September 17, 2008
Is This the Big One?

Howdy there, pardners, sorry I’ve been out of touch. A housemate moved and we bungled the Comcast handoff; as a result I spent a week in blessed innocence of the outside world. Now I return to find the world has fallen apart! Five hundred points off the Dow Jones, 4.4% off the NASDAQ. Where is the world headed? Is this the end of capitalism as we know it? Fortunately the Guardian has commissioned a survey article on this very topic.

Ken Livingstone, former Mayor of London, says:

Sadly, I don’t think this will be the end of capitalism. But there is going to have to be a return to a much, much more interventionist state. As a system for the distribution and exchange of goods, you can’t beat the market. But the mistake a lot of politicians have made is to think that because the market was good at that, it could be good at everything: it could train workers, create infrastructure, protect the environment, regulate itself. Quite obviously, it can’t.

So the real issue is, what sort of international structures do we need to ensure this never happens again? Thatcher and Reagan deregulated massively and let the financial markets do as they liked — and they’ve turned into one bloody great big rip-off. The good news is, there’ll now be a realisation — even George Bush sees this now — that we need international regulatory mechanisms that will ensure, for example, that these people and operations actually pay tax. There’ll be a realisation in Britain that while it’s certainly useful to host a world financial centre, it has to rest on a solid, genuinely productive real economy. In China now they make things; we’ve decided we’re not interested in that.

Former broker Max Keiser adds a long-term view:

This is not a blip. It’s extremely significant. We will see a shift in power away from the US, and towards the developing world — to countries such as Brazil and the Gulf states that have commodities to sell, and to China, where the savings ratio is high. We are going to see a new world order. America as a driver of the global economy is finished.

The left has nothing to say about any of this. And because the left has no economic programme, we will see the rise of social unrest. We are already seeing it in the US. The left has no real response to that either.

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Posted by Chuck Dupree at September 17, 2008 07:04 AM
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So the real issue is, what sort of international structures do we need to ensure this never happens again?

That'd be the structures that were dismantled by, er, Reagan and Thatcher. Those structures were dismantled because they were thought to be "bad for business."

How's business, kids?

Our "conservative" friends have been laboring mightily for a generation to restore an economic system that used to fail regularly. (The Great Depression merited an adjective because of previous depressions.) What a surprise that it's failing again.

Posted by: Roddy McCorley on September 17, 2008 12:06 PM

True, and if we don't rein them in they'll leave it this way. William Greider's famous Secrets of the Temple: How the Federal Reserve Runs the Country, said to be on the shelves of the Fed itself, tells why: for Adam Smith's masters of mankind, this system is great.

As the economy expands, those at the top do very well, but those nearer the bottom do fairly well too. Thus the super-rich need deflations to follow inflations; this keeps a certain percentage of the population jobless, homeless, and otherwise available, as a threat against those whom the corporations have ensnared. It also causes many who've bought on credit to fail to pay off the debt, which means the assets are generally returned to the seller, and the consumer has effectively been milked.

We don't have crises like this despite them hurting everyone; we have them precisely because they don't hurt those who run the show.

Posted by: Chuck Dupree on September 17, 2008 5:26 PM
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