Wednesday, 23 January 2013

2012 review

I realise that the fourth week of January 2013 is probably a little late to publish a review of  2012, however it is probably better late than never.

From a personal point of view 2012 was a reasonable year. The economic insanity of austerity has plunged tens of millions of families into desperate poverty across the European Union, however my family have been fortunate in that my wonderfully supportive wife maintained full-time work throughout 2012 and I had some part time work too. 2012 was hardly a prosperous year for us, but in comparison to the suffering of others, we have much to be thankful for.

2012 was a great year for the Another Angry Voice blog. The year started the year with fewer than 50 followers on the AAV Facebook page and average monthly traffic of just a few thousand hits on the blog. I finished the year with almost 4,000 Facebook followers and more than 30,000 hits in the month of November.

In my view, the single biggest story of 2012 was not the "Savile was a predatory paedophile" revelation or the London Olympics, it was the sheer scale of financial sector fraud. HSBC were fined £1.2 billion for laundering money for drug traffickers and international terrorist organisations, Standard Chartered were fined £327 million for deliberately bypassing sanctions on Iran but the most shocking revelations related to the Libor rigging scandal that involved several British banks Barclays, RBS and HBOS.

Few people even understand the implications of the Libor fraud (because it just sounds like complicated financial word stuff to the layman). To put it simply, manipulating the interbank lending rate results in the manipulation of virtually every financial transaction in the western world because the value of so many of the world's major currencies (US dollar, Japanese yen, the euro, British pound, Australian, Canadian and New Zealand dollars, Swiss frank, Swedish and Danish krone) are all fixed by the Libor rate. Thus if a trader at a financial institution fraudulently manipulates the Libor rate up or down, they manipulate all financial transactions carried out in any of the aforementioned currencies. Andrew Lo of MIT described the Libor fraud by saying:
"this dwarfs by orders of magnitude any financial scam in the history of markets"
If it wasn't completely obvious that the global financial system is hopelessly corrupt before 2012, it most certainly is now. Now that there is conclusive evidence that financial institutions have fraudulently undermined the value of the US dollar and the GB pound, it is obvious that the whole financial system is clearly unfit for purpose. The problem of course is that establishment interests have far too much riding on the current neoliberalised financial system to ever consider fundamental reform. In fact it is much worse than that. The most senior banker at Barclays to be implicated in the Libor scandal (which cost the bank £290 million in fines) Jerry del Missier didn't face prosecution, he got to walk away with an £8.75 million payoff! This wasn't just a reward for failure, it was a reward for outright criminality.

2012 also featured more Quantitative Easing from the Bank of England, who pumped another £50 billion into the UK bond market, driving bond yields to historic 300 year lows, giving George Osborne and the Tories yet another economic soundbyte to weave into their absurd, misleading and downright dishonest economic justification narrative. The Bank of England went ahead with another tranche of QE despite their own research telling them that the wealthiest 5% of families received 40% of the benefit of their newly invented money, whilst ordinary people like savers, pensioners and workers suffered the adverse effects of currency devaluation. The Federal Reserve went even further than the Bank of England launching "QE to infinity" to magic up $40 billion a month to buy up toxic assets from the debt riddled US financial sector.

Despite another £50 billion in "magic money" from the Bank of England and several events that were spun as dead cert monet spinners (the Olympics, the Jubilee, the Royal Wedding) the UK economy slumped back into recession in 2012. When the Tories came to power in 2010, George Osborne's OBR predicted a 2.5% growth rate for the UK economy for 2012, in reality the economy stagnated and shrank by 0.1%. The disparity was hard to explain, Osborne and the OBR tried with a litany of excuses (the cold winter, extra bank holidays, the Japanese Tsunami, the Eurozone crisis, the wet weather...) however the truth was revealed in the The Office for Budget Responsibility2012 Forecast Evaluation Report in October 2012 which stated:
"The average multiplier over the two years would have needed to be 1.3 – more than double our estimate – to fully explain the weak level of GDP in 2011-12"
This means that for austerity to have been entirely responsible for the double-dip recession the fiscal multiplier would have to have been around 1.3 instead of the 0.5 figure they had been assuming. Days later the IMF released a report which admitted that:
"[We previously claimed] that fiscal multipliers used in the forecasting process are about 0.5. Our results indicate that multipliers have actually been in the 0.9 to 1.7 range since the Great Recession. This finding is consistent with research suggesting that in today’s environment of substantial economic slack, monetary policy constrained by the zero lower bound, and synchronized fiscal adjustment across numerous economies, multipliers may be well above 1." 
1.3 happens to be slap bang in the middle of the IMF's revised fiscal multiplier figures. If the mainstream media had've been paying attention in October, "Fiscal Multiplier" would now be a commonly known term throughout the UK and Osborne's ideological "cut now, think later" austerity agenda would have been holed beneath the water line yet again. However, the mainstream media weren't just not paying attention, they were deliberately avoiding discussion of the economic evidence of George Osborne's economic illiteracy. I'm not sure why, they were either too stupid to understand the evidence, working under the assumption that the public are too stupid to understand the evidence or they simply didn't want to abandon the mainstream media fantasy that austerity is necessary. Whatever the case, they refused to report it and left it to independent bloggers like me to explain it.

The clearest demonstration of Tory economic incompetence came in the guise of George Osborne's 2012 "Millionaires budget" which included several measures that were abandoned (Pasty tax, philanthropy tax, static caravan tax), but several other measures made it through the storm of public criticism including cutting the top tax rate to 45p (a gift of £50,000+ a year to anyone with a salary above one million) and several new tax loopholes to reward tax-dodging British companies, including a loophole to allow British based companies to siphon wealth out of 3rd World countries into tax havens. After all of their rhetoric about being "in it together", the Tories lavished even more wealth upon the richest individuals.

Another clear example of Tory economic illiteracy was revealed by the wet weather and extensive flooding in 2012. Several of the most badly effected areas had had their flood defence schemes cancelled by DEFRA minister Caroline Spelman, who had enthusiastically slashed flood defence spending in order to meet George Osborne's across-the-board spending cuts. The problem of course is that spending on flood defences has an astonishingly high multiplier. For every £1 spent on flood defences, £8 are saved in avoided economic damage. Slashing flood defence spending is a perfect example of short-termist false economies. Instead of taking responsibility for the disastrous consequences of their barmy "cut now, think later" policies, Cameron and Osborne simply used Spelman as a human shield, sacking her as DEFRA minister and restoring £120 million of flood defense spending, a tiny fraction of the estimated £860 million Spelman slashed from the 2011-2015 spending period at their behest.

I asked people on the AAV Facebook page for their biggest story of the year. The overwhelming response from my right-leaning followers was the Andrew Mitchell plebgate scandal, where it seems that the police fabricated evidence to stitch him up and get him sacked. The problem is that it is hard to see Mitchell as the poor victim in the situation given that he:
A. Admitted swearing at the police
B. Was forced out of his job by members of his own party. 
In my view the Andrew Mitchell Gate-gate issue was not even the most important example of police corruption exposed in 2012. After 23 years of battling for the truth, the families of the 96 Liverpool FC fans that died at Hillsborough were finally given access to the wealth of evidence that the South Yorkshire police and Margaret Thatcher's government had conspired to cover up police culpability for the tragedy and to smear Liverpool fans as the guilty parties. The fact that Tories would consider falsified police evidence that led to one unpleasant man losing his job as a more important story than the falsified police evidence and a 23 year long Tory party orchestrated cover-up relating to the deaths of 96 innocent people clearly illustrates their mentality. In the Tory mind, police corruption is fine if it is used to smear people like football fans, miners, lefties etc, but it suddenly becomes the most important story of the year if the police falsify evidence to smear a foul mouthed Tory MP that is so obnoxious he is despised by members of his own political party.

There were a number of noteworthy elections in 2012. The French elected a socialist President for the first time in decades and the American public re-elected Obama which came as a relief to the vast majority of the global population, given that his opponent Mitt Romney was a foaming at the mouth vulture capitalist who made "Tricky Dicky" Nixon look like a man of profound integrity, Ronald Reagan look like a man of towering intellect and George W. Bush look like a man of great competence.

Possibly the most significant elections of 2012 were the Greek elections, in which the Greek electorate voted for anti-austerity parties despite numerous overt threats from the Germans, the EU, the ECB and even David Cameron, but thanks to their unrepresentative electoral system the pro-austerity parties managed to form a majority coalition.

In contrast, probably the least significant elections in 2012 were the farcical Tory devised PCC elections in November in which fewer in one in five of the electorate even bothered to vote and several candidates won with less than 5% of the eligible vote in their constituencies; all of which exposed Tory MP Priti Patel's comments on trade union ballots (see image to right) as the disgustingly partisan nonsense they were. It is quite remarkable that the Tories wasted £100 million on these farcical ballots, whilst simultaneously slashing the number of front line police.

In education, Michael Gove's school privatisation bonanza steamrollered on, with Tory party donors like Lord "Carpetright" Harris bagging more free public infrastructure and taxpayer subsidies for his education pseudo-charity. It also became much clearer that Gove's school sell off was allowing schools to exempt themselves from all kinds of legislation, from health standards in school meals to minimum outdoor play space requirements. Not only that, Gove also saw fit to declare war on the wages, working conditions and morale of British state school teachers by threatening to dock their wages for engaging in work-to-rule strike actions. This vindictive attitude clearly illustrates the Tory contempt for education. Gove clearly believes that the UK is best served by ensuring the staff that teach the 93% of British kids that go to state schools are underpaid, overworked and utterly demoralised.

There are a number of highly qualified candidates for political monster of the year, however one Tory politician stands above all the rest. Not only has Iain Duncan Smith's flagship Work Programme cost £500 million in fees to corporate outsourcing profiteers to achieve results that are worse than if the jobseekers had just been left to their own devices, but his disability witch hunt has thrust thousands of severely disabled, bedridden, hospital bound, post-operative and even terminally ill people onto dole queues and into extremely stressful appeals processes. His callousness was perfectly illustrated, in one of the TV moments of the year, when, instead of paying his respects to the dead and their families, he angrily shouted down Owen Jones on Question Time for eves daring to mention the names of his disabled victims.

I've had to wrack my brains to think of anything particularly good the Conservative led coalition managed to achieve in 2012, however if something positive must be identified, the quashing of the extradition orders on Gary McKinnon and Richard O'Dwyer are worth a mention. There is absolutely no way the UK state should be extraditing their own citizens if they are either wacky autistic conspiracy theorist teenagers or people engaging in activities on UK soil, that were not even crimes under UK law. The fact that Theresa May over-ruled both of these extradition orders was one tiny victory for common sense in an ocean of Tory malice and incompetence.

Finally, I'd like to conclude on a high. Despite costing six times as much as the initial projection, the London Olympic Games were a great success. Some of my personal highlights included: Bradley Wiggins annihilating the field in the road race time trial just nine days after becoming the first British man ever to win the Tour de France endurance race. 15 year old Rūta Meilutytė winning the 100m breaststroke final to claim Lithuania's first ever swimming medal. Stunningly high scoring finals in the men's floor, vault and rings in the gymnastics. 36 year old Chris Hoy powering to victory in the Kierin and 19 year old Jade Jones becoming Britain's first ever Taekwondo champion. Jessica Ennis sprinting to win her 800m race in the Heptathlon when she only needed to avoid finishing 18 seconds behind her opponent. David Rudisha winning an incredible 800m race in which practically every competitor beat their national record or personal best time. 19 year old Kirani James winning the 400m, a first ever gold medal for Grenada. The astonishing photo finish after a two hour race in the women's triathlon. Mo Farah winning golds in the 10,000 and 5,000m to become undoubtedly Britain's favourite Muslim immigrant. I don't even like Tennis but Andy Murray claiming Olympic gold to become the first British man to win a major international tournament in over seven decades has to be worth a mention.

One of the most enjoyable aspects was seeing the bigoted Tory MP Aidan Burley (who bitterly criticised "multiculturalism" during the Olympic opening ceremony) proved spectacularly wrong by Britain's multicultural medal winning athletes.

Another enjoyable aspect was the successful role of the public sector. Public sector police and military personnel stepped in at extremely short notice to rescue the private outsourcing company G4S from the abject shambles they had made of their £240 million Olympic security contract. If this isn't a clear case for protecting the efficient public sector against Tory privatisation fantasies, I don't know what is.

Another example of successful public sector influence came with the success of the British team. Many of the successful athletes and teams were recipients of National Lottery cash. Had the state not intervened to ensure that a proportion of national lottery profits went to worthy causes such as sports and the arts, the British team would have been nowhere near as successful. Had the neoliberal adage that "state intervention is always evil" been followed, the lottery profits would have flowed to the owners of the private sector operator Camalot, rather than into British sports. The influence of National Lottery cash in turning British athletics from the laughing stock of 1996 (just one gold medal) to the third most successful team (29 gold medals), behind only the economic super-powers of China and the US is the perfect example of how targeted state intervention can create enormous success in what is a highly competitive area of human endeavour.

This brings us back to the current Tory obsession with "cut now, think later" austerity. The diverse successes of the British Olympic team can be seen as a testament to intelligently targeted investment, however the Tories are taking a completely different approach. One imagines that had they been in charge of Olympic funding decisions, virtually every sport would have had their funding slashed to bits in order to pour millions in extra funding into elitist sports like dressage, yachting and showjumping.

If you think I've missed anything important from 2012 please feel free to mention it in the comments section below.

   

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