Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page: http://www.socialistparty.org.uk/issue/551/6466

From The Socialist newspaper, 7 October 2008

The Socialist editorial

Casino capitalism's crisis continues

FTSE 100 UK stock market in record plunge

FTSE 100 UK stock market in record plunge

"Black Mondays used to be a once-a-decade event - now they're coming along more regularly than a London bus" declared one senior London trader as the UK stock market suffered the biggest one day points fall on record.

Stock markets also plunged worldwide on Monday 6 October. Unsurprisingly, it was the banking sector which suffered the biggest losses. The 'credit crunch' is turning into a freezing up of the world financial system. Every day another bank teeters on the brink of collapse.

As The Socialist has repeatedly warned, the finance-dominated, debt driven boom of recent years could not continue indefinitely, and when it reached its limits the world would face a severe economic crisis. Faced with overwhelming evidence, this conclusion has now been drawn by the vast majority of capitalist commentators.

Jeremy Warner summed up the situation in The Independent, saying: "So destructive has this storm in the banking system become that without the correct policy response it is certain to plunge the world into severe recession or even depression. Even a month ago, I would have regarded this as an extreme view which was highly likely to be proved wrong-headed. Yet events have since moved with terrifying speed and there is now a very real chance of them ending very badly indeed."

Far from being able to find a 'correct policy response', the world's governments have been reduced to little more than horrified onlookers, desperately and empirically trying to intervene in response to the latest disaster unfolding before them. Their ineffectiveness was summed up by the president of the World Bank, Robert Zoellick, when he declared simply: "The G7 is not working".

No matter how many emergency summits or 'war cabinets' are held, the efforts of capitalist politicians are having a limited, and sometimes even a negative, effect. Chancellor Alistair Darling's speech, designed to calm the markets, was a trigger for the latest plunge in the FTSE - wiping 100 billion off the value of shares.

The markets had hoped that Darling would announce a 'part-nationalisation' of the entire banking system, using taxpayers' money on a huge scale to rescue the banking sector. Instead Darling limited himself to generalities with virtually no policy content. Nonetheless, the government will have no choice but to introduce some kind of scheme along those lines - a British version of the US $700 billion Paulson plan - in order to try to avert catastrophe. However, as the continued nightmare on Wall Street shows, the announcement of such a plan is far from guaranteed to 'put a floor' under the crisis.

At one stage the possibility of a pan-European version of the Paulson plan was mooted. However, both the British and German governments have said that they will not take part in any EU-wide banking rescue programme. The crisis is laying bare the limits of the European Union.

One of the fundamental contradictions of capitalism is the antagonism between the world market and the nation state. In the previous decade, with the launch of the euro, it could seem superficially that European capitalism had been able to overcome some of those limits. However, this was never fully the case. And now, under the impact of economic turmoil, each national government is acting to try to defend capitalism in its own country, even if doing so damages the eurozone as a whole.

The Irish government broke ranks by declaring it would guarantee all banking deposits in Irish banks. In reality, few, if any, national governments have the funds to 'guarantee' all banking deposits. However, the Irish move put enormous pressure on other countries to follow suit, in order to prevent depositors moving their money to Ireland. A series of countries have done so. Germany, the biggest economy in the EU, panicked by the collapse of Hypo Real Estate, the second biggest mortgage bank in the country, made a similar declaration, only to partially retreat from it later.

As the tensions that have already developed indicate, as economic crisis develops, there will be a possibility of some countries pulling out of the euro altogether. Even a complete breakdown of the currency cannot be excluded.

However, Britain, outside the eurozone, remains among the most vulnerable of the major capitalist powers to the coming recession. The British Chambers of Commerce have described the outlook for the British economy as "exceptionally bad".

Under the pressure of the crisis, a show of unity has temporarily broken out in New Labour. The 'ultra-Blairites' have come behind Brown for now - summed up by Peter Mandelson joining the cabinet for the third time. This will enrage working-class people who remember him as the man who summed up New Labour by declaring: "We are intensely relaxed about people getting filthy rich" and was twice removed from the cabinet for sleaze.

Mandelson's rehabilitation is an indication that, while the government is ineffective and panic stricken in the face of the economic crisis, it is clear on one thing - the working class will be expected to 'tighten our belts'. Over the last three New Labour 'boom years', pay has remained stagnant for 80% of people, while family incomes have fallen for a third. As unemployment starts to rise, a determined struggle by the trade unions and the working class to defend our pay, jobs and conditions is urgently required. This needs to be linked to a mass repopularising of socialist ideas, as the only real alternative to the nightmare of twenty-first century capitalism.

Why not click here to join the Socialist Party, or click here to donate to the Socialist Party.


In The Socialist 7 October 2008:


Credit crunch

Where is the bailout for us?

Editorial: Casino capitalism's crisis continues

Lessons of the 1990s recession in Japan

House building hits new low

Responsibility for the 'age of irresponsibility'

Tories grasp at popularity


Socialist Students

Campaign to defeat fees!

Students look for socialist ideas


Education

University workers fight pension attacks

NUT strike ballot: Action on pay can win


Socialist Party campaigns

A day in the life of a care worker

The sacking of Blair, London's police chief

Socialist meeting blocked by councillor

No to incinerators, give us a real say!

Keep the Metro public!


International socialist news and analysis

Mbeki dismissed by ANC as South Africa's president


Socialist Party workplace news

"Telling the boss: You can't do that"

Fight against the Unison witch-hunt

Frustration with union leadership

Another victory in Greenwich

Workplace news in brief


 

Home   |   The Socialist 7 October 2008   |   Join the Socialist Party

Subscribe   |   Donate  




Related links:

Capitalism:

triangleSwansea Socialist Party: Women - fighting sexism, violence and capitalism

triangleThe Socialist Inbox

triangleDebate: should tower blocks form part of socialist housing policy?

triangleWidening wealth gap, increase in poverty...make the fat cats pay

triangle2018: more upheavals loom

Capitalist:

triangleSocialist sales highest in years as mistrust in capitalist media hits record levels

triangleTrump's incendiary Jerusalem statement reignites Israeli-Palestinian conflict

triangleA world in crisis, ripe for revolution

triangleBrexit deal no solution to Tory rifts

Stock market:

triangleThem & Us

Credit crunch:

triangleThem & Us

triangleWitty take on credit crunch misses problems at heart of capitalism

News and socialist analysis

News and socialist analysis

17/1/18

Labour

Corbyn's Labour needs 100% anti-cuts strategy and fight for democracy

17/1/18

Trump

Victory! Trump's UK visit cancelled by fear of protests

17/1/18

NHS

NHS crisis: under pressure from all angles - end cuts and sell-offs!

15/1/18

Carillion

Carillion crisis: demand action to save jobs and services

10/1/18

Tories

Cabinet chaos as shambolic reshuffle underlines Theresa May's impotence

10/1/18

NHS

Sustained mass movement needed to stop Tories wrecking our NHS

10/1/18

Education

Bigot Toby Young quits - now scrap the new uni regulator driving privatisation

10/1/18

Them & Us

Them & Us

10/1/18

Teachers

Teacher recruitment falls by a third - cut workload, not funding

3/1/18

Fire service

Fire service victory

3/1/18

Fares

Rail: fares up, bosses' pay up - delays and cancellations up

3/1/18

Higher Education

Mobilise against rip-off executive pay

3/1/18

Virgin

NHS in winter crisis as Branson creams off 1bn

3/1/18

Homes

Thousands live in tents and sheds - seize empty homes

3/1/18

Fat cats

Widening wealth gap, increase in poverty...make the fat cats pay

triangleMore News and socialist analysis articles...


Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party

triangle17 Jan Corbyn's Labour needs 100% anti-cuts strategy and fight for democracy

triangle17 Jan NHS crisis: under pressure from all angles - end cuts and sell-offs!

triangle17 Jan We must fight all council cuts!

triangle16 Jan Home care workers to strike

triangle15 Jan Carillion crisis: Demand action to save jobs and services

triangle12 Jan Outrage against 'monster block' plan

triangle12 Jan Mini-strike wave continues and intensifies

More ...

triangle23 Jan Bristol North Socialist Party: 'You can't have capitalism without racism' - was Malcolm X correct?

triangle23 Jan Cardiff West Socialist Party: How the Poll Tax was beaten

triangle24 Jan Caerphilly Socialist Party: The Carillion scandal

triangle24 Jan Cardiff Central Socialist Party: Carillion collapse - Watershed moment for public services

More ...

Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube

Archive

Archives:

January 2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

Legal

SP RSS feed RSS

Platform setting: = No platform choice

V2