Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Silver Price 2021 Roadmap - 22nd Jan 21
Why Biden Wants to Win the Fight for $15 Federal Minimum Wage - 22nd Jan 21
Here’s Why Gold Recently Moved Up - 22nd Jan 21
US Dollar Decline creates New Sector Opportunities to Trade - 22nd Jan 21
Sandisk Extreme Micro SDXC Memory Card Read Write Speed Test Actual vs Sales Pitch - 22nd Jan 21
NHS Recommends Oximeter Oxygen Sensor Monitors for Everyone 10 Months Late! - 22nd Jan 21
DoorDash Has All the Makings of the “Next Amazon” - 22nd Jan 21
How to Survive a Silver-Gold Sucker Punch - 22nd Jan 21
2021: The Year of the Gripping Hand - 22nd Jan 21
Technology Minerals appoints ex-BP Petrochemicals CEO as Advisor - 22nd Jan 21
Gold Price Drops Amid Stimulus and Poor Data - 21st Jan 21
Protecting the Vulnerable 2021 - 21st Jan 21
How To Play The Next Stage Of The Marijuana Boom - 21st Jan 21
UK Schools Lockdown 2021 Covid Education Crisis - Home Learning Routine - 21st Jan 21
General Artificial Intelligence Was BORN in 2020! GPT-3, Deep Mind - 20th Jan 21
Bitcoin Price Crash: FCA Warning Was a Slap in the Face. But Not the Cause - 20th Jan 21
US Coronavirus Pandemic 2021 - We’re Going to Need More Than a Vaccine - 20th Jan 21
The Biggest Biotech Story Of 2021? - 20th Jan 21
Biden Bailout, Democrat Takeover to Drive Americans into Gold - 20th Jan 21
Pandemic 2020 Is Gone! Will 2021 Be Better for Gold? - 20th Jan 21
Trump and Coronavirus Pandemic Final US Catastrophe 2021 - 19th Jan 21
How To Find Market Momentum Trades for Explosive Gains - 19th Jan 21
Cryptos: 5 Simple Strategies to Catch the Next Opportunity - 19th Jan 21
Who Will NEXT Be Removed from the Internet? - 19th Jan 21
This Small Company Could Revolutionize The Trillion-Dollar Drug Sector - 19th Jan 21
Gold/SPX Ratio and the Gold Stock Case - 18th Jan 21
More Stock Market Speculative Signs, Energy Rebound, Commodities Breakout - 18th Jan 21
Higher Yields Hit Gold Price, But for How Long? - 18th Jan 21
Some Basic Facts About Forex Trading - 18th Jan 21
Custom Build PC 2021 - Ryzen 5950x, RTX 3080, 64gb DDR4 Specs - Scan Computers 3SX Order Day 11 - 17th Jan 21
UK Car MOT Covid-19 Lockdown Extension 2021 - 17th Jan 21
Why Nvidia Is My “Slam Dunk” Stock Investment for the Decade - 16th Jan 21
Three Financial Markets Price Drivers in a Globalized World - 16th Jan 21
Sheffield Turns Coronavirus Tide, Covid-19 Infections Half Rest of England, implies Fast Pandemic Recovery - 16th Jan 21
Covid and Democrat Blue Wave Beats Gold - 15th Jan 21
On Regime Change, Reputations, the Markets, and Gold and Silver - 15th Jan 21
US Coronavirus Pandemic Final Catastrophe 2021 - 15th Jan 21
The World’s Next Great Onshore Oil Discovery Could Be Here - 15th Jan 21
UK Coronavirus Final Pandemic Catastrophe 2021 - 14th Jan 21
Here's Why Blind Contrarianism Investing Failed in 2020 - 14th Jan 21
US Yield Curve Relentlessly Steepens, Whilst Gold Price Builds a Handle - 14th Jan 21
NEW UK MOT Extensions or has my Car Plate Been Cloned? - 14th Jan 21
How to Save Money While Decorating Your First House - 14th Jan 21
Car Number Plate Cloned Detective Work - PY16 JXV - 14th Jan 21
Big Oil Missed This, Now It Could Be Worth Billions - 14th Jan 21
Are you a Forex trader who needs a bank account? We have the solution! - 14th Jan 21
Finetero Review – Accurate and Efficient Stock Trading Services? - 14th Jan 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

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.


© 2005-2019 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

6 Critical Money Making Rules