Tony Curzon Price

Tony Curzon Price is Editor-in-Chief of openDemocracy. He received a PhD in economics from University College London (UCL), and worked as a jobbing economist for more than ten years. He founded a high-tech electronics compancy, Arithmatica, in 1998 and lived in Silicon Valley from 2001 to 2004.

He has lectured on economics and energy policy to postgraduates at Imperial College, London, and at the École Polytechnique Fédérale de Lausanne (EPFL).

Recent articles

Here's a fascinating chart of spam activity on oD's forums for the past 2 months:

So, has Mollom beaten the site spamsters? It certainly looks as if they eventually learn that their spam messages are getting blocked ... Now we just need Mollom to implement this for Drupal 4.7 so we can apply to the main site and I'll be singing the praises of Mollom to all who care to listen.

The G20 communique from their November 15th Washington meeting is reproduced below. Join me in doing a group read/comment of the text. Is it what we need from our leaders? Are the principles right? What is missing? What does it mean?

To join in, follow these steps: 1) get a diigo account 2) join the oD-G20-communique group 3) start using diigo to add notes and comments to any part of the text below. I recommend you do this either through the diigolet functionality, or, my preferred option, through installing the diigo toolbar.

The Bank of England has just come out with its quarterly inflation report.

The big headline is that recession for the next 12-18 months is almost certain.

A comparison with August's forecast is interesting:

Although the shape of the downturn is broadly similar, the current forecast has essentially shifted down between 3/4% and 1.5%. Note also that the BoE has been consistently optimistic in its forecasts---if you look at the balck "ONS Data" line, that is how things actually turned out. You might have thought that the statisticians at the BoE might have learned by now to take the pinch of salt into their own forecasts by now. (Actually, the optimism seems even worse than the graphic suggests. The Quarter 3 out-turn growth was a whisker above 0%, which is right on the outside edge of the outside August probability band. However, the BoE has decided to represent this graphically in the November chart as being on the inside edge of the outside band. (Ah! The rhetoric of charts!)

Anyway ... what we now know is that the BoE thinks we have a nastier and sharper depression coming than it thought in August. It is interesting -- particularly so given the election cycle that sees a general election by May 2010 -- to see what kind of shape they predict for the end of the depression.

Their central estimate is that things are getting better very fast by May 2010, with growth around 2% and the rate of change of growth very rapid --- things have been pretty bad just 6 months earlier. Sounds good for Brown. Indeed, one assumes that an independent bank must play the election calendar into its scenario-building, and must be assuming heavy government action in its central case.

In this respect, it is interesting to compare the August and November inflation forecasts. This is the current forecast of inflation:

And this was the August forecast:

In August, the rate of price growth rate was expected to fall for the whole 3 year forecasting period. Now, inflation starts to rise again (although from a lower base) already by mid-2010. This seems clearly compatible with a change in the basic assumptions about increased government borrwing and a lower sterling exchange rate.

Based on these BoE forecasts, Brown's window for an election in 2010 looks very tight---when incomes have started growing again and before inflation has shown the economy to come out of the depression in a pretty unproductive state.

And remember the BoE pinch of salt -- that will make the window even tighter.

The Group of 20 meeting in Washington this week-end will do little in the way of solving the financial crisis, let alone designing a new World Economic Order (WEO). The Green New Deal (GND) hopefuls would like to see  environmental concerns built into the fabric of the WEO --- if banks can have reserve requirements, then why not carbon per dollar loan limits too? --- or at least make the idea of Keynesian reflation focused on programs for renewable energy. Whatever the fundamental problems with the suggestion (see my response here), the two practical problems for the GNDers are firstly that Obama will not be present at the Washington meeting and secondly that there is a remarkable lack of support for an international-level tie of the financial and green agendas in the economics community. The creative and very timely Vox ebook edited by Barry Eichengreen and Richard Baldwin has many radical suggestions, but not a mention of any GND ideas.

This may be disappointing for all of us concerned with the environment. But it seems right. We can still avoid depression, and we should focus our attention on that. The unforeseen consequences of the crash of 1929 were horrific, as could be the consequences of depression over the next decade (Simon Maxwell and Dirk Messner in oD are very good on this). This is especially true for emerging nations and powers whose social stabiltiy and geopolitical good behaviour requires delivery of improving economic conditions.

Maxwell and Messner get the balance just right, I think -- the November 30th Copenhagen climate change summit must keep the environmental agenda moving with an eye firmly fixed on the middle-distance. The G20 summit must deal with the immediate and dangerously close.

The European Investment Bank's deal, announced yesterday, whereby it made €30bn available for lending to the Europe's small and medium sized companies is interesting for the model of emergency banking that it suggests and pilots.

Westminster is delegating two ways: first, the administration of these loans is going to the big clearing banks, who know the businesses in question, have their credit records and bank movements; second the source of the funds is coming from a European institution that is used to spending and accounting for public money.

So when we've had enough investing in propping up bad banks, here is what we do: we massively increase the capital available to the EIB---as taxpayers, we put our money there rather than in idle accounts with the banks through their equity account---and we employ the bankrupt bad banks to be our agents in lending the money.

We'll need to design the incentive contract with the bad banks ... but with financial sector employment falling fast, that negotiation shouldn't be too tough on us. The banks can get some variable amount depending on a host of effectiveness indicators: volume lent, default rates, GDP growth ... with a bonus "kicker" in the contract on average median incomes and carbon emmissions for the whole economy over the next 20 years.