Economic crisis
Sep 16 2009 10:18
#1262
I've been interested in this idea for a long time but this is the first time I've managed to find a graph that shows the industrial capacity utilization in the US:
Note how, that after each recession, utilization rises but fails to reach its previous peak. It is clear that there is a secular tendency to ever-greater overproduction of the means of production, relative to the demand of the market.
The question is whether this is a tendency limited to the US, which is well acknowledged as a declining economic power. Well, not quite.
Here's a graph for the G7, covering a shorter period of time, but apparently demonstrating a similar trend:
This is the graph for China, and while not covering the same period of time, demonstrates that when China began its really big expansion at the beginning of 2000, capacity overhang develops rapidly:
I haven't been able to find anything for the world economy as a whole but these graphs do seem to indicate that there is a general tendency, at least in the major powers.
Oct 1 2009 00:59
#1263
@demogorgon303
If you haven't read it already, you might be interested in this article (by Walden Bello).
Oct 1 2009 07:50
#1264
I think the various phases that Bello outlines are reasonable.
Also, while I would agree that world economy's trend is going to be downward in the years to come, I think that the powers are indeed determined to prevent this and so we could see periods of artificial expansion fueled by programs like "Cash For Clunkers".
Keep in mind, capital has done Globalization/neoliberalism/marketization to the hilt and done financialization similarly. What's it got left? As far as I can see, the only thing left is to apply the same solutions but faster!, stronger!, harder!
So, I think we'll be having decline with a side of extreme volatility.
Oct 9 2009 02:07
#1265
Interesting article:
Asia steps in to support dollar wrote:
The mainly south-east Asian countries have been spurred to defend the competitiveness of their currencies by China’s decision to in effect re-peg the renminbi to the dollar since July last year.
Oct 15 2009 12:09
#1266
I saw this very interesting article by Jeremy Warner in the Telegraph today.
It highlights the potential for the return of bubble-dynamics in the financial markets, pushed forward by the ultra-loose monetary policy. For those who can't be bothered to read the whole thing, highlights include:
"For example, the value of CCC-rated corporate credit – which is sub-junk - has more than doubled in six months. Coming so soon after such a massive banking crisis, this is quite something. It took four times as long for this to happen after the last recession ... Carry trades are reappearing all over the place, with the US dollar increasingly used as the funding currency of choice to buy higher yielding assets in emerging markets ... In some emerging markets, property prices and equity valuations already exceed pre-crunch levels ... Right now, liquidity in the US as defined by cash, bank deposits and money market funds, has reached an unprecedented $10 trillion – not far off America's entire annual GDP."
Oct 15 2009 16:08
#1267
Here's a vid worth thinking about (Steve Keen).
The gist:
"If you have a sane economy, and by sane economy I mean one which is not addicted to debt, not a Ponzi economy, then the change in debt each year should contribute a minor amount to demand. Therefore, if you tried to correlate debt to the level of unemployment you would not find much of a correlation. Unfortunately that is not the economy we live in."
Not even leftist let alone anarchist, but explains the situation very well.
Oct 16 2009 11:10
#1268
Fuckin hell, this thread is massive. Is anyone who has followed it from the start interested in giving some kind of overview of the main conclusions/assertions that have been thrown up.
I'm particularly intrigued as to how/if people think that Capital has been re-amalgamated over the course of this crisis and how this directly affects us on the ground level. Of course there has been a surge in unemployment, an apparent move to the right (I say apparant because Im not so sure that the recent european election figures for the right represent a growth in support or just a lack of voter confidence in their tradtional choice) and a sustained attack on wokers autonomy. One of the most strange events in this crisis has definitely been the case of the BA workers choosing to work for free to keep the company afloat indicateing that the idea of a consensual capitalism is ingrained at a ground level. Put another way the idea that we are all in this together regardless of class. These are my minor assertions off the top of my head. Im more interested to hear what you have come up with over the duration of this thread.
Oct 19 2009 12:53
#1269
More on the renewed bubble-dynamics from a comment in the Financial Times:
"Cape and Q measure different things. Yet they both tend to agree on relative market mispricing most of the time. In mid-September both measures concluded that the US stock market was overvalued by some 35 to 40 per cent."
Nov 9 2009 16:56
#1270
BBC News wrote:
The unemployment rate in the US rose to 10.2% in October, which was its highest rate since April 1983, according to figures from the US Labor Department. It rose from September's figure of 9.8%. The economy lost 190,000 jobs in the month. Since the recession began in December 2007, the number of unemployed has risen by 8.2 million...
It was the 22nd month in a row that the US economy had shed jobs, which is the longest run since records began 70 years ago.
According the to NY Times, the broader measure of unemployment stands at 17.5%
Nov 10 2009 08:18
#1271
I think shadow government statistic has the real US employment rate above 20%. Extended unemployment insurance is carrying a lot of people. It seem like we're seeing more bubble dynamics and instability before we've even seen very much growth or "recovery". The only thing we can say is that the crisis roller-coaster isn't headed straight down at 90 mph at currently.
It might not head back that way for a couple of years if we're lucky...
Nov 12 2009 12:33
#1272
According to this Telegraph blog, the real figure in the UK is 15% of the workforce or 5.7 million.
It's noteable that the official bourgeois media is being forced to confront the reality of unemployment more and more openly.
Nov 12 2009 12:44
#1273
Quote:
Extended unemployment insurance is carrying a lot of people.
Negative feedback loop though. Insurers are losing money, so they pressure their remaining clients, increasing the burden on the remaining workforce who thus spend less and reinforce the underlying problems. And once it runs out of course...
Ttbh I'd reckon six months is generous before we see another shock, particularly as these articles are symptomatic of elites eying up the underperformance of the stock market, suggesting a mood of skittishness which could be hugely damaging in the wrong circumstances.
Nov 13 2009 18:05
#1274
Great link concerning the current situation.
The world's leaders seem to be scrambling to avoid blame for the next collapse as even as massive accommodation is not producing anything resembling recovery.
bloomberg wrote:
The Federal Reserve’s policy of keeping interest rates near zero is fueling a wave of speculative capital that may cause the next global crisis, Hong Kong’s leader said.
...
bloomberg wrote:
“Asia’s bubbles now pose a serious risk to financial stability,” said Barry Eichengreen, professor of economics at the University of California, Berkeley in an article published today on Eurointelligence.com. This is “a task for emerging market central banks, not for the Fed or the European Central Bank.”
And this is not to celebrate or minimize the misery that a further decline may have.
Nov 13 2009 19:44
#1275
Quote:
The world's leaders seem to be scrambling to avoid blame for the next collapse
it actually shows a refreshing outpouring of honesty & pragmatic realisation about how things work - loads of the efforts going into changes in regulation are also directed at the orderly winding up of financial institutions after they fail (living wills etc..) , so less and less regulators even pretending that a bit of tinkering here or there will prevent another crisis and instead focussing on how to clean things up once its happened
Quote:
The Federal Reserve’s policy of keeping interest rates near zero is fueling a wave of speculative capital that may cause the next global crisis, Hong Kong’s leader said.
was a pretty good article by Nouriel Roubini a few weeks ago on this
Mother of all carry trades faces an inevitable bust
So what is behind this massive rally? Certainly it has been helped by a wave of liquidity from near-zero interest rates and quantitative easing. But a more important factor fuelling this asset bubble is the weakness of the US dollar, driven by the mother of all carry trades. The US dollar has become the major funding currency of carry trades as the Fed has kept interest rates on hold and is expected to do so for a long time. Investors who are shorting the US dollar to buy on a highly leveraged basis higher-yielding assets and other global assets are not just borrowing at zero interest rates in dollar terms; they are borrowing at very negative interest rates – as low as negative 10 or 20 per cent annualised – as the fall in the US dollar leads to massive capital gains on short dollar positions.
Let us sum up: traders are borrowing at negative 20 per cent rates to invest on a highly leveraged basis on a mass of risky global assets that are rising in price due to excess liquidity and a massive carry trade. Every investor who plays this risky game looks like a genius – even if they are just riding a huge bubble financed by a large negative cost of borrowing – as the total returns have been in the 50-70 per cent range since March.
Nov 18 2009 19:30
#1276
An article published today in Forbes.com about the current state of unemployment in various places across Europe:
Spain - 19.3%
Ireland - 13%
France - 10%
Portugal - 9.2%
Sweden - 8.7%
UK - 7.8%
Overall the worst places are (perhaps unsurprisingly) former eastern bloc countries:
Latvia - 19.7%
Lithuania - 13.8%
Estonia - 13.3
Slovakia - 12%
Nov 19 2009 00:43
#1277
i'm surprised it's that low in lithuania - the country's fucked
my gf's mum lives out there on one of the biggest housing estates in europe - was there a few weeks back, she lives in a flat in a big fuck off tower block which is one of hundreds in that area - was looking out the window one morning and saw a person out on the wee balcony thing in the block opposite, then looked round again about 3 seconds later and somehow became immediately aware that the person wasn't in the same place as they were previously but was flat on the ground 15 stories below - the medics arrived not long after and did little more than confirm the guy was dead and then just left the body there, uncovered, for about an hour, meanwhile loads of people were walking in and out of that block, almost literally having to step over the body to get by, with most hardly even stopping to acknowledge what had happened
what shook me the most was how nonchalant (is that the right word?) everyone was about it, my gf's mum said it happens pretty regularly in their wee area - i always knew lithaunia had the highest suicide rate in europe even before the crisis but this motored it on even more in the last 9 months or so, the atomisation of society there is almost utter, it's scary as fuck
Nov 19 2009 01:27
#1278
I'm wondering how long it's going to be before people are 'nonchalantly' stepping over bodies over here in the good old UK - plenty of stuff about 'the lack of care abroad', whether it's Channel 4 or the Daily Mail, but are people (in the UK) being softened up (no matter how subtly) for similar levels of public aresponsibility?
Nov 19 2009 01:29
#1279
Double post - how did that happen?
Nov 19 2009 20:37
#1280
US unemployment figures are wildly fudged and I would expect that a number of countries' figures are also fudged to various degrees.
Also:
Telegraph wrote:
Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction
Nov 19 2009 20:47
#1281
I posted the last link before noticing the author (Ambrose Evans-Pritchard). This source does make the story a good deal less creditable in my mind: Evans-Pritchard has been a font of dubious predictions over the years. I hadn't realized he'd started writing ostensible news stories. That doesn't mean he's wrong, the world economy is seriously sagging and one weakness is the international monetary regime. But whether large capitalists are whispering this around is another question.
Nov 20 2009 10:46
#1282
Evans-Pritchard is the International Business Editor for the Telegraph, so he does write news stories fairly regularly. His comment pieces are generally extremely gloomy but I don't understand your bias against him. What actual facts is he getting wrong?
There's a separate report of the same reporthere (complete with illustration), and here.
As far as I can tell, the report is not a prediction, but an illustration of the worst case scenario.
Nov 20 2009 12:55
#1283
stupid name for a boy, ambrose
stupid name full stop to be fair
Another update on the bourgeoisie's money supply worries. Apparently bank loans and money supply arecontracting at "Great Depression" rates in the US:
Money supply in the 4 weeks to August 24th:
M1 = -6.5%
M2 = -12.2%
M3 = -5%
Bank loans in three months to August = -14%