The first, Top Economic Strategist warns of ‘Catastrophe and Revolution’ by Rob Sewell looks at warnings from a leading strategist of capitalism in the City:
We are facing the worst economic crisis since the 1930s. Despite all the efforts to bail out the banking system, the economic crisis has only just started to bite. How deep or long the crisis will last is difficult to estimate, but given the financial house of cards built up in the last world boom, the capitalist system has entered unprecedented times, in which a depression cannot be ruled out.
Needless to say, we’ve seen quite enough already. And, yet, it’s likely we’ve only seen the tip of the iceberg. Whole countries in Europe are threatening to go bust. The US is in a position where it will probably go further into recession and maybe depression. The rest of the world waits with bated breath to see which shoe fall next or which bubble bursts.
The artificial boom is giving way to a great downturn. The gloom surrounding the capitalist class is mirrored by their spokespeople. Martin Wolf, the key economic writer for the FT ably expresses the panic and dread of the capitalists. On 20 February, he wrote in his column: “America’s economy risks the mother of all meltdowns”.
Well, the world capital of capitalism should fall if capitalism fails, wouldn’t you think? Keep in mind, this has been brewing for at least 25-30 years. The deindustrialization of the US has played a great part. As well, the Chicago School ethos of the main job for a company is to maximize profit has played it’s part. And don’t forget the warlords and their pathetic attempts to become global hegemon.
In today’s FT, Martin Wolf points to the global outlook from JP Morgan Chase, which was forced to revise down its previous bullish predictions. In their assessment entitled “A bad week in hell”, the bank expects a shrinkage this quarter at an annualised rate of 4 per cent in the US, 3 per cent in the UK and 2 per cent in the euro-zone. However, Wolf qualifies this assessment:
“Given the near-disintegration of the western world’s banking system, the flight to safe assets, the tightening of credit to the real economy, collapsing equity prices, turmoil on currency markets, continued steep declines in house prices, rapid withdrawal of funds from hedge funds and ongoing collapses of the so-called ‘shadow banking system’, these forecasts even look quite optimistic. The outcome next year could be far worse.”
You get the idea. So far, what we’ve done to slow down this crisis is to throw money at those who’ve helped to create it. We’ve yet to see any moves toward an acutal rebuilding of the economy. Until that happens, and as of now it’s likely that any rebulding will only pull us from the depths of this economic downturn, not avert it. Read the article and be scared…be very scared.
The second article, Short squeeze – capitalism is bonkers by Mick Brooks, looks at a recent hedge fund blunder:
It really is a pity capitalism can’t devote as much ingenuity on a cure for cancer as it does on trying to make money or as much resources on getting rid of world poverty as it does on gambling. But it’s a laugh when they get it horribly wrong.
I remember when we found out that one of the Democratic candidates was a hedge funder. The true believers wanted us to think that it was a perfectly legitimate job. Perhaps it is. Here’s a short course in part of hedge funding for you!
Hedge funds are a bunch of locusts who add nothing to the sum total of human happiness. One of the ways they make money is by short selling. Short selling is betting that shares, or other pieces of paper, will go down in price. The hedge fund borrows the shares from an institution for a fee, for example £80 for 8. They sell the shares – that they don’t own! If they’re right and the shares go down they can buy them back later for £64, give the institution 10 shares back and keep £16. Easy peasy.
Man, we need someone as President who thinks this is a viable way to make money.
Well, OK, no we don’t. Hedge funds are locusts and parasites on the well being of society. And I’ll never believe the populist clarion call of a hedge funder.
The reader may very well ask the question: why should an institution lend its assets to a hedge fund whose intention is to sell them short? It’s a good question. The short answer is: that’s capitalism for you.
The article goes on and tells us how the hedge fund vultures had targeted Volkswagen. Who ever thought Porsche would end up being a good guy (in relative terms) in such a saga. Well, have fun reading the article, and have a few good laughs. Sure, it’s all part of our likely economic ruin: I guess it’s better to laugh when we can rather than just keep uttering contempt at the capitalist parasites who run our economy for now.