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FOLLOWING THE FINANCIAL COLLAPSE IN 2008 THE ‘Washington Consensus’ of unregulated money markets was universally acknowledged to have reached the end of its usefulness, if it ever had any. The need for reform was further underlined as the crisis spread to the real economy and, due to the attack by the markets on national debt, to the political and social spheres. Although some regulation of these global activities was obviously needed at World level, for instance the imposition of a financial transfer tax (see our last issue), the European Union, some of whose members have been worst affected by the debt crisis, also wanted to introduce controls. Now, 21 months after the collapse of Lehman Brothers sparked the acute phase of the financial crash, there are some details of the proposed reform emerging from the fog of negotiation and lobbying behind closed doors. Three new European supervisory authorities would be set up: for the securities, banking and pensions sectors while a European Economic Crisis Committee (CERS) would monitor macroeconomic trends and individual companies if necessary; it would also have the power to declare a state of emergency. A proposed European Securities and Markets Authority (ESMA) would have the power to prohibit complicated financial transactions such as ‘short-selling’ and ‘credit default swaps’ in an ‘emergency situation’. A European Banking Authority (EBA) is envisaged to manage a fund, established by a levy on banks, to guarantee savers’ deposits and to restructure failing banks. There would also be a second fund controlled by national governments. A European Insurance and Occupational Pensions Authority (EIOPA) would regulate the pensions sector.
|European Day of Action to protest austerity cuts|
AS SUCCESSIVE EUROPEAN GOVERNMENTS have responded with austerity measures to the attacks by financial markets on their borrowing, trade unions have warned of the effects, both on those losing their jobs and the services they carry out, and on the future of the economy as a whole. The public sector will bear the brunt of the cuts so the European Federation of Public Service Unions (EPSU) is in the forefront of protest at these policies. Conscious of the possibility of a ‘double-dip’ recession Carola Fischbach-Pyttel, the EPSU General Secretary commented ‘As governments swing the austerity axe they risk chopping off any green shoots of recovery, leaving workers, pensioners
and communities to face the prospect of an even longer recession’. The federation, which is an umbrella for 250 unions organising a range of occupations from tax collector to nurse and librarian to prison guard, estimates that the current cuts of more than €200 billion will reduce employment by about 200,000 throughout Europe. As well as hitting the sick, elderly, poor and vulnerable as well as the education of children, EPSU believes that a reduction in public officials will result in companies getting away with health and safety violations and tax evasion. It is therefore supporting the European Trade Union Confederation (ETUC) Day of Action which will take place in Brussels on September 29th. The protest will reject austerity cuts and call for quality jobs and services, decent pay and pensions, a tax on financial transactions and the development of industry with low carbon consumption and emission to engender sustainable economic growth.