Forum 3 “Power and instability of the financial spere” South-East-Asian Crisis and the current Subprime-Crisis – Different Crises, same solution? European Attac Summer University Saarbrücken, 5th August 2008 Philipp Hersel

Financial Crisis then and now – Differences: Who is affected? Periphery (“emerging markets”) vs. Center (“heart of the beast”) Who manages? IMF vs. governments and central banks of the affected countries Is it systemic? Both were, but todays crisis seems to be far more difficult to judge Who bears the brunt? Poor and middle-class people in the South vs. investors, poor house owners AND ?????

Differences and its implications for today: Far more difficult to mobilise solidarity and activism No comparable spill-over (so far !!!) to the real economy The managers are really committed to limit the spill- overs  far more difficult to attack them (e.g. no simple “Bad Guy” like the IMF) Concessions at least on rhetoric level Some willingness on the investors’ side to limit risks

Similar analysis, but we should refocus Joint analysis: Liberalised financial markets cause major risk Capital mobility undermines social and workers rights and causes reckless competition at the expense of financial stability, human dignity and justice  Our Focus in South-East-Asian Crisis: Excessive CAPITAL FLOWS are at the heart of the problem  Today we should refocus our analysis: Excessive CAPITAL is at the heart of the problem

Distribution, stability and justice Increasing unequal distribution puts economic stability at risk: The gap between investment seeking money and profitable real invest widens, because lack of demand Investment seeking money goes into the secondary market and derivatives of the existing stock of real capital (I.e. profitable corporations, real estate etc.)  periodic BUBBLES and CRISES, frequency rises with unequal distribution This can only be prevented by fundamental redistribution

Lets start on the European Level: Our message: The world we advocate for is not just about more justice, but also about more economic stability and prosperity Stop the ECB Focus on monetary stability but and widen it with employment and growth Higher wages in Europe, particularly for the lower income groups, are a necessary prerequisite to ask them to buy environmentally, socially and fair traded goods Advocate a concrete Alternative European Policy Framework, e.g. Clearing Union-type of BoP- Regulation instead of EMU Stability pact.

Imbalances today: Germany and the EU Quelle: Statistisches Bundesamt 2007

Germany and Developing Countries Quelle: Statistisches Bundesamt 2007

Current Account Balances today Quelle: IMF Direction of Trade Statistics 2007