Crisis opening in 2007

Seize the loot from the predators!

“Companies are sitting on huge cash reserves”, reports a writer in the Financial Times (3 October). “In the US, for example, companies had $1,200bn (€880bn) stashed away in cash and short-term liquid investments at the end of last year”. The banks, bailed out by governments in 2008, are sitting on even huger cash piles. Central banks anxiously stuff more and more cash into the commercial banks, hoping that this will ease up credit and stop a new sharp economic downturn. And yet global capitalism is on the brink of a new crash, and set for a long period of economic depression and high...

Nationalise the banks!

By Michel Husson The crisis has taught us a lesson: “neoliberal Europe” was a badly-conceived thing, which has become more and more rickety over the years and appears to be incapable of standing up to the “stress test” of crisis. Right now, there are only two ways out: either everyone is going to take their marbles home and quit; or the whole edifice will have to be rebuilt, from top to bottom. But sticking plasters are being stuck over sticking plasters. How things turn out in Greece will serve as a barometer for this whole stop-starting process: everyone knows that Greece won’t be able to...

Save jobs and services, not bankers' wealth

Samuel Brittan, a conservative columnist in the Financial Times, argued on 24 September that the crisis demands “a Treasury directive to [state-owned] banks to replace profit maximisation with a requirement to promote economic recovery”. The labour movement should demand that all the banks and high finance are expropriated and put under democratic control with a priority of saving and improving services and jobs, not maximum loot for bosses and shareholders. Neo-liberalism, and capitalism itself, are signalling their delirious inhumanity and infirmity. “Global economy pushed to brink”...

The banks' crisis and the left's crisis

In 2010 veteran Canadian socialist Leo Panitch argued for a bolder response by the left to the financial crisis. For more on the banking and financial sector, see here . A common response of the left to the financial crisis that broke out in the USA in 2007-08 was often a kind of Michael Moore-type populist one: Why are you bailing the banks out? Let them go under. This kind of response was, of course, utterly irresponsible, with no thought given to what would happen to the savings of workers, let alone to the paychecks deposited into their bank accounts, or even to the fact that what was at...

Heading for the double-dip?

On top of the public sector job cuts, private-sector industry is cutting jobs too. On 27 July the bosses’ association CBI published survey results showing that most manufacturing employers plan to cut jobs over the next three months. Until spring this year, manufacturing employment was increasing a bit from its slump levels in 2009. The increase was not enough to validate the coalition government’s claim that public sector cuts, by holding down public debt levels and so interest rates, will produce a counterbalancing private-sector boom. But there was an increase. No longer. Manufacturing...

US debt: into the abyss?

“An August panic similar to those in 2007 and 2008 no longer appears far-fetched. Only this time, the global economy is far less well-equipped to cope... “Another leg of the economic crisis which started in 2007 is a distinct possibility – and exchequers simply do not have the fire-power to offset another private sector panic”. That is how the Financial Times summed it up (18 July), under the headline: “The abyss that awaits”. One factor is the spread of the eurozone crisis to Italy. The other is the prospect that the US government will run out of cash on 2 August. The US government, unlike...

"Euro periphery" needs investment

George Irvin is a professor at the School of Oriental and African Studies in London, and author of Super rich: the rise of inequality in Britain and the United States . He spoke to Solidarity about the new stage of the eurozone crisis created by the jump, from 8 July, in the interest rates that Italy has to pay to sell bonds (IOUs) on world markets. Eurozone politicians have been so slow to react that the bond markets are rightly worried about the poor and inadequate nature of the response. Bond markets a few months ago worried about excessive deficits and high public debt-to-GDP ratios. Now...

The falling rate of profit: how business measures its performance

By Barry Finger Socialists have been at loggerheads concerning the immediate relevance of the falling rate of profit as an explanatory backdrop to the current crisis. At the extremes are those, such as Andrew Kliman, who have argued that rates of profit in the American economy have fallen since the late 1960s and have never fully rebounded and Michel Husson and Gérard Duménil and Dominique Lévy who have argued that neoliberal policies have so raised the rate of exploitation to have, in effect, neutralized or undermined this as an underlying cause of the current crisis. I have no intention of...

Roots of Euro crisis

John Grahl (Professor of European Integration, Middlesex University), will be speaking at “Ideas for Freedom”, 9-10 July. He talked to Solidarity . Some of the Baltic and central and east European countries are in virtually the same situation as the eurozone crisis countries. One big difference as far as the west is concerned is that they’re not in very heavy debt to western banks, so western banks haven’t got a lot to lose. Their debts are largely to the IMF and so on. But the debts are large relative to the size of those economies. Huge deflationary processes have been launched in the...

Harshest slump since the 1930's

Economic output in the UK has now been fairly static for about eight months. It is still 4% below 2008. This makes this slump harsher than any since 1930-4, when output was 5% down a similar time along. The National Institute of Economic and Social Research reckons it will be 2013 before output is back to 2008 levels. That prediction assumes no new convulsions. But the Bank of England reports that the prices at which old Greek government bonds is trading imply that international financiers guess an 80% probability of Greece defaulting (i.e. not paying debts when they fall due). The implied...

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