The decline of the Chinese stock exchange by 20% over the last weeks, and its general convulsive behaviour since early April this year, has many echoes of the Great Depression (1929 - 39.) Although the apocryphal story of that time was the account of stock brokers jumping out of Wall Street windows when the final crash occurred, inevitably it was the workers and small farmers who suffered the most. This was obvious later in the 1930s but one less known aspect of the time was the fact that in 1929 millions of US workers and their families, sold, borrowed and pawned to raise the cash to 'get into the market.' By the first half of 1929, as the market started playing 'loop de loop', small investors had been loaned over $8.5 billion by stock sellers. This was more than the total value of all the currency then circulating in the US. The final and definitive crash of 1929 destroyed any future financial stability for millions of ordinary people in the US - at a stroke. Since then, and despite the wave of Thatcherite selling of utilities etc, picked up across the western hemisphere through the 1980s, the overwhelming majority of shares sold on the stock exchanges of the west were, and are, held by big corporations and financial institutions. Conversely, for two years the leadership of the Chinese Communist Party has been encouraging ordinary Chinese people to 'invest' as much of their savings as they can in the market.
Naturally the leadership of the CCP understands it is in a pickle via a vis its relations with the generally politically cautious Chinese population. In April this year alone, the Peoples Bank of China bought $256 billion in stocks to prop up the market. It has become difficult to accurately report further spending in the market by the PBC since then. But the current overall debts of China, combining personal, corporation, local and national government debts, are $28 trillion. This debt amounts to 282% of China's Gross Domestic Product. In fact current estimates show the total value of China's economy as $10.4 billion. Looked at objectively there is the real prospect of an irrecoverable market collapse in China.
There has been considerable speculation in the western media about the impact of a serious economic collapse in China on the rest of the world. As China's voracious appetite for both commodities, and for luxury western goods diminishes, there are already serious problems emerging in the BRIC countries and the the EU. But a debt laden crash in the world's second largest economy is something else. Its fundamental character is of a classic crisis of overproduction - as with 1929 / 31. And this at least requires a root and branch reorganisation of global capitalism - with all its attendant political and social crises. When the preemptive, sui-generis Keynesianism that has already been used by Western governments and by Japan, to 'ease' the banking crisis of 2008 is added to the picture, the potential global prospects of a Chinese collapse are nothing less than calamitous.
In the US in the 1930s the Roosevelt administration used government spending to build infrastructure, advance new technology and to increase the wealth of subordinate classes, in effect the overwhelming majority of the US population, in order to promote spending. These are the classic Keynesian solutions to capitalist crises of over-production and debt. In a perverse, not to say lick spittle version of the same project, the US, UK, Japanese and now the EU have introduced 'quantatative easing' as a rich person's version of Keynesian model, to stem the effects of the 2008 financial crisis. This has meant the UK 'Bank of England' has spent $577 billion via banks on stocks and shares in the last 5 years. The US 'Fed' spent $3.8 trillion up to October 2014 in the same way. In Japan the national bank has already spent $923 billion; Japan originated QA as a result of its decade of stagnation. It is now spending $447 billion on QA every year, an open decision taken in October 2014. The European Central Bank's first serious act since its hurried, crisis ridden birth, has been to announce a $1.23 trillion QA programme. (January 22, 2015.) Amounting to a current global total of $4.51 trillion QA 's main impact has been to massively increase wealth (and the wealth of the wealthy) through the creation of a constantly inflating stock exchange. Leaving the busted finance industry, the global market became the next golden goose, the next security, indeed the next golden egg, for the world's rich.
This $4.51 trillion was not used to develop infrastructure and investment, not used to conquer disease, ease homelessness, was unavailable as a source of spending for the majority whose living standards lurched downwards. It secured and then increased the wealth of the rich. Accordingly, the national debt mountains and the personal debt mountains have increased in the west since 2008 as debt is the only means to secure peoples' spending - in reality, partly as a result of the remedy of QA. (For instance by June 2015 in the UK, people owed £1.441 trillion in personal debt - including their mortgages. The average debt per adult was £28 532 - 111% of average earnings. And UK people paid £53.497 billion in interest. This is all miles higher than it was in 2007/8. The national debt has also increased to over a £1 trillion.) And it is precisely this still expanding debt bubble, masking the chaos of capitalist overproduction, that renders western economies and ultimately their societies so vulnerable to the current Chinese disequilibrium.
Note: The data for this piece was drawn from many sources but three are worth particular mention.
Guardian 'QE Around the World' Katie Allen, 22 January 2015; Bloomburg April 2015 report on the Chinese market and indebtedness; The Money Charity, June 2015.
Saturday 29 August 2015
Thursday 27 August 2015
Political regroupment in Greece
There has been a bitter battle in Europe since January 25 this year between, on the one side, the second most powerful political and financial elite in the world and, on the other, the Greek people and their allies and leaders. It was nothing less than the choice of the direction of the future economic policy of Europe. This battle, which continues, has already produced several convulsions, including the U turn on the need for Greek debt relief by the Washington based International Monetary Fund, the opening of wide divisions between the French and German political class and the current necessity for the German political establishment to take up the cause of the current wave of refugees as a result of the negative international impact of the tarnished and authoritarian reputation that the German leaders have attracted as a result of their treatment of the Greeks.
On the other side, the battle has confronted and shaken Europe's anti-austerity movements. This is most obvious in Greece itself with the split in Syriza after Tsipras's agreement to a new Troika package of deeper austerity and deflation, tied to a permanent debt economy. On August 21, 23 Syriza MPs voted against the new proposals and Tsipras resigned as Prime Minister provoking a September General Election. On August 27, 53 members of Syriza's Central Committee announced their support for a new Popular Unity Party (Laiki Enotita), based on opposition to the new EU agreement and exit from the Euro, if that is required to sustain Greek opposition to the EU's previous and to their current austerity and debt repayment programmes.
But there are further shifts. Pablo Iglesias, leader of Spanish Podemos, may be giving his support to Jeremy Corbyn,
'In Podemos we share Jeremy Corbyn’s view that another Europe is not just possible but necessary. Against the irresponsibility of the troika and the Eurogroup, against the Europe of financial lobbies and puppet representatives, a new democratic and social Europe is emerging, and Jeremy Corbyn’s victory would be great step in that direction.'
But his reaction to Tsipras and the Greek crisis was more worrying; calling Tsipras a 'lion', Iglesias said he was confident Greek citizens would again show their support for him.
'He (Tsipras) recognised that he wouldn’t be able to complete some of the elements of his program, so Tsipras did what any democrat would do – he asked the citizens of his country if they want him to remain prime minister, if they want him to continue negotiating, if they in some way support the manner in which he is negotiating,' Iglasias has not yet seen fit to mention 'what any democrat would do' about the July Greek referendum, which gave the Greek citizen's emphatic negative opinion on the Troika's proposals - now adopted by Tsipras.
And now the new context in Europe will create a new and more deadly battlefield for its contending forces. The largest wave of refugees since WW2 is gathering its personal, social and collective calamities in a movement away from western originated poverty and wars towards life, for safety and for humanity, all of which it demands from the west, from Europe. The social and political institutions of Europe and its major countries were not built to favour such a gigantic and insistent cause. They are built to preserve and increase the wealth and power of Europes' corporations, banks and rulers. This utter failure of Europe's institutions and its current political classes will magnify despair and fear among its populations. Golden Dawn will reemerge with new force in Greece's next election. And the economic and its associated social crisis are equally unrestrained indeed fomented by those same European institutions - as the thunder and dust of debt collapse begins to shake the planet from the East.
A renovation of Europe's current direction in its politics and economics is certainly needed. How absurd it would be not to include a thorough going inspection of the movements, policies and proposals presented by the 'alternative' Europe? Surely, as the evolution of the Greek battle against austerity demonstrates, the counter to Europe's current direction requires the utmost critical examination and debate. Such argument and discussion is best achieved in the actual struggle for humanity, another lesson for those who stood aside from Syriza's contest with the Troika between January and July this year. As the various crises of Europe come to their peak, so will the ferocity of the contest between the future and the past and so must the intensity of the debate and discussion. It is one of our movement's greatest strengths.
On the other side, the battle has confronted and shaken Europe's anti-austerity movements. This is most obvious in Greece itself with the split in Syriza after Tsipras's agreement to a new Troika package of deeper austerity and deflation, tied to a permanent debt economy. On August 21, 23 Syriza MPs voted against the new proposals and Tsipras resigned as Prime Minister provoking a September General Election. On August 27, 53 members of Syriza's Central Committee announced their support for a new Popular Unity Party (Laiki Enotita), based on opposition to the new EU agreement and exit from the Euro, if that is required to sustain Greek opposition to the EU's previous and to their current austerity and debt repayment programmes.
But there are further shifts. Pablo Iglesias, leader of Spanish Podemos, may be giving his support to Jeremy Corbyn,
'In Podemos we share Jeremy Corbyn’s view that another Europe is not just possible but necessary. Against the irresponsibility of the troika and the Eurogroup, against the Europe of financial lobbies and puppet representatives, a new democratic and social Europe is emerging, and Jeremy Corbyn’s victory would be great step in that direction.'
But his reaction to Tsipras and the Greek crisis was more worrying; calling Tsipras a 'lion', Iglesias said he was confident Greek citizens would again show their support for him.
'He (Tsipras) recognised that he wouldn’t be able to complete some of the elements of his program, so Tsipras did what any democrat would do – he asked the citizens of his country if they want him to remain prime minister, if they want him to continue negotiating, if they in some way support the manner in which he is negotiating,' Iglasias has not yet seen fit to mention 'what any democrat would do' about the July Greek referendum, which gave the Greek citizen's emphatic negative opinion on the Troika's proposals - now adopted by Tsipras.
And now the new context in Europe will create a new and more deadly battlefield for its contending forces. The largest wave of refugees since WW2 is gathering its personal, social and collective calamities in a movement away from western originated poverty and wars towards life, for safety and for humanity, all of which it demands from the west, from Europe. The social and political institutions of Europe and its major countries were not built to favour such a gigantic and insistent cause. They are built to preserve and increase the wealth and power of Europes' corporations, banks and rulers. This utter failure of Europe's institutions and its current political classes will magnify despair and fear among its populations. Golden Dawn will reemerge with new force in Greece's next election. And the economic and its associated social crisis are equally unrestrained indeed fomented by those same European institutions - as the thunder and dust of debt collapse begins to shake the planet from the East.
A renovation of Europe's current direction in its politics and economics is certainly needed. How absurd it would be not to include a thorough going inspection of the movements, policies and proposals presented by the 'alternative' Europe? Surely, as the evolution of the Greek battle against austerity demonstrates, the counter to Europe's current direction requires the utmost critical examination and debate. Such argument and discussion is best achieved in the actual struggle for humanity, another lesson for those who stood aside from Syriza's contest with the Troika between January and July this year. As the various crises of Europe come to their peak, so will the ferocity of the contest between the future and the past and so must the intensity of the debate and discussion. It is one of our movement's greatest strengths.
Wednesday 26 August 2015
It's my party - and I'll cry if I want to.
Caroline Lucas, Britain's single Green MP, has written an open letter to Jeremy Corbyn (see The Independent, 25 August.) She calls for a
'Progressive alliance', for the next election. This alliance is to be based on Corbyn's programme, then what she describes as the unique Green contribution and, most importantly for the future, the fact that,
'The beauty of this moment, and what scares the political establishment most, is that the power of your campaign (Corbyn's campaign) is coming from thousands of grassroot voices - not a diktat from above'.
Lucas argues that
'The old politics is crumbling, not just in Britain but across our continent.' But she expresses her disappointment that Corbyn's campaign has
'Not focused more on reforming our ailing democracy. A truly progressive politics fit for the 21st century requires a voting system which trusts people to cast a ballot for the party they believe in.' And Lucas goes on to suggest that if Corbyn were to win his Labour Party leadership bid, the momentum would open the opportunity for him to spearhead the call for a Constitutional Convention
'To allow people across the country to have a say in remodelling Britain for the future.'
Exciting stuff.
The gathering of popular support for Corbyn is certainly a remarkable political fact - first brought into life by the mass demonstration called after the General Election in June - by the Peoples' Assembly. Hundreds of thousands marched in London (with a large Green contingent) showing the awakening of a new, youthful based political current, that regarded the election result, and the traditional parties and choices that it expressed, as not representing them or their hopes. Corbyn's candidacy, and Labour's new internal election rules (that Miliband thought he was borrowing from the US Democratic party) have provided another focus for this new political trend. So much is obvious, and while the concrete details of history are always unique, the new potential radicalisation was generally predicted, well before the election, by the leadership of the Peoples' Assembly - among others.
So far the new British radical movement has not been disrupted by events in Greece. But in its most political centres there is increasing interest in the progress of the left organisations across Europe that challenge austerity and a growing recognition that the great questions of the future are inextricably linked to European, not to say global solutions. But although this active layer constitutes hundreds of thousands, if not a million or two, it has yet to 'win' a leadership role in the wider British society. This fact may yet be reflected in a much closer call in Labour leadership elections than expected, if not the defeat of Jeremy Corbyn's candidacy. Should Corbyn win then the Britain's radical left has created a much greater platform to address the whole of society and to begin the task of winning the leadership of Britain's nations to a new direction.
Corbyn's 'grass roots' campaign is the opposite to Foot's campaign and his victory as Labour leader in the 1980s, where the left trade union ranks and the mass Campaign for Nuclear Disarmament were used solely as adjuncts to the decision making power of the immensely powerful trade union bureaucracy of the day. But while the political space for a new version of the Social Democrat party, presumably under the Blairites, does not exist (witness what happened to Clegg et al) a Corbyn victory would certainly herald a further disintegration of the parliamentary Labour Party. Already the negative impact of the Scottish National Party's victory in Scotland for the future governmental prospects in Westminster of the traditional Labour Party is causing serious self-searching among Labour's right wing. A Corbyn leadership would bring Labour's crisis to the fore. Quite soon new quasi-party formations would emerge inside Labour and rightist coalitions sought, to prepare against future electoral 'ruination'
The weakness of British mainstream political thought (as reflected in the media debate about Corbyn's campaign) is that it does not understand that Labour's crisis is also a feature of the crisis of the British capitalist political system as a whole. The Empire and the City of London no longer buttress Britain's political stability; they no longer allow the wholesale export of its domestic social violence and economic misery to other, poorer parts of the world. As we approach 2016 a new global economic collapse looms and the EU is in its greatest turmoil since its inception. Mass movements by the near-world's poor and war-torn are on the march towards Europe while the EU itself is in a battle royal over austerity. All of which underlines the global and European dimension of everyday political lives in the UK. And, against that background, the Tories are about to start a excoriating 'debate' in society about EU membership. It is this combination that will frame the next stage of political radicalisation, both to the left and to the right, inside British politics. It will not be a discussion about whether or not to accept Cameron's treaty compromises. It will be a social, political, economic and moral battle about what sort of society is acceptable in an advanced country, what is feasible, what would be based on human need as opposed to the defence of the wealthy; how far is this a European, even a global cause? This debate has the potential to crack wide open all three of the main traditional parties of Britain, as well as challenging the basis of our current, decrepit political system itself.
And the key for the British left in this tussle? Whether or not to join the Labour Party? Whether to set up a left inside the SNP? Build new left parties? Perhaps to federate with the Greens? All, no doubt, important tactical questions to be determined in the concrete conditions of the new reality. What is strategic here (and across Europe) is something that Britain's new left might well learn from Greece as its European interest grows; it is that the various political developments now in creation, including the possibility of a Corbyn victory, will undoubtedly require the utmost political intelligence and imagination to succeed, but most of all, the priority of continuing to build up a fighting mass movement, against austerity, for human dignity and welfare, will, in the end, be the critical precondition for any secure progress.
'Progressive alliance', for the next election. This alliance is to be based on Corbyn's programme, then what she describes as the unique Green contribution and, most importantly for the future, the fact that,
'The beauty of this moment, and what scares the political establishment most, is that the power of your campaign (Corbyn's campaign) is coming from thousands of grassroot voices - not a diktat from above'.
Lucas argues that
'The old politics is crumbling, not just in Britain but across our continent.' But she expresses her disappointment that Corbyn's campaign has
'Not focused more on reforming our ailing democracy. A truly progressive politics fit for the 21st century requires a voting system which trusts people to cast a ballot for the party they believe in.' And Lucas goes on to suggest that if Corbyn were to win his Labour Party leadership bid, the momentum would open the opportunity for him to spearhead the call for a Constitutional Convention
'To allow people across the country to have a say in remodelling Britain for the future.'
Exciting stuff.
The gathering of popular support for Corbyn is certainly a remarkable political fact - first brought into life by the mass demonstration called after the General Election in June - by the Peoples' Assembly. Hundreds of thousands marched in London (with a large Green contingent) showing the awakening of a new, youthful based political current, that regarded the election result, and the traditional parties and choices that it expressed, as not representing them or their hopes. Corbyn's candidacy, and Labour's new internal election rules (that Miliband thought he was borrowing from the US Democratic party) have provided another focus for this new political trend. So much is obvious, and while the concrete details of history are always unique, the new potential radicalisation was generally predicted, well before the election, by the leadership of the Peoples' Assembly - among others.
So far the new British radical movement has not been disrupted by events in Greece. But in its most political centres there is increasing interest in the progress of the left organisations across Europe that challenge austerity and a growing recognition that the great questions of the future are inextricably linked to European, not to say global solutions. But although this active layer constitutes hundreds of thousands, if not a million or two, it has yet to 'win' a leadership role in the wider British society. This fact may yet be reflected in a much closer call in Labour leadership elections than expected, if not the defeat of Jeremy Corbyn's candidacy. Should Corbyn win then the Britain's radical left has created a much greater platform to address the whole of society and to begin the task of winning the leadership of Britain's nations to a new direction.
Corbyn's 'grass roots' campaign is the opposite to Foot's campaign and his victory as Labour leader in the 1980s, where the left trade union ranks and the mass Campaign for Nuclear Disarmament were used solely as adjuncts to the decision making power of the immensely powerful trade union bureaucracy of the day. But while the political space for a new version of the Social Democrat party, presumably under the Blairites, does not exist (witness what happened to Clegg et al) a Corbyn victory would certainly herald a further disintegration of the parliamentary Labour Party. Already the negative impact of the Scottish National Party's victory in Scotland for the future governmental prospects in Westminster of the traditional Labour Party is causing serious self-searching among Labour's right wing. A Corbyn leadership would bring Labour's crisis to the fore. Quite soon new quasi-party formations would emerge inside Labour and rightist coalitions sought, to prepare against future electoral 'ruination'
The weakness of British mainstream political thought (as reflected in the media debate about Corbyn's campaign) is that it does not understand that Labour's crisis is also a feature of the crisis of the British capitalist political system as a whole. The Empire and the City of London no longer buttress Britain's political stability; they no longer allow the wholesale export of its domestic social violence and economic misery to other, poorer parts of the world. As we approach 2016 a new global economic collapse looms and the EU is in its greatest turmoil since its inception. Mass movements by the near-world's poor and war-torn are on the march towards Europe while the EU itself is in a battle royal over austerity. All of which underlines the global and European dimension of everyday political lives in the UK. And, against that background, the Tories are about to start a excoriating 'debate' in society about EU membership. It is this combination that will frame the next stage of political radicalisation, both to the left and to the right, inside British politics. It will not be a discussion about whether or not to accept Cameron's treaty compromises. It will be a social, political, economic and moral battle about what sort of society is acceptable in an advanced country, what is feasible, what would be based on human need as opposed to the defence of the wealthy; how far is this a European, even a global cause? This debate has the potential to crack wide open all three of the main traditional parties of Britain, as well as challenging the basis of our current, decrepit political system itself.
And the key for the British left in this tussle? Whether or not to join the Labour Party? Whether to set up a left inside the SNP? Build new left parties? Perhaps to federate with the Greens? All, no doubt, important tactical questions to be determined in the concrete conditions of the new reality. What is strategic here (and across Europe) is something that Britain's new left might well learn from Greece as its European interest grows; it is that the various political developments now in creation, including the possibility of a Corbyn victory, will undoubtedly require the utmost political intelligence and imagination to succeed, but most of all, the priority of continuing to build up a fighting mass movement, against austerity, for human dignity and welfare, will, in the end, be the critical precondition for any secure progress.
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