The US Economy is dying

[Comrade B]

http://finance.yahoo.com/echarts?s=^DJI#symbol=^DJI;range=1d

I felt this was important enough to just put up. This is the worst day for the US economy since the day of the world trade center attacks

[Hyacinth]

This recession, which we haven't fully entered yet, is expected, even by the media of the ruling class, to be the worst one since WWII; but it is too early to mark the end of capitalism or even of the US economy yet. What we have seen is progressively worse economic crises since WWII, and if the trend continued we can expect to see future recession to be even worse than this coming one. That being said, capitalism has proven quite resilient in the past, and has been able to adapt, the question remains whether it will be able to do so this time. As well, we socialists cannot sit back and be passive, waiting for capitalism to collapse of its own accord; we need to be offering both criticisms of the present system (which we're certainly not in shortage of), *and*, more important, alternatives for what to replace it with. And here I mean not some vague talk of socialism or the public ownership of the means of production, worker's control, etc. but rather concrete economic policies which we would put forth as alternatives to capitalism.

Socialist economics (i.e. planned economics) was in many ways discredited in the eyes of many due to the collapse of the USSR (despite the USSR being state-capitalist, but I don't wish to get into a debate here on what the USSR was or wasn't, though I'm sure we can all agree that we do not wish to replicate the Soviet economy, which isn't to say that the Soviet experience didn't each us anything useful about planning). Because of this many believe that there are no alternatives to market economies. And socialists, with few exceptions, have been largely silent on the economic question. For the left to be a real force politically it must be seen as offering viable solutions and models of a future society, and while in Marx's time it may have been excusable to leave such questions unanswered, or vaguely answered, today we need a more concrete program, if for no other reason than to show that a planned economy *will* work, and that it will work *better* than market economies.

[Die Neue Zeit]

^^^ And while #2 (alternatives) is important, I'd sandwich this #3 in between #1 and #2 in terms of importance: a dynamic minimum program that isn't stuck in "broad economism" (the OP should feel free to read my Theory thread on "non-reformist reforms (http://www.revleft.com/vb/non-reformist-reforms-t86845/index.html)").



Back on topic, more bad things will come, since the US is too mired not just in government debt (resulting from deficits as well as underfunding of Social Security, Medicare, and so on), but business ("derivatives") and consumer debt, as well...

[Tower of Bebel]

It is hard to tell what the future will bring us. There will be crises, both on an economic, political and social scale. The problem for us socialists is the fact that we don't have the political organizations yet to oppose the bourgeoisie and pose an alternative.

There is no strong workers' movement. No workers' movement means no end to capitalism. I do believe that the workers will revolt, but the fact remains that a working class in 1918 - much more organized than today's working class - also failed to put an end to capitalism.

[R_P_A_S]

Why is this happening? can anyone offer me an explanation? or some links? I'd like to further understand this.

[Tower of Bebel]

Why is this happening? can anyone offer me an explanation? or some links? I'd like to further understand this.

Since the late 60's capitalism is struck by an crisis of overproduction. Commodities don't find a market that easily anymore. This is the beginning of neoliberalism as a system which cuts public spending and wages in order to push profits higher, as the production of commodities doesn't suffice to keep profits growing.
The overthrow of the Soviet Union and China made it possible for capital to exploit many new markets of labour an produce some more commodities. But this small boost has ended.
Capitalism falls back on profits form financial transactions, insecure loans and cuts in public spending and wages. Capitalism also generates more competition and war (Iraq, Iran, Georgia, the Ukrain, Africa) to keep the engine running. Bu finally the bubble bursts. Making capital out of capital does not suffice. Debts are made by banks who granted too many loans to workers who were unable to pay them off. Debts are also used to profit from, but profit from the lack of capital also isn't stable. This situation is reflected in the billions of losses and the closure of banks and companies. Because suddenly investors and other capitalists found out that billions of dollars weren't real. Billions of dollars were based on loans which were never payed off, billions were based on commodities never sold on the markets. The financial sector finally suffers from the same crisis as the crisis in the industrial sector (where commodities are produced). I recently read this is also some sort of an overproduction crisis of capital because too much capital is saved up by investors who don't want to invest because profits are insecure.

[Comrade Looter]

This is what happens when you un-regulate corporations and allow big businesses to destroy small businesses.

[trivas7]

Why is this happening? can anyone offer me an explanation? or some links? I'd like to further understand this.
David Harvey's A Brief History of Neo-Liberablism (http://www.amazon.com/Brief-History-Neoliberalism-David-Harvey/dp/0199283273/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1221578511&sr=8-1) documents how Neoliberalism--the doctrine that market exchange is an ethic in itself, capable of acting as a guide for all human action--has become dominant in both thought and practice throughout much of the world since 1970 and has led to the current crisis of capitalism.

[RedDawn]

The US Economy is dying (http://www.revleft.com/vb/us-economy-dying-p1241693/index.html#post1241693)

Why is this topic in Theory? Shouldn't it be in Fact? :tt2:


This is what happens when you un-regulate corporations and allow big businesses to destroy small businesses.

"Comrade Looter" STFU with your petit-bourgeois, conspiracy nut, libertarian bullshit. You deserve to go to Opposing Ideologies. Let me guess, you're voting for Ron Paul, right?

Anyway, RPAS, heres a good article explaining the current state of the mortgage crisis:

http://www.socialistparty.org.uk/issue/547/6374

And here is one from our organization about the mortgage crisis back in May 2007 when it was on the front cover of our magazine:

http://www.socialismtoday.org/109/economy.html

[Comrade Looter]

Fuck Ron Paul.

[R_P_A_S]

Fuck Ron Paul.

LOL.. what did i miss?

AND THANKS TO ALL WHO PROVIDED LINKS AND EXPLANATIONS!

[Rosa Lichtenstein]

Excellent analysis here:

http://leninology.blogspot.com/2008/09/sound-of-raining-bullshit.html

[Tower of Bebel]

Part of the discussion (http://www.revleft.com/vb/capitalist-crisis-can-t89600/index.html)has been moved to learning.

[R_P_A_S]

So guys.. i got a question. I was out of work for nearly 7 weeks. it really sucked.. but this last week I've gotten calls from 4 jobs I applied for. I took 2 jobs and I still get called to do more freelance type work.. So if the economy is so damn bad.. why am i getting so much work?

[MarxSchmarx]

Don't get your hopes up. Although I agree the problem comes down to consumer credit being over-extended (as in that leninology post), I don't see how this really translates into the cataclysm it's being called.

Many loans are souring, yes, and the profit margins aren't quite as high; there might even be a few losses in usury where a profit is supposed to be, well, a sure thing. Credit might be tighter, but that doesn't mean business comes to a grinding halt. And besides there is still the old trickle-down fallback, not to mention global investors scouring the US for a bargain. Most people still have their jobs, and the business loans are still being repaid. Personal and corporate bankruptcies might surge into the millions, but I don't see it affecting more than 10~15% of the population outside of those who rely on pension funds. Even those who rely on pension funds are probably rushing for the safer investments right not to secure them, and the proportion of the pensioners who relied on above-average returns is pretty small anyway.

Long term, I think the US is doomed b/c it can't make anything cheaper or better than the rest of the world with the possible exception of mining, agricultural and food products. But I don't believe that day is upon us yet.

If you think I'm not really directly affected by it, think twice. This is what capitalism does to people, yours trully included. I just don't see this "crisis" as being bad enough for a large enough number of people in the US to really have the majority there dislike capitalism.

[Sendo]

but it will severely lower the quality of life of everyone but the very rich (tax exempt as always!)

[Josef Balin]

Why is this topic in Theory? Shouldn't it be in Fact? :tt2:



"Comrade Looter" STFU with your petit-bourgeois, conspiracy nut, libertarian bullshit. You deserve to go to Opposing Ideologies. Let me guess, you're voting for Ron Paul, right?

Anyway, RPAS, heres a good article explaining the current state of the mortgage crisis:

http://www.socialistparty.org.uk/issue/547/6374

And here is one from our organization about the mortgage crisis back in May 2007 when it was on the front cover of our magazine:

http://www.socialismtoday.org/109/economy.html
LOL, he's complaining of government not getting involved in the private sector and you called him a libertarian! What an idiot.

[Comrade Looter]

Disregard my early statement about Ron Paul, seeing as how he's the only politician laying down the truth about this crisis, and refuses to support John McBush.

[Schrödinger's Cat]

Disregard my early statement about Ron Paul, seeing as how he's the only politician laying down the truth about this crisis, and refuses to support John McBush.

True in some parts (the government had a hand in this mess through regulating and deregulating), but then he turns around and supports a reactionary like Chuck Baldwin. Right-libertarians are fucking crazy.

[MarxSchmarx]

but it will severely lower the quality of life of everyone but the very rich (tax exempt as always!)

Welcome to capitalism - yes, that's just capitalism doing what it does best.

But in all seriousness, I'm not entirely convinced. Inflation at the pump and in grocery stores is doing much more to lower people's standard of living than the shenanigans of high finance. Sure, unemployment leads to crime which we don't want. But for example, tailspinning home prices make homes affordable to more people. Tighter credit can also mean businesses buy things within their means and stay in business longer.

I think it's an open question how many people will lose their jobs over this crisis. The reality is most people's jobs are unrelated to what happened, which doesn't make it any better for those losing their jobs. Insurance claims need to be dealt with, people will still travel home for thanks giving, and food will need to be cooked at restaurants. Frankly it might even raise the quality of life in areas that have been developing unsustainably like Las Vegas.

[peaccenicked]

We ain't seen nothing yet. The financial crisis which we were told would not effect the real economy even by some leftists has truly transformed. The tail is wagging the dog. The dollar is due to be crushed and this bailout can only accelerate it, if it passes on Wednesday. Kucinich says they have not the votes (http://inthesenewtimes.com/2008/09/29/kucinich-says-bailout-doesnt-have-the-votes/). It is not really a matter if but when. Most economists are saying two years of slump conditions, they hold back from saying recession or depression and their statistics have never really had anything to do with the real value of anything. The US is a sinking ship and the cost as always will be dumped on the creators of real value the working class.
To-day we can moan about the lack of class consciousness and organization
but that is not our function. Hell No! Don't mourn organize.

Today the left in the developed countries is too small electorally to make much impact on media manipulated or distorted events. Yet, if we only sit back and only assess how bad things are we will never go forward.

The most important thing we can do is propaganda work and that is about
reaching out, to our immediate communities.
I reckon we have to accumulate small victories be there. Support campaigns
like the National Network to Stop Foreclosures and Evictions (http://inthesenewtimes.com/2008/09/29/bail-out-the-people-not-wall-street-bankers/), we also need something like it in the UK.

[Guerrilla22]

My analysis in a nutshell: Greedy corporations tried to make a buck by preying on ignorant consumers, lack of regualtion allowed it happen, corpoarations got burned and now they want they want the government to bail them out.

[BashTheFash]

I hope the economy dies!

[Lenin's Law]

My analysis in a nutshell: Greedy corporations tried to make a buck by preying on ignorant consumers, lack of regualtion allowed it happen, corpoarations got burned and now they want they want the government to bail them out.

Capitalism cannot be regulated! This is a petit-bourgeois lie used by the social democrats who yearn for a "nice" capitalism. The capitalist market is by its nature anarchic and the only rule it follows is profit.

The ruling class to be sure will use this to further dismantle what's left of the welfare state (they already started this process long before the current crisis) which will undoubtedly lower people's living standards. Obama has already called for "sarcifices" , and by this he means sacrifices from the working class, the rich will carry on much like before.

The crisis is certainly not limited to just insurance companies and banks; the credit crunch has had an effect and will have an increasing negative effect on the entire economy as it will get harder and harder to secure loans and capital that businesses need as the capitalists aren't sure where the so called fictitous capital is that reckless speculators have used to make quick profits from during the housing bubble.

As for futuristic predictions? No one can know for sure but the short-term effect will be an increased class consciousness worldwide and many will start to question a system that so blantantly bails out the millionaries on Wall Street but allows them to lose a job and go bankrupt. How far this goes will depend upon the objective balance of forces and how strong the left organizations are in each respective country.

[Lenin's Law]

So guys.. i got a question. I was out of work for nearly 7 weeks. it really sucked.. but this last week I've gotten calls from 4 jobs I applied for. I took 2 jobs and I still get called to do more freelance type work.. So if the economy is so damn bad.. why am i getting so much work?

The capitalist goal is not for everyone to be unemployed; it's for everyone to be exploited.

True, they do require a certain percentage to be unemployed as a reserve pool of labor but in general the capitalist does not make any money with you sitting at home. If you're not working, they're not making a profit off your labour and if you're not working you're not an active consumer so you're not buying things you're told you need but really don't.

Also saying you have found a job means little; I can apply to all the fast food restaurants in the area and I'm sure I'll have lots of job offers. Wow. And I'm just guessing here but a "freelance job" doesn't sound like a high paying with benefits and paid vacation...sounds like a job that a cappie can make a quick profit out of.

[Psy]

The ruling class to be sure will use this to further dismantle what's left of the welfare state (they already started this process long before the current crisis) which will undoubtedly lower people's living standards. Obama has already called for "sarcifices" , and by this he means sacrifices from the working class, the rich will carry on much like before.

The ruling class can't go on as they did before, bailing out the capitalists will cause inflation that will set the market up for more crises.

[Guerrilla22]

Capitalism cannot be regulated! This is a petit-bourgeois lie used by the social democrats who yearn for a "nice" capitalism. The capitalist market is by its nature anarchic and the only rule it follows is profit.

Yeah actually the global market place is regualted heavily. It can cause disasters, such as this one, which is why isn't a good system and why a "free" market can't actually happen. Since instant socialism isn't an option right now I'll settle for government checks on large businesses to prevent them by law from doing the things that led to this mess. Of course this is just beating around the bush, but we really don't have any other option at the moment.

[spice756]

Since the late 60's capitalism is struck by an crisis of overproduction. Commodities don't find a market that easily anymore. This is the beginning of neoliberalism as a system which cuts public spending and wages in order to push profits higher, as the production of commodities doesn't suffice to keep profits growing.

Why would they do that ? That makes no sense ,if they have overproduction and Commodities don't find a market they should up people their pay to buy it.Lowering people pay will have less people who want Commodities .Do to them having less money.





The overthrow of the Soviet Union and China made it possible for capital to exploit many new markets of labour an produce some more commodities. But this small boost has ended.

It allowed them to set up businesses there to exploit them low pay and long work hours so on.To have cheaper US goods.



Capitalism falls back on profits form financial transactions, insecure loans and cuts in public spending and wages.

That is way of capitalists making money.




Capitalism also generates more competition and war (Iraq, Iran, Georgia, the Ukrain, Africa) to keep the engine running. Bu finally the bubble bursts. Making capital out of capital does not suffice.


You cannot make money out of money.If you invest money and get no money back that is bad .If you spend money on some thing and no money back that is bad.





Debts are made by banks who granted too many loans to workers who were unable to pay them off.


Ya but now the banks have a big debt.






Debts are also used to profit from, but profit from the lack of capital also isn't stable.


You cannot profit from debts.





This situation is reflected in the billions of losses and the closure of banks and companies. Because suddenly investors and other capitalists found out that billions of dollars weren't real.


They would have been real if people paid off the loan on time.






Billions of dollars were based on loans which were never payed off, billions were based on commodities never sold on the markets.



Lack of immigrants.The more immigrants the more they need food,house ,clothing so on that stimulates the economy.


The financial sector finally suffers from the same crisis as the crisis in the industrial sector (where commodities are produced). I recently read this is also some sort of an overproduction crisis of capital because too much capital is saved up by investors who don't want to invest because profits are insecure.

investors do not save money.