Economy
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By Mick Brooks
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Wednesday, 29 October 2008 |
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It really is a pity capitalism can’t devote
as much ingenuity on a cure for cancer as it does on trying to make money or as
much resources on getting rid of world poverty as it does on gambling. But it’s
a laugh when they get it horribly wrong.
Hedge
funds are a bunch of locusts who add nothing to the sum total of human
happiness. One of the ways they make money is by short selling. Now they've been caught in “The biggest short squeeze in history.”
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By Michael Roberts
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Thursday, 23 October 2008 |
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Unprecedented!
That was the mantra of the broadcasters, pundits and newspapers
throughout September, as the credit crisis took a dark turn. Credit markets (mortgages, loans for cars and
goods, company bonds and overdrafts) just dried up. Banks stopped lending even to each
other. Liquidity disappeared like water
into the Sahara desert. Interest rates
rocketed despite the best efforts of the central banks to provide unlimited
credit at almost any price. The
capitalist financial machine seized up.
Banks started to go bust and even countries went bankrupt
(Iceland). Nothing has ever been seen
like it – for the first time in the hyperbole of the news media, it really was
unprecedented.
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By Walter Leon
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Tuesday, 21 October 2008 |
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Over the past couple of weeks, Britain,
many other European countries and the US have announced plans to nationalise
large chunks of the financial sector, thereby taking a good proportion of the
commanding heights of the economy into public ownership. The British government
has been forced to effectively part-nationalise three of the country’s biggest
banks, RBS, Lloyds TSB and HBOS. The plan, which includes putting treasury-appointees
on the boards of all three banks, will cost the taxpayer in the region of £37
billion. Many of the major European powers are unveiling similar plans, and
even the US, the ideological bastion of free-market capitalism, has been forced
to invest $250 billion into buying stakes in nine of its banks (though these
‘non-voting preference shares’ mean the US government will have no direct control
over the running of these banks).
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By Andy Viner
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Tuesday, 21 October 2008 |
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Nationalisation of the banks and financial institutions
is a corner stone of any plan by socialists to implement socialism. This idea
has been ridiculed and has always been hated by big business, capitalists and
economic commentators.
Yet within the last months, because money
that the banks don’t have has been lent to people, banks and companies which
they cannot pay back, the chickens have been coming home to roost. Bank after bank has been partly or totally
nationalised. What a turnaround in events! Does this mean that we have won the ideological
argument and socialism is around the corner?
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By Mick Brooks
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Thursday, 16 October 2008 |
New Labour is the bastard child of
Thatcherism. Blair, Brown and Mandelson inherited from the evil witch the
belief that the market (capitalism) was god and that the rich are the wealth
creators we must all bow down to.
As Marxists know, and as the present crisis
has shown, this is the opposite of the truth. But this has been the foundation
of all the policies carried out by New Labour over the past years.
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By Socialist Appeal
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Wednesday, 15 October 2008 |
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On 8th October the government
and the banks came to an emergency agreement to prevent financial meltdown. The
government agreed to commit:
- £50bn for bank
recapitalisation
- £200bn in
short-term loans to boost liquidity
- £250bn debt guarantee for inter-bank lending.
The banks committed themselves to – nothing.
A
few days ago RBS and Lloyds TSB/HBOS alone claimed £31.5bn of public money. The
final bill could come to £75bn
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By Alan Woods
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Tuesday, 14 October 2008 |
Panic
has gripped the stock markets of the world. Things are completely out
of control, and there is nothing that governments can say or do that
can stop it. As in 1929, every time people thought that the worst had
come, further falls were just round the corner. Nobody knows how far
share prices have still to go. The world economy now finds itself in
unsheltered waters.
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By Socialist Appeal
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Friday, 10 October 2008 |
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Last
month we reported how insurance giant AIG had to be bailed out by the US
government for $85bn. It’s all part of ‘Socialism for the rich, capitalism for
the poor.’
Less than a week after the bailout, the company held a week-long retreat for
its executives at the luxury St. Regis Resort in Monarch Beach, Calif., running
up a bill of $440,000,
At the opening of a House committee hearing about the near-failure of the
insurance giant, Congressman Henry Waxman showed a photograph of the resort.
Waxman said the executives spent $200,000 for rooms, $150,000 for meals and
$23,000 for the spa.
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By Mick Brooks
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Wednesday, 08 October 2008 |
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In the early hours of this morning
(08.10.08), the government and the financial authorities have finally agreed an
ambitious plan to save the banks. They present the £50bn bail-out as decisive
action to stop the rot. In fact their hands were forced, and there’s no sign that
it will stem the panic on UK stock markets in any case.
Last Tuesday shares in two of our biggest
banks, HBOS and RBS, plummeted by 40%. Let Nils Pratley (Guardian 08.10.08)
chronicle the damage. “At the close of trading, Royal Bank of Scotland, a bank
that raised £12bn of fresh capital from its shareholders in June, was worth
only £18bn.” (That is what the sum total of its shares came to.) “Shares in HBOS were priced 50% below the value
of a bid from Lloyds TSB to buy it.” The banking system faced catastrophe.
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By Rob Sewell
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Tuesday, 07 October 2008 |
Yesterday saw the biggest ever one-day fall on the world’s
stock markets. The Dow Jones collapsed by over 800 points at one stage, pushing
the Dow below the 10,000 level. The FTSE 100 suffered its biggest one-day
percentage fall since Black Monday in October 1987 and the biggest points fall
ever. The Russian stock market fell by 19% and the exchange remains closed. The
sell-off engulfed Brazil, Indonesia and Saudi Arabia. The MSCI Emerging Markets
Index slumped 11%, its largest daily fall since 1987. This has been one of the
worst days yet in the 14-month-old credit crunch.
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By Mick Brooks
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Friday, 03 October 2008 |
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Neoliberalism, the dominant ideology of modern capitalism, is under
sustained challenge. For the past quarter of a century neoliberalism, sometimes
called market fundamentalism, the policy of non-intervention in the economy, has
been the ideology, and the set of policies that go with it, which has adamantly
opposed the rights and attempted to drive down the living standards of the
working class all over the world. Now the economic crisis is forcing the authorities
to intervene, regulate, and even nationalise firms because they have no choice.
Is neoliberalism dead?
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By Walter Leon
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Thursday, 02 October 2008 |
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'Modern history’s greatest regulatory failure’; ‘The end of American
capitalism as we know it’; these are just two of the headlines thrown up by the
credit crunch, both appearing in the Financial
Times, the organ of British finance capital. In the course of a single
week, we have seen the collapse of three of America’s biggest financial
institutions: on Sunday 13th September, Bank of America announced it
was buying out Merrill Lynch, one of the world’s most famous investment banks; on
the following Monday, Lehman Brothers, the fourth largest securities firm in
the US, filed for bankruptcy; and, as if that were not enough, on Tuesday, the
US Federal Reserve invested $85 billion in a takeover of AIG, America’s largest
insurance company. More recently, on Thursday 25th, the huge US bank
Washington Mutual, in a state of collapse, was taken over by JP Morgan Chase,
in a move described as ‘the biggest bank failure in American history” (Saskia Scholtes, Joanna Chung and Deborah
Brewster, JPMorgan swoops in again, FT, September 26 2008).
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By Michael Roberts
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Tuesday, 30 September 2008 |
What a kick in the face for America’s
capitalist elite! The US House of
Representatives voted to reject the Emergency Economic Stabilisation Act put
forward by Treasury Secretary Hank Paulson, Fed Chairman Ben Bernanke, President
Bush, Vice-President Cheney, the majority Democrat leader of the House, the
Republican minority leader of the House, both candidates in the upcoming
presidential election, Barack Obama and John McCain and all the American media.
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By Alan Woods
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Monday, 29 September 2008 |
We live in exceptional times. The financial panic in the USA is
creating waves that are threatening to engulf the whole world. This is rapidly
transforming the consciousness of millions. Alan Woods
looks at how the world economy reached the stage it has, where it is on the
brink of a serious downward, so serious that it could be as worse if not worse
than 1929.
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By Mick Brooks
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Monday, 29 September 2008 |
Bradford
& Bingley has finally been put out of its misery. After months of
cliff-hanging the government has been forced to nationalise the bank. In
many respects the ‘rescue’ plan is a clone of the $700bn Paulson plan being
pushed through in the USA. The basic idea is that the good stuff is sold off to
the private sector while the taxpayer is lumbered with the bad debts, the
toxins. Socialism for the rich and the rigours of free enterprise for the rest
of us!
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