“Red warning” on economy

Submitted by Matthew on 19 November, 2014 - 11:12 Author: Martin Thomas

Prime Minister David Cameron has used the occasion of the G20 summit of big-power governments in Brisbane to declare that "red warning lights are once again flashing on the dashboard of the global economy", as in 2008.

"The eurozone is teetering on the brink of a possible third recession... Emerging markets [like Brazil, Russia, India, China, South Africa...] are now slowing down... [There is] instability and uncertainty".

It is not a dispassionate scientific opinion. Cameron wants to use "global warning lights" to square the circle of justifying the Tories’ cuts frenzy while also claiming that the last four years of Tory policy have brought a splendid recovery.

Things are going well, he says, so it’s fine that the rich are raking it in, and it’s all right to cut taxes for them. But uncontrollable global threats mean that the Tories must "stick to our long-term plan" (i.e. continue cuts and pay freezes), "not waver on dealing with debts" (i.e. ditto), and "back business by scrapping red tape" (i.e. scrap protections for workers).

The most likely focus for a new financial crash like 2008 is China, where over-investment and bad debt have ballooned. A crash there has been a possibility for some time. There is no special reason visible why it should happen soon, but no guarantee that it won’t.

More likely than a crash, in fact almost certain, is continuing dull depression. Even in the USA, where output is expanding fairly well, working-class living standards are falling.

The eurozone is stuck on a manic policy of cuts all round which is justified as making countries’ economies more "competitive". It can’t possibly make them all more competitive relative to each other, but it will make them all more depressed — just as Tory education minister Michael Gove’s demand that all schools become "above average" could only make them all more stressed.

Tory Britain is not an island of recovery threatened only by external factors beyond its control. In London, as globally, the free-wheeling financial profiteering which led to the 2008 crash has not been curbed. The drastic government intervention, nationalisations of banks and so on, done in the crisis days of 2008 is being unwound as fast as the governments can manage. New regulations for banks have been introduced, but only mildly and slowly.

And working-class living standards are still being squeezed.

The ills of the global economy are a reason for rejecting capitalism, not for supporting the Tories’ "long-term plan".

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