The following article was forwarded to me by an American friend. It's written by the former Assistant Secretary of the Treasury in the Reagan Administration. No leftwinger then! If he's correct in his assessment it makes for scary reading.
July 16, 2009
There's Nothing Left to Recover
What Economy?
By PAUL CRAIG ROBERTS
There is no economy left to recover. The US manufacturing economy was lost to offshoring and free trade ideology. It was replaced by a mythical “New Economy.”
The “New Economy” was based on services. Its artificial life was fed by the Federal Reserve’s artificially low interest rates, which produced a real estate bubble, and by “free market” financial deregulation, which unleashed financial gangsters to new heights of debt leverage and fraudulent financial products.
The real economy was traded away for a make-believe economy. When the make-believe economy collapsed, Americans’ wealth in their real estate, pensions, and savings collapsed dramatically while their jobs disappeared.
The debt economy caused Americans to leverage their assets. They refinanced their homes and spent the equity. They maxed out numerous credit cards. They worked as many jobs as they could find. Debt expansion and multiple family incomes kept the economy going.
And now suddenly Americans can’t borrow in order to spend. They are over their heads in debt. Jobs are disappearing. America’s consumer economy, approximately 70% of GDP, is dead. Those Americans who still have jobs are saving against the prospect of job loss. Millions are homeless. Some have moved in with family and friends; others are living in tent cities.
Meanwhile the US government’s budget deficit has jumped from $455 billion in 2008 to $2,000 billion this year, with another $2,000 billion on the books for 2010. And President Obama has intensified America’s expensive war of aggression in Afghanistan and initiated a new war in Pakistan.
There is no way for these deficits to be financed except by printing money or by further collapse in stock markets that would drive people out of equity into bonds.
The US government’s budget is 50% in the red. That means half of every dollar the federal government spends must be borrowed or printed. Because of the worldwide debacle caused by Wall Street’s financial gangsterism, the world needs its own money and hasn’t $2 trillion annually to lend to Washington.
As dollars are printed, the growing supply adds to the pressure on the dollar’s role as reserve currency. Already America’s largest creditor, China, is admonishing Washington to protect China’s investment in US debt and lobbying for a new reserve currency to replace the dollar before it collapses. According to various reports, China is spending down its holdings of US dollars by acquiring gold and stocks of raw materials and energy.
The price of one ounce gold coins is $1,000 despite efforts of the US government to hold down the gold price. How high will this price jump when the rest of the world decides that the bankruptcy of “the world’s only superpower” is at hand?
And what will happen to America’s ability to import not only oil, but also the manufactured goods on which it is import-dependent?
When the over-supplied US dollar loses the reserve currency role, the US will no longer be able to pay for its massive imports of real goods and services with pieces of paper. Overnight, shortages will appear and Americans will be poorer.
Nothing in Presidents Bush and Obama’s economic policy addresses the real issues. Instead, Goldman Sachs was bailed out, more than once. As Eliot Spitzer said, the banks made a “bloody fortune” with US aid.
It was not the millions of now homeless homeowners who were bailed out. It was not the scant remains of American manufacturing--General Motors and Chrysler--that were bailed out. It was the Wall Street Banks.
According to Bloomberg.com, Goldman Sachs’ current record earnings from their free or low cost capital supplied by broke American taxpayers has led the firm to decide to boost compensation and benefits by 33 percent. On an annual basis, this comes to compensation of $773,000 per employee.
This should tell even the most dimwitted patriot who “their” government represents.
The worst of the economic crisis has not yet hit. I don’t mean the rest of the real estate crisis that is waiting in the wings. Home prices will fall further when the foreclosed properties currently held off the market are dumped. Store and office closings are adversely impacting the ability of owners of shopping malls and office buildings to make their mortgage payments. Commercial real estate loans were also securitized and turned into derivatives.
The real crisis awaits us. It is the crisis of high unemployment, of stagnant and declining real wages confronted with rising prices from the printing of money to pay the government’s bills and from the dollar’s loss of exchange value. Suddenly, Wal-Mart prices will look like Nieman Marcus prices.
Retirees dependent on state pension systems, which cannot print money, might not be paid, or might be paid with IOUs. They will not even have depreciating money with which to try to pay their bills. Desperate tax authorities will squeeze the remaining life out of the middle class.
Nothing in Obama’s economic policy is directed at saving the US dollar as reserve currency or the livelihoods of the American people. Obama’s policy, like Bush’s before him, is keyed to the enrichment of Goldman Sachs and the armament industries.
Matt Taibbi describes Goldman Sachs as “a great vampire squid wrapped around the face of humanity, relentless jamming its blood funnel into anything that smells like money.” Look at the Goldman Sachs representatives in the Clinton, Bush and Obama administrations. This bankster firm controls the economic policy of the United States.
Little wonder that Goldman Sachs has record earnings while the rest of us grow poorer by the day.
Paul Craig Roberts was Assistant Secretary of the Treasury in the Reagan administration. He is coauthor of The Tyranny of Good Intentions.
Showing posts with label Crisis of Capitalism. Show all posts
Showing posts with label Crisis of Capitalism. Show all posts
18.7.09
2.12.08
OPPORTUNITIES FOR CHANGE
Apparently when the G20 was mentioned to George Bush earlier this year by Kevin Rudd the Australian Prime Minister, Bush had to ask what it was. Unfortunately this is not another joke about the limited intellectual capacity of the outgoing US President but rather it reveals the insignificance of the G20 meeting held in Washington on 15th November. Despite the optimistic statements issued by the participants the underlying fact was that they had no collective answer to the deepening crisis facing their economies.
US Treasury Secretary Henry Paulson had already backtracked from his previous decision to buy up the ‘toxic assets’ of the financial institutions because of the sheer volume of debt involved, and updated forecasts by the IMF now signal that both the US and European economies amongst others, will be in recession throughout 2009.
With this background it is beyond ironic to hear the world leaders proclaim that capitalism is ‘the best possible system of government’, making one wonder what the worst system of government would be like!
Yet such rhetoric is stock in trade for the defenders of capitalism, feeding the general population with statements made purely for public consumption, while the reality is often the complete opposite to what is being said.
The Labour government has told workers for years that the economy could not afford above inflation wage rises, and that there was no money available for the development of health and education, yet the moment the wealthiest layers in society run into self-made problems, this same government suddenly find billions of pounds to bail the financial sector out.
Furthermore, in an attempt to placate the population at large Gordon Brown and his ministers announced that they have asked the mortgage lenders to explore all avenues to ensure that home repossessions only take place as a last resort, knowing full well that this is merely political spin and the reality is quite different.
Recent figures reveal a 40% increase in the number of home repossessions in the last six months alone. Moreover, the main culprit in repossessions is the government-owned Northern Rock, which has been responsible for more than 20% of the total, whilst also recruiting almost five hundred more people to work in its repossessions department. In addition, a recent court ruling, dragging up legislation from the 1920s, allows mortgage lenders to repossess properties even if they are a mere two months behind in missed payments. Does that sound like the action of last resort as promised by Brown?
Yet this financial sector that are now so quick to resort to repossessions, have had, on a worldwide basis over £5 trillion handed over to them to keep them afloat.
In the United States the emphatic victory of Barack Obama signified that the American population wanted a complete break with the policies of the Bush Administration, and far from being a question of race, Obama’s election demonstrated that in the final analysis it is not religion, gender or race that is the decisive factor but the deepening economic crisis and the class struggle it engenders that predominates.
However the hopes and aspirations that working people have invested in Obama will sooner rather than later be shattered as he gathers around him the same characters that have dominated both the Bush and Clinton administrations. Obama, no matter what his subjective intentions may have been, will defend capitalism at the expense of the interests of the millions of workers who put him in office, a situation that will result in increased social and industrial conflict.
In Britain the desperate attempt by the Brown government to control the crisis by cutting interest rates will not only see the collapse of the pound but will also raise the prospect of national bankruptcy, meanwhile doing nothing to prevent the rising levels of unemployment and the gutting of public services. Also, in an attempt to save the system, the Labour government will continue to pursue privatisation and wage cutting policies as they seek to make workers pay for a crisis not of their making and overturn every gain made by the working class over decades of struggle.
In contrast and in opposition to the desires of capitalism, socialists should see this coming period as an opportunity for change. The political void now open must be filled by developing and promoting SLP policies that do represent and give voice to the best interests of the majority of the population.
Ends.
US Treasury Secretary Henry Paulson had already backtracked from his previous decision to buy up the ‘toxic assets’ of the financial institutions because of the sheer volume of debt involved, and updated forecasts by the IMF now signal that both the US and European economies amongst others, will be in recession throughout 2009.
With this background it is beyond ironic to hear the world leaders proclaim that capitalism is ‘the best possible system of government’, making one wonder what the worst system of government would be like!
Yet such rhetoric is stock in trade for the defenders of capitalism, feeding the general population with statements made purely for public consumption, while the reality is often the complete opposite to what is being said.
The Labour government has told workers for years that the economy could not afford above inflation wage rises, and that there was no money available for the development of health and education, yet the moment the wealthiest layers in society run into self-made problems, this same government suddenly find billions of pounds to bail the financial sector out.
Furthermore, in an attempt to placate the population at large Gordon Brown and his ministers announced that they have asked the mortgage lenders to explore all avenues to ensure that home repossessions only take place as a last resort, knowing full well that this is merely political spin and the reality is quite different.
Recent figures reveal a 40% increase in the number of home repossessions in the last six months alone. Moreover, the main culprit in repossessions is the government-owned Northern Rock, which has been responsible for more than 20% of the total, whilst also recruiting almost five hundred more people to work in its repossessions department. In addition, a recent court ruling, dragging up legislation from the 1920s, allows mortgage lenders to repossess properties even if they are a mere two months behind in missed payments. Does that sound like the action of last resort as promised by Brown?
Yet this financial sector that are now so quick to resort to repossessions, have had, on a worldwide basis over £5 trillion handed over to them to keep them afloat.
In the United States the emphatic victory of Barack Obama signified that the American population wanted a complete break with the policies of the Bush Administration, and far from being a question of race, Obama’s election demonstrated that in the final analysis it is not religion, gender or race that is the decisive factor but the deepening economic crisis and the class struggle it engenders that predominates.
However the hopes and aspirations that working people have invested in Obama will sooner rather than later be shattered as he gathers around him the same characters that have dominated both the Bush and Clinton administrations. Obama, no matter what his subjective intentions may have been, will defend capitalism at the expense of the interests of the millions of workers who put him in office, a situation that will result in increased social and industrial conflict.
In Britain the desperate attempt by the Brown government to control the crisis by cutting interest rates will not only see the collapse of the pound but will also raise the prospect of national bankruptcy, meanwhile doing nothing to prevent the rising levels of unemployment and the gutting of public services. Also, in an attempt to save the system, the Labour government will continue to pursue privatisation and wage cutting policies as they seek to make workers pay for a crisis not of their making and overturn every gain made by the working class over decades of struggle.
In contrast and in opposition to the desires of capitalism, socialists should see this coming period as an opportunity for change. The political void now open must be filled by developing and promoting SLP policies that do represent and give voice to the best interests of the majority of the population.
Ends.
15.10.08
NEW LABOUR AND THE RISE OF FINANCE CAPITAL.
For background information, in view of the ‘credit crisis’ developments in the capitalist economy, we are reissuing an article from 2001 by Ian Johnson which traces the rise of finance capital in the 20th Century.
When we talk about finance capital we are talking about the banks, insurance companies, and other financial institutions and their representatives, in short, we are talking about ‘the City’.
This section of society does not manufacture anything, it does not build or create anything, yet it is now the most dominant sector in the U.K. Its chief objective is the movement of money in search of the biggest profit margin in the quickest possible time.
In the early part of the 20th century the financial sector was subjected to government controls and confined its activities to the sterling area of the Commonwealth, indeed, even through the latter part of the 1940s the stock market and merchant banking was at best static, and at worst transactions were actually in decline. In the 1950s the financial sector tried to break free from government controls but achieved only partial success. It was not until the late 1960s that the City really began to expand with the development of London as an off‑shore base for American money fleeing the low interest rates in the United States.
FINANCIAL INSTABILITY
This was followed in 1971 by the Tory Government removing controls on credit growth which meant that market forces, namely interest rates, would now control the growth of credit in the system. This led to an end to limits on lending and meant that banking would have greater control over British industry and the economy as a whole. This coincided with the ending of the post‑war Bretton Woods agreement which had backed paper money with real value by linking it to the gold standard at the rate of 35 dollars equalling an ounce of gold. Now however, paper money was being printed and was not backed by any real value whatsoever.
Between 1979 and 1982 Margaret Thatcher's Tory Government removed all remaining controls from the financial sector and left it virtually unregulated and unchallenged.
Thatcher abolished restrictions on bank lending and hire purchase transactions and lifted all controls over building society lending, thus starting them off on the road to becoming banks and creating the basis for the great credit explosion in the late 1980s.
The Tory Government crucially abolished all exchange controls with the immediate effect that capital previously invested in the U.K. began going abroad in search of greater and quicker profits. There has been hardly any investment in U.K. manufacturing since exchange controls were abolished.
The dominance of finance capital became obvious in the 1980s when manufacturing output fell by 25%, when house building plummeted and thousands slept on the street, yet the City boomed. The banks made so much money in the '80s that even the Tories eventually levied a national 'windfall tax', though this was compensated for by tax allowances on bad overseas loans.
The Tories and the financial sector were responsible for the squandering of North Sea oil revenue during this period, with not one penny invested in U.K. manufacturing. The City wanted to use it to recreate their earlier role of financiers of the world, and the Tories believed that North Sea oil had made sterling a petro‑currency which signalled the days of manufacturing were over and that Britain was on a path to becoming a post‑industrial service economy.
THE GREAT RIP OFF
The looting of the British economy for the benefit of the few reached its most obscene proportions with the privatisation process of state assets which was first elaborated in the Tory election manifesto of 1983 and which resulted in the following years with the privatisation of coal, steel, gas, electricity, water, railways, telecommunications, shipbuilding and also took part of the oil and road haulage industries. This is not to mention the devastation of council housing that took place in the same period.
The sell‑off of state assets was overseen by City merchant banks who acted as 'advisors' and received literally hundreds of millions of pounds in fees for this 'service'. This period will rightly go down in history as one of the great rip‑offs of all time.
Alongside this privatisation came the reform of the National Health Service, schools and universities, prisons, the police force and justice departments and their regulating authorities, with the plan being to remove them from the control of democratically elected local authorities and place them under the control of unelected quangos and Next Step Agencies. By such means the market mechanisms of compulsory competitive tendering, performance related and profit related pay and other such devices, were introduced into all public services.
SOCIAL DEMOCRACY
Of course none of the above would have been possible without an attack on the traditional defensive organisations of the working class ‑ the trade unions. The destruction of the trade union movement was a clear objective of the Thatcher regime and resulted in confrontations with virtually all sections of workers. Indeed, the destruction of manufacturing and the move to a service based industry made it imperative for the ruling class to introduce anti‑trade union laws to shackle workers and reduce their ability to fight back.
That they were partially successful is a reflection not on the fighting capacity of the working class but on its social democratic leaders.
With a few honourable exceptions these politicians and trade union leaders functioned as policemen for the capitalist state against their own members. These careerists and opportunists are tied to capitalism, their status and significant salaries are dependent upon it, and forced into a situation where they have to choose, they will always come down on the side of the present system.
The introduction of new employment law effectively weakened the trade unions and created a more individualist labour market, moreover a labour market that would be open to the whims of a free market economy, modelled on the American labour market with its high levels of mobility, downward flexibility of wages and low employer costs.
As a result of these policies there has been an increase in part‑time and contract work and an ending of any traditional career with its accompanying security. Furthermore, many low‑skilled workers now earn less than the minimum needed to support a family, resulting in the diseases associated with poverty, TB, rickets and others, returning.
At the same time the restrictions on welfare entitlements, particularly with unemployment benefits such as the Job Seekers Allowance introduced in 1996, are designed to compel recipients to accept work at market‑driven rates.
NEW LABOUR
It was the finance sector that Blair's New Labour courted for over a year prior to the 1997 general election. They had to convince the financiers that they were the Party for them, and that they would continue to create the framework where they could operate freely. New Labour people threw so many banquets for these financial parasites that the City's nickname for the Labour Party is, 'the prawn cocktail party.'
Members of the then Shadow Cabinet began touring the dining rooms of the City of London assuring their hosts that Labour had no intention of bringing back exchange controls and had no intention of doing anything they would not approve of.
Stuart Bell MP went to New York on a trip paid for by Kleinwort Benson Securities to reassure Wall Street that the 'financial markets will be safe in the hands of a future Labour government.' (Sunday Telegraph 17th Dec. 1995). Consequently, by the beginning of 1996, the financial pages of the newspapers were full of articles in praise of Labour's policies. Thus the stage was set for New Labour to not only continue Tory policies but to take them farther than even the most right wing Tory dared to imagine.
The Labour Party had concluded that the only way to get elected was to accept the agenda of the Americans and the City, to be pro Nato, pro EEC and pro non regulation of the City.
Due to the massive exportation of British capital, which began during the Thatcher years, Britain now has the largest overseas investment after America, and this will dictate that they continue to support American political and military hegemony as the best way to protect those interests. Indeed, all the key Labour personnel are linked to the United States, with the intent to preserve the so‑called Anglo‑American special relationship, to compensate for British capitalism's long term decline.
Ian Johnson.
When we talk about finance capital we are talking about the banks, insurance companies, and other financial institutions and their representatives, in short, we are talking about ‘the City’.
This section of society does not manufacture anything, it does not build or create anything, yet it is now the most dominant sector in the U.K. Its chief objective is the movement of money in search of the biggest profit margin in the quickest possible time.
In the early part of the 20th century the financial sector was subjected to government controls and confined its activities to the sterling area of the Commonwealth, indeed, even through the latter part of the 1940s the stock market and merchant banking was at best static, and at worst transactions were actually in decline. In the 1950s the financial sector tried to break free from government controls but achieved only partial success. It was not until the late 1960s that the City really began to expand with the development of London as an off‑shore base for American money fleeing the low interest rates in the United States.
FINANCIAL INSTABILITY
This was followed in 1971 by the Tory Government removing controls on credit growth which meant that market forces, namely interest rates, would now control the growth of credit in the system. This led to an end to limits on lending and meant that banking would have greater control over British industry and the economy as a whole. This coincided with the ending of the post‑war Bretton Woods agreement which had backed paper money with real value by linking it to the gold standard at the rate of 35 dollars equalling an ounce of gold. Now however, paper money was being printed and was not backed by any real value whatsoever.
Between 1979 and 1982 Margaret Thatcher's Tory Government removed all remaining controls from the financial sector and left it virtually unregulated and unchallenged.
Thatcher abolished restrictions on bank lending and hire purchase transactions and lifted all controls over building society lending, thus starting them off on the road to becoming banks and creating the basis for the great credit explosion in the late 1980s.
The Tory Government crucially abolished all exchange controls with the immediate effect that capital previously invested in the U.K. began going abroad in search of greater and quicker profits. There has been hardly any investment in U.K. manufacturing since exchange controls were abolished.
The dominance of finance capital became obvious in the 1980s when manufacturing output fell by 25%, when house building plummeted and thousands slept on the street, yet the City boomed. The banks made so much money in the '80s that even the Tories eventually levied a national 'windfall tax', though this was compensated for by tax allowances on bad overseas loans.
The Tories and the financial sector were responsible for the squandering of North Sea oil revenue during this period, with not one penny invested in U.K. manufacturing. The City wanted to use it to recreate their earlier role of financiers of the world, and the Tories believed that North Sea oil had made sterling a petro‑currency which signalled the days of manufacturing were over and that Britain was on a path to becoming a post‑industrial service economy.
THE GREAT RIP OFF
The looting of the British economy for the benefit of the few reached its most obscene proportions with the privatisation process of state assets which was first elaborated in the Tory election manifesto of 1983 and which resulted in the following years with the privatisation of coal, steel, gas, electricity, water, railways, telecommunications, shipbuilding and also took part of the oil and road haulage industries. This is not to mention the devastation of council housing that took place in the same period.
The sell‑off of state assets was overseen by City merchant banks who acted as 'advisors' and received literally hundreds of millions of pounds in fees for this 'service'. This period will rightly go down in history as one of the great rip‑offs of all time.
Alongside this privatisation came the reform of the National Health Service, schools and universities, prisons, the police force and justice departments and their regulating authorities, with the plan being to remove them from the control of democratically elected local authorities and place them under the control of unelected quangos and Next Step Agencies. By such means the market mechanisms of compulsory competitive tendering, performance related and profit related pay and other such devices, were introduced into all public services.
SOCIAL DEMOCRACY
Of course none of the above would have been possible without an attack on the traditional defensive organisations of the working class ‑ the trade unions. The destruction of the trade union movement was a clear objective of the Thatcher regime and resulted in confrontations with virtually all sections of workers. Indeed, the destruction of manufacturing and the move to a service based industry made it imperative for the ruling class to introduce anti‑trade union laws to shackle workers and reduce their ability to fight back.
That they were partially successful is a reflection not on the fighting capacity of the working class but on its social democratic leaders.
With a few honourable exceptions these politicians and trade union leaders functioned as policemen for the capitalist state against their own members. These careerists and opportunists are tied to capitalism, their status and significant salaries are dependent upon it, and forced into a situation where they have to choose, they will always come down on the side of the present system.
The introduction of new employment law effectively weakened the trade unions and created a more individualist labour market, moreover a labour market that would be open to the whims of a free market economy, modelled on the American labour market with its high levels of mobility, downward flexibility of wages and low employer costs.
As a result of these policies there has been an increase in part‑time and contract work and an ending of any traditional career with its accompanying security. Furthermore, many low‑skilled workers now earn less than the minimum needed to support a family, resulting in the diseases associated with poverty, TB, rickets and others, returning.
At the same time the restrictions on welfare entitlements, particularly with unemployment benefits such as the Job Seekers Allowance introduced in 1996, are designed to compel recipients to accept work at market‑driven rates.
NEW LABOUR
It was the finance sector that Blair's New Labour courted for over a year prior to the 1997 general election. They had to convince the financiers that they were the Party for them, and that they would continue to create the framework where they could operate freely. New Labour people threw so many banquets for these financial parasites that the City's nickname for the Labour Party is, 'the prawn cocktail party.'
Members of the then Shadow Cabinet began touring the dining rooms of the City of London assuring their hosts that Labour had no intention of bringing back exchange controls and had no intention of doing anything they would not approve of.
Stuart Bell MP went to New York on a trip paid for by Kleinwort Benson Securities to reassure Wall Street that the 'financial markets will be safe in the hands of a future Labour government.' (Sunday Telegraph 17th Dec. 1995). Consequently, by the beginning of 1996, the financial pages of the newspapers were full of articles in praise of Labour's policies. Thus the stage was set for New Labour to not only continue Tory policies but to take them farther than even the most right wing Tory dared to imagine.
The Labour Party had concluded that the only way to get elected was to accept the agenda of the Americans and the City, to be pro Nato, pro EEC and pro non regulation of the City.
Due to the massive exportation of British capital, which began during the Thatcher years, Britain now has the largest overseas investment after America, and this will dictate that they continue to support American political and military hegemony as the best way to protect those interests. Indeed, all the key Labour personnel are linked to the United States, with the intent to preserve the so‑called Anglo‑American special relationship, to compensate for British capitalism's long term decline.
Ian Johnson.
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
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
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