Commentary on Political Economy

Thursday 4 August 2011

The Merry Go-Round (Part 2)

As friends would know, the plunge in markets last night is something I had predicted since the start of the year - repeating ad nauseam the mantra that Bernanke would be forced into QE3 by the fact that "the fracture" in the US capitalist elites would stymie any action on the fiscal front, even in view of the remarkable 'gutlessness' of the current President. What is needed in the US is a change in the institutional framework so that the will of the nation, its true human resources are fully utilised and not laid to waste by the need to meet the "obligations" (that is what bonds are known as) of interest repayments on "privately-held debt" that only became "public debt" because Finanzkapital re-cycled ill-gotten profits from "emerging countries" (now being submerged in a sea of greenbacks with inflation and high interest rates from China to India and Brasil, Turkey and soon even Germany!)...

All this because the European Central Bank is foolishly protecting the interests of German exporters at a time when the rest of Europe is crying desperately for lower rates and massive reflation of their economies (not the austerity they are practising!) so that the so-called "public debt" can be gnawed down by a healthy bout of inflation and financial repression!

All these things you will find on this site, if you look carefully, especially at the theoretical material that explains how these capitalist economies "work", although right now they are not because of "the merry go-round" of Finanzkapital selling off European bonds to protect their "cash" (promptly reinvested in US treasuries) from the effects of the indecisiveness of their governments still squabbling over who is going to payfor the crisis and which banks are going to fail while the entire ship goes down! German industrial capital is in it as well, not wishing to see any form of "inflation" that will threaten its exports to China - which will collapse soon with the Chinese economy, anyhow, because of its incurable imbalance toward exports and infrastructure spending, rather than on raising living standards for its workers!

Perhaps our most recent prediction (only a few months ago) was that the European banking system would collapse and its banks be bought over by well-cashed-up US counterparts - a prediction borne out by the recent catastrophic results of EU banks (Lloyds just joined them last night) and the excellent ones of the Bernanke-led US counterparts!

Few prizes for guessing where resources and Australia and Canada are headed! They are suffering from the worst form of 'Dutch disease' and their currencies will pay dearly for it - I hope Gross and Paulson are reasing - for their sake!

I will come back later with more news. I am writing a review of Jurgen Habermas's theory of "Labor and Interaction" and applying it to Nietzsche as part of my book on the philosopher of Rocken. Gruss gut!

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