Economic crisis

Lazy's got a point, I read that Telegraph article and a couple others this weekend and they were talking about the collapse of property markets in Europe citing the example of France's 3% growth.
You've got a point about speculation, though dem, the fact that there is a lot of cash floating around that has to provide a return means that it must go somewhere and gambling on futures will work as long as enough people do it. There was something in the Telegraph about overproduction, particulalry a glut in the sugar market.

I'm not sure what you mean here. Are you saying the papers are interpreting a 3% rise as a crash? This is possible, after all they've universally reported the earnings of major banks in a negative manner despite the fact they've still made bumper profits (some even increased). But there are plenty of reports about the British market, pointing to a nominal drop in the market:

Regardless of this, it's clear investors are spooked about the potential for a crash, if nothing else. Funds don't close their doors for no reason. As far as the debate is concerned, I've linked my sources. Lazy can slag off the newspapers all he wants ... it's not quite the same as showing they're inaccurate. Until he links to some figures to support his point of view, I'm going to treat this as yet another LR derailment and ignore him.

Yes, it's definitely a factor, although in some commodities supply is definitely a constraint. Wheat stocks are at historical lows in the US and copper was has also been a problem recently.

Lazy yu gave innocuous facts to make a point with regard to what Dem had said stop arsing around.

Ok they didn't use the word crash but they are reporting reasonable growth as if it is a bad thing.

I don't really know enough about this to get into it too deeply to be honest.

Hmm,

Failure is always relative but that doesn't mean that we don't have a natural standard to judge things by.

Ten years ago, the Bank of Japan eventually failed to keep economic growth from halting. Various commentators have noted that actual economic collapse in Japan was fended off because Japan still had a huge export economy supporting it.

Today, the US is in a speculative collapse of larger proportions than Japan's bubble. Moreover, there is nothing outside the US which can supply excess demand to support the US economy.

Also, it seems the effects of the crisis are already being felt in a massive of stock foreclosed houses. One can expect a considerably rising unemployment and further increases in energy prices. Given the dependency of other economies on the US, there may be a series of panics through-out the world, each feeding on the other.

Seems like something to keep one's eyes on.

Red

Different in what way jef?

Well, most serious commentators (e.g. IMF) seem to think our housing market is even more maladjusted than the US one.

In general, there is a real danger of something approaching financial armageddon, which is why the bourgeoisie have undertaken enormous levels of intervention to control it. I'm not sure how reliable they are, but I've seen a couple of comments suggesting the Fed has already spent half of its reserves in the various rescues and emergency loans, not counting what it's just guaranteed for JP Morgan's takeover of the Bear Stearns (the world's 9th largest investment bank!). Interest rate cuts are, at best, holding back the flood and if the Fed really is running out of money, they may have to resort to printing more money with all the inflationary dangers that implies.

Of course, a potential crisis is not the same as an actual crisis and we haven't yet seen anything on the scale of the 30s, but a number of analysts are (again) saying this is the worst crisis since the Great Depression and the worst in living memory:

http://www.guardian.co.uk/business/2008/mar/18/creditcrunch.marketturmoil1
http://www.independent.co.uk/news/business/news/wall-street-fears-for-next-great-depression-796428.html

Although the fears about the monoline insurers haven't yet come to pass, this danger is still far from over, leaving open the potential for a meltdown in the bond market. The CDS market remains fragile. But I think the real shit is going to hit the fan when unemployment starts to show serious rises and (in Britain) when people trying to refinance their mortgages find they can't afford it.

I suppose it depends what you mean by a complete collapse. I think it would take several episodes of Great Depression style catastrophes in rapid succession to really finish off the capitalist system - or a prolonged period of global Japanese style stagnation. Even then something would carry on limping along, if only because people have to feed themselves. But economic crisis, combined with war, ecological disaster, mass migration, etc. That could definitely bring about the end of this civilisation.

I don't think you can ignore the economic factor though. At the end of the day, capitalism is about profit and the more difficult this becomes to obtain, the more the social fabric of bourgeois society will be ripped assunder. It will encourage them to pursue more war (even though war is enormously expensive and counter-productive) and reduce their ability to make even the most minimal efforts to control the ecological crisis. The danger is that all these phenomena will interact and reinforce each other, until finally they spiral completely out of control and our civilisation sinks into a quicksand of its own making.

If you put it in those terms, civilisation-in-general is about profit. If you get less out than you put in you'll eventually starve to death.

The economic crisis (like war, etc.) can provide a stimulus for class struggle, but this is not always the case. In some circumstances it can demoralise the class or, even if the class struggles it can be dragged onto bourgeois terrain like the strikers in France in the 30s who supported leftist governments and marched under the national flag. But in the current circumstances, I think its effects will be positive.

Elements like climate change, however, are more problematic. Personally, I think the ecological disaster saps class struggle for a number of reasons:

- unlike the economic crisis, it affects all social strata in very much the same way, making it difficult for the working class to develop and independent response. When the working class has developed its class identity and entered into massive struggles, then a class response here is more possible.

- the fatalism affecting the bourgeois presentation of this issue saps the proletariat's self-confidence. What's the point in struggle if we're all going to be dead in 20, 50, 100 years anyway. While workers can perceive the necessity and possibility of reorganising the economy to their benefit, the radical problems of reorganising the entire basis of production onto an ecologically sound footing seems enormous in comparison. Again, following a real radicalisation of the class, the proletariat will be able to face up to it.

no - we could get the same out as we put in

Profit isn't the same as a social surplus that is reinvested in production to enlarge it, among other things. Marx makes the point in Critique of the Gotha Programme that even in a communist society, "deductions" will be made from the total social product for all sorts of reasons:

"From this [the total social product] must now be deducted: First, cover for replacement of the means of production used up. Second, additional portion for expansion of production. Third, reserve or insurance funds to provide against accidents, dislocations caused by natural calamities, etc."

The US has had immense increases in housing value - it the prices of houses has increased faster than wages for many, many years now.

The US is spread-out and geographically varied, so the crisis has hit in different ways in different places so far. As might be expected, poor and minority neighborhoods have been more affected. At the same time, there are reasons to expect things to get much worse. However, this down movement is highly chaotic. The market moves in a way that can seem like an "over-correction" and then rallies and the Fed can throw all of the previous bubble dynamics into the rally. Thus, even with the current crisis, we could even have a few more years of the financial system twisting in the wind for all I know about the exact details of financial manipulation. But it is clear that the efforts today are desperate, that they are staving off major collapse and that they are setting the stage for that collapse to be sharper when it happens.

The conditions of China is as crucial for the eventual crisis as the condition of the US financial markets. China's export economy has depended on low, subsidized gas prices as much as it has depended on lower labor costs. This has bred the present polluting, energy-inefficient production. Now that oil prices are rising, the Chinese state is relaying on rationing rather than higher prices to stem demand. But this is system which cannot continue indefinitely. China is half free market, half-stalinist state capitalist management. This has helped build a giant production system (whose pollution is accelerating the environmental devastation of the planet). But this hybrid could quite possibly be torn apart by the tidal forces of market and class struggle. And this would hit harder than all the financial explosions so far.

There, is this something worth paying attention to? No, I'm sure the local football match is much more important.

Red

Also, I think The Wolf Report had some good things to say about the present state of affairs.

What does "roll on the crisis" mean? Like, "bring it on"? Is it supposed to show support for the crisis or something? (And no, I'm not asking about whether or not you think the crisis provides more opportune moments for working class struggle and revolution, since it is clear you do think this. I'm asking what "roll on the crisis" is supposed to mean.)