Black Monday: 2 days after

Stock exchanges continue to plunge for the 3rd day. The WSJ oL opens with:

Central Banks Cut Rates World-Wide

The Federal Reserve, ECB and other major central banks announced coordinated cuts in target interest rates, the latest dramatic action to help stem a growing global financial crisis.

Palliative again! Of course, the liquidity and credit crisis is imploding, but policies are not changing anything. As Roubini has detected  in his Oct.3 post on the “cardiac arrest”, CIRCLATING K has almost stopped its circulation.

But no one is coordinating and harmonising ST and LT measures to regulate this hugh crisis of global capitalism. The crisis is likely precipitate  for the same reasons of its origin: an unequal distribution depressing effective demand, and behind it the weakness of the oppressed of the world, the lack of any alternative to usury capitalism, after the fall of totaliarian communism.

Actually, political power and CC.BB.  are turning around themselves, like in a Turkish Dervishi mystical dance, but never get to the point.

1) On the one hand, the “FINANCIAL K PARTY”, as well as other sections of K, push towards an EMERGENCY NATIONALISATION, along financial socialist lines: let’s make the taxpayer pay the crisis a  2nd time (foreclosures, and new taxes to save banks, sub-criminals and Wall Street). On this, as Paul Krugman notes today UK is leapfrogging the US: Paulson just buys toxic derivatives and commercial papers, Gordon Browns nationalises the whole UK banking system (except perhap HBOS). The US will get there as soon as Paulson’s plan will make its failure evident – likely at the start of Obama’s Presidence.

2) On the other hand, markets perceive how hard is the ongoing recession, forecast a deepening of the global recession in 2009, and their stocks precipitate. There is no floor in sight  for stock markets; they have already lost approx. 1/3  of their value and might fall another 50% in a few months (at 1/3 of their top). Then the expected real recession will hit harder and harder, as soon as Asia decelerates abruptly (small export-lead countres are doing it already, then it’ll ne the turn of India and China – see yesterday’s, Oct. 7  Are We Headed Towards a Global Recession?).

3) Without Keynesian-socialist ROBIN HOOD new  rules, fiscal and structural policies, the recession will not touch a floor until 2010, then even a depression is possible.

FINANCIAL SOCIALIST and myopic SR measures on liquidity, are leading the global economy to a historical, unprecedented disaster.


Published in: on October 8, 2008 at 1:23 pm  Leave a Comment  
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