The big finance bosses and their buddies running countries like ours are thrashing about like mad tyring to find a way out of the mess they've got themselves into.
An editorial in the Economic Observer said: "The United States is no longer the omnipotent savior and global protector of American values ... The demise of Wall Street means that the cornerstone of this global financial empire has been broken and no one knows whether it can ever be repaired."
John Bellamy Foster, editor of the independent socialist magazine Monthly Review and professor of sociology at the University of Oregon in Eugene, said in a recent interview:
"But in the face of this massive financial crisis, now 14 months old, and rapidly morphing into what looks like a full-scale debt deflation on the order of the Japanese meltdown/stagnation in the early 1990s -- even threatening to turn into a new Great Depression on the scale of the 1930s -- the U.S. government is bailing like mad with bigger and bigger buckets, and trying absolutely everything it can think of."
But the capitalists won't find a quick fix.
And we will all suffer for it. Some obviously worse than others. The crisis will undoubtedly hit the poor countries of Africa, the Middle East, Asia and Latin America hardest. Just today, for example, the UN warned that hunger in Africa is being made and will be made worse thanks to capitals latest hiccup.
Capitalism is global now and so are its problems.
And so is speculation. So waffleheads sitting at their computers around the world are buying and selling stocks by the seconds trying to make one more buck...voila today the stock market goes down 700, goes up a bit, goes down 500, goes up over 100 and ends up down again over 100. Nothing is real...it's lala land.
Then there are those who seeing this as the demise of the superpower United States (which it is) turn to China asking for help. Some of them have called on Beijing to snap up stakes in United States financial institutions and further China's influence on global financial power.
China should lead rescue efforts for the US financial crisis, Mexican tycoon Carlos Sim, one of the world's richest men, told the press last week.
"China is now the most important country to help responsibly in this crisis," he says. "In the past, developed countries had reserves and financed developing countries, while today developed countries, especially the United States, are being financed with resources from developing countries".
The Chinese aren't so sure now is the time to come riding in and save the West. From Asia Times, "Although fortified with great liquidity and large reserves, Chinese banks and government investors have preferred to sit on their hands rather than go on a shopping spree of tumbling Wall Street firms."
Chinese Vice Premier Wang Qishan told former German Chancellor Gerhard Schroeder yesterday as the largest developing country and a rising market, China's priority is to well handle its own problems
Premier Wen Jiabao summed up China's cautious position: maintaining "steady and fast growth" is the "biggest contribution" China can make to help the world overcome the current financial crisis stemming from the United States, he said during an inspection tour of Chinese provinces this week.
The Chinese aren't stupid thought. They know they are tied into international capitalism now just like everybody else. Their own stock market is going anywhere but up at the moment.
China is following closely Washington's response to the ongoing financial crisis for its own reasons. Chinese ambassador to the US Zhou Wenzhong said the other day the turmoil in the US has affected Chinese investment there, especially the large amount of US bonds being held by the Chinese.
"As China holds large amounts in Fannie Mae and Freddie Mac shares and in US bonds, the financial storm has definitely impacted Chinese investment. So we're paying a good deal of attention to the crisis," said Zhou in a speech on China-US trade relations at the Center for National Policy in Washington DC, on Wednesday.
Foreign Ministry spokesman, Qin Gang, says the current turmoil in the financial market is global, rather than confined to any single country. He says it is beyond any single state's ability to deal with such crisis. Qin says that's why all members of the international community should make joint efforts to cope with it. He says this is China's clear message as well as a solemn commitment to the international community. He says China will ensure the stable development of its own economy at a relatively fast pace and that will be an important contribution to the world economy.
People's Bank of China (PBOC) spokesman Li Chao told Xinhua today, "The PBOC will continue close contacts and cooperation with counterparts and international financial organizations to jointly maintain stability of global financial market." The global economic slowdown reduced demand for Chinese exports and inevitably affected China's economy, he said.
But China has something the US doesn't anymore.
China actually produces "things." They have factories.
And that ain't all China has.
Li Chao points out, "China has a huge domestic market and the liquidity is abundant. As long as we take strong measures to boost domestic demand, the economy has big potential for sustainable growth."
There are some folks who have other ideas although you'll seldom see them and those presenting them will be attacked for making them.
Marx argued that the cycles of capitalism could no more be abolished than the tides or the seasons. Since the 1990s, Marxism has either been ignored or dismissed by almost all mainstream economists and media commentators as an old time religion, of no relevance to the modern world.
Maybe they should think again.
At a news conference in Luxembourg, the communist parties from Belgium, the Netherlands, and Luxembourg this week called for a new financial institution that will serve the interests of the people, not maximum profits.
Whoa, there's a strange idea.
“Instead of throwing public money at private banks over and over again – as if to satisfy their craving for a drug, we are instead calling for a major redistribution of wealth, a redistribution of income and property,” said Jo Cottenier of the Workers’ Party of Belgium (PTB). This is the way we can ultimately achieve A fair re-evaluation of public and collective property.”
Aloyse Bisdorff, member of the Executive Committee of the Communist Party of Luxemburg says following the Southeast Asia economic crisis and the crisis of the “New Economy,” this is already the third great crisis caused by free-market capitalism since its recent domination of the world. "While the governments try to save the capitalist system with the help of taxpayers’ money, they are at the same time creating the basis for a new crisis.”
Will the capitalist crisis weather the storm and right itself at some point. I'd say that's a good bet. As Marx pointed out over 150 years ago, capitalism has internal mechanisms — driving down wages, reorganizing work, massive bankruptcies — that allow it to recover from these crises. There will be no “final” economic crisis of capitalism — it will have to be overthrown.
But what does a "recovery" really mean.
The journal Solidarity says, "Whoever is elected President in November 2008 will likely face the same “stagflation” — the combination of price inflation and economic stagnation — that Nixon, Ford, and Carter wrestled with through the 1970s. For most of us, an ever-sharper attack on working-class standards of living will be the main consequence of the current crisis."
In the Monthly Review on line William K. Tabb writes what he thinks Marx might say today:
"Yes, the system may recover -- but only at great cost to working people, who will eventually understand that they do not have to put up with all this." He would also add that we now have the potential to meet human needs, accept that the development of each of us should be the goal of all of us, reject wars for oil, save the planet, and have ordinary people learn that they can govern themselves."
In the same analytic piece Tabb writes:
"David Harvey in an introduction to a new printing of The Communist Manifesto called attention to one of its modest proposals for reform, the centralization of credit in the hands of the state. This is happening already on a temporary basis as it did in Sweden and now in the UK and other places. So wrote Harvey earlier this year, why not consider some of the other equally modest but wholly sensible proposals -- such as free (and good) education for all children, serious progressive taxation, and significant inheritance taxation? The proposals made in the Manifesto for the most part now strike us as tame stuff. Yet even those which were to some extent achieved have been significantly repealed in the last decades in America. It would be useful to think about what we need and want and demand it, if not in some grand manifesto then in public discussion, demonstrations, and electoral struggles... And, if these are good ideas for a time of crisis, why not as a route to a more just economic system? We may be moving closer to a point similar to the one when the New Deal began: an entire economic system is understood to be broken and the usual policies of bailing out corporations can't reverse the decline, fear permeates all and hundreds of millions of Americans are desperate. At such times, people begin to say if this is how capitalism works it is time to figure out something better."
As John McCain would say, "I know what that something is!"
Says the Socialist Party USA (speaking in general terms what we all know), "The real solution to the vast majority of these problems would be to move rapidly to a socialist society, one in which housing is provided to all as a basic right, the financial sector and commanding heights of the economy are made publicly accountable through social ownership and worker control of the economy, and production is oriented toward the needs of working people, rather than maximizing the profits of an obsolete ruling class of multi-millionaires and billionaires."
Last week, Alan Greenspan, the former chairman of the Federal Reserve, was giving a lecture in Georgetown. Greenspan, the consumate capitalist, said the crisis will mean, "a return to the ideological struggle between socialism and capitalism.” He added, “Many of us thought that struggle was over with the collapse of the command economies, but this is not the case.”
I sure as hell hope not.
The following is from Bloomberg.
Berlusconi Says Leaders May Close World's Markets
By Steve Scherer
Oct. 10 (Bloomberg) -- Italian Prime Minister Silvio Berlusconi said political leaders are discussing the idea of closing the world's financial markets while they "rewrite the rules of international finance."
"The idea of suspending the markets for the time it takes to rewrite the rules is being discussed," Berlusconi said today after a Cabinet meeting in Naples, Italy. A solution to the financial crisis "can't just be for one country, or even just for Europe, but global."
The Dow Jones Industrial Average fell as much 8.1 percent in early trading and pared most of those losses after Berlusconi's remarks. The Dow was down 0.5 percent to 8540.52 at 10:10 in New York.
Group of Seven finance ministers and central bankers are meeting in Washington today, and will stay in town for the International Monetary Fund and World Bank meetings this weekend. European Union leaders may gather in Paris on Oct. 12, three days before a scheduled summit in Brussels, Berlusconi said today, while Group of Eight leaders may hold a meeting on the crisis "in coming days," he said.
Berlusconi didn't give any details about what kind of rules leaders were looking to change, except to say that leaders are "talking about a new Bretton Woods."
The Bretton Woods Agreements were adopted to rebuild the international economic system after World War II in a hotel in Bretton Woods, New Hampshire. The aim of the agreements was to establish a monetary management system, initially by pegging currencies to gold. The IMF was set up later to help manage the international financial system.