The ‘credit crunch’ and the SAD economy

The current financial crisis now appears certain to translate into a very severe downturn. That’s going to mean a lot of hardship for people. But this is also an opportunity for people who are interested in the development of ideas.

We have had a quarter century of the depoliticisation of the economy. The economy has been turned into a technical, micromanagement issue. This has been one of the problems for those now running the economy and helps to explain why they’ve not been able to cope with what has been going on. The current situation gives us an opportunity to repoliticise the economy and raise some profound questions about the nature of capitalism.

The state of the crisis
Things have got worse; worse, I must admit, than I thought they would get a year ago. We have seen the mushrooming or morphing of a sub-prime debt crisis in America into an all-embracing financial crisis and then into a banking crisis that has effected the whole of the Western financial system, and which is now spreading elsewhere. In turn, this has led to generalised economic recession. I’m not sure all those steps were necessary.

Why are these things happening? What it reflects is a fundamental atrophy of economic activity in the West combined with the inability of Western leadership to cope with this economic crisis. While it is often dangerous to make predictions about the future, I believe that the authorities will now find it very difficult to contain these problems.

The actions of politicians and senior bankers have been the expression of an out-of-touch leadership. Many people have greeted the huge injections of cash by governments on both sides of the Atlantic as examples of decisive action. However, the reality is that the response has been schizophrenic. The financial authorities and politicians have oscillated between putting their heads in the sand and hoping the problem will go away - while declaring that ‘the fundamentals are sound’ - or they have engaged in fitful fire-fighting.

For example, the $700billion bailout in the US has been put forward as an instance of decisive leadership. But leadership requires being resolute and consistent. When the authorities oscillated backwards and forwards, not really deciding whether or not there was a real problem, or whether or not to put money into the system, then it was pretty much in the script that the bailout would be rejected by Congress.

When you look at the major economic problems we face in a very technical way, the supposedly bold move to pour $700billion into the economy was devoid of any sense of political leadership or establishing any sense of urgency. Policymakers could then pursue their own agendas and so Congress rejected the original plan. That is not the definition of resolute activity.

Even what the bailout was supposed to do changed very quickly. Originally, the money was going to be spent on buying up toxic financial instruments - effectively worthless IOUs - from the banks rather than to put those funds into the banks themselves to recapitalise them. A few days later, the authorities flip-flopped again and are now buying shares in the banks. The whole crisis has been a catalogue of indecision and a sad reflection on the state of political leadership.

Sourced from: http://www.spiked-online.com/index.p...rintable/5884/



What is your thoughts on all that?

 

I think that is fine but it doesnt matter at all to me why dus it matter so much to you?

 

All my lively hood is Dependant on the economy.
I have many dollars invested in the stock market and seeing my personal equity fall is greatly depressing.

 

That is why i have never invested in the stock market. You can lose so much money in so little time. I am a simple person on a simple salary

 

http://www.spiked-online.com/index.php?/site/printable/5884/

Cite your sources.

 

Well I guess this this issue would not be of that great importants to you.
I would have never guessed that the money that I have invested into the stock markets could have fallen so greatly in a shot time.
Do you think I should sell my shares or wait until the economy stabilizes?

 

u spent what 1 hour on that and its :s

 

No, he copied it from another site.

http://www.spiked-online.com/index.php?/site/printable/5884/

 

Nah, The topic was source from http://www.spiked-online.com/index.p...rintable/5884/
Sorry if it was missleading.

 

Sorry for being off topic, but pounded, are you russian lol?

 

Nah, Im not Russian,
Hah why?

 

The picture you have is of the Russian version of Winnie the Pooh

 

you guys are missing the point

 

Which is?