Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

European and U.S. Economies Falling Dominoes

Economics / Great Depression II May 29, 2010 - 03:47 PM GMT

By: Shamus_Cooke

Economics

Best Financial Markets Analysis ArticleAttempting to fix an unfixable problem can create new problems.  Why is the global economy unfixable in the current context?  For one, the cause of the depression is never mentioned in the mainstream media or politicians.  And when a disease is misdiagnosed, a prescribed medication creates new afflictions. 


Massive, bad debt is often cited as the cause of the global depression, but whythis debt existed in the first place is never discussed.  Quite simply, the debt was needed to buy the products of corporations that wages once consumed.  Over time, corporations drove down wages to out-compete each other while driving up profits, creating the global “demand” for credit, which the banks are now demanding be paid back. 

Unraveling the global trillions of dollars of bad debt must take the whole system down with it; no amount of “stimulus” will do the trick. Tinkering with the money supply is no fix either.  Mountains of fake wealth (debt) need to be destroyed, taking real wealth down with it, since products (real wealth) were being produced with the idea that the fake wealth would gobble it up.   

As wealth — both real and imaginary — is destroyed, a battle is being waged as to “whose” wealth will be eliminated as a result: that of the corporate-elite or the rest of us.

This fight is apparent for anyone reading the news of any national paper, anywhere.  Bank bailouts are the most blatant example: bank shareholders receive taxpayer money to compensate for their destroyed wealth (bad loans). 

The European Union’s giant bailout package is such an example. The European bankers and corporate-elite in general will have their billions in bad loans repaid by governments.  Meanwhile the taxpaying workers of Greece,Spain, Ireland, Italy, etc., are having their wages reduced, their pensions slashed, their retirement age raised, all to pay for a crisis they did not cause.

It is unknown if Europe can punish its workforce enough to push profits back up to competitive levels; there is a long and turmoil-filled road ahead. 

The corporate-elite of the U.S. is watching closely, since they’ll have to eventually fight a similar brawl with their working class.  Not a day goes by without some politician or corporate-media hack talking about U.S. workers needing to payback the national debt, accumulated through bank bailouts, multiple wars, and years of receding taxes for the rich. 

To pay for these corporate policies, U.S. workers are being told that Social Security and Medicare will need to be reduced, as will social services and public education.  This policy is already underway on a state-by-state level, and wages for all public workers are already under attack as a result.  Obama’s Race to the Top education policy is decimating the public school system nationally. 

The situation can be expected to worsen.  Much of the U.S. “recovery” was predicated on increasing exports (Obama’s goal was to increase exports five fold).

Europe’s collapse will keep the U.S. export business in a coma, since the Euro is plummeting — closing off U.S. exports — while global investors stick with the dollar, boosting its price and thus hurting U.S. corporate exports by making them more expensive.  China will not re-evaluate its currency in this climate.   

Now U.S. government and corporate officials are lecturing the Europeans on how to conduct economic policy, when only months ago the tables were turned.  In reality, the downturn will be protracted, spreading to different areas of the global economy at different times, since both the U.S. and Europe were long-term players in the corporate globalization game that turned millionaires into billionaires.   

There are still many bad loans that will require reconciliation, and workers will be asked to do the “sacrificing.”  The delicacy of the situation is described in a recent article of the corporate Washington Post, titled One False Move in Europe Could Set Off a Global Chain Reaction.  The article states:

“ If one or more [European nations] fail to make the expected progress on cutting budgets, [cutting wages, pensions, etc.] restructuring economies or boosting growth, it could drain confidence in a broad and unsettling way. Credit markets worldwide could lock up and throw the global economy back into recession.”  (May 24, 2010). 

Ultimately, global “investors,” i.e. capitalists, will force governments everywhere to protect their unearned money by destroying the miniscule wealth of the European and U.S. working class.  Workers everywhere must demand that the corporate-elite pay for the crisis they created.  An international slogan is already making its appearance: Tax the Rich and Corporations! 

Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action (www.workerscompass.org).  He can be reached at shamuscook@yahoo.com

Shamus Cooke is a frequent contributor to Global Research.  Global Research Articles by Shamus Cooke

© Copyright Shamus Cooke , Global Research, 2010

Disclaimer: The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of the Centre for Research on Globalization. The contents of this article are of sole responsibility of the author(s). The Centre for Research on Globalization will not be responsible or liable for any inaccurate or incorrect statements contained in this article.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in