The mutating crisis of global capitalism | SocialistWorker.org

YOU KNOW that you've been living through a very profound crisis in the system when a whole series of different cultural markers emerge that indicate this. Some of you may know that about a quarter million jobs were lost in the financial services industry, predominantly on Wall Street, in the course of 2008 as banks collapsed.

A number of gallows-humor jokes started to make the rounds in the investment community in New York City, and I'll share with you my favorite, from fall 2008: How do you start a small business? Buy a big one and wait. When that kind of joke is making the rounds through the investment banking community, you know things are bad. Another example of the gallows humor: How do you define an optimist? An investment banker who irons three shirts on Sunday night.

Those are some of the markers. The more serious ones: In March 2009, the Financial Times, arguably the most important English language financial newspaper in the world, started a series called "The Future of Capitalism"--as if this was now an issue.

Let me just quote you a couple passages from the editors of the Times as they launched this series: "The credit crunch has destroyed faith in the free market ideology that has dominated Western economic thinking for a decade, but what can and should replace it?" The next day, they wrote, "The world of the past three decades is gone." (By the way, I think they're right about that, and I'm going to speak to that as I proceed.) And then they proceeded to quote a Merrill Lynch banker, who said, "Our world is broken, and I honestly don't know what is going to replace it."

That gives you a sense of the fact that within the mainstream, the most serious financial analysts understood the gravity and the profundity of what was happening, and that there was a seismic shift--as if the tectonic plates of global capitalism were shifting, and they didn't know where we were going to be when that shifting stops.

But perhaps the one thing that sums up the ruling class panic best was the front page of the Economist from September 27, 2009, after the Lehman Brothers bank collapse. The Economist had a two-word front page: "Oh Fuck!" This was the largest corporate bankruptcy in world history. You thought Enron was big when it went under, owing about $60 billion. Lehman Brothers went under owing about $635 billion to its creditors around the world.

So that's the context, and what it generated was the most massive coordinated central bank intervention into the so-called free market system in the history of global capitalism. We don't know the exact amounts, but the conservative estimate for the size of the bailout packages that comes from the Bank of England is around $14 trillion. That's around the annual output of the American economy.

Once you then factor in the additional $1 trillion they decided to throw in for good measure a number of weeks ago in Europe, and you start factoring in the stimulus packages and so on, we're probably in the area of a $20 trillion intervention to bail out and stabilize the system. This was the scale of the ruling class panic and, as I say, it produced something unprecedented in the history of the system. Never before had world central banks coordinated an intervention like this and on this scale.

But what they did in the course of this was simply push the problem out of the private banks and into the public sector. They socialized the debt--they made taxpayers take on the burden of all the toxic waste that the banks had been selling and holding onto. But in doing that, they raised huge questions about the long-term viability of government debt. So we're now getting these so-called "sovereign debt crises," which has been particularly profound in Europe, with Greece at the forefront,

via socialistworker.org