Financial Crisis

Baring in mind the gravity of the financial crisis that has occurred within the recent months, that already by now led to recession in many countries, as also realising that it is an actual prelude to what is being currently called already ‘upcoming global economic crisis’, as ECOSY we set up a ‘rapid reaction’ working group.

The aim of the group is to design the strategy for what Europe should do in our opinion, as young European socialists and social democrats. We need to give these replies, as naturally it is our generation that in effect of this crisis will particularly suffer as far as the cuts in jobs and social security are concerned, as also the rapidly diminishing value of savings on one side and growing obstacles in getting credits i.e. for buying apartments. Having in mind that the next years European Elections will be a test, if we can propose a coherent and sensible answer, as also remembering that in our Manifesto “Change for Europe – 9 deliverables” ending global financial crisis is pledge number 9 – we set up herewith a working group with a mission to elaborate our response.

The group will be led by three ECOSY Vice-Presidents: Nils Hindersmann, Estelle Göger and Petroula Nteledimou. It will compose of 12-15 members, who will meet in January/February for a working weekend in Brussels and if necessary, will meet for the second time in the period before the ECOSY Congress 2009. The work will consist both the meetings with experts, as also the elaboration of the own project. The reimbursement for the travel expenses will be given accordingly to the rules and regulations applicable for seminars.

As the group aims to gather youth experts, participants are required to be students or have a degree in economy or finances. In case on any related studies – like political sciences, law or international relations – specific knowledge of economy is required to be proved. All participants must speak and write in English, as also have at least 3 years experience of work within the ECOSY Member Organization.

As far as the end result is concerned, the outcomes will be presented to the ECOSY Congress 2009, as also at PES, PES Group and FEPS forums in the framework that the Group itself will decide to be the most feasible.

The applications, consisting of the Nomination Letter of Member Organization, as also CV and motivation letter, must be sent by the ECOSY Bureau Member to ecosy@pes.org no later than by 30th October, so that the Working Group can be composed and the work plan scheduled.

We are looking forward to your contributions,

With socialist regards,

Giacomo Filibeck, ECOSY President

Ania Skrzypek, ECOSY Secretary General

Europe’s socialist, social democratic and labour parties are resolved to draw up a “roadmap” for “urgent action” to avoid “long-lasting recession” and to “prevent mass unemployment”.

At a meeting in Brussels PES member party representatives called for “proactive investments across member states, including in productive infrastructure, education and climate change. Europe needs an ambitious green growth strategy to jump start recovery and create jobs.”

The PES also agreed that “The financial markets excessive and risky debt, excessive remuneration, conflicts of interest, and lack of transparency are all the result of a lack of regulation” and adopted 7 steps towards “a sound regulatory framework” for the financial markets including:

1. Universal legislation covering all financial players with supervision across the financial markets reinforced.
2. Transparency and disclosure including of debts
3. Mandatory ‘capital requirements’ for all financial players
4. Rules to prevent excessive borrowing
5. Limits on pay and remuneration, and mechanisms to ensure that earnings reflect losses as well as profits
6. New rules to prevent conflict of interests
7. Protecting workers interests such as by ensuring that employees are informed and consulted during all takeovers including leveraged buy-outs

“Preventing the financial meltdown was the first urgent step. Now we must urgently take action on a second stage: to build better regulation and do all we can to avoid the financial crisis turning into a long-lasting recession.”

FINANCIAL CRISIS: A CALL FOR EUROPE TO ACT AS ONE

On the eve of the European Council on 15–16 October 2008, the European Trade Union Confederation (ETUC) calls upon the European leaders to give a European response to the double meltdown of the financial system and the real economy. Europe and its governments need to act not only urgently but also as one. A systemic crisis calls for a systemic policy response.

As highlighted by John Monks, ETUC General Secretary: 'Casino capitalism has failed and policy must change track. Europe can no longer allow its members to pursue the typical agenda of the national interest. If ‘beggar-thy-European neighbour’ policies continue, things will get pretty ugly. Instead, Europe needs to bundle resources and mobilize the power of acting together.’

We need a European policy reply in order to:

1. Save Europe from the financial profiteers: a European Recapitalisation Fund injecting new capital in the banking sector, thereby also avoiding the danger of national governments leaving the rescue of cross-border multinational banking groups to other governments, hence to no one. A full re-regulation of financial markets so that they function in the interest of the public good.
2. Save the real economy from casino capitalism: a European Investment Fund to promote investment in renewable energies, energy savings, innovation and European infrastructure networks. Growth driven by bubbles and speculation needs to be replaced with green investment as a new and sustainable driver for European demand.
3. Save wages from the central bankers: a total overhaul of the European Central Bank’s (ECB) policy model. The ECB’s crusade against wages is misguided and has to stop. The model of monetary policy–making needs to be completely overhauled. Inflation cannot be the only needle of the compass. The ECB also needs to take into account the Treaty mandate of pursuing economic growth, high employment and social cohesion.
4. Ensure that monetary policy focuses not only on past inflation but also on where the real economy is headed. A Supervisory Board comprising representatives of the European social partners and the members of the European Central Bank’s Executive Board has to be put in place.

See also the Annex to this press release outlining in more detail ETUC's proposals to tackle the financial crisis in a socially sustainable way.