Reflections on the Economic Meltdown by an Ordinary Joe.

$700 Billion, possibly double that, of US public funds given over to bailing out corrupt, failed, usurial fat cats. Unimaginable sums, trillions of dollars! So runs the US regime’s plan to rescue the financial markets. It has been described as a financial lifeboat. However, as a salvage plan, it makes the Titanic safety procedures look positively trustworthy and sound.

I learned a new phrase recently – Credit Default Swaps (CDS). CDS trading is the epitome of parasitic capitalism and is an illustration of why the big international investment banks are up to their ears in the financial muck. A CDS is a credit derivative that whose value derives from the credit risk on an underlying bond, loan or other financial asset. A derivative is a “financial instrument” whose value changes in response to the changes in underlying variables such as inflation, exchange rates, stock/share prices, interest rates etc. The more one looks into the subject the more it becomes apparent that the management of financial trading is intentionally complex with a nefarious nature akin to a mafia run “numbers” game. CDS trading is the most widely traded credit derivative “product” and was valued by the Bank for International Settlements at $62.2 Trillion at the end of 2007 (up from $28.9 Trillion in December 2006). Other commentators have recently valued all derivative “worth” as high as $480 Trillion. This is said to be ten (10) times global GDP!

These mind bending figures illustrate just how feeble and flimsy George W. Bush’s “lifeboat” is. His (?) gamble is that by nationalising the relatively very small bad housing/mortgage debt this will “free” up banks to release credit averting a much wider impact and crash in the wider economy. It’s very much a gamble and the odds are long. In fact it’s a rank outsider.You wouldn’t back it if it was a horse! One way or another we are moving into very difficult times where the working class will be expected to shoulder a burden unknown in modern times.

Arthur Scargill was first to point out the nature and depth of this economic crisis (you can see and hear him for yourself on a series of videos available on You Tube). As Arthur pointed out, we are heading for an economic disaster of a scale as bad as or worse than the 1930’s.

We are heading toward interesting and simultaneously dangerous and opportune times for revolutionary socialists. Capitalism, as we’ve known it for decades, is in a terminal state. Social Democratic parties have no answers and are in decline everywhere while the fascist right is a growing threat across Europe. Only a party with socialist solutions can offer working people a vision and a possibility of a better world. Here in this country Socialist Labour has the policies, and also the organisation able to take us forward to socialism.

There is much work to be done.

24th September 2008