Emergency....paging Doctor Beat!

As May draws to a close the new Con-Dem coalition has really been only engaging so far in shadow boxing with regards to the massacre of public services that they will carry out to pay for the bail-out of the banks. Indeed to salve their consciences the Liberals and Clegg have stressed the progressive nature of the reforms of civil liberties .Indeed Clegg has said this "will be a government unlike any other".

6 billion pounds of cuts were announced last Monday by the now resigned but "dignified" copyright British Media Right wing Liberal Democrat Laws. But the ominous date is the upcoming June 22nd "Emergency Budget".

The formation of an unlikely coalition behind closed doors and an emergency economic programme reminded me of a passage in the Shock Doctrine on Bolivia. In 1985 Bolivia became a laboratory for neo-liberal economics. Not unique but unlike Chile where a bloody dictatorship brought in the Chicago Boys to carry this out on the crushed bones of the Allende regime. This time however it was done after an election.

The Presidential election of 1985 had been inconclusive but both candidates were locked away to discuss the economy. The "left" candidate Paz a sort of Peronist figure emerged as Presidente. He was then in his 80s and had been a long standing figure in Bolivian politics But the important point was that along with his emergence there was announced a cross party economic programme called Decree 21060 (passed in a one-r) - drawn up by Jeffrey Sachs an unelected American academic advisor - later a critical figure in the reintroduction of capitalism in Russia .

This programme (which noone had voted for) included mass privatisation, huge price hikes of basics and an opening up of the economy to global capitalist forces. 20,000 miners lost their jobs, Oil and bread prices went sky high. It was the ultimate shock therapy. Although there was much resistance it took another generation for the political impact to hit of President Evo Morales and his Movement for Socialism administration (elected first in 2005).

Back to GB and all the rhetoric post election is that things are much worse than anyone imagined. Managers across the public sector are using it as an excuse to justify excessive cuts amongst staff.
So a cobbled together coalition in the national interest may use its majority to get through an economic programme that was not endorsed in any election. Austerity and Emergency Budgets have been passed in the last couple of years.
Ireland: Public Sector pay cuts and big taxes on the lowest in 2009 - provoking public protests and a swing to the left in some elections. Spain passed its austerity budget by 1 vote on May 26th icluding a 5% pay cut and a freeze in pensions. The trade unions have called a public sector strike for June 8th.
So the real fight against the coalition will become clearer after June 22nd - though the way they will sell it may be rhetorically different because of the Liberals. For example if there is a sizeable rise in Capital Gains Tax this will be promoted as a tax on the rich - it is already provoking opposition from the Tories bristling at the coalition - the Daily Telegraph have launched their own campaign. But I would guess in Bonapartist style this will be coupled with some outrageous attack on the public sector.
How the opposition will manifest itself is hard to see as the left are so weak at the moment but the battle lines will be clearer post Emergency or rather shock.

Return of the Samurai.

With all the exaggerated talk of an economic recovery sounding more and more like an alcoholic convincing himself he's kicked the habit and can just have a couple of drinks there are some pretty significant happenings out east, far east which undermine the whole picture.

It should be noted the first foreign leader that Obama chose to meet was the PM of Japan, Aso on February 24th of this year. Even though he was a lame-duck leader who was going to lead the LDP to its worst result in its history a near wipeout for a party that had run the country for nearly 50 constant years. The reason was, of course, economic Japan holds a massive amount of US Bonds -second only to China- thus supporting the massive debt which American capitalism has.

This has lead to a lot of resentment by buying dollars they are adding to their problems by strengthening their own currency. This means that exports - a critical part of their economy - are weakened. Sony made their first loss for 14 years. The economic turmoil largely led to the defeat of the LDP the only other time they have lost power very briefly was in response to the recession of the early 90s which its domestic economy has never fully responded to.

Although the new PM Hatoyama is an establishment figure his financial advisers took a much more strident approach to the US - this was also reflected in some foreign policy pronouncements. For example reviewing the US military bases on the islands. Concretely they want to promote Samurai bonds based on yen - more importantly they want America to buy them so that Japan is not so reliant on the dollar.

The Finance spokesman for the new governing party the DPJ wants to promote other bonds as reserve including IMF and Samurai bonds. Obviously the current situation suits the US as they remain the world's reserve currency everyone has to come and buy them. This in turn finances its debt. So will the new government push US capitalism on this issue? This will have a bigger impact on global recovery than a lot of the superficial stories appearing in the British press. There is speculation that this is just nationalist rhetoric for the election and this wont materialise.
Indeed it seems that the Finance spokesman who promoted this policy :Masaharu Nakagawa may be being sidelined with veteran politician Fujii aged 77 likely to get the job. This shows the issue may not be live for a while but it is definitely one to watch if/when the economy goes down again.

Gordon Brown as overenthusiastic SW member - discuss!

Looking at the coverage at the recent G20 meeting over the last week I sensed a certain desperation about G Brown. Firstly he built the meeting up ridiculously from what was a run of the mill summit. In the words of the FT

"Finally, it is most interesting that the G20 emerged as the crucial global economic forum. This is quite a transformation. It started as a forum for finance ministers and central bankers to discuss technical arcana. Five years ago, when the G20 convened in the small Mexican city of Morelia, it was not even the biggest act in town. Hotel space in the city was instead hogged by a convention of Harley-Davidson owners, and there was not a protester in sight".

Such was his hyperbole he almost caused capitalism to splinter between European and American interests. Then he overhyped the results stating $1 trillion had been injected even though most of it had already been pledged.

It reminded me of standard SW behaviour - totally exaggerate the importance of an upcoming demo (normally in London). Annoy everyone by focussing on it to the detriment of everything else. Then when the demo is a bit of a damp squib give a completely upbeat report of it playing with the attendance numbers a wee bit! I know Brown was once on the left neolithic ages ago but was he grounded in this school I think we should be told!

I'll Protect you for the Hooded claw

As the economic crisis maintains its momentum despite the stock exchange displaying its usual bi-polar elements, there are worried glances by the neo-liberals as regards the p-word: Protectionism. This is anathema to the globalisation disciples like Brown, Blair etc yet although all the leaders are protesting against the possibility of bringing back national barriers there are several straws in the wind that shows the big capitalist powers are drawing up their drawbridges.

Sakorzy in France is trying to woo car business back from Slovenia - fellow EU member. As discussed below China have killed off the Coke deal: dead in the sugary water. American Congress puts Buy American steel clause in new public building projects. Oz politicians campaigning against the Chinese state owned metal company buying a huge stake of Rio Tinto mines. Even Britain which under Nulabour was arguably the most globalised part of the global economy - literally everything was for sale- hence why belief that Britain will suffer more than most other countries in recession is urging Banks to lend to domestic customers hence negating foreign investment.

Its all little bits and bobs just now but could mount up particuarly if populist politicians take up the mantle - sadly more likely than the left at the moment given the general weakness of socialism internationally.

In truth free trade was always a bit of a myth - witness the continual failure of the WTO talks but the shift is still significant, particularly ideologically.

In other news Hungary latest to lose PM cos of IMF austerity and Serbia need to go back for more cash with conditions.

Have a Coke and a smile...

Viz the terrible adverts with insipid pop starlet Duffy with her extolling the virtues of sugary water based drinks. Mind you the corporate evil that Coca Cola represent are admittedly less annoying than those bloody Lenny Henry ones for Travel Inn "I've found something small time - the price!".

Anyway discovered in FT that Coke want to buy the biggest indigenous Chinese soft drink company the China Huiyan Juice group. It would be the biggest corporate take over in Chinese history - big business tends to just use Chinese capitalism as a staging post at the moment. Could be a significant test of the threat of protectionism which Brown has being waxing lyrical about in states.

It already is the 3rd biggest market for Coke in the world but that seems mainly down to population as their pc consumption is only about a third of global average. So the West want to introduce China to the wonders of tooth decay and obesity and of course Duffy!

Bizarre quote though re the biggest "research and development Coke centre in Asia" based in Shanghai- what the hell can you research about Coke! Its fizzy and sweet?