Who Owns Ireland? UCD Lecture 10 February 2014

11 May 2010

Dear Chief Secretary,

I'm afraid to tell you there's no money left.

Sincerely,

Liam Byrne.

chief secretary to the Treasury.

“The British Government has run out of money because all the money was spent in the good years.”

George Osborne, 25 February 2012

“So we cannot just carry on as we are. Unless we reform our economy - rebalance demand, restructure banking, and restore the sustainability of our public finances - we shall not only jeopardise recovery, but also fail the next generation.”

Mervyn King, TUC Conference, 15 September 2010.

5 March 2009. QE : £75 billion

10 October 2011. QE : £75 billion

2009 – 2011. corporate bond purchase via asset purchase facility : £375 billion

2012: Monetary Policy Committee approve a further £50 billion.

“So we cannot just carry on as we are. Unless we reform our economy - rebalance demand, restructure banking, and restore the sustainability of our public finances - we shall not only jeopardise recovery, but also fail the next generation.”

Mervyn King, TUC Conference, 15 September 2010.

Long Term Refinancing Operations (LTRO)

21 December 2011: €489.2 billion to 523 banks – 3yrs @ 1 per cent

29 February 2012: €529.5 billion to 800 banks – 3yrs @ 1 per cent

“Some banks, particularly in Spain and Italy, used portions of those funds to buy higher-yielding bonds issued by their governments at a time when most investors remained skittish, and it helped reduce government borrowing costs.

“Some banks, particularly in Spain and Italy, used portions of those funds to buy higher-yielding bonds issued by their governments at a time when most investors remained skittish, and it helped reduce government borrowing costs.

But many banks primarily used the funds to pay down maturing debts or simply deposited the money at other banks or with the ECB itself, even though they yield less.

“Some banks, particularly in Spain and Italy, used portions of those funds to buy higher-yielding bonds issued by their governments at a time when most investors remained skittish, and it helped reduce government borrowing costs.

But many banks primarily used the funds to pay down maturing debts or simply deposited the money at other banks or with the ECB itself, even though they yield less.

The infusion fell short of some politicians' hope that it would stimulate bank lending to customers in struggling European economies.”

Wall Street Journal, 1 March 2012

Financialization refers to the increasing importance of financial markets, financial motives, financial institutions and financial elites in the operation of the economy and its governing institutions, both at the national and international levels.

Gerald Epstein (2002) Financialization, Rentier Interests, and Central Bank Policy’

1970s – The Monetarist revolution

1980s – war on labour

1990s – Credit as a substitute for wage increases

2000s – Credit solution for wage stagnation fails

Present day – open conflict over monetary policy once again

Work as a realm of class conflict

Inflation as a realm of class conflict

“In the case of the United States, financialization during the 1990s led to a closer alignment of large industrial and financial firms in the U.S., leading to a greater emphasis by Alan Greenspan and the U.S. Federal Reserve in financial asset appreciation as a goal of monetary policy.”

Gerald Epstein (2002) ‘Financialization, Rentier Interests, and Central Bank Policy ‘

“Part of the reason people get less giddy about the Dow than they did five years ago is that they have learnt a bit about inequality.

what looks like a recovery, a rally or an increase in consumer confidence may just be the effect of elites passing money among themselves.“

Christopher Caldwell, FT 9 March 2013

Michael Taft, ‘The Inexorable Rise of the Wealthy Class’ Unite’s Notes on the Front, 22 January 2014 - http://goo.gl/O84GJn

Michael Taft, ‘The Inexorable Rise of the Wealthy Class’ Unite’s Notes on the Front, 22 January 2014 - http://goo.gl/O84GJn