Crisis opening in 2007

What Now for the World Economy?

Bear Stearns

Author: 

AWL EC 14/02/08

Document Of AWL Conference 2008

1. The UK has not had an actual recession since 1990-2. Manufacturing went into recession in 2001, but not the whole economy. People under the age of about 30 generally have no living memory of a recession.

We do not know whether the recession now underway will spread into a full-scale world recession, or how big the effects in Britain of a world recession may be. But there is a serious probability of a serious downturn.

"From a world in which many basic industries and services were run directly by the state - though actually according to the overall interests of the national capitalist class - we have moved to one each Government's role is redefined as making its national economic arena advantageous for the operation of giant multinationals, and especially of international financiers".

The AWL, Labour and the Left: 

Marxist Theory and History: 

How many more bubbles to burst?

Author: 

Violet Martin

When the scandal broke about a single trader running up £4.7 billion in losses for the French bank Société Général, the first response from financiers was shock because they thought Société Général was particularly well-regulated — “the gold standard”, one called it.

Now France’s finance minister says that “internal control procedures didn’t work”.

It is not a problem of Société Général. It is an endemic problem of capitalism, and especially of the highly “financialised” capitalism of the period since 1980.

Endemic problems of capitalism, and especially of the highly “financialised” capitalism of the period since 1980.

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Capitalism is crazy: private profits, social losses

Crisis

Will the stock-market crash of 21 January continue, or ease? We don't know. But what about the monolines?

The monolines? They are a fairly specialised part of the financial sphere. Yet their current crisis could have huge repercussions. That is how capital works. Hiccups in the tricks and speculations of tiny cliques of financiers can wreck the livelihoods of millions.

Hiccups in the tricks and speculations of tiny cliques of financiers may wreck the livelihoods of millions.

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An insurance society for the ruling class

Alistair Darling

An editorial in the Financial Times (21 January) summed up well the Government's new plan for the collapsed bank Northern Rock.

"The plan is this. Northern Rock will issue billions of pounds in new bonds... and repay its debt to the Bank of England. Private investors will [take over the bank]. And to make it work the bonds - all £30 billion or so - will carry a government guarantee...

"The package amounts to a subsidy [from the Government to the Northern Rock shareholders and its putative buyers] and it may be worth billions of pounds...

In post-1980 capitalism, everything is privatised. The market is Heaven. But there is a priest sedulously fleecing the flock to maintain the welfare of the Gods who inhabit this Heaven. Namely, the Government.

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Is capital in a big expansion or a long downturn? Will the current crisis snowball?

Author: 

Martin Thomas

I attended two sessions discussing the current credit crisis at the conference on 9-11 November sponsored by Historical Materialism magazine. The two sessions offered very different views on the crisis, with disappointingly little interaction.

No speaker in either session was confident enough to give a definite yes or no on whether the credit crisis will snowball into a sizeable crisis of trade and production. Robert Brenner, in the second session, ventured a prediction that it will snowball, but made it clear that was only a best guess.

I attended two sessions discussing the current credit crisis at the conference on 9-11 November sponsored by Historical Materialism magazine. The two sessions offered very different views on the crisis, with disappointingly little interaction.

Marxist Theory and History: 

Northern Rock and the case for nationalising the City

The Liberal Democrats are calling on the Government to nationalise the failed bank Northern Rock, and denouncing New Labour from being held back from this course by "ideological preoccupations".

Such are the weird convolutions produced in British politics by the Blair-Brown counter-revolution in the Labour Party. Lib Dem economic spokesperson Vincent Cable, a man solidly on the pale-Thatcherite right wing of the Lib Dems, denounces the Labour Party leadership for having "ideological preoccupations" against public ownership (Guardian, 20 November 2007)!

The Liberal Democrats are calling on the Government to nationalise the failed bank Northern Rock, and denouncing New Labour from being held back from this course by "ideological preoccupations".

Marxist Theory and History: 

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World credit spiral hits nemesis

Author: 

Martin Thomas

“You can expect”, writes US economist Nouriel Roubini, “that the ongoing credit crunch will get much worse in the year ahead and its fallout will spread from the US to Europe and throughout Asia and the globe.

"Trillions of dollars of securitised assets that were sliced and diced in the long food chain of securitisation are now at some risk. The first crisis of financial globalisation and securitisation is only at its beginning stage”.

The credit crisis, its origins in the general mechanics of capital, and its more specific origin in the strategic choices of world capital in the late 1970s and early 1980s.

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An opaque economic crisis

Author: 

Rhodri Evans

Over the last several months, a crisis originating at the lower end of the US mortgage market has become, at least incipiently, a world credit crisis.

The immediate background to the credit crisis is a bubble, since about 2003, in low-security, high-interest mortgage lending in the USA. Corporations have made a buck by lending to house-buyers with poor credit records, at high rates of interest.

They allow for some defaults in payment. But when interest rates go up, and the house-price spiral slows or reverses, the defaults swell.

Over the last several months, a crisis originating at the lower end of the US mortgage market has become, at least incipiently, a world credit crisis.

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Lessons of Northern Rock's collapse?

Author: 

Rhodri Evans

Some questions and answers on the Northern Rock collapse

Why did Northern Rock collapse?

Not directly because people couldn't meet their mortgage payments, but because of the knock-on effects from the US mortgage bubble bursting. Those knock-on effects are as wide-ranging and unpredictable as they are because of the dramatic, historic expansion and restructuring of global financial markets in the last two decades or so.

Some questions and answers on the Northern Rock collapse

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