Breivik's trial now focuses on victims

Breivik's trial continues - but the attention is no longer on the killer.

The court lecture played faithfully into the absurd image he has constructed for himself – Commander Anders Behring Breivik, the gallant defender of Norway.

"If anyone wants to throw something, you can throw it at me,” Commander Breivik admonished the Olso court after the brother of one of his victims hurled a shoe.

The accused gunman and bomber murdered 77 people on July 22 last year, most of them teenagers executed at close range. But they were legitimate targets. Vibeke Hein Bæra, hit gently by footwear aimed at him, was an innocent bystander. Commander Breivik was honour-bound to intervene: “Don’t throw things at my lawyers.”

It was one of several opportunities he has taken to try to regain the attention of a court which has moved on despite him, and attempt to re-establish himself as the hero of his own trial. The contrast with the genuine heroism of some of the survivors from his rampage on the holiday island of Utoya last year could hardly be starker.

Tonje Brenna, 24, terrified, under fire, watching her friends die around her, picked up and carried a wounded 14 year old girl to the relative safety of a steep cliff edge. She slid down to shelter only after guiding others, then held the wounded girl in her arms, willing her to stay awake, while Commander Breivik stood at the top of the rock face, letting out yelps of joy as his bullets found their teenage targets.

Faced with this story of heroism - one of many heard by the court over the last three weeks - Commander Breivik smiled contemptuously and shook his head.

Beneath Ms Brenna, in the shallow water of the lake, a 17 year old boy, Viljar Hanssen, shot five times, felt for his eye. He couldn’t find it. Instead he reached through the gap in his head and touched his brain. While trying to take stock of his injuries – the three fingers dangling by a thread from his hand, the wounds in his shoulder, arm and leg, and the bullet hole in his head – Viljar could only think of his brother. He had kicked him to safety when the first shots found his own flesh and ordered the younger boy to swim to safety.

Disfigured now, unable to run and ski the way he could before and still unsure about the effects the missing part of his brain might have on his life, Viljar made the court laugh by saying that at least missing an eye meant he didn’t have to look at his would-be killer while he testified. When he described his delight at discovering his brother was unhurt then spoke unselfishly, with stirring fraternal compassion, about the younger boy’s own island ordeal, several in the court cried. Almost nobody was left unmoved.

Commander Breivik took notes. Nothing he has seen so far has shaken his belief that he is the only real hero at the trial. He is defending Norway against “Islamic colonisation” by striking at the heart of the “leftist” establishment. Presumably that is why he was screamed, “today you will die Marxists,” at the unarmed children he was gunning down on the island, and why he was satisfied enough at his work to call the police and proclaim, “this is Commander Breivik... Mission accomplished.”

He is not a commander in the established sense.  He’s not been in any of the forces; never even served his normally obligatory year’s national service. He is, however, part of an imagined pan-European chivalric order, The Knights Templar, similar to the online guilds he was so familiar with from playing World of Warcraft 16 hours a day for a whole year.

He also has a uniform. There are camp pictures of him wearing it in the manifesto he emailed to hundreds of supposedly like-minded right-wingers in the hours before the slaughter. But he has dropped his demands to be allowed to wear it in the court – presumably on the advice of his defence team who would argue that in seeking to be sentenced as a sane man, he should ditch anything which might make him look anything but.

There must be disappointment. The uniform was supposed to have been part of the propaganda front Mr Breivik believed he would be able to sustain throughout the course of this ten week trial. But the media have largely been and gone. He has already been given his legal opportunity to preach his ideology and has now been pushed aside. Now, try as he might to wrestle back some attention, as brave witnesses to the Utoya massacre relive their island nightmares, he has been relegated to a sideshow in his own show trial.

Mark Lewis tweets @markantonylewis
 

One of the survivors of Breivik's massacre Photograph: Getty Images
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We're racing towards another private debt crisis - so why did no one see it coming?

The Office for Budget Responsibility failed to foresee the rise in household debt. 

This is a call for a public inquiry on the current situation regarding private debt.

For almost a decade now, since 2007, we have been living a lie. And that lie is preparing to wreak havoc on our economy. If we do not create some kind of impartial forum to discuss what is actually happening, the results might well prove disastrous. 

The lie I am referring to is the idea that the financial crisis of 2008, and subsequent “Great Recession,” were caused by profligate government spending and subsequent public debt. The exact opposite is in fact the case. The crash happened because of dangerously high levels of private debt (a mortgage crisis specifically). And - this is the part we are not supposed to talk about—there is an inverse relation between public and private debt levels.

If the public sector reduces its debt, overall private sector debt goes up. That's what happened in the years leading up to 2008. Now austerity is making it happening again. And if we don't do something about it, the results will, inevitably, be another catastrophe.

The winners and losers of debt

These graphs show the relationship between public and private debt. They are both forecasts from the Office for Budget Responsibility, produced in 2015 and 2017. 

This is what the OBR was projecting what would happen around now back in 2015:

This year the OBR completely changed its forecast. This is how it now projects things are likely to turn out:

First, notice how both diagrams are symmetrical. What happens on top (that part of the economy that is in surplus) precisely mirrors what happens in the bottom (that part of the economy that is in deficit). This is called an “accounting identity.”

As in any ledger sheet, credits and debits have to match. The easiest way to understand this is to imagine there are just two actors, government, and the private sector. If the government borrows £100, and spends it, then the government has a debt of £100. But by spending, it has injected £100 more pounds into the private economy. In other words, -£100 for the government, +£100 for everyone else in the diagram. 

Similarly, if the government taxes someone for £100 , then the government is £100 richer but there’s £100 subtracted from the private economy (+£100 for government, -£100 for everybody else on the diagram).

So what implications does this kind of bookkeeping have for the overall economy? It means that if the government goes into surplus, then everyone else has to go into debt.

We tend to think of money as if it is a bunch of poker chips already lying around, but that’s not how it really works. Money has to be created. And money is created when banks make loans. Either the government borrows money and injects it into the economy, or private citizens borrow money from banks. Those banks don’t take the money from people’s savings or anywhere else, they just make it up. Anyone can write an IOU. But only banks are allowed to issue IOUs that the government will accept in payment for taxes. (In other words, there actually is a magic money tree. But only banks are allowed to use it.)

There are other factors. The UK has a huge trade deficit (blue), and that means the government (yellow) also has to run a deficit (print money, or more accurately, get banks to do it) to inject into the economy to pay for all those Chinese trainers, American iPads, and German cars. The total amount of money can also fluctuate. But the real point here is, the less the government is in debt, the more everyone else must be. Austerity measures will necessarily lead to rising levels of private debt. And this is exactly what has happened.

Now, if this seems to have very little to do with the way politicians talk about such matters, there's a simple reason: most politicians don’t actually know any of this. A recent survey showed 90 per cent of MPs don't even understand where money comes from (they think it's issued by the Royal Mint). In reality, debt is money. If no one owed anyone anything at all there would be no money and the economy would grind to a halt.

But of course debt has to be owed to someone. These charts show who owes what to whom.

The crisis in private debt

Bearing all this in mind, let's look at those diagrams again - keeping our eye particularly on the dark blue that represents household debt. In the first, 2015 version, the OBR duly noted that there was a substantial build-up of household debt in the years leading up to the crash of 2008. This is significant because it was the first time in British history that total household debts were higher than total household savings, and therefore the household sector itself was in deficit territory. (Corporations, at the same time, were raking in enormous profits.) But it also predicted this wouldn't happen again.

True, the OBR observed, austerity and the reduction of government deficits meant private debt levels would have to go up. However, the OBR economists insisted this wouldn't be a problem because the burden would fall not on households but on corporations. Business-friendly Tory policies would, they insisted, inspire a boom in corporate expansion, which would mean frenzied corporate borrowing (that huge red bulge below the line in the first diagram, which was supposed to eventually replace government deficits entirely). Ordinary households would have little or nothing to worry about.

This was total fantasy. No such frenzied boom took place.

In the second diagram, two years later, the OBR is forced to acknowledge this. Corporations are just raking in the profits and sitting on them. The household sector, on the other hand, is a rolling catastrophe. Austerity has meant falling wages, less government spending on social services (or anything else), and higher de facto taxes. This puts the squeeze on household budgets and people are forced to borrow. As a result, not only are households in overall deficit for the second time in British history, the situation is actually worse than it was in the years leading up to 2008.

And remember: it was a mortgage crisis that set off the 2008 crash, which almost destroyed the world economy and plunged millions into penury. Not a crisis in public debt. A crisis in private debt.

An inquiry

In 2015, around the time the original OBR predictions came out, I wrote an essay in the Guardian predicting that austerity and budget-balancing would create a disastrous crisis in private debt. Now it's so clearly, unmistakably, happening that even the OBR cannot deny it.

I believe the time has come for there be a public investigation - a formal public inquiry, in fact - into how this could be allowed to happen. After the 2008 crash, at least the economists in Treasury and the Bank of England could plausibly claim they hadn't completely understood the relation between private debt and financial instability. Now they simply have no excuse.

What on earth is an institution called the “Office for Budget Responsibility” credulously imagining corporate borrowing binges in order to suggest the government will balance the budget to no ill effects? How responsible is that? Even the second chart is extremely odd. Up to 2017, the top and bottom of the diagram are exact mirrors of one another, as they ought to be. However, in the projected future after 2017, the section below the line is much smaller than the section above, apparently seriously understating the amount both of future government, and future private, debt. In other words, the numbers don't add up.

The OBR told the New Statesman ​that it was not aware of any errors in its 2015 forecast for corporate sector net lending, and that the forecast was based on the available data. It said the forecast for business investment has been revised down because of the uncertainty created by Brexit. 

Still, if the “Office of Budget Responsibility” was true to its name, it should be sounding off the alarm bells right about now. So far all we've got is one mention of private debt and a mild warning about the rise of personal debt from the Bank of England, which did not however connect the problem to austerity, and one fairly strong statement from a maverick columnist in the Daily Mail. Otherwise, silence. 

The only plausible explanation is that institutions like the Treasury, OBR, and to a degree as well the Bank of England can't, by definition, warn against the dangers of austerity, however alarming the situation, because they have been set up the way they have in order to justify austerity. It's important to emphasise that most professional economists have never supported Conservative policies in this regard. The policy was adopted because it was convenient to politicians; institutions were set up in order to support it; economists were hired in order to come up with arguments for austerity, rather than to judge whether it would be a good idea. At present, this situation has led us to the brink of disaster.

The last time there was a financial crash, the Queen famously asked: why was no one able to foresee this? We now have the tools. Perhaps the most important task for a public inquiry will be to finally ask: what is the real purpose of the institutions that are supposed to foresee such matters, to what degree have they been politicised, and what would it take to turn them back into institutions that can at least inform us if we're staring into the lights of an oncoming train?