Tag: economic crisis

Yes, comrades, we need to talk about crises again, the term recession simply does not explain what is really going on! Just in case you might not have noticed or perhaps the mainstream media where you live ignored it, the obvious has happened and the end of the so-called recession has disappeared into the fantasy novel. Once again there is a slowdown in growth and the financial markets are not particularly happy. This time, Germany and China are showing signs of slowdown. Globalisation has not ended the potential towards crises in the capitalist economic system; in fact, the greater interconnectedness of the world economy has exacerbated the situation and ensured that the contagion spreads.  

For those who believe the fantasies of neoliberal economics, the shock of these latest failures of neoliberalism must come as a surprise. But for those of us that have been warning of the stupidity of squeezing wages and destroying work conditions, rising inequality in income and wealth, the dangers of export-led growth when wage incomes are being squeezed meaning that unless governments become the sole purchasers of goods and services that are being produced (and they are not) that obviously there comes a point when working people cannot purchase goods and services as their incomes are too low, wiping out of savings  has happened and personal indebtedness leads to default and bankruptcy. Neither of these things helps to maintain capitalist growth, accumulation and profitability in the long run; forget that, it hasn’t even lasted in the short run.

I will be giving a run through on what is going on and why our lives feel as though we are living through the Shock Doctrine (which we are) then address the proposals of dealing with persistent unemployment under capitalism from the Left on which there is significant disagreement.

Effective regulation, and on that note, it is a positive thing that the Summers of our discontent can finally be laid to rest. After all the damage Larry Summers has caused in being one of the architects of this crisis, from boxing in Brooksley Born and ignoring her warnings with regard to derivatives which brought down Long Term Capital Management during the Clinton administration, to his sexism among everything else. He has now thankfully taken himself out consideration for the job.

It’s a good thing he did. Rather than fighting for something or someone that helps people suffering from this economic crisis, President Obama strongly recommended and fought for Larry Summers to be Chairman of the Federal Reserve, a guy who lost a billion dollars as President of Harvard betting on interest rates. Yeah, let that sink in for awhile.

It’s really not OK. This is why making excuses for everything the President does, as too many Democrats do without thinking of the damage, is dangerous, immoral, and unprincipled. Now it looks like the front runner to replace Ben Bernanke as Chairman of the Federal Reserve is going to be Vice Chairwoman of the Board of Governors of the Federal Reserve System and once President and Chief Executive Officer of the Federal Reserve Bank of San Francisco, Janet Yellin. Unlike Larry Summers, she at least saw the crisis coming as early as 2005.

Sitting there looking vainly at the growth, or lack of it to be more precise, of the British economy quarter by quarter following the introduction of austerity measures is a dubious use of time. So rather than sit there each quarter and discuss a dismal economy, I think the first step is to understand that we are in a world-wide economic crisis of the capitalist system. We also need to understand that the policies being introduced are actually not only extending the current crisis, but given that they are leading to increased income and wealth inequality, they will have a devastating impact upon the working classes in the countries introducing these measures. Moreover, the impact of austerity is not accident, it is being introduced specifically to create the economic contraction and  the increased wealth and income inequality in the hope that private sector will take over the state sector services being undermined.

Triple-dip recession?

We need to understand that the introduction of austerity in an economic crisis does not lead to economic growth contrary to the absurd pronouncements of Prime Minister, David Cameron.  Essentially, following a slight blip caused by the Olympics, I suspect we will be witnessing rather bad news. The combination of “beggar thy neighbour” low corporate taxation (to supposedly encourage investment in Britain) and cuts to public spending, services and benefits is not leading to a reinvigoration of the economy; rather the opposite is occurring.

Quite simply, the fall in service sector activity (which accounts for 75% of British economic activity) for the first time in two years (note that it was not in great shape beforehand) means that the economy is contracting.

It may be my masochism, but I actually watched the Presidential debates. I also regularly watch the news over here in the UK. Cameron and his cronies constantly spout this argument that governments cannot create economic growth. During the Presidential debates, Mitt Romney even went a step further; he argued that governments cannot create employment. The Tory argument is a bit more sophisticated, but both arguments have their roots in the fantasies of neoliberal economics of which both the Tories and the Republicans have adopted in its most fundamental form; their arguments also tie into the perspective of reduction of the central government budgets along the lines demanded by the IMF and the introduction of austerity measures to ensure these results. Except, and this is a big exception, neither of these governments have been forced to do so by the IMF.

Given that these statements are not only historically inaccurate, but bordering on the patently absurd, it never ceases to amaze me that challenge from the mainstream media is not forthcoming. Even more so, during the debate, President Obama did not respond to the absurd statement by Romney; in fact, he also raised budget deficit reduction which essentially means cutting state employment and social services. The Labour Party does not disagree with the Tories; they only say that austerity must be done more slowly and Ed Balls (the shadow Chancellor of the Exchequer) has said at the Labour Party conference that, if elected, they had no intension of reversing the austerity measures forced upon the British populace by the Con-Dem government.  Essentially, all of the mainstream parties are singing the same tune; honestly, different tonalities of the same argument do not change the fact that the underlying tune is the same.



To someone that is living in the real world, in other words, someone that actually heard about the New Deal, that knows the role of government in ensuring economic growth during the post-war period in Europe, who knows damn well that state (or public) sector workers exist and that the government’s purchase of goods and services from the private sector and investment in the private sector help to ensure economic growth it makes me wonder if they think that we are extremely stupid.  

Cross posted at Voices on the Square

To start things off, I recommend first reading Cassiodorus's piece The case against the case for Obama even though I started mine about the same time he did. It's definitely quite worthy of checking out before mine because it has many apt points to it. My views are slightly in a different vein as I’m more of a mix of Jim Hightower and L. Randall Wray as one of my friends used to say so read his piece before reading my take.

Well I guess we knew it was coming. Matt Stoller's superb piece The progressive case against Obama was bound to exercise a reaction from the veal pen or hacktivist pen appealing to their own authority first hand to make sure you all know how serious their decisions to sell out are. The end justifies the means and in Peter Coyote’s case it is a failed exercise in condescension right off the bat. He claims he is making…

"The Progressive case for Obama"

So right off the bat we get an exercise in condescension—Peter Coyote is older than Matt Stoller so therefore his time working for CA Governor Jerry Brown must be more relevant than Matt Stoller’s past work including his tenure working for Congressman Alan Grayson. Psychologically one might think, as I do reading this piece, that Peter Coyote's arguments do not come from a position of strength behind them. Whether he realizes it or not, it lets you know how unserious Peter Coyote perhaps thinks of his own arguments right off the bat. After all, he must provide authority for them but not from historical facts of course, from his own resume.