Dealing with Sovereign Debt Crises Today: Lessons from Eastern Europe and the Balkans

Click to increase image sizeClick to decrease image size

Notes

1. Hayek (The Constitution of Liberty) and Friedman (Capitalism and Freedom), and also his very significant policy article (Friedman “The role of monetary policy” 1–17). For a perceptive critique: Chomsky and McChesney (Profit Over People) and Harvey (A Brief History of Neo-liberalism).

2. The classic statement on Open Door imperialism is by Williams (The Tragedy of American Diplomacy), first published in 1959. In the main, the Open Door reflects the need of US capital to conquer new markets outside the US, as there is not enough consumer demand domestically to support mass production. In other words, the Open Door is a manifestation of crises of over-accumulation. In this context, two remarks are important. When the global economy is geared to industrialism, then the US Open Door aims primarily, but not exclusively, to open up the retail market of subaltern/vassal capitalisms. But, when the global economy is geared to financialization and services, then the US Open Door aims primarily, but not exclusively, to open up to US-led agencies – such as the IMF and the World Bank – the banking and financial sectors of subaltern/vassal capitalism (this is the case, for example, with the South-east Asian crisis, or the persistent attempts by the US to have an open European financial system with no fiscal consolidation and centralization). The second remark is equally important. The Open Door has been accompanied by politics and security perceptions embedded in the US policy-making elites ever since it was adopted as a key policy in the late nineteenth century. This means that the spread of political democracy and free markets abroad have to be enforced, since homeland security is contingent upon the extent to which political democracy and free market capitalism flourishes abroad. On this issue, the contribution to the debates on Open Door by Christopher Layne remains very significant (Layne The Peace of Illusions).

3. For the Gramm–Leach–Bliley Act, see http://banking.senate.gov/conf/. “Casino capitalism” was a term coined by Susan Strange in the mid-1980s to describe the unbridled speculation that was developing in the wake of neo-liberal economics and financialisation.

4. A seasoned investment advisor, Jubak, observed that, “the more investors who bought in [to speculative investments such as credit default swaps], the more of these new products Wall Street could sell and the more money it was willing to lend to home builders, home mortgage lenders, and credit card companies; to the savings and loans, and banks that created the raw materials (mortgages, credit card debt, auto loans) that Wall Street needed to manufacture its products; and to the hedge funds and structured investment vehicles that bought what Wall Street produced.... It worked out just fine until reality stuck a pin in the bubble.”

5. The concept of “global fault-lines” is defined in our forthcoming work (Fouskas and Bülent The Fall of the US Empire). It is the historical tendency of global social, political, economic, and ideational structures to develop unevenly and in a combined way, causing transformations and change. Global fault-lines serve the disciplines of social sciences and international relations better than the concept of “uneven and combined development” and we use it in order to decipher the causes of the current crisis. Global fault-lines do not isolate the economic instance from the other instances of the social totality, such as politics, ideology, and the environment.

6. China, for instance, is especially vulnerable to local government debt, as local governments have borrowed heavily to invest in property and infrastructure. Some estimates put this debt as high as 40–50% of the country's GDP (Editorial “China's Mountain Debt”).

7. The yin and yang of these crisis displacement strategies can be clearly seen in William Greider's account of the struggle between neo-liberal monetarism and liberal regulation during the extended inflation-deflation crisis of 1979–1983.

8. From our work here with the Editorial team of the Journal of Balkan and Near Eastern Studies, we would distinguish the contributions by Ateljevic and Budak (“Corruption and Public Procurement” 375–97), and also other articles by Ateljevic on the issue of corruption. We should also mention here Schierup (Scramble for the Balkans), especially the contributions by Vesna Bojičič and Branka Likič-Brborič.

9. From 1981 to 1991, Attali was special adviser to François Mitterrand.

10. Sachs quoted in Gowan (“Neo-liberal theory and practice for Eastern Europe” 5) (the same text also in Gowan's The Global Gamble).

11. Total external debt comprises long-term debt, short-term debt and use of IMF credits.

12. Glenny argued that global transnational crime, and not just East European, might account as much as 25% of world GDP.