Economy

The pandemic spreading across the world has triggered a global recession. The ruling class is scrambling to find means of cushioning this savage blow to the economy. In their desperation, they are breaking all the rules that have governed their policy for the past 80 years. The capitalist system is facing its worst crisis ever.

The prospects for the world economy are growing grimmer by the day. Governments are throwing everything they have at the situation. But they have run out of ammo fighting the last crisis. There is no way out under capitalism.

In the latest episode of Marxist Voice, a series of livestreams created by the British Marxists at Socialist Appeal, Rob Sewell (editor of Socialist Appeal) discusses the global economic crisis that has been triggered by the coronavirus pandemic.

In the depths of the 2008 crisis, Beijing rescued world capitalism. The fiscal stimulus they carried out was the largest in world history, at over £500bn. Had it not been for this stimulus, and the global demand it created for raw materials and other goods China needed as a result, the financial crisis would have been an all-out depression. The crisis unfolding before our eyes is far more serious than that of ten years ago. Yet this time, China will not be able to rescue the world, let alone its own economy.

Yesterday's Budget announcement by Tory Chancellor Rishi Sunak attempted to calm the capitalists’ fears with promises of extra spending and stimulus. But British capitalism faces a perfect storm, and the Tories’ promises will soon turn to dust.

The coronavirus has become the catalyst for a crash on the stock markets, with drastic slumps everywhere on ‘Black Monday’. The recent epidemic is a historical accident that has exposed the deep sickness in the capitalist system, which at any moment risks tipping into an even-deeper recession than 2008, Rob Sewell (editor of Socialist Appeal) explains.

The latest outbreak of coronavirus has caused the biggest wave of stock market losses since 2008, wiping $5tn off share values worldwide. Markets are worried that the virus will have a serious impact on an already weak world economy. These fears are not unfounded.

The out-of-touch elite are meeting in Davos this week for their annual exclusive shindig. But the mood amongst the super-rich and their representatives will be glum and gloomy, with their liberal world order facing threats on all fronts.

In August, the expected yield for ten-year Treasury notes fell below the yield for two-year notes for the first time since 2007, with the 30-year bond yield also reaching a new low. The “yield curve” tracks the yield to investors who purchase shares in government debt to be paid back over various time horizons. The national debt accrues as the US Treasury sells Treasury securities in exchange for cash used to finance the government.

Business news headlines recently bemoaned the incidence of “bond yield inversions” in a series of countries as the supposed harbinger of doom and destruction. Many working-class people were left scratching their heads about what on earth this all means. 10 years after the “Great Recession”, many could be forgiven for thinking that we have been living in permanent recession and things can’t get any worse. The reality is that, while things have not been good in most countries, things can also get far, far, worse. In this article, we will explain why.

Stock markets have experienced a roller-coaster ride over the past two months, as Trump’s erratic trade policy has brought the world economy to the brink of recession. In the latest move, Trump yet again partially postponed the introduction of new tariffs, which he announced two weeks ago. This temporary reprieve will do little to solve the conflict.

At the recent meeting of the World Economic Forum in Davos, the rich and powerful gathered to discuss a strategy for the defence of their system. In the past, the mood of this gathering has been one of confidence and determination. This year, however, it reeked of desperation. The ruling class has gone from victory celebrations to staring into the abyss within the space of just 25 years.

As we step into a new year, the world is facing a decisive turning point. The crisis of capitalism is reaching a new level – one that threatens to overthrow the entire existing world order that was painfully put together after the Second World War. 10 years after the financial collapse of 2008, the bourgeoisie is nowhere near solving the economic crisis. 

Rob Sewell, editor of Socialist Appeal(British paper of the IMT) spoke at the Revolution Festival in London about the 2008 financial crisis, 10 years after the fact. He explains that we are living through perhaps the greatest ever organic crisis of capitalism, from which there has been no meaningful recovery; and that all attempts to deal with the fallout of 2008 (from quantitative easing to austerity) have now disrupted the social and political situation.

Upwards of a trillion-and-a-half Danish kroner in “dirty money” (an amount that corresponds to about 60 percent of the Danish GDP) appears to have passed through the Danish financial giant Danske Bank. This case is just one in a long series of scandals, which show that the bourgeois rule of law is an illusion.

The headline announcement from the latest UK budget was that “the era of austerity is finally coming to an end”. This assurance, coming from a Conservative chancellor, is an indication of just how far the mood in society has shifted. After eight years of cuts borne by the working class, the vulnerable, and the poor, it is clear that ordinary people are no longer willing to tolerate any more hollow rhetoric that “we’re all in this together”.

According to the British chancellor, Philip Hammond, austerity is apparently over. But for the super-rich it looks like it never even began! The latest figures reveal that the international billionaire class made more money in 2017 than in any year in recorded history.

26 years ago, after the fall of the Soviet Union, the defenders of capitalism were euphoric. They spoke of the death of socialism and communism. Liberalism had triumphed and therefore history had reached its final expression in the form of capitalism. That was the moment when Yoshihiro Francis Fukuyama uttered his famous (or notorious) prediction that history had ended. What he meant by this was as follows: now that socialism (in the form of the Soviet Union) had failed, the only possible socio-economic system was capitalism, or as he and others preferred to describe it: “the free market economy”.

Two weeks ago, Trump announced tariffs on another $200bn worth of imports from China. The announcement was met with protests from the Chinese, as well as big business in the US. China responded with tariffs on another $60bn of imports from the US. This trade war reveals the frictions that have been developing for some time between the imperialist powers, and threatens to plunge the world into a new recession.

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