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Transcript of CANADIAN TEACHERS FEDERATION
CANADIAN TEACHERS FEDERATION
PRESIDENT’S FORUMEdmonton, 12-13 July 2010
FORCES FOR CHANGE:EDUCATION FINANCE
Profiles of a crisis:
Phase 1: Early warnings 2006 - 7
Nouriel Roubini (as far back as September 2006 – forecast the end of the real estate bubble)
Poul Nyrup Rasmussen’s book: “In a Time of Greed” 2007
Joseph StiglitzAmartya SenPaul Krugman
Phase 2: Pressure builds: 2007 - 2008Profiles of a crisis:
AUGUST 2007
Sub-prime mortgages
Structured financial products
Where are the toxic products?
Inter bank lending freezes
THE PARTY STOPS !
DECEMBER 2007
Central banks start to easecredit and money supply
AUGUST 2008
US Fed bails out Fannie Maeand Freddie Mac
15 SEPTEMBER 2008
Lehman Brothers collapses
16 SEPTEMBER 2008
US bails out AIG
Phase 3: Saving the financial sector
G20 Leaders Washington, USA Nov. 2008
G20 Leaders London, UK April 2009
Profiles of a crisis:
Phase 3: (2)Profiles of a crisis:BAILOUTS
AIG Banks Auto companies
STIMULUS PACKAGESMonetary Stimulus
Reducing cost of credit (interest rates) Increasing money supply (UK, US, Japan)
Fiscal StimulusIncrease spending Cut taxes
IMF ESTIMATED IN JANUARY 2009 THAT 2% OF GLOBAL GDP WAS NEEDED FOR RECOVERY
NATIONAL STIMULUS PLANS SHOULD BE COORDINATED TO HAVE BEST IMPACT
PUBLIC SECTOR SPENDING, INCLUDING EDUCATION, WILL HAVE TWICE THE IMPACT OF TAX CUTS
Phase 4: Saving the real economy
G8 L’Aquila, Italy July 2009
G20 Leaders Pittsburgh, USA Sept. 2009
G20 Labour Ministers Washington, USA March 2010
Profiles of a crisis:
Phase 5: A rush to the exits
Greece, Spain, Portugal, Ireland, the Euro Zone sovereign debt crisis
OECD Ministerial CouncilParis May 2010
G20 Finance Ministers Busan May 2010
Severe budget cuts Germany, France and UK
G8/G20 Leaders Muskoka/Toronto June 2010
Pascal LAMY, DG WTO: “THE SHRINKING AGENDA”
Profiles of a crisis:
Stocks in companies traded on regulated stock markets
TRADITIONAL CAPITALISM
Corporate bonds Government bonds
Banking system
• Pension Funds Private/Commercial property
Shareholders Employees
Personal and corporate taxation on
• companies raise capital • finance for infrastructure(roads, schools)
Circulates credit
•revenues• assets• capital gains• consumption (VAT)
• Recurrent spending• Debt service on capital/
infrastructure investments
Public sector
CASINO CAPITALISM HEDGE FUNDSPRIVATE EQUITY STRUCTURED FINANCIAL
PRODUCTS
house extensions; car; holiday; college fees
OFFSHORE HAVENS
PPPs
Corporate bonds replaceGovernments bonds
Often funded by private equity
for which a major source of finance
MORE BONUSES
HUGE BONUSES ! MINIMIZE TAXES !
MORE COMMISSIONS
PROPERTY SUB-PRIME MORTGAGES
Unlisted on stock markets Off bank balance sheets
Escape banking Regulations
Buy a house (110% mortgage)Raise your mortgage to finance:
PENSION FUNDS
GLOBAL IMBALANCES
The United States No 1 economyFrom balanced budget (Clinton)
Coming out of « the lost decade »
EU/Euro zone No 3 economyGrowth slowing
Oil/gas producers
Emerging economies
Developing countries
Exchange ratesUSD, Euro, Yuan
Japan No 2 economy
SWFs
To record public deficits (Bush: taxcuts and Iraq war)
Higher unemployment
Russia, Gulf States, Nigeria, Venezuela, Norway
= Financial flows
Big trade deficit
Other OECD countriesEg Australia: Commodities
China
India, Brazil, Chile, South Africaoutsourcing
big trade surpluses
Africa, Asia/Pacific, Central/South America, Caribbean
The next phase?D. Strauss-Kahn, IMF, Vancouver, 22 June: “A road along a cliff”
Heavy sovereign debts Double-dip recession
Consultation with Stephen Harper 18 June
Letter by US President Obama to G20 Leaders, 18 June
G20 Statement 26-27 June
The risk down the road:
DSK again in Vancouver, 22 June
“The taxpayers bailed out the banks once. They won’t do it a second time.”
IF banks and other financial actors (hedge funds, etc.) continue to speculate …IF the financial sector is insufficiently regulated …IF regulation lacks global coherence …andIF there is no reserve for a future bail-out
The global economy could reach …. the end of the road
March 2009 – March 2010
Financial markets had recovered significantly
Upswing continued to March 2009
An indicator of global trade:The BDI shows increasing signs of stress
June 23, 2010, 3:58 PM GMTDon’t Panic, But The Baltic Dry Is Down Again
5 July 2010: 25,900,000 hits for "recession is over“
Radio Canada, 22/4/2010:Rapport du FMI: la récession mondiale est terminée!!
BBC News, 23/5/2010:Is the recession definitely over now?
OECD has predicted a jobless recovery
Unemployment increased steeply in Industrialized countries
OECD does not project much improvement in employment in 2010 - 2011
TUAC trade union advisory committee to the OECD CSC commission syndicale consultative auprès de l’OCDE
Global Economic Prospects for 2010 – according to the IMF
The World Bank: 6 July 2010
Many are still being left behind
43 poor countries are suffering effects of the global recession
They face $11.6bn shortfall in core spending for health, education, etc
Global economy is showing signs of recovery, but
64 million more people will fall into extreme poverty in 2010
30-50 thousand more babies may die in Africa this year
1 billion people could go chronically hungry this year
The World Bank: 6 July 2010
The crisis is jeopardizing years of progress in fighting poverty
The World Bank: 6 July 2010
The poorest countries have been hit hard in 2009
The crisis increased poverty rates in comparison to what they would have been without the crisis. This is the case for all these four countries.
Source World Bank
While the global focus on food prices has waned, domestic staple food prices in several countries have experienced double digit increases in 2009, particularly in Sub-Saharan Africa.
Source World Bank
THE ILO:
THE FINANCIAL AND ECONOMIC CRISIS:A DECENT WORK RESPONSE
Dominique Strauss-Kahn, London 23 November
“The old growth model is dead”“The old model under which households in the USA and elsewhere propelled the global economy with their voracious appetite for consumption, is dead – or at least on its last legs”
“This shift would be helped by stronger social security systems and higher spending on health and education”
“Exit too soon, and you kill the recovery. Exit too late, and you sow the seeds for the next crisis” “Exiting too early is costlier than exiting too late”
Repeated in Peru 22 June 2010.
PARADIGM CHANGE
From: Global imbalancesInequityCasino capitalism
To: Decent workJust transition to green jobsEquityHealth and education
A paradigm for sustainable recovery
THE UNWANTED PARADIGM
Back to:A new cycle of massive profit-taking
Monetary easing of Oct – Dec 2008 created liquidityStimulus packages were financed by banks
So: “Bank bonuses make a come-back”
The Wall Street Journal, 14 Oct 2009:23 firms will pay $140 billion this year – back to 2007 levels
A new round of speculation – until the bubble bursts againAnd this time, no more room for monetary easingor fiscal stimulus !
THE BIG THREAT TO PUBLIC EDUCATION
Declining public revenues
“Exit strategies” toreduce deficits
CTF-FCE Research
Chart E.Share of Consolidated Provincial/Territorial and Local Government Spending in Canada Allocated to Elementary-Secondary Education Drops to Lowest Level in Two Decades in 2007 08e‑
1 4 .2 %
1 4 .0 %
1 4 .1 %
1 4 .4 %1 4 .6 %
1 4 .1 %
1 4 .3 %
1 3 .9 %
1 4 .1 %
1 3 .9 %
1 3 .4 %
1 3 .1 %
1 2 .9 %1 2 .8 %
1 2 .7 %1 2 .5 % 1 2 .5 %
1 2 .7 % 9
1 2 .2 %
1 1 .8 %
1 9 8 8 - 8 91 9 8 9 - 9 0
1 9 9 0 - 9 11 9 9 1 - 9 2
1 9 9 2 - 9 31 9 9 3 - 9 4
1 9 9 4 - 9 51 9 9 5 - 9 6
1 9 9 6 - 9 71 9 9 7 - 9 8
1 9 9 8 - 9 91 9 9 9 - 0 0
2 0 0 0 - 0 12 0 0 1 - 0 2
2 0 0 2 - 0 32 0 0 3 - 0 4
2 0 0 4 - 0 52 0 0 5 - 0 6
2 0 0 6 - 0 72 0 0 7 - 0 8
0 %
1 1 %
1 2 %
1 3 %
1 4 %
1 5 %
EDUCATION FINANCE IN CANADA
CTF-FCE Research
Chart D.Shares of Consolidated Provincial/Territorial and Local Government Spending Allocated to Elementary-Secondary Education in 2007 08e‑
1 4 .0 %1 3 .8 % 1 3 .7 %
1 2 .8 % 1 2 .8 %1 2 .5 %
1 2 .1 % 1 2 .0 %
1 1 .5 %1 1 .3 % 1 1 .2 %
1 0 .7 %
9 .7 %
C a n a d a = 1 1 .8 %
Sask. Nun. Man. O nt. A lta . N .L . P .E .I. N .W .T. N .B . N .S . B .C . Yn. Q ue.
8 .0%
9 .0%
1 0 .0 %
1 1 .0 %
1 2 .0 %
1 3 .0 %
1 4 .0 %
1 5 .0 %
EDUCATION FINANCE IN CANADA
FOUR KEY MESSAGES
1. DEFEND AND DEVELOP QUALITY PUBLIC SERVICES
2. CLOSE THE FINANCING GAP FOR EFA
3. PROMOTE A “SURGE” IN VOCATIONAL EDUCATIONAND TRAINING
4. ETABLISH A NEW GLOBAL PARTNERSHIP FORTEACHER EDUCATION AND PROFESSIONALDEVELOPMENT
REASSERTING VALUES
VALUES
EI’s VISION FOR EDUCATION AND SOCIETYEducation is a public good not a commodity.Education is central in our societies in many ways;
Quality education requires quality teachersEducation unions should be key actors
Education is a human right.
• social and economic;• building and defending democracy;
• individual fulfillment;• community development;
Education should promote
• equity• non-discrimination• understanding among peoples
CTF PRESIDENT’S FORUM
Edmonton, July 12, 2010
Gracias Merci
Thank you
Bob HarrisEducation International
www.ei-ie.org/handsup
http://fundingeducation.blogspot.com/
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