ORIGINAL FRENCH ARTICLE: La crise sous le krach
by Pierre Ivorra
Translated Monday 22 August 2011, by Bill Scobleand reviewed by
The Stock Markets’ black week illustrates the seriousness and the permanence of a crisis – the crisis of financialized and globalized capitalism. The only way out is through radical reforms.
The acceleration of the collapse of the financial markets at the end of the week of August 15 illustrates the unheard-of and serious character of the financial crisis that began in 2007 and of the 2009-early 2010 recession.
Its unheard-of character? Of course, the frequency of financial crises has accelerated in recent years, but this one is different due to its violence, its depth, and its extent – no continent has been spared. In addition, it presents the particularity of having necessitated unprecedented government intervention so as to prevent the collapse of the international financial system. Unfortunately, trillions of dollars, euros and yen were injected without anything being demanded in exchange, without any consideration of environmental or social criteria. And it is certainly this absence of any effective conditions aimed at assuring the development of employment, job training, research or human expenses that explains why, unlike at the exit from normal crises, there has not been any frank and real recovery of economic activity in the big capitalist countries.
Its seriousness? The crisis has struck the heart of the financialized and globalized capitalist system and has seriously affected the whole world economy and the living conditions of hundreds of millions of people. In its 2011 report, the International Labour Organization (ILO) estimated the number of unemployed in the world at 205 million in 2010, a figure similar to that of 2009, an increase of 27.6 million over 2007.
Moreover, the aid to failing banking systems, the aid to the big corporations (General Motors in the U.S., Peugeot and Renault in France, …) the budgetary imbalances caused by the economic recession, the worsening of unemployment and the difficulties facing the people in the different nations all caused sovereign debt to the financial markets to skyrocket.
The refusal by the G7 leaders to question the omnipotence of the financial markets and their illusions concerning the virtues of an austerity policy give rise to fears that the world economy will become bogged down in persistent stagnation, or even a new recession. These fears, combined with the euro zone crisis and suspicions with regard to the European banking sector, burdened as it is with a big portfolio of government bonds from the euro zone countries facing the biggest problems, explain the collapse of the equities markets, which have been deserted by capital, which is seeking refuge in what are thought to be trustworthy values: gold, and U.S. and German Treasury bonds.
These movements of capital are inflamed by three things: the desire of the big German corporations to reinforce their domination of southern Europe, the battering-ram attacks of British and U.S. speculative funds, which are betting on a dislocation of the euro zone, and the desire of Washington, thanks to a very expansionist monetary policy, to bolster U.S. growth at the expense of the growth of its partners.
This underlines the responsibility of progressive forces and social movements in France and in Europe. Jacques Delors rightly affirmed that “Europe and the euro are at the edge of the precipice,” but if they are not to fall, it is still necessary to break with the neo-conservatism that is sticking like white on rice to a certain section of the left, and to fight in favor of radical reforms that question the capitalist system itself, and which will make possible gradual escape from the vicious circle of the economic crisis.