but this is a banking crisis..not a free market crisis. ............. Simply put, this mess wouldnt have occured if the banks had been put under greater scrutiny
I'm not convinced that you're not arguing against yourself a bit here Clive?
Are you not saying that by putting the banks under closer scrutiny/ regulation you would have kerbed their excesses, by denying them the unfetted access to a rabid free market? By granting them such a modus operandi however, you have created the very environment that you appear to be trying to distance them from. In other words, I don't see how it can't be a free market crisis, as it is precisely this that has created the mess. Your own conclusion is acknowledging that intervention and the dilution of a free market would have avoided this collective corporate suicide. It is this very contradiction that I have used in pronouncing the death of the free market capitalist philosophy, although I expect social capitalist, mixed economy type of models to continue, and feel that it is these that will emerge from the end of this implosion, whilst the wreaths are hung round the tombstone of things like monetarism.
If you think maunfacturing is some how immune from this, and that this is exclusively a banking crisis, then I think you're likely to be proven sadly wrong (and I suspect you know that too?). The inter-relationship in a capitalist model regarding production and consumption has the banks and the flows of capital pretty well at its foundations, and industry thus relies on this life blood. If it stops pumping from the heart, then the limbs start to die. If you don't believe me watch manufacturing output figures and unemployment rates in the next year.
Today we've seen General Motors have their credit risk upgraded and one of the true giants of corporate America has been forced into denying that they aren't seeking to file for bankruptcy (unthinkable a week ago, yet alone a year ago). Abbey have failed to pass on the interest cut, why? Because they can't afford it? Expect a run on their shares. On the same day it would appear that Iceland might actually be bankrupt as a country as the true scale of their exposure emerges. The stock market fell 8.9% and Wall Street is all over the place too. This is just on one day mind you, what might Monday bring? Tuesday, and then Wednesday?
I'm mildly amused to listen to Fox tonight incidentally, as they're blaming it all on 'Acorn' for "bullying banks into lending to high risk prospects in the sub-prime market". Yeah ...... like campaign groups have a history of being able to bend and bully big banks don't they? Not. But wait for it. Barrack Obama once defended Acorn in a law suite. Guess who they're now blaming for the collapse?
Now I realise Fox is broadcasting at its most pathetic, but it strikes me as being symptomatic of this whole confusion, and worrying need to scapegoat which opportunists always seek to exploit in times of economic uncertainty, rather than indulging in the more challenging (and less palatable analysis of the root causes)
I can't recall the exact figures from 1929 onwards, but I've got it in my head it took until 1954 for the Dow to recover to its 1929 levels? In the 4 years after the immediate crash, stocks continued to fall and lost something like 75% of their value in the next 4 or 5 years?. Unemployment in America rose to 25%?, and Hoover sat by and said the market would sort it out. Widespread social unrest followed with things like the 'bonus riots' and the country's fabric fell apart in desolation with the 'grapes of wrath'. Eventually Roosevelt intervened with a new deal programme and massive public investment and subsidy. Even then the economic slump remained stubborn as for the most part he largely stabalised the situation rather than recover it. It was only with the on set of war and manufacturing growth that the American economy started to pick up.
In Europe the situation was arguably even more dramatic. People turned to radical solutions in national socialism which must have looked like an appealing prospect until such time as it revealed its true identity. The rest as they say is history, and I'm sure it doesn't need me to go over it. The European economies were of course victims of the depression, and then had to recover from the ravages of war to boot. The Soviet Union was no different. They came out of WW1 in a desperate situation. Then had to endure a largely foreign backed and financed civil war in what were already perilous economic circumstances. They resorted to desperate measures and had launch one of the most rapid industrialisation programmes in history in order to protect themselves against the inevitable attack they were going to face from aggressive capitalist interests in the future. When the attack came it was indeed brutal, but they endured it (just) and with an even greater sacrifice and shattering of an already decimated economy. It's hardly surprising that they sought to retain their territorial gains at Potsdam. They needed territory with access to new natural resources and raw materials to try and rebuild a war shattered economy for the third time in 40 years. Having lost 27 million people to WW2 they also needed a productive population. They would of course remain under attack for the duration of Soviet Communism, which meant having to dedicate inordinate amounts of productive capacity and expenditure to arms production and defence, despite this being so much at odds with Marxist Leninist ideology. Indeed it was a contradiction that Lenin was aware of when he wrote 'The State and Revolution', which broadly said you needed a strong state to defend the gains of the revolution, because without one, the agents of capitalism will seek to attack and destory because of the threat it poses to them.
I digress (but then you knew i would) I'll see if I can dig out the economic figures for 1929 to 1939 etc
). I like your draconian ideas and inherent contradictions though.
