US Debt, Global Economy: Results and Prospects

[S.Artesian]

So a moderator, wait.. a global moderator, got his knickers all in a twist, because in the previous thread on the downgrade of the US debt, some posters went a bit off topic and weren't using soft and cuddly language, so rather than separate that into a separate thread, he closed the entire thread. Brilliant.

If anyone wants to continue discussing what the downgrade of the US sovereign debt means, or doesn't mean, to capitalism this is the place......Until some moderator gets another set of knickers in a twist.

[Thirsty Crow]

Absolutely, I think that such a move is unwarranted and that the debate should continue.

Right now, I'm watching the local news, and it seems that ECB has announced that it'll buy out the Italian and Spanish debt, concentrating especially on Italy as the hot bed of potential financial horror.

As usual, the chorus of reducing the deficit and "deep running reforms" was clearly sung.
I'm intrigued, do these reforms imply anything other than a restrucuring of public spending?

[Rusty Shackleford]

well, it looks like global markets are averaging a ~3% drop minimum on mondays. It looks like its possible for the Dow to go below 11000 again

As for the ECB deal and Italian austerity. is it possible to reproduce what is goign on in Greece?

[Rusty Shackleford]

Prezzy is going to be speaking on the downgrade in about 20 minutes.

[Fulanito de Tal]

Prezzy is going to be speaking on the downgrade in about 20 minutes.

So this is the setup. The stocks tank. The President tells us that we need to do what he says without giving one bit of evidence-based research, then we follow what he says to screw ourselves. He doesn't go up there an list a bunch of studies showing that what he's suggesting will have a certain effect while rebutting studies that say otherwise. He just says that it will. If you were the administrator of a hospital or research center, you would have to show to a great extent that what you propose will have the results that you state they will. However, when you're the president of the US, you can just base it on your word, which is garbage if you're a politician. The lack of rationality among the population in the US is high.

This is what I don't get at all: How can reducing redistribution policies such as progressive taxes, medicaid, welfare, food stamps, be good for the capitalist economy????? If the vast majority of people don't have money to buy what is produced, then the economy stalls.

This further highlights that everything spoken by politicians and the media in the US is the opposite of the correct version. "We're going to save the economy by allowing the cutting taxes (on the rich). With the money that is saved, they will be able to invest in cleaner technology, healthier treatment, research, etc." What? To what? What does it matter if the technology is the most advanced thing in the world? NO ONE CAN AFFORD IT.

[Thirsty Crow]

This is what I don't get at all: How can reducing redistribution policies such as progressive taxes, medicaid, welfare, food stamps, be good for the capitalist economy????? If the vast majority of people don't have money to buy what is produced, then the economy stalls.

Isn't this exactly the point which all kinds of revolutionaries tried to get across: that capitalism is forced to develop into such a situation where it cannibalizes itself, so to speak?

[Rusty Shackleford]

so it all edged towards 6% down but now its goign back up a percent. it may end up in another drop by the end of the day or a slight recovery into -2/3% im thinking.

[RED DAVE]

Right now, 2:55 PM EDT, the Dow is off another 500 points.

CAPITALISM IS DOOMED!

RED DAVE

[Welshy]

The Dow is below 11,000 again and has dropped by about -4.40%

[Rusty Shackleford]

i still dont think this is the final straw. but it may very well be leading to that point before we tip into another recession. Dow is still not getting back to 11,000 mark.


who was it that said the global economy could not stand one more shock this year?

[RedScare]

DOW is above 11,000 again. It's bouncing around close to that level. I think this will only cause something big if Italy and Spain fuck the eurozone at the same time.

[Rusty Shackleford]

I think with 40 minutes left and no real good news coming out and people still talking about todays lows its not going to end much higher than 11,050 if it even gets to that point by the end of the day.

[S.Artesian]

I don't think that this "the big one," for capitalism, no more than the Great Depression of the 1930s was the big one for capitalism. Capitalism might collapse, but it doesn't disappear. It's got to be broken up, destroyed, overthrown.

And I don't think the downgrade is a "set-up"-- a wink, wink, nod-nod, on the party of Obama, Boehner, teabaggers, keynesians etc etc.

I think the confusion, the lack of unity, etc are quite real and reflections of the inability of capital's own inability to resume accumulation without running smack into the wall of overproduction, and declining profitability. Which it has.

Cannibalize itself? Sure. Except that really isn't going to help. What does overproduction, overaccumulation mean. It means the inability of the extraction of surplus value to be either massive or rapid enough, or both, to maintain the valuations of the previously accumulated capital. Hence sudden, drastic, devaluations, as in the US housing market, as in the collapse of oil prices in 2008 after the dramatic runup, which runup itself was indicative of the inability to produce enough profits in oil production.

So the bourgeoisie require a bit more than devaluation-- they require out and out destruction of the accumulated capital in the means of production, and they need to intensify the exploitation of labor-- more layoffs, more cuts, more wage reductions, more benefits destroyed. And even that will only get the bourgeoisie right back to where they are today-- all dressed up with nowhere to go but to war.

[Rusty Shackleford]

http://www.revleft.com/vb/data:image/gif;base64,R0lGODlhAQABAIAAAP///////yH5BAEKAAEALAAAAAABAAEAAAICTAEAOw== Dow Jones (http://www.google.com/finance?q=INDEXDJX:.DJI) 10,809.85 -634.76 (-5.55%) http://www.revleft.com/vb/data:image/gif;base64,R0lGODlhAQABAIAAAP///////yH5BAEKAAEALAAAAAABAAEAAAICTAEAOw==
S&P 500 (http://www.google.com/finance?q=INDEXSP:.INX) 1,119.46 -79.92 (-6.66%)
http://www.revleft.com/vb/data:image/gif;base64,R0lGODlhAQABAIAAAP///////yH5BAEKAAEALAAAAAABAAEAAAICTAEAOw== Nasdaq (http://www.google.com/finance?q=INDEXNASDAQ:.IXIC) 2,357.69 -174.72 (-6.90%)


(final numbers keep coming in so i gotta keep reposting lol)


Also, lol. check out S&P 500

[danyboy27]

if it still goes down tomorow that way, shit will go crazy.

I really doubt that tho, tomorow gonna be an avearge day, some losses, some gain.

Today trading was mainly caused by automatized selloff, since the us lost his aaa rating, certain programs, like the 401k have to sell some assets beccause they are conditionals to that rating.

There was of course a certain panic has well, but we will see tomorow.

[danyboy27]

holy shit.

-634 point for the dow.

[Rusty Shackleford]

my guys is there might be a buyback tomorrow. from what ive seen, after big dips theres usually a whiplash between moderate gains and losses the next day.

im just wondering if it will go below 10k by the end of the week.



http://latimesblogs.latimes.com/money_co/2011/08/dow-down-633-points.html

The Dow Jones industrial average finished the day down 633 points Monday after a full-day sell-off accelerated in the final hour of trading as investors struggled to absorb Standard & Poor's decision to downgrade the United States' credit rating. Investors piled out of stocks and into a few "safe havens," such as gold and Treasury bonds. The appetite for Treasury bonds suggests that the Standard & Poor's downgrade has not shaken investors' faith in U.S. bonds.
Market experts said the Monday sell-off was sparked by the S&P announcement but was motivated more by growing concerns about the weakness of the global economy.
"It’s really all about economics," said Mike Norman, the chief financial strategist at John Thomas Financial.
The Dow ended the day down 633.17 points, or 5.5%, at 10811.44. The broader Standard & Poor's 500 index fell even more sharply, finishing the day down 79.83 points, or 6.6%, at 1119.55.
"It's been harried," said Sal Arnuk, head of Themis Trading, which has its trading floor in Chatham, N.J.
The concern about the U.S. credit rating was amplified when Standard & Poor's announced Monday morning that it was also downgrading the debt of mortgage giants (http://www.latimes.com/business/la-fi-fannie-downgrade-20110808,0,4273684.story) Fannie Mae and Freddie Mac, which rely on U.S. government guarantees. But traders said much of the pessimism Monday resulted from broader concerns about the economy.
"I don’t think the S&P announcement is the lead director of the day -- I just think it is the icing on the cake," said Jonathan Corpina, a trader on the New York Stock Exchange for Meridian Equity Partners.
Markets have fallen nearly every day for the last two weeks and are now down to levels last reached in September of last year.
With the United States' credit risk being judged lower by Standard & Poor's, Treasury bonds might have been expected to lose some of their luster. But investors still appear to be using Treasuries as a haven amid global economic turmoil. The 10-year Treasury bond was trading at a 2.34% yield, down from 2.56% on Friday, indicating that there was heavy demand for the bonds.
Gold, another haven, saw its value rise nearly 3.9% on Monday.

[Fulanito de Tal]

Here's some preparation for you <3 My stuff is in red.

http://www.nytimes.com/2011/08/08/us/politics/08panel.html?_r=1&hp

S.&P. Downgrade Is Seen as Adding Urgency to Debt-Cutting Panel

WASHINGTON — The downgrade of the United States government’s credit rating by Standard & Poor’s is almost sure to increase pressure on a new Congressional “supercommittee” to mute ideological disagreements and recommend a package of deficit-reduction measures far exceeding its original goal of at least $1.5 trillion, lawmakers said Sunday.

Even before the panel is appointed, its mission is expanding. Like...it was almost even planned. Its role is not just to cut the annual budget deficit and slow the explosive growth of federal debt but also to appease the markets and help restore the United States’ top credit rating of AAA. Appease the markets? Who is the government working for? Also, doesn't the market correct itself? Otherwise, taxpayers may eventually have to pay more in interest for every dollar borrowed by the Treasury.

The report certainly got the attention of Capitol Hill. “I think this is one of the most telling, important moments in our country’s history right now,” Senator John Kerry, Democrat of Massachusetts, said Sunday on the NBC program “Meet the Press.” He added: “This poses a set of choices not just about a recession (http://topics.nytimes.com/top/reference/timestopics/subjects/r/recession_and_depression/index.html?inline=nyt-classifier). It’s about a financial crisis and the structure of our economy, which really has been misallocating capital.”

In the S.&P. report on Friday outlining the reasons for removing long-term Treasury debt from its list of nearly risk-free investments, the company cited doubts about the ability of the two political parties to bridge their gulf on fiscal policy.

Credit rating agencies have thus emerged as a powerful constituency whose concerns are taken seriously by Congress.

Representative Joe Courtney, Democrat of Connecticut, said he had “read and reread the S. & P. report” several times since it was issued Friday night, and he said it could spur action by Congress. If the 12 members of the committee, to be appointed by Aug. 16 by Congressional leaders of the two parties, could agree on a deficit-reduction package, and if Congress approved it, Mr. Courtney said, “that would surprise a lot of skeptics” and could disprove the company’s criticism of the United States political system.

Representative Blake Farenthold, a freshman Republican from Texas, said the S.&P. report could have a beneficial effect. “Anything that encourages the new committee (http://topics.nytimes.com/top/reference/timestopics/organizations/c/congress/joint_congressional_committee_on_deficit_reduction/index.html?inline=nyt-org) to get the job done and get us back on a rational fiscal path is a good thing,” Mr. Farenthold said. Let's push this thing through as fast as possible without debates to avoid any barriers from the people.

Another freshman Republican, Representative Steve Southerland II of Florida, said the credit report created “a sense of urgency for the two parties to come together.” The possibility of a further downgrade “scares me,” Mr. Southerland said.

The stated goal of the new panel, the Joint Select Committee on Deficit Reduction, is to cut federal budget (http://topics.nytimes.com/top/reference/timestopics/subjects/f/federal_budget_us/index.html?inline=nyt-classifier) deficits by a total of “at least $1.5 trillion” over the next decade.

The first round of savings under the new law, coming from annual caps on appropriations, is estimated at $917 billion over 10 years. Standard & Poor’s had said it was hoping to see $4 trillion in total deficit reduction. If the joint committee wanted to reach that goal, it might seek a bigger, more comprehensive deal, aiming to save $3 trillion rather than $1.5 trillion over 10 years.

If Congress wants to satisfy the rating agencies — Moody’s and Fitch have so far kept their AAA ratings of government debt — it will need to lock in substantial deficit-reduction measures, without using the kind of budgetary gimmicks that sometimes appear to produce savings under accounting rules prescribed by Congress, several lawmakers said. At least we know that congress answers to the privately owned corporations and not the voters.

Senator John McCain, Republican of Arizona, said Sunday on “Meet the Press” that the credit downgrade created an “added incentive” for the new committee and Congress as a whole to agree on major deficit-reduction plans.

On the other hand, opposition to proposals from the committee, due by Nov. 23, could increase with the size of the package. And a bigger joint committee bill might make the alternative — automatic across-the-board cuts saving $1.2 trillion over 10 years — appear more attractive, lawmakers said.

Democrats like the Senate majority leader, Harry Reid of Nevada, cited the downgrade as another reason to include revenue-raising measures in a package. Republicans like Speaker John A. Boehner of Ohio said the downgrade strengthened the case for deeper cuts in spending.

Before their talks broke down last month, President Obama and Mr. Boehner were pursuing a “grand bargain” that sought savings of $4 trillion over a decade.

Senator Kerry also endorsed that goal. The United States must show the markets that it is “deadly serious about dealing with its long-term structural debt,” he said, and the way to do that is by “putting a plan on the table, $4 trillion plus, if necessary.”

Republicans have historically seen the deficit as an issue that plays to their political advantage. Deficit-reduction proposals floated by Mr. Obama as part of a grand bargain set him against many of his liberal supporters.

Congressional Democrats, lobbyists for older Americans and advocates for the poor expressed alarm last month when Mr. Obama showed serious interest in proposals to reduce the cost-of-living adjustment for Social Security (http://topics.nytimes.com/top/reference/timestopics/subjects/s/social_security_us/index.html?inline=nyt-classifier) benefits, increase the eligibility age for Medicare (http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/medicare/index.html?inline=nyt-classifier) and cut Medicaid (http://topics.nytimes.com/top/news/health/diseasesconditionsandhealthtopics/medicaid/index.html?inline=nyt-classifier) payments to the states for treating poor people.

The new panel will have 14 weeks to do its work. Republicans have made clear that they will push for cuts in federal spending under the new health care law, arguing that it should be on the table along with other government programs and tax breaks. The Congressional Budget Office says the law will cover 34 million uninsured people by expanding Medicaid and subsidizing private insurance at a cost of $1.1 trillion over 10 years. See ya, health care!

On “Fox News Sunday,” Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, said the new panel would probably not “achieve a full fix to our problems because Democrats have never wanted to put their health care bill on the table.”

S.&P. did not advocate a specific mix of increased revenue and spending cuts. But it did say that overhauling entitlement programs was “key to long-term fiscal sustainability” and that the debt deal “envisions only minor policy changes on Medicare.”

[Welshy]

So here are the people that Reuters is saying are the front runners for the positions in the Super Congress.

Senate Democrats:

- Max Baucus
- Kent Conrad
- Richard Durbin

Senate Republicans:

- Rob Portman
- Jeff Sessions

House Democrats:

- Xavier Becerra
- Chris Van Hollen
- James Clyburn
- Allyson Schwartz

House Republicans

- Dave Camp
- Eric Cantor
- Jeb Hensarling
- Paul Ryan

http://www.reuters.com/article/2011/08/08/usa-debt-committee-contenders-factbox-up-idUSN1E7721BX20110808?rpc=401&feedType=RSS&feedName=bondsNews&rpc=401

[S.Artesian]

Doesn't make a bit of difference.

[Welshy]

Doesn't make a bit of difference.

Since there was talk of the Super Congress using this to expand its role, I thought it would be relevant to post an update on the Super Congress. And yes it doesn't make a bit of a difference when it comes to whether or not we are going to get austerity measures shoved down our throat, but you response seems to imply we shouldn't keep updated on who the capitalists choose to represent their interests.

[S.Artesian]

Since there was talk of the Super Congress using this to expand its role, I thought it would be relevant to post an update on the Super Congress. And yes it doesn't make a bit of a difference when it comes to whether or not we are going to get austerity measures shoved down our throat, but you response seems to imply we shouldn't keep updated on who the capitalists choose to represent their interests.

If it doesn't matter as to the results, why does it matter who's on the committee? It's like keeping up with Republican and Democratic presidential candidates. What difference does it make?

I have no objection to anyone posting who's on the committee, I just think it's important to understand that these clowns don't control the economy, the economy controls them.

What was it some group sang 43 years ago? "A choice of cancer or polio"?

[RED DAVE]

Only liberals care about whose face is under the executioners mask.

RED DAVE

[Welshy]

Man, just thought you all would be mildly interested in hearing this update on Super Congress. But I guess I was wrong.


Only liberals care about whose face is under the executioners mask.


Nice attempt at flaming.

[Rusty Shackleford]

updates on the super congress are welcomed. by me at least.

it is important to know what it is up to and who its members are.

and though i agree with Red Dave on that. This may help give a wee bit of a look into the problems that will come of the Super Congress.

[Welshy]

and though i agree with Red Dave on that.
I saw RED DAVE's post as a jab at me for posting what I did. But yes in the long run it doesn't matter if the executioner is a liberal or a conservative, but what matters is that they are doing the executing. So yes in that way I agree with RED DAVE.

[RED DAVE]

I saw RED DAVE's post as a jab at me for posting what I did. But yes in the long run it doesn't matter if the executioner is a liberal or a conservative, but what matters is that they are doing the executing. So yes in that way I agree with RED DAVE.Sorry you took it that way. It wasn't meant as a jab at you at all, but at liberals who will agonize over how deep they're going to have to cut, while cutting.

I posted this article by Joel Geier of ISO about a year ago. It gives a good summary of the systemic nature of the crisis.

http://www.isreview.org/issues/71/rep-economy.shtml

RED DAVE

[Welshy]

Sorry you took it that way. It wasn't meant as a jab at you at all, but at liberals who will agonize over how deep they're going to have to cut, while cutting.

I posted this article by Joel Geier of ISO about a year ago. It gives a good summary of the systemic nature of the crisis.

http://www.isreview.org/issues/71/rep-economy.shtml

RED DAVE

Ah ok, then I take no offense. Also thanks for the link!

[Martin Blank]

Doesn't make a bit of difference.

I disagree. I mean, it's not going to alter the fact that the Council of State will be authoring massive cuts and austerity for the Congress to adopt (without so much as a peep of opposition allowed). But it does give us a sense of what to expect in the details. For example:


Senate Democrats:

- Max Baucus
- Kent Conrad
- Richard DurbinBaucus and Conrad are "Blue Dog" Democrats, last made famous for their watering down of Obama's health insurance "reform" (they were the architects of eliminating the "public option"). Those two will vote along with the Republicans on any kind of taxation issues. So, expect that tax break for private jet owners to remain put. Durbin is often used for "liberal" posturing, so he's there for the "liberal" bobbleheads -- Maddow, Schultz, O'Donnell, etc. -- to interview.


Senate Republicans:

- Rob Portman
- Jeff SessionsBoth Portman and Sessions are well-known conservatives, but not so much tied to the Tea Party Nativists. The lack of a third name in this list indicates a need on the part of McConnell to find a GOP Senator more acceptable to the Nativists. Nevertheless, these two will work to find a balance between the demands of Wall Street and the Nativists.


House Democrats:

- Xavier Becerra
- Chris Van Hollen
- James Clyburn
- Allyson SchwartzBecerra, Van Hollen and Schwartz are all conservative Democrats serving on the House Budget Committee. Clyburn is a well-known liberal, but it seems that the only reason he is on the list is because he is a well-known liberal. Becerra, Van Hollen and Schwartz will not put up any kind of phony outrage over the massive cuts being demanded. If Clyburn is put on the Council, it will be solely to have (along with Durbin) a handwringing Democrat to put on MSNBC to mollify the "liberal base" after the body's work is done.


House Republicans

- Dave Camp
- Eric Cantor
- Jeb Hensarling
- Paul RyanAll four of the House Republicans are in close with the Nativists. Hensarling was the GOP Representative that led the charge against TARP in the House. Ryan has been the loudest among well-known Republicans calling for sharper cuts. Camp, along with Hensarling and Ryan, support privatizing Social Security and Medicare. Cantor, believe it or not, is the most moderate of the four, but he's also Boehner's right hand, so, depending on how much control the Speaker wants to exercise in the new Council, he may or may not be on.

There's more that can be said about each of these people, but this is enough to make my point.

[S.Artesian]

I think it's fine to know who is on the committee, just like it's fine to know all the state capitals, the Supreme Court justices, who your congressional representative is etc. etc. etc.

But is it going to make a bit of difference to what is going to happen in the economy in the next 4 years? No more than electing Obama made a bit of difference in the last 3 years.

The needs of capital determine whether we get Palin or Pelosi, cancer or polio. You got Obama in 2008 because the bourgeoisie wanted out of a recession. You're getting this "super-committee" because capital needs to intensify the attack on living standards, and thinks this is a cheaper way to do it.

[Die Neue Zeit]

I disagree. I mean, it's not going to alter the fact that the Council of State

Why did it take both houses of Congress these many decades? Aren't the Joint Economic Committee (http://en.wikipedia.org/wiki/United_States_Congress_Joint_Economic_Committee) and the Joint Committee on Taxation (http://en.wikipedia.org/wiki/United_States_Congress_Joint_Committee_on_Taxation ) enough?

[Martin Blank]

Why did it take both houses of Congress these many decades? Aren't the Joint Economic Committee (http://en.wikipedia.org/wiki/United_States_Congress_Joint_Economic_Committee) and the Joint Committee on Taxation (http://en.wikipedia.org/wiki/United_States_Congress_Joint_Committee_on_Taxation ) enough?

No. While both of those committees can draft bills, they do not have the power to "fast-track" the legislation. Sure, they could have went back and tried to imbue one of these committees with that power, but the problem is also that these committees also are specific Congressional bodies that are bound by the rules and statutes for each house. The new Council of State (the so-called "Super Congress") does not have those restrictions. It is, in many respects, an Emergency Commission with extraordinary powers. This is certainly what the exploiting and oppressing classes need today -- something that cuts through all the "messiness" of capitalist democracy, and imposes both order and unity.

[The Dark Side of the Moon]

The Dow is below 11,000 again and has dropped by about -4.40%

It's the highest in years, still, remember when it hit 7000? You can't determine an economy on a stock market

[CHE with an AK]

http://i83.photobucket.com/albums/j318/Tredcrow/2011/Karl_Marx__The_Prophet_by_Latuff2.jpg

[A Revolutionary Tool]

http://i83.photobucket.com/albums/j318/Tredcrow/2011/Karl_Marx__The_Prophet_by_Latuff2.jpg

Dude you know that's a fake quote that someone invented to make people scared right;fear-mongering. Conservatives use that all the time to make it look like liberalism is a Marxist conspiracy when they try to bail out banks and shit.

[CHE with an AK]

Dude you know that's a fake quote that someone invented to make people scared right;fear-mongering. Conservatives use that all the time to make it look like liberalism is a Marxist conspiracy when they try to bail out banks and shit.
I've never heard that it was fake, not that it really matters all that much, since I hope the banks have to be nationalized because of debt anyway.

[Die Neue Zeit]

No. While both of those committees can draft bills, they do not have the power to "fast-track" the legislation. Sure, they could have went back and tried to imbue one of these committees with that power, but the problem is also that these committees also are specific Congressional bodies that are bound by the rules and statutes for each house. The new Council of State (the so-called "Super Congress") does not have those restrictions. It is, in many respects, an Emergency Commission with extraordinary powers. This is certainly what the exploiting and oppressing classes need today -- something that cuts through all the "messiness" of capitalist democracy, and imposes both order and unity.

When was it reported that the name of the Joint Select Committee on Deficit Reduction was changed to "Council of State"? :confused:

[Martin Blank]

When was it reported that the name of the Joint Select Committee on Deficit Reduction was changed to "Council of State"? :confused:

It wasn't. But "Council of State", the name of the body set up by Napoleon Bonaparte after 18 Brumaire VII to draft legislation for the Tribunate (which could debate bills, but not amend or vote on them) and Legislative Assembly (which could vote on bills, but not debate or amend them), seems more appropriate ... and rolls off the tongue better.

[Die Neue Zeit]

^^^ I prefer the Councils of State in Cuba, in the Soviet-era Eastern European countries, and in Brezhnev's aborted plan to replace the Presidium of the Supreme Soviet (http://www.time.com/time/magazine/article/0,9171,877509,00.html). ;)

[Kiev Communard]

I don't think the observation on the state of stock market indices is a reliable indicator to analyse the state of the capitalist economies worldwide. The stock markers are notoriously volatile and reflect the signals from the basic economic indicators only indirectly and in a confused way. The official statistics of the public bodies, whatever their bias may be, is way more helpful than that. For instance, for all my political differences with the WSWS crew, I would recommend the following article of them that is based on the analysis of the U.S. statistics on unemployment (http://www.wsws.org/articles/2011/aug2011/jobs-a06.shtml) and on the U.S. credit downgrade (http://www.wsws.org/articles/2011/aug2011/pers-a08.shtml).

If not for their sectarianism and espousal of parliamentarist strategy (while their position on the trade unions is pretty much correct - even though their alternative of "rank-and-file committees" is less constructive than that of revolutionary Unionen, AAUD-style (http://libcom.org/forums/history/left-communist-unions-31012011)), I would say the WSWS might be an excellent candidate for the position of the revolutionary Left's The Economist.

[Rusty Shackleford]

PSL Article on Markets (http://www.pslweb.org/liberationnews/news/stock-market-plummet-blame-capitalism.html)


If there is one thing that the developments of the last week in Washington and Wall St. show, it is this: Capitalism is a system of mass destruction. It cannot be reformed—it must be replaced through the revolutionary reconstitution of society on a socialist basis.
The fraud propagated by capitalist politicians and pundits—that the “Great Recession” ended two years ago—has been exposed. Now the depression is deepening.
Tens of millions of workers in the United States and hundreds of millions around the world have been deprived of the right to work as a consequence of the ruthless drive to maximize corporate profits. But the dictatorship of capital is not going unchallenged.
The rebellions spreading through London, Birmingham and other cities in England today follow on the heels of the upheavals in Tunisia, Egypt, Greece and elsewhere. Workers and youth are rebelling not only against police brutality and government repression, but also against the theft of their future for the sake of austerity and neo-liberalism. There can be no doubt that the deepening of the global economic crisis will bring more resistance, including here in the heartland of world capitalism.
The anti-working class deal struck a week ago between the White House and Congress to resolve the contrived debt ceiling crisis was acclaimed in capitalist circles as averting a global financial crisis. Instead, it helped turn a slide in the stock market into a crash.
A crisis over the debt ceiling—which had been routinely raised 72 times since 1962—was manufactured as a pretext for slashing social programs. In this, the President and Congressional leaders of both corporate parties were partners. The final arrangement called for not one penny in tax increases for the super-rich or any closing of the hundreds of billions in corporate tax loopholes.
Late on Friday, August 5, Standard and Poor’s, a credit rating agency, lowered the U.S. rating for the first time in history. U.S. and world stock markets, already slipping, took a nose dive when they re-opened on Aug. 8.
Today, the Dow Jones Industrial Average, considered the benchmark stock index in the world, lost more than 634 points, over 5.5 percent of its worth. Other U.S. and global stock markets fell even further. On August 8 alone, the cumulative loss for U.S. stocks exceeded a trillion dollars.
Unfortunately, it was not just the capitalists who are suffering huge losses. A reported 41 percent of U.S. families own stocks, many through 401(k) and other retirement plans. Cumulative stock losses in the last 11 days amount to more than $2.9 trillion. Many big investors are suffering losses, but have huge reserves. But millions of workers, who have no such reserves, have seen their retirement funds decimated in less than two weeks.
The latest crash illustrates once again the extreme danger inherent in proposals to privatize Social Security by creating “private investment accounts,” another scheme to further enrich Wall Street.
Why has the debt doubled?
In the last ten years, the U.S. national debt has more than doubled, to $14.3 trillion. There were several factors that contributed to this, none of them having anything to do with Social Security, Medicare, Medicaid or other social programs:


Three rounds of huge tax cuts and the creation of new tax loopholes that primarily benefited the big banks, corporations and already wealthy individuals. Many of the biggest corporations, like General Electric which took in $16 billion in profits last year pay no income taxes—in fact, they receive billions of dollars in taxpayers subsidies.
In place of the lost tax revenue, the government has borrowed trillions of dollars in the same period. Many of the banks and investors who have had their taxes cut or eliminated, are double winners: they lend their tax savings back to the government and collect interest on the loans.
A military budget larger than all of the other countries in the world combined: now over $1 trillion per year. It is estimated that Iraq and Afghanistan/Pakistan wars alone will end up costing $4.4 trillion.
The fundamental cause of budget crisis is the capitalist system itself. The economic crisis that began in 2007-08, was a crisis of capitalist over-production. Capitalist over-production has a particular meaning: too much was produced—not in relation to people’s needs, but too much that could be sold at a profit. This was particularly so with the huge boom in housing construction, which caused the market to become over-saturated. Housing and construction collapsed, and millions of workers lost their jobs, homes and benefits. As a result, not only the federal government, but nearly every state and municipality saw sharp declines in tax revenues and budget crisis.

Many banks large and small went under, and the entire banking system would have collapsed except for a massive bailout involving trillions of dollars, engineered by the Treasury Department and Federal Reserve Banks.
The bail-out saved the biggest banks—Citigroup, Chase, BofA, Wells Fargo, Goldman Sachs and biggest corporations—GM, Ford, Chrysler, AIG and others from bankruptcy. Many of the same corporate executives and their bought politicians, who had for years been repeating the mantra of, “get government off our backs,” in panic turned to the government begging to be saved. And they were saved, while millions of working people enjoyed no such assistance. It showed that we live under a government of, by and for the rich.
No double-dip—the 'Great Recession' never ended
To justify turning over trillions to the banks and corporations, a public relations campaign was created around the idea that if they were rescued, the banks would begin lending again, the corporations would resume hiring, and workers would go back to work. But this version of the “trickle down” theory had no more relation to reality than earlier ones.
The problem was that the “job creators”—as the whole bourgeois political spectrum from Tea Party to Obama and Pelosi like to call the corporate executives and investors—did the opposite. Instead of more hiring, there were more layoffs. This was not because they were strapped for cash. The recession supposedly "ended" during this period because their profits returned, and in 2010 reached an all-time record high. Today the banks and big corporations are sitting atop mountains of cash, more than $2 trillion.
The official unemployment rate is 9.1 percent or 14 million workers. In reality, it is more like 20 percent or about 30 million people, if those who have stopped looking or can only find part-time work are counted. Unemployment rates for African Americans, Latinos, Native Americans and youth are even higher.
Mass unemployment is a social disaster for tens of millions of people, who have lost jobs, homes, health care, pensions and other benefits. Long-term unemployment is a major cause of family break-ups and other social problems. Losing a job is the number-one predictor of domestic violence.
It is a great disaster for society as well. There are tremendous needs–affordable housing, new schools stocked with school supplies and more teachers, a real health care system, the rebuilding of roads, bridges and other infrastructure, sustainable energy projects, etc.
Why aren’t these projects being undertaken, projects that could provide everyone able to work with a good job? The need is there, the workers who can do the work are there. But what could be done and needs to be done is not being done. Why? Because the great wealth of society is owned and controlled by a tiny handful of the population–the capitalist class.
How did they acquire this wealth? Was it because the executives were so smart, the entrepreneurs so bold, as we are constantly told? No, it was exploitation of labor—not paying the workers for the full value of what they produce.
Corporate capitalism is highly efficient theft, but it’s all legal in the system under which we live.
An absurd and criminal system
The contradictions this has created in society are mind-boggling. On August 4, it was announced that a record 45.8 million people are now receiving food stamps. The same day, the New York Times carried an article headlined: “Even Marked Up, Luxury Goods Fly Off the Shelves.” It reported that Nordstrom’s has a waiting list for Chanel sequined tweed coats, priced at $9,010, and Mercedes Benz had the strongest July sales for its high-priced cars in five years.
The percentage of adults who are working has fallen from 64 percent in 2007 to 58 percent now. But in the last year, the average compensation for CEOs in the largest 200 corporations rose 23 percent to $10.8 million. During the same period, the average pay for workers rose .05 percent, meaning that in reality it fell about 3 percent due to inflation.
Why don’t the banks and corporations use the piles of cash they are sitting on to hire workers and produce more goods, in other words, get the economy going as the politicians like to say? It is because the crisis of over-production that began more than four years ago never ended.
What we have witnessed in recent days has reaffirmed the reality that capitalism and a just society are a contradiction in terms. Capitalism must be replaced through revolution by a system based on meeting the needs of the people of the world in a long-term sustainable way. That system is socialism and that is what the Party for Socialism and Liberation is fighting for.

[Rusty Shackleford]

after an up day yesterday
today was a pretty big down day


Dow Jones (http://www.google.com/finance?q=INDEXDJX:.DJI) 10,719.94 -519.83 (-4.62%)
S&P 500 (http://www.google.com/finance?q=INDEXSP:.INX) 1,120.76 -51.77 (-4.42%)
Nasdaq (http://www.google.com/finance?q=INDEXNASDAQ:.IXIC) 2,381.05 -101.47 (-4.09%)

[DaringMehring]

Good article.

No illusions in the Democrats.

Revolution not capitalist-controlled "reform."

[ckaihatsu]

after an up day yesterday
today was a pretty big down day


Dow Jones (http://www.google.com/finance?q=INDEXDJX:.DJI) 10,719.94 -519.83 (-4.62%)
S&P 500 (http://www.google.com/finance?q=INDEXSP:.INX) 1,120.76 -51.77 (-4.42%)
Nasdaq (http://www.google.com/finance?q=INDEXNASDAQ:.IXIC) 2,381.05 -101.47 (-4.09%)


Hey, the Dow's tucked in nicely under 11,000 again -- does this roll back about a decade of financial gains or what? Netscape and Alta Vista, anyone?


x D


Right now the markets and banks are competing with *mattresses*, and the mattresses don't even have an advertising campaign...!


x D

x D

x D

[ckaihatsu]

The crisis of the world’s stock exchanges and financial markets is increasingly spiralling out of control. Governments are being driven by developments which they are unable to influence.

On Tuesday, Angela Merkel and Nicolas Sarkozy, the leaders of the fourth- and sixth-largest economies in the world, met at an emergency summit with the aim of calming the markets. Two days later the stock markets responded with the biggest fall in three years.

http://wsws.org/articles/2011/aug2011/pers-a20.shtml


Time to head for your escape pods now while those remaining invent a new mythology and/or crane your heads down to kiss your asses goodbye...!


= D

[Jimmy Haddow (SPS)]

World economy
A new phase of the great recession

www.socialistworld.net, 25/08/2011


Capitalist strategists are filled with gloom at the prospect of a new economic downturn.

Lynn Walsh, editor of Socialism Today, magazine of the Socialist Party (CWI England & Wales)


Fear of recession in the US, its credit rating downgrade and political dysfunction, not to mention the ongoing eurozone crisis, Japanese stagnation and slowdown in China, have all led to convulsions on world stock markets. LYNN WALSH reports.

THE WORLD ECONOMY appears to be sliding into a ‘double-dip’ recession or, more accurately, a continuation of the ‘great recession’ of 2008-09, following a feeble ‘recovery’ in 2010. The advanced capitalist countries are most severely affected, but the brightly burning furnaces of the semi-developed giants of China, India and Brazil (so-called ‘emerging markets’) are beginning to flicker. Until recently, signs of a slowdown which appeared in the second quarter of 2011 were regarded by many capitalist commentators as merely a ‘soft patch’. But the outlook changed dramatically with the convulsions in global stock exchanges during the first three weeks of August.

Trillions of dollars were wiped off the value of shares, with bank shares being especially hit. This is in spite of the high profits garnered by big business in the last period, and their huge cash reserves. The volatility and sharp decline – not at this stage a crash – reflect fear of an economic downturn and a collapse of profits in the future. Huge amounts of money have been taken out of company shares and transferred to so-called ‘safe havens’. In the first three weeks of August, $42 billion was taken out of equity funds. Financial institutions and big investors have moved from shares to government bonds (notably the US and Japan), to gold (pushed up to almost $1,900 an ounce), and cash deposits in Switzerland (Swiss banks are now charging fees for deposits, effectively a negative interest rate!).

The stock exchange volatility was triggered by a series of events, all interconnected and symptomatic of an underlying slowdown in the global economy. One financial analyst described the situation as “an imperfect storm of downgrades, rumours, lacklustre macroeconomic data and the ongoing eurozone debt crisis [which] transformed a retreat by investors into something approaching a stampede”. (Financial Times, 13 August) Investors fled from risk and sought ‘safe havens’.

The confidence of investors internationally was shaken by the struggle between Barack Obama and the US Congress over raising the country’s debt limit and the subsequent downgrading by S&P of the US government’s credit status. The battle over the $14.5 trillion national debt highlighted the dysfunctional character of the US political process. A minority of Tea Party Republicans appeared ready to plunge the country into default rather than accept even very limited tax increases on the wealthy to help reduce the deficit. While many commentators regarded a US default as ‘inconceivable’, others were not so sure.

In downgrading the US debt status from AAA to AA+, the rating agency S&P referred not only to the absolute level of debt but the dysfunctional process. “The effectiveness, stability, and predictability of American policy-making and political institutions have weakened at a time of ongoing fiscal and economic challenges”, S&P wrote in its downgrade report. The rating agency Fitch later confirmed the US’s AAA rating. In any case, when shares plunged funds poured into US Treasury bonds, despite S&P’s downgrade. The US is still seen as a safe haven, even when T-bond yields are reduced to record lows. However, the episode has clearly left its mark: “Once unthinkable things have happened, such as the US losing its AAA rating”, commented an analyst at Barclay’s Capital. “Investors are literally feeling the earth shifting under their feet; you just don’t know what else you thought of as rock solid might turn out to be untrue”. (Reuters, 15 August)

Temporary fixes
BY EARLY AUGUST it was clear that the 21 July deal agreed by eurozone leaders had far from resolved the eurozone crisis. Renewed fears of defaults in eurozone government bonds were also leading to doubts about banks believed to be holding large quantities of sovereign debt. The situation was intensified by a statement from José Manuel Barroso, head of the European Commission, who said there was “a growing concern among investors about the systemic capacity of the area to respond to the evolving crisis”. This statement, in itself, intensified the turmoil on bond markets.

It had been agreed that Greece should be given another loan of €109 billion. However, this, as with other sections of the deal, is subject to approval by the national governments or parliaments of the 17 eurozone members. There are growing doubts as to whether even the German parliament, the Bundestag, will ratify the agreement. Moreover, Finland has subsequently demanded that Greece provides collateral (security) in the form of certain assets (not so far specified publicly) to guarantee their share of the new loan. This opens up the possibility of other eurozone governments demanding similar collateral, which could make the loan financially unviable or politically unacceptable for cash-strapped Greece.

The summit also agreed to extend the powers of intervention of the EFSF (European Financial Stability Facility), but did not raise the very modest €440 billion funds available. Again, any real extension of EFSF powers depends on the approval of national parliaments.

This situation led to renewed, intensive speculation against the bonds of some eurozone governments and also the shares of banks holding euro bonds. This was not so much directed, at this stage, against the bonds of Greece, Portugal and Ireland because the European Central Bank had (somewhat reluctantly) already been intervening to buy their bonds, thus sustaining their prices.

Speculators, however, began to bet on a fall in the prices of the sovereign bonds of Italy, Spain and later France. This speculation began to drive up the borrowing costs of these countries. It also brought a sharp fall in the share prices of major banks. Notably, there was an especially sharp fall in shares of the French bank, Société Générale, following rumours (in the Daily Mail) that it was in trouble.

A major crisis in eurozone sovereign debt/banking was averted by a u-turn in ECB policy. Under pressure from Germany and France, the ECB agreed to start buying the bonds of Spain, Italy and France to sustain their price and ward off speculators. This has temporarily stabilised the position. But it is far from clear how much longer the ECB will continue this intervention. Some members of the ECB board are openly opposed to this policy, as is the Bundesbank. Once again, there is a temporary fix to the ongoing eurozone crisis, not a resolution.

In recent weeks there have also been renewed fears of a new round of banking crisis. Since 2008 some banks have reduced their debts and increased their capital reserves. Others, however, are still heavily weighed down by bad debts and may not have sufficient reserves to withstand another major downturn. But the position of different banks is far from transparent. This has resulted in a growing reluctance of banks to lend to one another through interbank money markets. News that one unnamed European bank had borrowed 500 million US dollars from the ECB sparked rumours that a major bank was in trouble and had been refused funding by US banks. As a result of this and other incidents, banks have increasingly been depositing their spare cash with central banks, even though this pays lower interest rates than the commercial money-market funds. While not yet as severe as in 2008, this trend carries the threat of a new credit squeeze like that of 2008, with banks being reluctant to lend to any customers perceived as risky.

Above all, however, it was the accumulating reports of a slowdown in the major capitalist economies that triggered the stock exchange falls. In the US, GDP growth fell to 0.8% (annualised) compared to 3% last year. Around 24 million workers are looking for full-time jobs. Moreover, a recent survey of manufacturing in Pennsylvania and New Jersey predicts a sharp decline in coming months.

In Japan, growth has declined for the third consecutive quarter, falling 0.3% in the second quarter of 2011. The rising value of the yen against the US dollar, propelled by the influx of cash in search of a safe haven, will make Japan’s exports more expensive, further cutting across growth. In Britain, the economy is stagnant, depressed by the austerity measures of the Con-Dem government. The economies of the two largest eurozone countries, Germany and France, are also stagnant. Even German growth, previously the most dynamic, has ground to a halt. This is partly the result of weak domestic demand (with a severe squeeze on wage levels in recent years) and, most significantly, a decline in exports to China (down 12%). Overall eurozone industrial output for May and June, moreover, declined by 0.7%. In Greece, as a result of savage austerity measures, the economy is likely to decline by 5% this year. The outlook is bleak and the slide in share prices reinforces the gloom. “Market crashes stoke a negative spiral”. (Financial Times editorial, 20 August)

A new credit squeeze?
THE NEW DOWNTURN is a prolongation of the 2008-09 recession, but a new phase of the crisis with different features. This time, it is not the banks and shadow banking network that have precipitated a broader economic crisis, but an economic slowdown which, together with the sovereign debt crisis, has precipitated a new phase of banking crisis. Although the position of most banks does not appear to be as bad as in 2008, there is the distinct possibility of a new credit squeeze as bank lending dries up. Some banks themselves would be hit by such a squeeze, and further bank failures certainly cannot be ruled out.

From the end of 2009 until early 2011 there was a feeble, uneven recovery. It depended on a number of factors. There was short-term fiscal stimulus, with increased government spending in the US, Britain, Japan, and core European countries. There was also an extremely loose money policy carried out by the major central banks in the US, Japan and Europe. This has meant near zero interest rates and, in one form or another, quantitative easing – the pumping of additional credit into the economy on the basis of ‘creating’ (ie printing, in old fashioned terms) money. The world economy was also sustained by the continued high growth rates in major developing economies, notably China, India and Brazil (which benefitted from additional investment derived from quantitative easing and also from the huge stimulus package of the Chinese regime).

However, massive problems remain, particularly the huge burden of state and private debt. State budget deficits and accumulated national debt have soared, partly due to bank bailouts and fiscal stimulus, but mainly due to low or negative growth, which slashed tax revenues and increased spending on unemployment benefits, etc. Household debt also remains a huge burden, depressing consumer spending, the main component of GDP in most advanced capitalist countries. Some companies, particularly in commercial property, have big debts (and some may well default in the coming months). On the other hand, many big corporations are sitting on huge piles of cash: they are not interested in investing this capital in new plant and machinery because it would not be profitable given existing levels of money-backed demand. Many have taken advantage of the recent fall in share prices to buy back their own shares, thus boosting their share prices while handing a bonus to their shareholders.

Given generally weak domestic demand, export growth has been seen as an important way out of the recession. However, there is intense competition for limited markets. In the case of the eurozone countries, they do not have the possibility of devaluing their currency in order to cheapen their exports and gain market share. Germany did manage previously to boost its exports (mainly on the basis of the quality of its manufactured goods), but has recently suffered a fall in exports as a result of the downturn in Japan and a slowing of manufacturing in China and elsewhere.

Bitter policy debates
THE CAPITALIST CLASS internationally faces not only an economic crisis but a political crisis of economic policy. A whole range of policies has been tried – to no avail, giving way to renewed recession. Bank bailouts in 2008-09 and stimulus packages prevented a catastrophic collapse of the world economy on the lines of 1929-33. But the solvency of some banks is now threatened by the sovereign debt crisis. Stimulus packages in the US and Europe have run their course. Priority is now being given to severe austerity measures in order to reduce deficits and accumulated debt. This is clearly having the effect of depressing growth, which is likely to lead to even higher deficits in the future.

Deficit reduction, however, has been the dominant ideology of big business (‘financial markets’) and the policy adopted by most political leaders (including those of former social-democratic parties). But even some bourgeois leaders and heads of financial institutions have begun to change their tune. For instance, the new head of the International Monetary Fund, Christine Lagarde, recently called for some countries (unspecified, but no doubt meaning Germany, Japan, the US and possibly Britain) to introduce short-term fiscal stimulus while preserving their commitment to medium-term fiscal austerity (a tricky balancing act!). (Don’t Let Fiscal Brakes Stall Global Recovery, Financial Times, 15 August) There is no indication at the moment of any major government adopting such a course, but in the face of an even deeper downturn in the world economy capitalist leaders will undoubtedly be forced to change direction in order to avoid economic collapse. The recent public-sector strikes in Britain are, in their different ways, a foretaste of the social upheavals to come. In this new phase of recession, which is likely to be protracted, the working class will be more prepared to struggle against austerity measures than in 2008-09, when the sharp downturn came as a sudden shock.

Bitter debates are also taking place in relation to monetary policy. While political leaders have been restrained by pressure from big business from adopting stimulus measures, the central banks have, to one degree or another, adopted measures to stimulate growth. For instance, both the Federal Reserve in the US and the Bank of England have reduced interest rates to near zero and adopted so-called quantitative easing programmes. The pumping in of credit into the economy has undoubtedly prevented the collapse of many banks and corporations, though it has had a limited effect in stimulating growth. At the same time, as critics point out, a large slice of the credit was diverted to speculative investments in ‘emerging markets’.

Quantitative easing, however, has been bitterly attacked by some sections of big business and ultra-free-market politicians. In the US, for instance, some members of the Federal Reserve board are strongly opposed to quantitative easing. Recently, Rick Perry, a contender for the Republican presidential nomination, denounced Ben Bernanke as a traitor for printing money. Similarly, in the eurozone, there is strong opposition to the ECB’s policy of buying government bonds in order to support their price levels. Three members of the ECB board (including the representative of Germany) and also the Bundesbank oppose this policy (even though the ECB has attracted deposits from banks that cancel out the value of the bond purchases).

Critics of quantitative easing argue that it is inevitably inflationary. However, much of the extra liquidity is actually hoarded by banks and financial institutions and, given the generally deflationary trends in the major economies, is not at this stage inflationary, though it certainly has the potential to cause inflation in the future. In reality, the ‘inflation hawks’ are like generals fighting past wars. In this period, the main threat to capitalism globally comes from deflation, the stagnation of the economy, the fall in prices, and the increase in the burden of debt. More and more, commentators are referring to the ‘Japanisation’ of the world economy, a reference to the 17-year stagnation of Japanese capitalism.

Keynesian-type stimulus packages, particularly if they involved infrastructure projects which create employment and boost unemployment benefits, would mitigate the downturn. Sections of big business that previously denounced Keynesianism as unredeemed evil are now beginning to call for such measures. Even the Financial Times, previously a pillar of neo-liberal doctrine, says that “for those with room for fiscal manoeuvre, there is a case for a more relaxed approach to economic belt-tightening”. (Ghost of Keynes Haunts Eurozone, 16 August)

Keynesian measures, however, would only be a short-term fix (as even John Maynard Keynes himself recognised). They would inevitably increase the indebtedness of states, and such debt could only be paid off on the basis of sustained growth. However, under capitalism sustained growth depends on sustained investment, which will only take place if the big corporations and capitalist investors believe that they will make adequate profits from their investments. In this period, capitalism cannot secure the combination of high investment levels and sustained productivity growth that would be needed to combine rapid growth, good wages, high social spending – and big profits. Ultimately, that proved to be beyond capitalism even during the ‘golden age’ (1945-73) of the post-war upswing. Today, as recent events show, we are facing the ‘bleak age’ of the crisis-ridden system.

[Rusty Shackleford]

so it seems were set for a few days of gains in the markets even though things still look shit everywhere else.

I think the next big shock is going to come from Europe for sure. Sarkozy's austerity & Merkels actions.

[ckaihatsu]

With growth rates (GDP) well under 1% across-the-board I'd have to say that the pulse at this point is *non-existent*.

Can we get an economics medical professional in here to call the time of death -- ???

Also, we need *yet another* remake of 'The Twilight Zone', for cultural reasons.

[Welshy]

It's been announced that the GDP growth for this past spring was 1% instead of the previous figure of 1.3%.

[S.Artesian]

With growth rates (GDP) well under 1% across-the-board I'd have to say that the pulse at this point is *non-existent*.

Can we get an economics medical professional in here to call the time of death -- ???

Also, we need *yet another* remake of 'The Twilight Zone', for cultural reasons.


Reports of the death of capitalism are vastly over-stated. Capitalism does not die, it must be killed.

"QE" didn't work, and won't work, because this is not a liquidity crisis, but a solvency crisis. And the solvency crisis is based on declining profitability.

[Kiev Communard]

There have been times when growth rates were negative for consequent years, yet capitalism survived. The old social-democratic dogma of "natural crash" of capitalism which would somehow happen by itself must be thoroughly trashed if anything resembling a decent revolutionary socialist movement may be rebuilt.

[Die Neue Zeit]

There have been times when growth rates were negative for consequent years, yet capitalism survived. The old social-democratic dogma of "natural crash" of capitalism which would somehow happen by itself must be thoroughly trashed if anything resembling a decent revolutionary socialist movement may be rebuilt.

I thought "natural crash" belonged to "Vulgar Marxism" and not social democracy. :confused:

I mean, Marx's Capital was written within the context of the Long Depression, while Bernstein's Evolutionary Socialism was developed during the emergence from that Long Depression.

[S.Artesian]

I thought "natural crash" belonged to "Vulgar Marxism" and not social democracy. :confused:

I mean, Marx's Capital was written within the context of the Long Depression, while Bernstein's Evolutionary Socialism was developed during the emergence from that Long Depression.

What? Volume 1 appeared in final form in 1867. The Economic Manuscripts were written between 1857-1864. Vols 2 & 3 were "completed"-- as draft manuscripts before 1870. So, no Capital was not written in the context of the long depression, which didn't begin until 1873.

Moreover, it wasn't a long "depression" as rates of growth continued to be positive. What it was was a long deflation, beginning in 1873. Prices dropped pretty consistently, but overall accumulation continued, reproduction expanded.

One more example of your self-aggrandizement at work. And your chronic disregard for anything even resembling historical accuracy.

[ckaihatsu]

Capitalism does not die, it must be killed.


Agreed.





It's been announced that the GDP growth for this past spring was 1% instead of the previous figure of 1.3%.





Reports of the death of capitalism are vastly over-stated.


Well, from a scientific, "medical" point of view it would be *dying* if it wasn't at least growing in accordance with the rate of growth for the world's population.





Economic growth stalls amidst debt crisis, austerity

By Andre Damon
26 August 2011

A new batch of economic figures released this week confirms a renewed economic downturn, amidst an intensified assault on jobs and living conditions internationally.

The Organization for Economic Cooperation and Development (OECD) said the gross domestic product of its member countries grew by only 0.2 percent in the second quarter of this year, dropping from 0.3 percent in the first quarter.

Growth has slowed for four consecutive quarters, hitting the lowest level in two years.

The OECD’s 34 members include the UK, Russia, Japan, Canada, the United States and most countries in the Eurozone. Most of the member nations separately announced their growth figures earlier this month. German economic growth all but collapsed, expanding only 0.1 percent in the second quarter, compared to 1.3 percent in the first.

The Japanese economy shrank 0.3 percent, after contracting .9 percent in the first quarter. The French economy stopped growing completely, after an expansion of 0.9 percent. The United Kingdom grew just 0.2 percent, after expanding 0.5 percent in the first quarter.

[...]

http://wsws.org/articles/2011/aug2011/econ-a26.shtml








Human population growth rate

Globally, the growth rate of the human population has been declining since peaking in 1962 and 1963 at 2.20% per annum. In 2009, the estimated annual growth rate was 1.1%.[3] The CIA World Factbook gives the world annual birthrate, mortality rate, and growth rate as 1.915%, 0.812%, and 1.092% respectively[4] The last one hundred years have seen a rapid increase in population due to medical advances and massive increase in agricultural productivity[5] made possible by the Green Revolution.[6][7][8]




Each region of the globe has seen great reductions in growth rate in recent decades, though growth rates remain above 2% in some countries of the Middle East and Sub-Saharan Africa, and also in South Asia, Southeast Asia, and Latin America.[10]

http://en.wikipedia.org/wiki/Population_growth





"QE" didn't work, and won't work, because this is not a liquidity crisis, but a solvency crisis. And the solvency crisis is based on declining profitability.


Agreed, and this solvency / valuation crisis means that there is a lack of sufficient velocity in the economy to make the appropriate connections that should be made between outstanding supply, as of labor, to meet the (human) demand for such products and services based on that labor. If it *weren't* for the artificial liquidity -- "quantitative easing" -- to temporarily mitigate the burgeoning financial risk, the implosion would be even faster and bigger.

A side-effect of providing temporary, state-based measures is that it introduces a "third-party" political-authoritarian influence into the economy -- normally I wouldn't be making such a "free-market" type of statement, except that I'm doing it here so that I can point out that such an influence then begs the question overall of what a third-party government role *should* be, if any.

From a *revolutionary* point of view it can be said that such government measures are both a sign of desperation on the part of the bourgeoisie over their own supposedly self-maintaining economic system, *and* that such government measures are entirely *supply-sided*, artifically maintaining a certain pricing structure for the sake of a show of political legitimacy.

Irrespective of these measures the increasing process of deflation continues, meaning that commodities become privately over-valued, making further economic transactions increasingly difficult -- a seeming paradox in light of the empirical reality of hyper-productivity and over-production.

The *political* aspect that results from economic over-valuation is an increasing *non-legitimacy* of that economics, due to that skewing of the valuations -- a solvency crisis, as you've pointed out, since it becomes nearly impossible to arrive at accurate valuation figures for *anything* if there's insufficient momentum in the economy by which to make valuations (comparisons) through healthy transactions. The very *currency*, then, suffers an existential crisis since it's nearly impossible to determine what 'meaning' it has without any accurate method available for valuating it.

The capitalist system *should* be called 'dead' at some point because the societal knock-on effect of its existential crisis is a diminishing possible individualism that results as a consequence of the "forced" politicization of economic activity itself, since the capitalist economy is no longer self-sustaining in any sense of the term, *and* is in a slumping atmosphere.

This "forced" politicization of economic activity is *not* the kind we *want*, because it's not a societal-*progressive* kind of collectivization, as through a liberated labor's control of the means of mass industrial production.

[Jimmy Haddow (SPS)]

http://www.youtube.com/watch?v=S1hah92U_8A&feature=youtu.be

Bring the biggest companies into public ownership -- Hannah Sell from the Socialist Party/CWI

[Rafiq]

Capitalism does not die, it must be killed.



I disagree..

Capitalism will die, but there is a chance it could be re-formed again.

[S.Artesian]

I disagree..

Capitalism will die, but there is a chance it could be re-formed again.


Hasn't died yet. Reproduces itself anew in what others call its "decay." I see nothing that indicates it will simply disappear on its own; stop functioning; lose social power without the collective action of the working class to abolish it.

[Rafiq]

Hasn't died yet. Reproduces itself anew in what others call its "decay." I see nothing that indicates it will simply disappear on its own; stop functioning; lose social power without the collective action of the working class to abolish it.

It almost died in the 1930's, but war time Keynesianism can't work anymore.

It will die someday, but it could be revived or turn into something worse.

[S.Artesian]

It almost died in the 1930's, but war time Keynesianism can't work anymore.

It will die someday, but it could be revived or turn into something worse.

Close doesn't count, except with massive ordnance air bursts.

"Almost" doesn't count in anything: "I almost won the lottery." "I almost had a date with Kate Moss." "There almost was a revolution." Meaning: lost, didn't, and wasn't.

[Rafiq]

It would have, if the Keynesian war time system didn't emerge.

And that can't work anymore, can it.

Communism has never existed. So?

[S.Artesian]

Keynes didn't resolve anything. The war did. And war is still an option for the bourgeoisie. The war reconstituted capitalism in the image of its maker then, and war will reconstitute capitalism in the future.

Right, communism has never existed. Another example of "close not counting."

[ckaihatsu]

Keynes didn't resolve anything. The war did. And war is still an option for the bourgeoisie. The war reconstituted capitalism in the image of its maker then, and war will reconstitute capitalism in the future.

Right, communism has never existed. Another example of "close not counting."





The capitalist system *should* be called 'dead' at some point because the societal knock-on effect of its existential crisis is a diminishing possible individualism that results as a consequence of the "forced" politicization of economic activity itself, since the capitalist economy is no longer self-sustaining in any sense of the term, *and* is in a slumping atmosphere.

This "forced" politicization of economic activity is *not* the kind we *want*, because it's not a societal-*progressive* kind of collectivization, as through a liberated labor's control of the means of mass industrial production.








Capitalism defeated feudal tyranny, because it unleashed humankind's creative potential. It allowed people to rise above their station in society. Unfortunately, this right becomes for most people more and more theoretical as the economic inequality grows - until there's some kind of social catastrophe, war, etc. And the cycle begins anew.

Communism can defeat capitalism when it offers stability without limiting the creative potential of humankind - it has to offer *each individual* the equal opportunity to use the collective tools and resources of mankind to shape the world according to their individual preferences. "A voluntary association of independent producers".

This is why I think that communist revolution is not the similar to a bourgeois revolution. Bourgeois revolution defeats the rigidity of feudal society, makes it evolve. Communist revolution eliminates the volatility of capitalist society (boom-bust cycle), enabling stable progress of society and its each individual member.


We can see a system's stagnation reflected in the cultural realm -- if there's too much of a facile reaching down into the overused, tired themes of historical nostalgia, yesteryear small-town quaintness, nature romanticism, and humanity's salvation through fresh-faced youth, then you *know* that present-day society is *fucked*.

Objectively speaking, humanity can certainly *survive* with little progress, but that's not saying much for humanity as a *society*, independent from and more interesting than animal populations.

Without a socially objective, broad-based empowerment and impetus for a renewed individualism, our human society and civilization will just revert to non-progressive and even regressive "bad habits", for the sake of some modicum of societal cohesion.

[Rusty Shackleford]

So, European banks and governments are scrambling to set up defenses against a possible Greek default which looks like its pretty much inevitable now.

US stocks were down 3% on Friday which has been pretty much a weekly phenomenon since the beginning of August with that joke of a debt ceiling deal and 'debate'.

Monday is going to be interesting. I really wonder every week day, "is tomorrow going to be another major sell-off?" Apparently, the western markets have basically become bear markets as some articles were saying.

[S.Artesian]

And September is known as the "cruelest month" on Wall Street. Here's to cruelty.

[Psy]

Keynes didn't resolve anything. The war did. And war is still an option for the bourgeoisie. The war reconstituted capitalism in the image of its maker then, and war will reconstitute capitalism in the future.

Right, communism has never existed. Another example of "close not counting."
Keynesian economists point to the long boom and claim responsibility for two decades of uninterrupted growth while the aftermath of WWI only gave half a decade of uninterrupted growth, plus there was only stagnation in the 1970's not a slump.

And they have a point, where would the crisis be without the tons of subsidies from state consumption the world markets constantly got before the stimulus?

[S.Artesian]

Keynesian economists point to the long boom and claim responsibility for two decades of uninterrupted growth while the aftermath of WWI only gave half a decade of uninterrupted growth, plus there was only stagnation in the 1970's not a slump.

And they have a point, where would the crisis be without the tons of subsidies from state consumption the world markets constantly got before the stimulus?

Except it wasn't 2 decades of uninterrupted growth. There were at least 2 recessions in the US post WW2-1969 period.

[Psy]

Except it wasn't 2 decades of uninterrupted growth. There were at least 2 recessions in the US post WW2-1969 period.
Yet even when factoring them in the average growth rate during the long boom was 4.8% per year (for the entire Earth including Warsaw nations) thus economists simply state mathematically those recessions didn't exist as they were not even a speed bump to the large growth rate.