Economic crisis

Economic crisis: State of collapse

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The US government is frantically relieving banks of their "toxic assets". But even the huge amount of dollars used for the buyouts is unlikely to rescue a system which shows all the signs of further collapse

Last month the greatest financial crisis since 1929 swept through the system. As Socialist Review went to press, some commentators were assuring us that "the worst is now over". Those are words we have heard many times since the crisis began in autumn last year.

Economic crisis: Crash course in capitalism

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It will be years for the full effects of the crash of September 2008 to be felt.

The mainstream media ran out of superlatives as they struggled to keep up with the events that threatened the whole basis of the capitalist system. All reflected shock and disbelief that everything that seemed so solid had melted into air.

Every economic crisis in history has been met with similar incredulity and copious explanations as to why very specific conditions caused the "never ending" boom to bust.

Credit crunch: A winning formula?

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The credit crunch has wiped £600 billion - more than £1 million a minute - from Britain's total wealth in the past year.

According to a recent set of figures, which seem almost impossible to take in, these losses are caused largely by falls in the value of houses and shares. They begin to highlight the scale of the economic crisis which is upon us and which shows every sign of getting much worse before it gets better.

The crisis fuels discontent

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Global economic turmoil has led to food riots abroad and spiralling inflation in Britain. Michael Bradley and Judith Orr report on the growing resentment towards the crisis-ridden Labour government

Where did it all go wrong for Gordon Brown? Was it his failure to call a general election last October? Was it the attempt to impose a pay freeze? Was it the vote in parliament to extend detention without trial to 42 days? Just one year into Brown's premiership a recent Gallup poll showed Labour's popularity at its lowest ebb of support since Gallup first asked people to declare their voting intention in 1943. The government is in a crisis that appears out of control and the central issue that is derailing Brown is the economic crisis.

The emperors, and their clothes

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Two new books on the state of the economy expose the speculation and greed that have propped up Gordon Brown's so-called boom years

What a difference a year makes. The conventional wisdom at the beginning of last summer was that the economy was performing wonders. Graham Turner, Larry Elliott and Dan Atkinson were among a small minority of economists and commentators prepared to say the emperor had no clothes. Now everyone can see that they were right.

No such thing as a safe bet in the market

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In April the International Monetary Fund dubbed the growing economic crisis "the largest financial shock since the Great Depression", leading to a one in four chance of a full-blown global recession.

There is little doubt that the US economy is already contracting.

The immediate problem is a pool of bad debt, so-called "toxic waste", clogging up financial markets. The waste is a consequence of the scramble to lend money during the property boom of recent years. Arcane financial innovations, which saw debt parcelled out and gambled on by banks, hedge funds and corporations, ensured that the contagion from dodgy mortgages went global.

Economic crisis: the new 1929 or the new Japan?

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Costas Lapavitsas is an economist at the School of Oriental and African Studies in London. He has written extensively on Marxist theories of finance. He spoke to Socialist Review and answered questions on historical parallels with the current economic crisis and its impact.

Many mainstream economic commentators are comparing the current economic crisis to the one that hit Japan in the late 1980s, which saw the country stagnate for 15 years. How strong are the similarities?

There are some clear similarities. First, the bubble that is now bursting in the US economy is in property. That was the same in Japan. Much of the speculation that led to the crisis of the late 1980s in Japan was related to housing and commercial property.

Jennifer Moses, Gordon Brown and social policy: trust me, I've lost millions

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February's collapse of the London-based Peloton hedge fund was a clear indication of the scale of the banking crisis.

Next we saw the further collapse of the Bear Stearns bank, and even the Financial Times declared that "there is a whiff of 1929 about this".

As the crisis gathered, Peloton managers informed investors that its flagship fund, supposedly worth £1 billion, was worthless and it did not know how much its remaining £800 million fund would have left after banks seized and sold its assets.

Economic crisis: Capitalism exposed

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Every time economic crises develop they are described as aberrations in an otherwise rational and balanced system. Chris Harman looks at the roots and implications of the recent credit crunch, and explains why crises are in fact an intrinsic feature of capitalism.

"Investors are no longer worried whether certain banks have enough cash. They are worried about the risk of a US or even a global recession." So the Financial Times summed up the fear of those who live off capitalist profits on 18 January.

Mainstream economic commentators agree on one thing: the crisis that began in one section of the financial system last summer could be about to create chaos through much of the capitalist system which they support.

Rate of profit warning

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No one can predict whether the recent financial crises will develop into a proper recession.

Some have hailed China's economic expansion and the development of computer technology as potential saviours of the world economy - Karl Marx would have disagreed.

The mainstream economic commentators have all been revising their calculations since the monetary crisis caused by lending to "subprime mortgages" broke in August. Alan Greenspan of the US Federal Reserve Bank thinks the odds on a recession next year have risen to about 50-50, and the International Monetary Fund seems to at least half agree.

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