Economic crisis

A bad year for the extreme centre

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With further elections coming this year in Europe, socialists must organise against racism and for alternatives to neoliberal politics.

If the year just ended had a single guiding theme, it was the accelerating crisis of what Tariq Ali dubs the “extreme centre”: mainstream political parties and institutions that have become addicted to the neoliberal status quo.

December was a fitting end to a year that had already seen Britain reject the EU and the US reject Hillary Clinton. In Austria, where the annulled presidential election run-off was restaged, an independent candidate from the Green Party defeated the far-right Freedom Party of Austria (FPÖ) candidate.

The dynamics of the world economy

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The weakness of the global economic recovery vindicates Marxists' analysis of the 2008 crisis.

It is sometimes hard to remember a time when the world economy was not meandering through a funk of stagnation or teetering on the cusp of some new disaster. Six years ago I wrote a piece for this magazine entitled “The Crisis: Over or Just Beginning?” Fortunately I erred on the side of “just beginning”, describing the much-hyped recovery with three words: weak, fragile and uncertain.

Stock crash shows up sham recovery

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The world’s stock markets were once more in turmoil as Socialist Review went to press.

The immediate trigger appears to have been the sharp downturn in Chinese share prices since July.

This, in and of itself, is a big problem for the Chinese authorities. As well as seeking to contain growing struggles by workers, they have encouraged so-called “middle class” Chinese to invest their savings in the stock market.

What a load of bankers

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Another month and another scandal with the banks — now centred on HSBC. After seven years of being told that “reforms” had been made, a “new start” acted on, “fundamental changes in the culture” made, new “super clean” managers with “openness and integrity” brought in…and we are back to the same old corrupt world of British banking.

Chained to austerity

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Despite slashing public spending, the coalition's economic medicine has failed. Now the economy is taking another turn for the worse.

According to the Greek legend Prometheus, who angered the gods by stealing fire from them, was chained to a rock to have his liver eaten away by an eagle. Each night the liver would grow back so when dawn broke the torture might begin again. So too the budget deficit. No matter the savagery that chancellor George Osborne perpetrates, it is still there the morning after.

The economy's empty smile

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October's market jitters show how confidence in the recovery can flip into panic. But what underlies the turmoil?

Appropriate mood music for London’s stock exchange last month, according to the Financial Times’s James Mackintosh, might have been Anthrax’s “I’m Alive”. For those readers unfamiliar with thrash metal, the relevant lyrics are: “An empty smile / And you’re hypnotised / Selling lies, my enterprise / The sheep just get in line / Capitulate so easily / The power of fear.”

Euro banks fail the stress test

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Bankers were crowing at the end of October when it was revealed that “only” 25 Eurozone banks failed stress tests conducted by the European Central Bank (ECB).

The tests, which looked at how banks would cope with adverse economic conditions, highlighted particular problems for the troubled Italian economy, where nine banks failed, but gave the all clear to much of the sector across Europe.

There are, however, questions about the stringency of the tests, especially as earlier tests, in 2011, cleared banks in Belgium and Ireland months before they had to be bailed out.

New Icelandic myths

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Iceland's Tories, the Independence Party, apparently had good reason to feel satisfied with the last year as they announced a new debt relief plan.

Having presided over Iceland's spectacular financial collapse in 2008, they were returned to office in May.

Despite only receiving a slight increase in their vote, and being forced into coalition with the liberal Progressive Party, they won the finance ministry for their leader Bjarni Benediktsson.

Global recovery fades

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The world suffered the economic equivalent of a heart attack in 2008-9, triggered by the collapse of the Wall Street bank Lehman Brothers. The current condition of the global economy isn't as acute. But a raft of bad economic data over the last couple of months point to a patient whose breathing is starting to become much more irregular.

Across the core of the capitalist system, economies are either slowing, stagnating or contracting. In the United States, the rebound from the crisis was already the weakest on record, hovering at around two percent annual growth. But this has weakened further, slipping to 1.7 percent in the latest set of GDP figures. This is despite four years of $1 trillion plus government deficits and huge injections of cash into the economy by the Federal Reserve, the central bank, on top of that. And it could get worse.

A new phase in the crisis

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The crisis in Europe has entered a new phase. 2008 saw the onset of the worst economic crisis since the 1930s. In 2010, and especially from 2011, there was a marked upswing in resistance, with a series of mass strikes in Greece, Spain, Portugal, France, Belgium and Britain, and the rise of the indignados in Portugal, Spain and Greece last spring and then the Occupy movement in the autumn.

Now the mood of bitterness and revolt against austerity has received a powerful electoral expression which will have major ideological, political and economic reverberations across the continent.

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