bloc-wide bailout fund."

The Guardian (UK):

"Asian Markets Tumble Amid Eurozone Fears

"Live Japan, Hong Kong, Australia, New Zealand, Taiwan, Indonesia and South Korea all see large falls
"Global stock markets panic after Wall Street losses
"Larry Elliott: Turmoil carries echoes of 2007
"Eurozone fears send banking shares plunging
"Dow Jones returns to losing ways
"Editorial: State of emergency
"Italian prosecutors turn fire on rating agencies
"Poll: are the euro's days numbered?"

El País (Spain):

"La Caída de los Mercados Asiáticos Hace Prever una Nueva Jornada Negra

"-Japón, Corea y Hong Kong abren con fuertes pérdidas.
"-Los mercados esperan un catalizador hoy en el previsible crecimiento del empleo de EE UU o en alguna medida de Europa.
"-Se extiende el temor a un parón en la recuperación
"-Suben las comisiones por la avalancha de liquidez".

The Sydney Morning Herald (Australia):

"$55b Wiped Off Market

"Aussie shares plunge at the opening, as investors reel over the state of the global economy."

And who's at fault? Go on, make a guess.

" 'One of the reasons [confidence] is beginning to erode is we have lost the reform energy that we had over a 25-year period.'
"In a reference to the politically fraught topic of industrial relations, Mr. [my comment: John] Howard said regulation of the labour market had taken the nation backwards." See here

Or this perfectly timed pearl of political and economic wisdom, by Paul Sheehan, published yesterday:

"What happened in Washington last week, embodied by the Budget Control Act and the brinkmanship that brought it into law, was a national failure. The bill is a bandage, when surgery is required.
"The financial markets tell the real story, and the conservative mothers have every right to be angry." See here.

I can smell a Nobel Prize somewhere near.

Witch Hunts Downunder?

I don't know Prof. John Quiggin personally.

I couldn't tell much about him as a person: whether he's tall or short; whether, surrounded by his mates, he digs into a good BBQ washed down with a cold beer or two, or whether he's a vegetarian and a teetotaller, instead.

I do know he is a distinguished Australian scholar, who makes himself available to the lay public through his blog, which I occasionally read.

By this limited interaction, I can say he seems to be a well-meaning, unpretentious bloke, with some progressive views (the kind of views that another well-known mainstream scholar, Prof. Paul Krugman, shares, for instance).

I can also honestly say that Prof. Quiggin's expertise does not extend to Marxian economics or politics. And at times, this shows.

In this context, I found the criticism directed towards Prof. Quiggin by Mr. Michael Stutchbury, from The Australian, surprising, misleading and disturbing: "an economist who is good in theory but on the far left in practice".

It's easy to understand why I find it surprising and misleading, given what I have already said about Prof. Quiggin. However, to make sure the message is not lost, let me state it clearly: he seems to be a decent bloke (maybe what Americans call "liberal"?), but he ain't no socialist, let alone a "far Leftist". Mr. Stutchbury's attack on Prof. Quiggin is as unfounded as it is ludicrous.

However, Mr. Stutchbury's accusation, coming in the wake of the Oslo-Utoya extreme-Right terrorist attacks, is disturbing, too. It sounds way too close to "cultural Marxist".

Mr. Stutchbury's piece could be saying much more about his personal politics, than what it says about those of Prof. Quiggin. And I call that disturbing.