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Date archive for: June 2015

The Surprise Election

By Philip Cowley.

In the early hours of 8 May, during his victory speech at Conservative Campaign Headquarters, David Cameron described the 2015 general election as one where ‘pundits got it wrong, the pollsters got it wrong, the commentators got it wrong’.

It was a fair complaint. A couple of months before, a collection of academic experts had met at the LSE to forecast the result of the election. No matter which model they used, or how they set about crunching the numbers, they all reached the same conclusion: no single party would win enough seats to command a majority in the House of Commons. A similar survey of over 500 academics, journalists, and pollsters in early March came up with the same finding. And the betting markets agreed. Just before the polls closed on 7 May, the Irish bookmaker Paddy Power had odds of 1/25 for a hung parliament, in which no party had an outright majority. A wager of £10 would have paid out just £10.40. Both Labour and the Conservative parties pretended they could win outright, but neither really believed it.

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Austerity and Resistance: Greece in the Eurozone crisis

By Andreas Bieler and Jamie Jordan.

Concerns over Greece’s ability to pay back its debt continue unabated, with one crisis meeting taking place in Brussels after another. While the media focuses on Greece’s ability to meet the conditions by the European Union, in this post we will have another look at some of the key underlying dynamics of the crisis.

It is often argued in the media that citizens of richer countries would now have to pay for the ‘profligacy’ of citizens from indebted countries. Cultural arguments of apparently ‘lazy Greek’ workers as the cause of the crisis are put forward despite the fact that Greek workers are amongst those who work the most hours in Europe (McDonald 2012). Rather than the result of Greeks living above their means, however, the crisis is a reflection of the highly uneven European political economy. While Germany and other countries of the European core have pursued a growth strategy based on exports, countries in the European periphery including Greece followed a strategy of demand-led growth often financed with loans from abroad. Nevertheless, it would be wrong simply to blame the Greeks for this situation. The super profits resulting from German export success needed new points of investment to generate more profits and state bonds of peripheral countries seemed to be the ideal investment opportunity with guaranteed profits, backed by sovereign states. In a way, Germany has recycled its profits in the form of lending to peripheral countries. In turn, these credits to the periphery were used to purchase more goods in the core ensuring a continuation of the German export success. Hence, the recurrent distinction between credit- and export-led economies is misleading. Firms in core countries would not have been able to pursue export-led growth strategies, if global aggregate demand had not been supported by the real estate and stock market bubbles that occurred in the periphery as a result of lending. German export success, in other words, depended on Greece’s increasing indebtedness.

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