Our economics correspondent Michael Roberts looks at the UK Finance Minister, Gordon Brown's budget, which was announced last week. He is going to raise taxes in order to spend more on the health service. But as he has no intention of changing the fundamental nature of the economy, a better health service must come from the pockets of the hardest-working labour force in Europe.

Our economics correspondent Michael Roberts looks at the British economy and the real situation facing workers in Britain today, which is somewhat different to the rosy picture painted by Tony Blair and his spin doctors.

The capitalist pundits are worried that the US and world capitalist economy is not recovering as they expected. Stock markets around the world are plummeting, investment spending is unusually weak and consumer spending unusually strong. This current capitalist economic cycle has no precedent in the whole post-war period. Yet this pattern has at least one ominous parallel before the second world war: the US economy of 1926-29.

In the six months to June 30, the US stock market had its biggest fall since 1970, down 14%. Following Enron, we have the WorldCom fiasco, which threatens to be the biggest bankruptcy in world history. Corporate executives lived off the fat of the boom, but now the tide has ebbed, the nasty rocks of failure, corruption and thievery are being revealed.

This article deals with the scandalous so-called "Private Finance Initiative" in Britain. This process allows private companies to be involved in the building and running of what were formerly public services, such as hospitals, railways, and even schools. Mick Brooks shows quite clearly that the only people to benefit from PFI have been the fat cat capitalists who run the private firms.

After all the talk of an economic revival in the USA, the headlines are now dominated by an epidemic of financial scandals, steep falls on the stock markets, waning confidence and increasing uncertainty. In spite of attempts by the media to present all this as purely a question of a few "bad corporations" the nervousness on the stock markets is in reality the manifestation of a far deeper crisis that expresses itself in extreme instability at every level - ­economic, social, political and military - on a world scale.

On Saturday, the Financial Times, a leading bourgeois publication, contained a prominent article entitled "Full Marx". Given the current crisis unfolding under their noses, bourgeois academics are once again forced to recognise the important contribution of Marx's analysis of capitalism.

Stock markets in the US and Europe have bounced up during August. Indeed, after reaching a new low on July 24, they've now recovered by 20%. It seems that there is some renewed optimism that capitalism is not going to slip into recession after all, but can make a steady recovery. But beneath all the hype the cruel realities of the economic data in America, Europe and Japan remain unchanged.

The mood of optimism about the world economy that arose during the summer months has now dissipated. The talk now is that there is a real risk of the US slipping back into an economic recession, taking the rest of the world with it. World stock markets are still pricing in the scenario of a quick victory in Iraq. But even if this were to happen, it might briefly improve "confidence" but it won't get businesses out of debt and it won't create jobs. Bush's Iraqi adventure is no way out for world capitalism at best, and it could be the tipping point for a world economic depression at worst.

On the one hand, Blair prepares to send troops into Iraq behind the coattails of the Americans to overthrow Saddam. On the other hand, he and 'two Jags' Prescott prepare to send in troops to break the picket lines of the firefighters. If you adopt the policies of capitalism abroad, inevitably you will adopt them in domestic policy.

The capitalist forecasters have got renewed optimism about the global economy and the value of their investments on the stock market. After huge falls in stock prices during September, the last two weeks have seen a significant rally in world financial market prices - up 15%. But world's stock markets are still down 15-20% on the year, which if maintained, would make it the third year in a row that they have fallen. That would not have happened since the Great Depression of the 1930s. Michael Roberts looks at the prospects for the world economy as it slides further into decline.

This time last year, all the talk among the capitalist economic experts was about the V-shaped economic recovery that world capitalism would make in 2002. All stock market experts expected a significant rally in share prices. The main risk was a return to higher inflation. Everybody expected that the main central banks would have to raise interest rates in order to curb price rises. This column, however, argued that the underlying economic forces increasingly suggested that the recession of 2001 was developing into the depression of 2002. .The whole world is now levered on what happens in the US, even more than it was in the 1930s. .The danger in 2002 is competitive devaluation and deflation, driving the world capitalist economy further down.

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