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CANADIAN TEACHERS FEDERATION

CANADIAN TEACHERS FEDERATION. PRESIDENT’S FORUM. Edmonton, 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). Joseph Stiglitz

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CANADIAN TEACHERS FEDERATION

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  1. CANADIAN TEACHERS FEDERATION PRESIDENT’S FORUM Edmonton, 12-13 July 2010 FORCES FOR CHANGE: EDUCATION FINANCE

  2. 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) Joseph Stiglitz Amartya Sen Paul Krugman Poul Nyrup Rasmussen’s book: “In a Time of Greed” 2007

  3. Profiles of a crisis: Phase 2: Pressure builds: 2007 - 2008 DECEMBER 2007 Sub-prime mortgages AUGUST 2007 Central banks start to ease credit and money supply Structured financial products Where are the toxic products? AUGUST 2008 US Fed bails out Fannie Mae and Freddie Mac Inter bank lending freezes 15 SEPTEMBER 2008 THE PARTY STOPS ! Lehman Brothers collapses 16 SEPTEMBER 2008 US bails out AIG

  4. Profiles of a crisis: Phase 3: Saving the financial sector G20 Leaders Washington, USA Nov. 2008 G20 Leaders London, UK April 2009

  5. Profiles of a crisis: Phase 3: (2) BAILOUTS • AIG • Banks • Auto companies STIMULUS PACKAGES Monetary Stimulus • Reducing cost of credit (interest rates) • Increasing money supply (UK, US, Japan) Fiscal Stimulus • Increase 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

  6. Profiles of a crisis: 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

  7. Profiles of a crisis: Phase 5: A rush to the exits Greece, Spain, Portugal, Ireland, the Euro Zone sovereign debt crisis OECD Ministerial Council Paris 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”

  8. TRADITIONAL CAPITALISM Stocks in companies traded on regulated stock markets Corporate bonds Government bonds • companies raise capital • finance for infrastructure(roads, schools) Banking system Circulates credit • Pension Funds Private/Commercial property Shareholders Employees Personal and corporate taxation on • revenues • assets • capital gains • consumption (VAT) Public sector • Recurrent spending • Debt service on capital/infrastructure investments

  9. CASINO CAPITALISM PRIVATE EQUITY STRUCTURED FINANCIAL PRODUCTS HEDGE FUNDS Unlisted on stock markets Escape banking Regulations Off bank balance sheets OFFSHORE HAVENS HUGE BONUSES ! MINIMIZE TAXES ! PROPERTYèSUB-PRIME MORTGAGES Corporate bonds replace Governments bonds Buy a house (110% mortgage) Raise your mortgage to finance: house extensions; car; holiday; college fees PPPs MORE BONUSES Often funded by private equity for which a major source of finance MORE COMMISSIONS PENSION FUNDS

  10. GLOBAL IMBALANCES Japan No 2 economy The United States No 1 economy Coming out of « the lost decade » • From balanced budget (Clinton) • To record public deficits (Bush: taxcuts and Iraq war) Other OECD countries Eg Australia: Commodities • Big trade deficit EU/Euro zone No 3 economy Emerging economies • Growth slowing China big trade surpluses • Higher unemployment India, Brazil, Chile, South Africa outsourcing Developing countries Africa, Asia/Pacific, Central/South America, Caribbean Oil/gas producers Russia, Gulf States, Nigeria, Venezuela, Norway = Financial flows SWFs Exchange rates USD, Euro, Yuan

  11. 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

  12. 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 … and IF there is no reserve for a future bail-out The global economy could reach …. the end of the road

  13. March 2009 – March 2010 Financial marketshadrecoveredsignificantly Upswingcontinued to March 2009

  14. An indicator of global trade: The BDI shows increasing signs of stress

  15. June 23, 2010, 3:58 PM GMT Don’t Panic, But The Baltic Dry Is Down Again

  16. 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?

  17. OECD has predicted a jobless recovery

  18. Unemployment increased steeply in Industrialized countries OECD does not project much improvement in employment in 2010 - 2011

  19. 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

  20. The World Bank: 6 July 2010 Global economy is showing signs of recovery, but • 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

  21. The World Bank: 6 July 2010 The crisis is jeopardizing years of progress in fighting poverty • 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

  22. The World Bank: 6 July 2010 The poorest countries have been hit hard in 2009

  23. 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

  24. 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

  25. THE ILO: THE FINANCIAL AND ECONOMIC CRISIS: A DECENT WORK RESPONSE

  26. Dominique Strauss-Kahn, London 23 November “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” “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” Repeated in Peru 22 June 2010.

  27. PARADIGM CHANGE From: Global imbalances Inequity Casino capitalism To: Decent work Just transition to green jobs Equity Health and education A paradigm for sustainable recovery

  28. THE UNWANTED PARADIGM Monetary easing of Oct – Dec 2008 created liquidity Back to: A new cycle of massive profit-taking Stimulus 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 again And this time, no more room for monetary easingor fiscal stimulus !

  29. THE BIG THREAT TO PUBLIC EDUCATION Declining public revenues “Exit strategies” to reduce deficits

  30. EDUCATION FINANCE IN CANADA 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 CTF-FCE Research

  31. EDUCATION FINANCE IN CANADA Chart D. Shares of Consolidated Provincial/Territorial and Local Government Spending Allocated to Elementary-Secondary Education in 2007‑08e CTF-FCE Research

  32. FOUR KEY MESSAGES • DEFEND AND DEVELOP QUALITY PUBLIC SERVICES • CLOSE THE FINANCING GAP FOR EFA • PROMOTE A “SURGE” IN VOCATIONAL EDUCATIONAND TRAINING • ETABLISH A NEW GLOBAL PARTNERSHIP FORTEACHER EDUCATION AND PROFESSIONALDEVELOPMENT

  33. REASSERTING VALUES VALUE S EI’s VISION FOR EDUCATION AND SOCIETY • Education is a public good not a commodity. • Education is central in our societies in many ways; • social and economic; • building and defending democracy; • individual fulfillment; • community development; • Education should promote • equity • non-discrimination • understanding among peoples • Quality education requires quality teachers • Education unions should be key actors • Education is a human right.

  34. CTF PRESIDENT’S FORUM Edmonton, July 12, 2010 • Gracias • Merci • Thank you Bob Harris Education International bob.harris@ei-ie.org

  35. www.ei-ie.org/handsup

  36. Blog: http://fundingeducation.blogspot.com/

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