By Nick
Beams
Global
Research, September 15, 2014
On this day
in September 2008, the collapse of the US investment bank Lehman Brothers
sparked the greatest financial crisis since the Great Depression of the 1930s.
Within days of the bankruptcy, the entire American and global financial system
was on the point of disintegration.
The WSWS
continued: “A sea change is unfolding in the US and world economy that portends
a catastrophe of dimensions not seen since the Great Depression of the 1930s.”
It warned that for the working class, the financial meltdown meant “rapid
growth of unemployment, poverty, homelessness and social misery,” while “many
of those who precipitated this economic disaster… will profit handsomely from
the debris they have left behind.”
That
analysis has been entirely confirmed. Six years on, the world economy has not
only failed to recover, it is experiencing continued stagnation, with the
ever-growing threat of a new financial crisis. In the euro zone, economic
output has yet to reach the levels it attained in 2007; Japan stands once again
on the brink of recession; and Chinese economic expansion is faltering. The
growth rate in the US economy is now 16 percent below that of 2005–2007, with
cumulative output losses totaling about 80 percent of gross domestic product.
But despite
stagnation in the real economy, stock markets have hit record highs, boosted by
the provision of ultra-cheap cash from the US Federal Reserve and other central
banks to the financial institutions and banks responsible for the crisis—a
continuation of the policy initiated in the immediate aftermath of the Lehman
collapse.
For the
working class all over the world, the past six years have brought lower wages,
rising social inequality and outright impoverishment. In the United States,
median family incomes fell by 5 percent in real terms between 2010 and 2013,
supposedly years of “recovery.”
The
financial crisis revealed a level of lawlessness on an unprecedented scale, as
major finance houses and banks sold complex financial products they knew were
doomed to fail and then profited on the outcome. Facts and figures produced in
a US Senate report in 2011 revealed that these were nothing short of criminal
operations.
But not a
single top executive of a major US or international bank has been prosecuted,
let alone jailed. The attorney general in the Obama administration, Eric
Holder, has specifically ruled out any prosecution on the grounds it could
jeopardise the US and possibly the global banking system.
In other
words, finance capital and its speculative and parasitic activities are a law
unto themselves. This culture of criminality and illegality in finance finds
its expression in politics: the illegal drone operations and assassinations
carried out by the Obama administration, including of American citizens; the
mass spying by the National Security Agency (NSA) and its equivalents around
the world; and the strengthening of the apparatus of a police state.
The ongoing
breakdown of the global economy underlies the growth of militarism, which is
creating the conditions for the eruption of a new world war. Here the first
place is occupied by the United States.
The
economic problems and contradictions of American capitalism, so graphically
revealed in the collapse of 2008, have only increased since then. This is the
economic impetus for war, as US imperialism seeks to use its military might to
reverse its economic decline and assert its global hegemony.
While the
connections between economic trends and political developments are never direct
and immediate, but always complex, there is nonetheless a profound significance
to the fact that this year, one of deepening economic malaise, both the German
and Japanese governments have broken with the post-World War II geo-political
framework.
The German
ruling elite, powerful sections of the mass media, and the foreign policy
establishment are conducting a campaign to assert Germany’s role not only as
the dominant power within Europe, but as a world power—a return to Hitler’s
agenda of the 1930s.
Likewise,
the right-wing nationalist government of Shinzo Abe in Japan has
“reinterpreted” the country’s constitution to allow Japan to play an
international military role.
The
significance of these events, in which three of the major imperialist
combatants of World War II are asserting their global role, is unmistakeable.
Six years into the global economic breakdown, the major powers, facing
contracting markets and stagnant or negative growth, are determined to fight
for their interests by military means.
The drive
to war is accompanied by militarism at home. The ruling classes everywhere know
they have no economic solution to the ongoing crisis of the profit system.
As a report
prepared by the World Bank, the Organisation for Economic Cooperation and
Development and the International Labour Organisation for the upcoming G20
summit stated, economic growth will “remain below trend with significant
downside risks for the foreseeable future,” while there is “no universal
formula for creating productive, quality jobs.”
Living in
fear of a coming social explosion, the ruling classes everywhere are organising
their repressive apparatuses. The police-military operation in Ferguson,
Missouri was by no means a purely American phenomenon, but reflected the
preparations being made in every country to confront the social consequences of
another financial crisis, the conditions for which are well advanced.
On Sunday,
the Bank for International Settlements (BIS), sometimes known as the central
bankers’ bank, warned in its quarterly review that the present lack of
volatility in global financial markets was not a sign of strength, but rather a
herald of new dangers.
As BIS
chief economist Claudio Borio told reporters in a briefing on the review: “It
all looks rather familiar. The dance continues until the music eventually
stops. And the longer the music plays and the louder it gets, the more deafening
is the silence that follows,” when markets become illiquid precisely at the
moment “when liquidity is needed most.”
The day
after the Lehman crash, the World Socialist Web Site set out a clear political
strategy:
“The entire financial system must be taken
out of private hands… and subordinated to the social needs of the people and
dedicated to developing and expanding the productive forces in order to
eliminate poverty and unemployment and vastly improve the living standards and
cultural level of the entire population.”
Six years
on, the fight for this perspective has become even more urgent as large
sections of the working class, in the US and around the world, have either been
impoverished or seen their living standards slashed, and a generation of
workers, students and youth that has come of age since then faces a future
under capitalism of poverty and war.
(Source: www.globalresearch.ca)