*** PAUL WASHER: Secret finance ou le grand Krach. Genèse Edition (92 rue Saint-Bernard, B-1060 Brussels. Internet: http://www.genese-edition.eu ). 2009, 127 pp, €14-95. ISBN 978-2-930585-00-0.
Paul Washer was born in 1922, the year that his famous great-grandfather, Ernest Solvay, died. Paul Washer spent most of his working life at his great grandfather's company, Solvay & Company, where he became manager in 1960, then member of the board of managers and finally Chief Financial Officer. He is therefore a true expert in the ways of the business world. (He also spent time as the manager and then the chair of the Belgian Chemical Industry Federation.) He writes in this book on another area of expertise - the world of finance, tearing into the abuses carried out by casino capitalism. He starts by describing a landscape devastated by speculation, talking of a 'dying economy' whose victims, collapsed banks and bankrupt companies, are sacrificed on the altar of wild speculation. He goes on to describe the origins of the crisis and criticise the failings of surveillance authorities and regulators, all of which '"failed in their mission, acting as if lost among all the red herrings" thrown their way by "banks and financial institutions, all of them working away to create fictitious currency".
Three questions run throughout this reflection in the form of an imprecation. Firstly, "What is the point of central banks?" Secondly, "Is this a crisis of capitalism or rather a crisis of stateism?" Thirdly, "Is this unrestrained free-marketism or unrestrained laisser-faire by the state in our various countries?" Striking questions, of course, to which he provides answers characterised by pessimism because based on the facts: How can "professional, erudite and overpaid professional gamblers" be held in check by "underpaid regulators who know less and have less expertise than" the very people they are supposed to be monitoring? The author explains that since the Second World War, the life of the market economy has been characterised by moderate cyclical crises that used to work as self-regulators of the markets. But then, "one day, a sorcerer called Alan Greenspan thought he'd found a way to prevent these crises by tolerating all kinds of operations to increase liquidity on the financial markets and lower interest rates". At the same time, the sorcerer's apprentices - economists - started playing around with mathematical models and placing bets on the values of the real economy. The smartest of them made tonnes of money in this way, until the day when "somewhere in Sarasota, one house too many was built" and the dream turned into a nightmare, cruelly reminding us all that "the economy is produced by human beings and is not a concept obeying the laws of physics and maths". The nightmare will only cease if nation states genuinely give themselves the resources they need to properly monitor and control the sorcerer's apprentices, failing which they will go back to their old ways.
Michel Theys
*** HERIBERT DIETER: Liquidity and Sovereignty. The Eurozone Needs a Lender of Last Resort. Stiftung Wissenschaft und Politik/German Institute for International and Security Affairs (3-4 Ludwigkirchplatz, D-10719 Berlin. Tel. (49-30) 88007-0 - Fax: 88007-100 -email: swp@swp-berlin.org - Internet: http://www.swp-berlin.org ). "SWP Comments" series. 2010, 4 pp.
Published in March this year, this brief study obviously does not take account of the decisions that were not taken until later in the year to bail out Greece when it was threatened with bankruptcy. It is no less useful for that because it explains various matters that are generally unknown or misunderstood, aspects of the financial crisis "that demonstrated a fundamental weakness in the construction of the eurozone'. The author explains that the designers of Economic and Monetary Union made the mistake of not including a lender of last resort that can bail out Member States suffering from cash-flow problems. Heribert Dieter notes that the idea and basic principles of the lender of last resort were developped in the nineteenth century by English economist Walter Bagehot, who stated that the lender of last resort system would require a state facing bankruptcy to give the potential lender of last resort sufficient collateral (sufficient additional guarantees). In the middle of the 1990's, for example, in order to receive aid from the United States, the International Monetary Fund and the Bank for International Settlements, Mexico had to promise the profits from future oil sales. We see that the Greek state could do likewise because it is… rich. The Greek state owns hotels ports, airports, banks, insurance companies and so on, and economist Michael Massourakis estimates that its assets are worth some €300 billion. This, as far as Heribert Dieter is concerned, means that Greece meets all the criteria to be able to provide sufficient collateral to a lender of last resort. He also points out that the reforms imposed on Greece could well turn against the European Union, if one is not careful, because the EU might be held responsible for making far deeper cuts in the civil service and fare greater pay cuts than "the irresponsible Greek governments of the past"…
(PBo)
*** GILLES LEPESANT: Géographies de la crise en Europe centrale. Centre d'études et de recherches internationales (56 rue Jacob, F-75006 Paris. Tel: (33-1) 58717000 - Fax: 58717090 - email: info@ceri-sciences-po.org - Internet: http://www.ceri-sciences-po.org ). "Les Etudes du CERI" series, No. 159. 2009, 52 pp.
This study by a researcher at the 'Centre d'étude et de recherches internationales de Sciences Po' (international study and research centre for politics) in Paris looks at the Central European countries' development model and how they have been hit by the crisis. The author distances himself from the idea of a re-run of the 1930s because "with the benefit of experience, international bankers and the politicians in control have not repeated the errors" of the past. That does not mean that all is well, however. Gilles Lepesant distinguishes between three phases in the crisis that started with the collapse of bank Lehman Brothers: a short, vicious financial phase, an economic phase that now seems to have passed its peak and a social phase that is likely to last some time yet. That is where the problem lies in this third phase, which is the one most likely to be noticed by ordinary citizens and therefore "the most dangerous politically," enlivening matters with the rise of the far right. The author points out that Central Europe is no longer a homogenous area because the crisis has highlighted huge differentiation among the countries of Eastern Europe. Moreover, the development model adopted by the new EU Member States is still vulnerable, particularly for the car industry that has developed in these countries and accounts for a significant share of jobs and GDP, but whose future prospects are now uncertain. Finally, the author points out that the conditions for long-term convergence among the EU Member States are only partially met and therefore the regional policy for EU countries acts to promote innovation, active labour market policies and sustainable development in order to help the lagging regions catch up.
(MT)
*** BERNARD SORDET: Carnets d'un Européen solidaire. Volume I: En face. L'Harmattan (5-7 rue de l'Ecole polytechnique, F-75005 Paris. Tel: (33-1) 40467920 - Fax: 43258203 - email: diffusion.harmattan@wanadoo.fr - Internet: http://www.librairieharmattan.com ). 2009, 380 pp, €34. ISBN 978-2-296-10399-3.
This book has been thought up and written by a fine soul, an engineer, economist and high-flying lecturer who has worked here, there and everywhere around the world. It clearly cuts across categories but is badly written, losing the reader down astonishingly verbose and long-winded side-tracks, but readers who stick with it could well be caught in the trap of striking, strong views founded on "creative doubt". Like a prophet in the days of old, Bernard Sordet launches an invective against the world he lives in, analysing it minutely and examining with discernment the organisations and large and small bodies (states and companies) that "channel ideas along with the ideas they use to their own ends", vomiting "the gnosis of Enterprise World that reigns by management" and inviting all and sundry to rebel against "this God that is alleged to be omnipotent Enterprise World thanks to the fact that science has been put to work for it to ensure the well-being of liberalism". In order to save Europe from globalisation that would lead it to becoming diluted and losing its personality, a personality that has become "a big hypermarket of global methods," the author calls for a utopia in the form of "going beyond forecasts and forward planning," in order to avoid talking of pragmatism that separates off intelligence from its creative potential. For this Europe that is sure of itself and yet at a loss, and we must return to Erasmus singing the praises of madness and providing his backing for Thomas More, who recommended Utopia, in other words, "reinventing the City" in order to opt for "solidarity and participation in a World Culture in cosmopolitanising". In the "path of awareness, medit-action and utoprisms" that he invites readers to take in each of the three chapters (gnosis of Enterprise World, dis-ease of sovereignty and a proposal for a Europe based on "the great resilience of Europe and the World" based on a "political project served by the economy that places human beings at the centre".) Defying classification and standing out from the crowd…
(MT)
*** FRANZISKA KEHRER: Staatenverantworltlichkeit und Meeresspiegelanstieg. Peter Lang (see above). "Europäische Hochschulschriften - Publications universitaires européennes - European University Studies", No. 4877. 2009, 386 pp, €61-50. ISBN 978-3-631-59312-7.
Climate change is a huge problem and any solutions will have to be negotiated and applied at global level. This book queries the responsibility of nation states in terms of the consequences of global warming and looks in greater detail at the rising level of the planet's seas and oceans. Although this is not a new subject due to events in recent years, legislation setting out private and public liability is only starting to emerge. In the study, Franziska Kehrer defines liability from the starting point of the rights of human beings. Some of the questions asked in the book can be described as novel, or even unheard-of, like the question about whether small islands have the right to exist - they are prime potential victims of rising sea levels - and state liability for carbon dioxide emissions that cause global warming Her analysis is more legal than political in tone.
The book is divided into eight sections. The first two provide an introduction to climate change, the first looking at the natural and anthropological causes, and the second describing the consequences. The remainder of the book is more legalistic. The third section examines legal measures covering state liability for damage to the environment and the fourth examines the separation of actions leading the degradation of the environment. The fifth section is the most profound in that it examines states' duties with respect of climate events caused by global warming, floods for instance. In this fifth section, which is above all a legal analysis of the problem raised here, the author asks the most interesting questions. Other s hypotheses are put forward in the sixth part of the book, examining the causal connections between state action and the consequences of global warming. Issues like the lack of evidence about state involvement are also discussed. The final section examines the legal consequences of states.
(JD)
*** ALEXANDER WIRSIG: Global Change and Regional Agricultural Land Use. Peter Lang (see above). "European University Studies" series, No. 3344. 2009, 187 pp, €40. ISBN 978-3-631-58698-3.
This study starts from the nowadays hard-to-challenge assertion that climate change is severely damaging the natural environment and also large swathes of the economy and society in Europe. These effects have already been observed in the regions and will becoming more frequent and more intense as time goes by. Agriculture is one of the main industries suffering the consequences of socio-economic changes, particularly in terms of land use, markets, technology and the Common Agricultural Policy. The aim of this painstaking research is to assess the economic and ecological impact in terms of farm land use in the regions of Europe by means of a case study of the Danube basin. The author starts by describing the natural climate conditions in the area, along with the methods used to set up the model developed for possible scenarios. The book ends with a discussion of the results of these scenarios and the consequences they would generate for arable land use and ecosystems in the Danube region. The author sets out future policy ideas and their political and economic implications for the future.
(NDu)
*** Responsabilité & Environnement. Editions ESKA (12 rue du Quatre-Septembre, F-75002 Paris. Tel: (33-1) 42865573 - Fax: 42604535 - email: eska@eska.fr - Internet: http: //http://www.eska.fr ). 2010, No. 58, 104 pp, €23. Annual subscription: €81 (France) or €98 (elsewhere). ISBN 978-2-7472-1672-2.
The raw materials sector is an excellent arena for taking a renewed critical look at what economics can provide as a science as a contribution to understanding of how the economy works in France and Europe as a whole. This is the aim of this issue of the review, examining price fluctuations in raw materials, from oil to farm and industrial products. The editorialist Bruno Sauvalle writes that it is difficult these days to be able to state with certainty that market prices will naturally constitute an economic optimum. Against this backdrop, the editorialist writes that competition policy limiting the intervention of the public authorities on the markets should be seen as "not going far enough because many areas are faced with the existence of State oligopolies". This comment is not restricted to the raw materials used to generate energy but also applies these days, as is shown in this review, to lithium and rare earth. There is also an article by a European Commission official on the European raw materials initiative undertaken by the Commission.
(PBo)