the cry is: credit crunch! You can smell the sweat on the brows of bankers as
their necks are squeezed by the tightening credit noose. In all the offices of
the great investment banks of Wall Street, the City of London and gnomes of
Zurich, you can hear the hissing sound of the global financial bubble bursting
to a recent United Nations study, the richest 1% of adults in the world own 40%
of the planet's wealth. Europe, the US and some Asia Pacific nations
accounted for most of the extremely wealthy. More than one-third lives in the US, while Japan
accounts for 27%, the UK for
6% and France
for 5%. But bourgeois economists still insist Marx was wrong!
The bourgeois economists are incapable of understanding
crises, which are an inescapable result of capitalism. They look for subjective
factors such as “confidence”, even “human nature”. In reality what we are
witnessing are the real workings of the capitalist system in a period of
The recent chaos on world stock markets is a
manifestation of the general turbulence that is the most prominent feature of
the present epoch. The crisis that affected the Northern Rock bank in Britain
is but an indication of dramatic
events that are being prepared globally.
Over the past 15 years
production has risen at about 3% a year in the OECD countries, while money
supply, mortgage and company debt, personal borrowing and the massive so-called
derivatives market based on this credit has increased at over 25% a year!
Result? A huge bubble which is now bursting, starting with Northern Rock.
Recently, the Bank of England hiked its interest rates yet
again to 5.75%,the fifth rise since August 2005, and "further action" on
interest rates could be on its way. The interest rate may go to 6% or more by
the end of this year. The credit-led boom is now in jeopardy as central banks
raise interest rates everywhere.
The financial turbulence of recent days has
wiped billions off the price of shares all around the world. On Friday August
10th Londonâ€™s stock exchange, the FTSE 100, alone dropped Â£63
billion. What does this mean?
This speech was delivered at a meeting of
the leadership of the International Marxist Tendency in Barcelona on 24 July
2007. The recent turbulence on world stock markets fully confirms the
perspectives outlined in it.
poorest 50% of the world's 6.6bn population own just 1% of the world's riches.
The answer? "Although we Americans strive to provide equality of economic
opportunity, we do not guarantee equality of economic outcomes, nor should
we." (Ben Bernanke, the chair of the US Federal Reserve)
This is an important book, written by Andrew Kliman, and published by
Lexington Books. In a nutshell, what Andrew Kliman shows is that Marx's laws of
motion of capitalism (how capitalism works and does not work) are logically
consistent and theoretically valid.
High levels of growth have been achieved in the
world economy, but these have been based on huge levels of easy credit, on
debt. This is not sustainable in the long run. Figures on the state of the US
economy indicate that the system is reaching its limits and crisis is looming.
The nerves of stock market speculators canâ€™t be in too good
a shape these days. Wall Street has just suffered its second biggest point drop
in four years. This immediately spread to Asian stocks markets that suffered