Recession

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.

UK economy: smoke and mirrors

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Conflicting figures and competing forecasts for Britain make confusing reading for anyone trying to make sense of what is going on in the economy.

In early autumn 2013 chancellor George Osborne was trumpeting economic recovery, but between October and November 2013 there was a sudden slump of output in construction, and manufacturing flatlined.

By January the International Monetary Fund (IMF) was making optimistic predictions about the British economy, and the coalition is crowing over the rise in employment.

To hell in a Chelsea tractor?

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The news that Vauxhall in Ellesmere Port is to move to a four-day week, albeit with no cut in basic working hours, highlights the predicament facing the UK motor industry. The industry appeared to have recovered from the worst of the recession.

Indeed, luxury and niche producers, like Jaguar/Land Rover - which is now the sector's biggest employer, mainly because of sales of the all-terrain vehicles derided as "Chelsea tractors" - and BMW/Mini are doing extremely well. However, continued recession and the impact of austerity means a drop in demand for cheaper "mid-market" models, especially in Europe.

The inside story: Waving or drowning?

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Considering the state of the UK economy, the figures for employment appear to present a paradox. While GDP has fallen by around 4 percent since the start of the slump in early 2008, employment is down by less than 1 percent over the same timescale. And the latest official figures show that employment has actually increased over recent months. What is going on? How can the economy have flat-lined, while employment seems to be holding up?

If we look behind the headline figures, we'll see that a number of factors are involved. Together they point to the conclusion that the labour market is nowhere near as healthy as it seems.

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.

The gathering storm

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The depth of the devastation of ordinary American lives means that the divisions between workers and protesters that existed in the 1960s have collapsed, writes Megan Trudell

It could be argued that it's been a long time coming. For 30 years, US capitalism's answer to falling rates of profitability has been to restructure - cutting manufacturing jobs, relocating operations from former industrial heartlands to the much more weakly unionised South and West, intensifying work processes, deregulating industry, privatising services and extending working hours while chipping away at wages and holiday and sickness benefits.

Eurozone on the brink of collapse?

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The global economy is entering "a dangerous new phase", said the International Monetary Fund before its annual meeting last month. The same can be said for the European Union (EU) and the eurozone.

At the centre of all the press talk of a capitalist crisis (and this is the phrase increasingly used by papers such as the Financial Times) lies a crisis of the eurozone - the EU economy is bigger than that of the US.

The Big Squeeze

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There is now much discussion about whether the British economy is heading back into recession.

The British economy shrank by 6.5 percent between the spring of 2008 and autumn of 2009. The recovery since then has been anaemic, with growth in the three months to June just 0.2 percent. Output remains significantly below its pre-crisis peak in early 2008. It's clear that most working class people are feeling the pinch, as unemployment rises and living standards are being sharply squeezed even for those in work. Unemployment at the end of June stood at 2.49 million, up nearly 40,000 on three months earlier.

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