The crisis of worldwide, capitalist business is entering its third year. It began in the summer of 2007 as a disruption of a specialized segment of the U.S. financial sector, when the devaluation of securities in which home mortgage and other debt had been used as speculative business items led to the insolvency of the special-purpose vehicles constructed for the purpose of creating and marketing these items. The crisis consequently spread further and further.
One thing is clear to states as a result of the destruction of all sorts of capital, on whose success they and “we all” live: the services of financial institutions terminated through mismanagement are one, if not the, pillar of the common good. The economic capacity of the financial sector is to be maintained or, as the case may be, restored; the banks are to be enabled to use their financial power once gain. Their rescue is being carried out by the authorities providing the funds that the banks are authorized, and usually also able, to generate.
Now that the world’s biggest banks are collapsing and assets valued at many billions are vanishing into thin air, politicians, economic experts, and journalists worry about the effects of these collapses on such a thing as the “real economy.” This is noteworthy, for until just recently a difference between stock market prices and bank yields on the one hand, and the wealth that comes out of production and sale of useful things on the other hand, was entirely unknown.
One is supposed to imagine it roughly the following way: the crisis drags on because business simply hasn’t got going again. That’s because the banks, “lifeline of our economy,” aren’t supplying business people with the loans they need. They don’t do this because they are sitting on “lots of toxic assets,” which is why there is simply ”no more trust” between them nor in their dealings with the rest of the business world. So it’s clear that the state absolutely has to help them trust again, thereby helping all of us out of the crisis.
In the last week of September, the U.S. government announces its intention not to let another big bank fail following the collapse of Lehman Brothers. Instead, the treasury secretary intends to buy the banks’ worthless securities for 700 billion dollars, and so supply them with fresh funds. The rescue package triggers off fierce controversies in the U.S.
[translated from junge Welt 29.09.2008]
The Norwegian parliament, which awards the world’s most important peace prize in memory of one of the biggest weapons manufacturers and war profiteers, has made a worthy choice, like always. Since a warlord who had just finished his job and made peace simply couldn’t be found, a different sort of benefactor of mankind has been honored: Mohammed Junus from Bangladesh, banker.
Without a free market economy, a category five storm certainly would not have been prevented, but only with one could death and destruction on the south coast of the United States have come to such a magnitude. Actually, the responsible government agencies had rather early information that a hurricane of force five was moving on the Louisiana coast. And how did they react to this?
If one were to believe the dogma of the apostles who pronounce that economic reason alone rules in, and only in, a market economy; and if one were to believe their analysis of recent events in the stock market; then it is evident that for some time now, sheer greed for money has dominated one of the most important, supposedly forward-looking sections of the market economy; and led to a horrendous overreaction in the wake of all sorts of fraudulent insider schemes; in other words, to an extreme overvaluation of so-called growth stocks; which has now been punished by an “astronomical elimin
The Japanese national economy is sliding into recession. It is shrinking instead of growing.
The facts of the case are rather banal, since recession is a periodically recurring "phenomenon" of a capitalistic economy. Capitalistic entrepreneurs, with their investment strategies, extend social production beyond the extent to which their commodity can be profitably sold, attempting to win the competition for revenue and profits. Investment is financed by credit in expectation of future returns. At some point, sales slump and traders and producers run out of cash. Capital advanced no longer yields a profit, credit granted and taken is no longer converted into capital, and debtors go bust, hurting creditors as well. By and large, financial difficulties increasingly occur among firms as well as between firms and banks, raising demand for credit, which is decreasingly met for exactly the same reason, so that difficulties to make payments become general. Production plants, which have been flourishing and expanding up to now, are closed down and the employees depending on them are laid off, because profit can no longer be realized.