World Financial Crisis Part 3

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Fidel

[url=http://www.globalresearch.ca/index.php?context=va&aid=17214]Michael Hudson wrote:[/url]

Quote:
There are two economies – and the extractive FIRE sector dominates the “real” economy

When listening to the State of the Union speech, one should ask just which economy Mr. Obama means when he talks about recovery. Most wage earners and taxpayers will think of the “real” economy of production and consumption. But Mr. Obama believes that this “Economy #1” is dependent on that of Wall Street. His major campaign contributors and “wealth creators” are in the FIRE sector – Economy #2, wrapped around the “real” Economy #1.

Economy #2 is the “balance sheet” economy of property and debt. The wealthiest 10% lend out their savings to become debts owed by the bottom 90%. A rising share of gains are made in extractive ways, by charging rent and interest, by financial speculation (“capital gains”), and by shifting taxes off itself onto the “real” Economy #1.

The parasite has taken over the host's brain. America has descended totally and hopelessly into financial oligarchy.

Doug
Fidel

[url=http://www.globalresearch.ca/index.php?context=va&aid=17319]Nerobama says Wall Street comes first... second and third, too[/url] Michael Hudson

Financial parasites have induced Stockholm syndrome in the now feeble minds of their hosts

Fidel

[url=http://globalresearch.ca/index.php?context=va&aid=17346]Ben Bernanke and parallel universe theories for banking and finance in Amerika[/url] There's a tear in the fabric of space-time in Washington and blowing bubbles down Wall Street.

NorthReport

Gotta love the business community's ethics - blame the government, and then blame the government some more.

 

State Farm cancels thousands in Fla.
125,000 customers to be cut during hurricane season

 Hurricane damage in 2005

http://www.msnbc.msn.com/id/35220269/ns/business-personal_finance/

Fidel

[url=http://www.guardian.co.uk/world/2010/feb/04/barack-obama-china-yuan]Obama to CPC in Beijing: Stop being so interventionist and get with the neoliberal agenda on currency[/url] ... so that marauding capital can play yo-yo with China's economy! CPC to Obama: Get real!

NorthReport

Europe entering major economic crisis

Analysts see risk of double-dip recession

http://baselinescenario.com/2010/02/07/europe-risks-another-global-depre...

Doug

NorthReport wrote:

 

State Farm cancels thousands in Fla.
125,000 customers to be cut during hurricane season

 Hurricane damage in 2005

 

http://www.msnbc.msn.com/id/35220269/ns/business-personal_finance/

 

I can't really blame them that much. It's getting more and more impossible to make money on hurricane insurance as the frequency and power of storms increases (thanks global warming!). When multi-billion dollar hurricane losses happen every year either the premiums must rise to accommodate that or the insurance companies will decide it's not worth providing. If you want an example of big business that unusually is entirely behind efforts to limit climate change, it's the insurance industry - especially the reinsurers into whose laps all these claims must eventually fall.  

Fidel
Fidel

[url=http://www.foreignpolicy.com/articles/2009/04/15/the_next_big_thing_neom... Next Big Thing: Neomedievalism[/url]

 The next Renaissance is still a long way off 

 

Doug

Fidel wrote:

[url=http://www.foreignpolicy.com/articles/2009/04/15/the_next_big_thing_neom... Next Big Thing: Neomedievalism[/url]

 The next Renaissance is still a long way off 

 

Calling Neo-Wat Tyler!

Doug
Fidel

[url=http://www.independent.co.uk/news/world/europe/ireland-set-to-go-bust-cl... set to go bust, claims economic historian[/url] "We have the fiscal policy of a world war without a war."

NDPP

Descent into Barbarism: The US and NATO Wage War on the World

http://www.globalresearch.ca/index.php?context=va&aid=17517

"Similar historic junctures have been witnessed before when capitalism floundered from its inexorable tendancy to make the rich richer and the poor poorer. Disturbingly, the release valve for the system and its bankruptcy has always been war...In our time, war, it seems, has already begun. The US oligarchy and its NATO allies are waging a veritable war on the world.."

Doug

The Nordics in the global crisis

Most importantly, the Nordic model itself contributes to resilience. The comprehensive safety net, one of the attributes of the Nordic model, has proved to be robust also in times of crisis. The entitlements are not tied to the fate of individual companies or particular markets, and risks are widely shared in the society. While forest plants are shutting down in Finland and car manufacturing is sharply contracting in Sweden, the governments are firmly rejecting requests for support of ailing industries. Still, there are no crowds protesting in the streets, largely because flexible work arrangements, based both on general and company-specific agreements between businesses and labour, alleviate a rise in unemployment. Structural change is enhanced by the employment protection legislation, which is more liberal than in most other EU countries. A well-educated labour force, another of the attributes of the Nordic model, facilitates adjustment by making it easier to upgrade skills through additional training.

N.Beltov N.Beltov's picture

Here's a good recent summary of the views of J.B. Foster et al over at Monthly Review: The Age of Monopoly-Finance Capital.

Samir Amin, whose views Foster makes reference to, has a related article that can be found over here:  The Battlefields Chosen by Contemporary Imperialism: Conditions for an Effective Response from the South . Amin clearly focuses on what the Global South needs to do, how the genuine left in the Global North can help, and so on.

Amin, taken together with Foster's piece, gives a very solid strategic view of the current impasse and what can be expected in the future.

N.Beltov N.Beltov's picture

Some global remedies, in the context of a discussion of US-China relations, can be found at The U.S. Economy and China: Capitalism, Class, and Crisis

Here is a relevant quote if you would rather not read the whole article:

Quote:
An appropriate response to the current crisis will, by necessity, have to challenge capitalism and its imperatives. One target has to be capital mobility. We have seen the destructive consequences of capital's freedom of movement. We therefore have to find ways to strengthen those movements that seek to dismantle free trade agreements and the broader global institutions, such as the WTO and IMF, which underpin them.

Another target has to be production for profit. Capital's pursuit of profit has created an economy that is not responsive to our needs, whether as individual workers or as members of broader communities. In terms of the former, we have to intensify our efforts to achieve a radical transformation of labor laws, thereby helping to ensure living wages and the right to unionize.

In terms of the latter, we have to build support for the demand that all who want to work should be employed in the production of needed goods and services (as determined democratically by communities). This will require, among other things, not only transforming and strengthening the public sector so that it is capable of regulating private (production, investment, and trade) decisions, but also planning, organizing, and directly engaging in production itself. This, in turn, means that we must fight to reverse the long-term decline in tax payments by the wealthy and corporations, and work to strengthen the ability of public sector unions to represent and defend the broader public interest.

Significantly, these general demands are ones that increasingly motivate the activism of growing numbers of Chinese workers. This should not be a surprise since, as I have tried to demonstrate, they are oppressed by the very same system that oppresses U.S. workers. If we can successfully incorporate that understanding into our own organizing, we are likely to find ourselves with valuable allies.

I particularly like that this author, in looking at some ways to address the current capitalist crisis and its strategy of placing the burdens of the crisis on ordinary working people, also addresses in his remarks the capitalist scourge of racism and its remedy - solidarity and internationalism.

 

NDPP

It Is Too Late to Prevent the Collapse of the G7

http://www.informationclearinghouse.info/article24675.htm

"Greece is irrelevent. We are all now insolvent.."

Fidel

You Think Greece Has Problems? [url=http://www.counterpunch.org/hudson02152010.html]Latvia's Road to Serfdom[/url]

Neoliberalorama in Eastern Europe: How to wreck entire economies without a sledgehammer

 

Doug

Chinese real estate bubble about to pop?

 Jack Rodman, who has made a career of selling soured property loans from Los Angeles to Tokyo, sees a crash looming in China. He keeps a slide show on his computer of empty office buildings in Beijing, his home since 2002. The tally: 55, with another dozen candidates.

“I took these pictures to try to impress upon these people the massive amount of oversupply,” said Rodman, 63, president of Global Distressed Solutions LLC, which advises private equity and hedge funds on Chinese property and banking. Rodman figures about half of the city’s commercial space is vacant, more than was leased in Germany’s five biggest office markets in 2009.

 

 

Fidel

[url=http://globalresearch.ca/index.php?context=va&aid=17633]"Economic Terrorism": The Consequences are Poverty and Mass Unemployment[/url]

"60% of Americans living paycheque to paycheque - over 50 million people need to use food stamps to eat, and a stunning 50% of US children will use a food stamp to eat at some point in their childhood. 50 million Americans sans health care. Approximately 20,000 people are added to this total every day. Real US unemployment at 20%"(economic Depression level)

Doug
Fidel

[url=http://www.theglobeandmail.com/report-on-business/economy/ottawa-defies-... defies call for bank tax[/url] Harpers promise to continue stooging for banksters

epaulo13 epaulo13's picture

http://www.spiegel.de/international/world/0,1518,678026,00.html

Quote: On the international stage, China's monetary policy officials are givers, not takers. They are starting to issue government debt abroad, even though the country doesn't need to borrow any money. But many states, for example Brazil, India and Russia, are happy to have an alternative to the US bond market. They buy Chinese bonds, and the Chinese in turn use this money to buy Russian, Indian and Brazilian bonds. This has created a second monetary circuit alongside the dollar.

This won't replace the dollar as a global currency in the foreseeable future, but it will help to prepare the ground for its replacement. Xiao Gang, the chairman of the board of directors of the Bank of China, said last summer: "The time has come to internationalize the yuan."

 

..a change is gonna come.

NDPP

Debt Dynamite Dominoes: The Coming Financial Collapse

http://globalresearch.ca/index.php?context=va&aid=17736

"Assessing the Illusion of Recovery.."

Fidel

NoDifferencePartyPooper wrote:

Debt Dynamite Dominoes: The Coming Financial Collapse

http://globalresearch.ca/index.php?context=va&aid=17736

"Assessing the Illusion of Recovery.."

In 2007, the British Defense Ministry released a report in which they analyzed future trends in the world. It stated in regards to social problems, “The middle classes could become a revolutionary class, taking the role envisaged for the proletariat by Marx.” Interestingly:

The thesis is based on a growing gap between the middle classes and the super-rich on one hand and an urban under-class threatening social order: ‘The world's middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest’. Marxism could also be revived, it says, because of global inequality. An increased trend towards moral relativism and pragmatic values will encourage people to seek the ‘sanctuary provided by more rigid belief systems, including religious orthodoxy and doctrinaire political ideologies, such as popularism and Marxism’.[95]

It's gut check time for the left and progressive people everywhere. The time is coming.

Where there is fire, there is smoke. And in that smoke, from this day forward, my people will conspire and plot and plan for the inevitable day of capitalism's downfall - the day when it finally and self-destructively turns its weapons against its own kind. The day of the writing in the sky, when your cities lie buried under ideological rubble! When the sea is a dead sea, and the land is a wasteland out of which I will lead my people from their captivity! And we will build our own cities in which there will be no place for war pigs except to serve our ends! And we shall found our own armies, our own religion, our own dynasty! And that day is upon you... now!  - Caesar, Planet of the Proles

Fidel

[url=http://www.washingtontimes.com/news/2010/feb/25/bernanke-delivers-warnin... "The US Could Soon Face A Debt Crisis Like The One In Greece"[/url]

Quote:
With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.

Doug

An interesting contrast between two different business cultures -

Royal Bank of Scotland and Commerzbank both reported poor financial results this week. Commerzbank accordingly did not offer its investment bankers bonuses. RBoS, however, paid well over a billion pounds out in bonus despite now being a state-owned company.

http://www.nakedcapitalism.com/2010/02/rbs-pays-billions-while-commerzbank-bankers-get-nothing.html

 

Doug

Bankers discuss paying themselves less over dinner, decide they'd rather not

 

America's top bankers quashed attempts by their British counterparts to persuade the industry to bring down salaries in response to public outrage after the world's governments spent billions rescuing the system.

 

Chief executives from the world's banks discussed the plans at a secret dinner held at Claridge's, the London hotel, last October, at which several leading British bankers are said to have suggested that the sector should take greater responsibility for its part in the crash, and do more to reduce the vast bonuses paid to staff.

Doug

An interesting, if unsurprising, economic metric - employment agencies are having more trouble than usual placing people in work.

 

“IN 2008 10m people came to us, and we placed 4m in jobs. In 2009 it was 11m, and we only placed around 3m. It’s been a tough year.” So says Jeff Joerres, the boss of Manpower, an employment-services firm best known for its army of temporary workers.

Fidel

[url=http://www.globalresearch.ca/index.php?context=va&aid=17881]IMF and oligarchs pushing for perestroika in America[/url] ex-nay on the glasnost though

NDPP

The Financial Coup d'Etat: Consolidation of America's Economic Elite

http://globalresearch.ca/index.php?context=va&aid=17742

"It is hard to see how any of the fundamental problems in the financial system have been addressed to date...we are still driving on the same winding mountain road, but this time in a faster car. Now that the 'Too big to Fail' Wall St. elite know that the government will come in to bail them out, they are engaging in even riskier behaviour then before. Corporation cunning has developed faster than the law of nations or state. It is hard to face the fact that we have been so taken advantage of and abandoned by the very people we supported and had put our hope and faith into...."

Doug

The death of the mall?


Shopping malls were particularly hard hit by the economic crisis that bean in 2008, as consumers reined in their legendary spending and national chains such as Circuit City, Sharper Image, and Lillian Vernon went bust, leaving gaping vacancies at many shopping centers. Suddenly, the mall -- the temple of American consumerism -- was in trouble. Today, consumer spending is still down and commercial property values have fallen 40 percent from their peak. The landscape is littered with struggling or dead malls.

 

 

epaulo13 epaulo13's picture

Iceland: Overwhelming rejection of Icesave bill in national referendum
By Jordan Shilton
9 March 2010

Saturday’s referendum in Iceland on whether to accept a deal to pay back nearly €4 billion to Britain and the Netherlands resulted in a massive “no” vote. More than 90 percent of the electorate voted the proposal down, with only 1.5 percent in favour. There were more blank ballots cast in the referendum than votes in favour of the proposal.

The referendum concerned demands by Britain and the Netherlands for the full repayment, with interest, of the monies the two countries paid out to depositors in the Icesave online bank which collapsed in 2008.

http://www.wsws.org/articles/2010/mar2010/ices-m09.shtml

 

Doug

Portugal applies the austerity brakes

 

Portugal's Finance Minister Fernando Teixeira dos Santos said he intended to introduce a new 45% rate of income tax for people earning more than 150,000 euros ($205,000; £139,000) per year.

In addition, the Socialist government is to cut spending on military equipment over the next four years by 40%, and postpone plans to build a new high-speed rail link to Spain.

The country also aims to raise six billion euros through a number of privatisations.

Doug

A good set of talks from the Roosevelt Institute's Make Markets be Markets conference on financial reform:

 

http://economistsview.typepad.com/economistsview/2010/03/make-markets-be...

thanks

Who currently has the right to access the actual trading records of Canadian banks?

Can some Canadian banks choose to delay reports of losses, caused perhaps their own unreported trading in derivatives markets,  and cover those losses by expanding into commodities, and further financial trading?

NDPP

Lehman Bankruptcy Report Exposes Wall Street Criminality

http://wsws.org/articles/2010/mar2010/pers-m15.shtml

"The 2,200 page document details accounting fraud on a massive scale, involving secret transactions that enabled the bank to falsify its level of debt and conceal the scale of its laosses from toxic mortgate linked assets.."

Fidel

[url=http://www.scribd.com/doc/6674234/Citigroup-Oct-16-2005-Plutonomy-Report... leaked Citigroup memo of 2006[/url] mentioned in Michael Moore's, Capitalism A Love Story.

The USA is now a plutonomy according to the leaked Citigroup memo. It's a glorious time for the richest one percent of Americans who own more financial wealth than the bottom 95 percent of Americans combined! 

NorthReport

The only hope in the USA is for the middle class to rise up but will they?  I doubt it.

Doug

The financial hangover continues:


Private equity firms and many nonfinancial companies were able to borrow on easy terms until the credit crisis hit in 2007, but not until 2012 does the long-delayed reckoning begin for a series of leveraged buyouts and other deals that preceded the crisis.

That is because the record number of bonds and loans that were issued to finance those transactions typically come due in five to seven years, said Diane Vazza, head of global fixed-income research at Standard & Poor’s.

In addition, she said, many companies whose debt matured in 2009 and 2010 have been able to extend their loans, but the extra breathing room is only adding to the bill for 2012 and after.

The result is a potential financial doomsday, or what bond analysts call a maturity wall. From $21 billion due this year, junk bonds are set to mature at a rate of $155 billion in 2012, $212 billion in 2013 and $338 billion in 2014.

Doug

Nouriel Roubini is being depressing again - and probably also right -

 

At the end of the day, resolving private-sector leverage problems by fully socializing private losses and releveraging the public sector is risky. At best, taxes will eventually be raised and spending cut, with a negative effect on growth. At worst, the outcome may be direct capital levies (default) or indirect ones (inflation).

Unsustainable private-debt problems must be resolved by defaults, debt reductions and conversion of debt into equity. If, instead, private debts are excessively socialized, the advanced economies will face a grim future: serious sustainability problems with their public, private and foreign debt, together with crippled prospects for economic growth.

Fidel

[URL=http://www.telegraph.co.uk/finance/china-business/7456775/Chinas-central...'s central bank won't decide yuan's fate[/URL] CCP central planners to continue with interventionist policies in currency and banking and targeting 8% economic growth

 

 

Doug

Hipsters on food stamps! (and not just ironically)

 

I guess people on this program can't win - they either get bashed for buying chips and pop or for buying organic vegetables and artisanal cheese.

epaulo13 epaulo13's picture

The Greek debt crisis signals a new stage in class conflict

http://www.wsws.org/articles/2010/mar2010/euro-m17.shtml

Quote: Within this international context, it is patently obvious that the most powerful global banking institutions have strategically singled out Greece to set an example for the entire European working class. With its small economy—just over 2 percent of the European Union (EU)—and high indebtedness, it was an ideal target.

Doug

China - the national version of the movie "Speed"

 

Because China lacks the social safety net of the developed world, unemployed people aren’t just inconvenienced by the loss of their jobs, they starve; and hungry people don’t complain, they riot and cause political unrest. 

Remember the 1994 movie “Speed”? A young cop (Keanu Reeves) had to save passengers on a bus that would explode if its speed dropped below 50 m.p.h. Well, China is like that bus with 1.3 billion people aboard. If the Communist Party can’t keep the economy growing at a fast clip, the result will be catastrophic. 

 

I hope nobody is the national version of "Speed 2", because that's just horrible to contemplate.

Fidel

They aren't too worried about speed in democratic capitalist India. [url=http://www.guardian.co.uk/world/2009/oct/04/india-slums-children-death-r... million slum children die every year as India booms[/url] Save the Children says state-run health system is failing to give skilled care to poor

China and India have it all wrong with having too much state-run socialized medicine. And the CCP should be looking for P3 partnerships in building 30,000 new hospitals and clinics across the country.

I sometimes find western news reports of soaring economic growth in those countries to be confusing at best. China seems to be a special  cause of upset among our neoliberal think tankers.

Doug

China doesn't really have a comprehensive socialized medicine program anymore. People living places they officially aren't supposed to (and that's many millions of people) don't have access and those who do have to pay large fees. The government is addressing this but it's not changed yet.

Fidel

[url=http://www.chinadaily.com.cn/china/2009summerdavos/2009-09/10/content_86... speeds up healthcare reform[/url]

Quote:
This year China's State Council announced an allocation of $124 billion toward healthcare reform.

Under the plan, by next year 90 percent of China's citizens will be covered by a universal system and facilities will be upgraded, including construction of 30,000 hospitals, clinics and care centers across the country.

I think China will have some form of universal health care before Americans do. Meanwhile the conveyer belt of death in democratic capitalist India has no off button.

NDPP

Euro Crisis: Latvia and the PIGS

http://globalresearch.ca/index.php?context=va&aid=18144

"The very future of the EU is being torn asunder as the rich members turn their backs on the poor. The iron law of capitalism -- the strong protect their own interests at the expense of the weak, is once again being played out. Squeeze the worker. Communist propaganda you might say but unfotunately true...In other words, the entire western world is insolvent and each country is facing its own day of reckoning, starting, appropriately enough, with Greece, the home of western civilization.."

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