Economy

As I write these lines the destinies of Greece are being decided in a
titanic struggle in which the Greek working class is confronting the big
banks and capitalists of all Europe. The EU is subjecting Greece to the
most shameless blackmail. They say: either accept draconian cuts in
your living standards, or else we will refuse to hand over the next
tranche of 12 billion euros.

Workers have been feeling the pinch for
some time, even before the slump of 2008-09. Now they are in for an even worse
time, the most prolonged squeeze on living standards in recent memory.

Everywhere you look there is upheaval and crisis, from Europe to Japan
and to the United States. This reflects the worldwide malaise of
capitalism that is struggling to emerge from the recent slump. This is a
confirmation of Marxist ideas, which explains that capitalism is a
crisis-ridden system.

The world of international finance has been shaken by the
default in Dubai.
Shares have taken a tumble all over the world. Commentators have suggested that
this could be the cause of the recession moving into a double dip, of a further
downturn in the world economy. Mick Brooks looks at the unfolding crisis in the, until last week,  ‘money no object’ world of Dubai.

Why is New Labour hurling yet more of our
money at the banks?  The London ‘Metro’
screams that the latest deal is the “World’s biggest bank bailout.” It’s
costing every household in Britain £2,000, on top of all the money wasted last
time round 

This plan costs nearly £40bn, more than the
£37bn the government pumped in to the banks a year ago. £40bn would build more
than 1,500 schools, but the banks, we are told, are more important than our
kids’ future. Brown boasted last year that he had ‘saved the world.’ Not quite,
it seems. Now the banks are in further financial difficulties and back with
their begging bowls.

In 1929, the New York stock exchange panic began, kickstarting a financial meltdown and opening up a decade of global depression. Only Marxism can explain the real cause of this crisis.

Lord Adair Turner is head of the UK’s Financial
Services Authority, the body in charge of regulating the banks and other
financial institutions. Some weeks ago, he was interviewed
by Prospect magazine, a small mouthpiece of the Blairite wing of New Labour.  In that interview, Lord Turner blurted out a
telling truth about finance capital that its proponents did not want to
hear. The reaction  from
financiers has been apoplectic.

Nearly fifty years ago, Ted Grant wrote a major article called ‘Will there be a slump?’ in which he outlined the underlying reasons for capitalist crisis and why it would keep happening – a controversial statement during the period of the post-war boom. This article from 1960 remains as relevant today as ever, given the world recession which has thrown the economies of the world into chaos.

It makes your blood boil!  The only good news to come out of the UK budget announced by New Labour Chancellor Alastair Darling last week was the slight increase in tax rate that would now be levied on those earning more than £100,000 a year.  The rate was being raised from 40% to 50% to help raise a little more money from those who have benefited most from the credit binge that has now gone bust around the world.But what a barrage of criticism and rage has erupted from the great and good and from the news media on Darling’s action.

The budget figures show starkly how desperate is the position of the British economy, faced with what Darling called the ‘worst global economic turmoil’ in living memory. The amount the economy will shrink has been revised to a record 3.5% fall this year, the biggest drop since the Second World War.

Stock exchanges in Britain and the USA have
been on the slide over the past few days. The reason is not hard to seek. The
FTSE has been spooked by bank shares collapsing. Barclays, for instance, saw
25% of its share price shaved off in one hour last Friday (16.01.09).
This was the day after the bank announced 2,100 job losses.It’s starting to look like the time back in
October when it seemed that banks such as Barclays and the Bank of Scotland
(now HBOS) that had been in existence for hundreds of years would be destroyed
by a share collapse in a matter of hours.

Graham Turner has published The
Credit Crunch.  (The credit crunch by
Graham Turner, published by Pluto Press) Turner is an independent consultant
who worked in the City of London for many years.  What singles out this book is that it claims
to approach the problem from a socialist perspective, or at least it has been
adopted by the left.  Turner has spoken
at many left forums in recent months.

What is Graham Turner’s message?  He outlines his aim in the preface: “the
roots of this crisis must be understood to ensure there is no repeat of the
flawed economic policies that have created the biggest credit bust since the
1930s.  If we understand the causes, the
damage can be mitigated”.