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Keep socialist blog En Passant going - donate now
If you want to keep a blog that makes the arguments every day against the ravages of capitalism going and keeps alive the flame of democracy and community, make a donation to help cover my costs. And of course keep reading the blog. To donate click here. Keep socialist blog En Passant going. More... (4)

Sprouting sh*t for almost nothing
You can prove my 2 ex-comrades wrong by donating to my blog En Passant at BSB: 062914 Account: 1067 5257, the Commonwealth Bank in Tuggeranong, ACT. More... (12)

My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. http://sharonfirebrace.files.wordpress.com/2014/02/18-2-14-john-passant-aust-national-university-g20-meeting-age-of-enttilement-engineers-attack-of-austerity-hardship-on-civilians.mp3 (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. http://sharonfirebrace.com/2014/02/11/john-passant-aust-national-university-canberra-2/ (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. http://sharonfirebrace.files.wordpress.com/2014/02/4-2-14-john-passant-aust-national-university-canberra-end-of-the-age-of-entitlement-for-the-needy-but-pandering-to-the-lusts-of-the-greedy.mp3 (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole
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Sick kids and paying upfront

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Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. http://sharonfirebrace.com/2013/12/03/john-passant-australian-national-university-8/ (0)

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Forget green shoots, the global freefall continues

One of the iron laws of capitalism in the era of media spin is that every half-baked fad wanting to pass itself off as serious opinion needs a catchy moniker.

Thus the “green shoots” we have been hearing so much of, apparently dotting the landscape of the world economy bringing tidings of better times coming.

Scorched earth is more like it.

In May, just as we were being told by politicians and the media that the world crisis wasn’t as bad as was first thought (a bit rich coming from people who denied we’d even go into recession until a few months ago) the European Commission released a report.

It contained what Times writer Anatole Kaletsky said were “arguably the most catastrophic economic statistics produced by any official institution in the capitalist world since 1945.”

These figures showed that Germany, the world’s fourth biggest economy and, significantly, the largest exporter, suffered the steepest economic collapse ever recorded in a major industrialised nation.

The 3.8 per cent decline in its first-quarter GDP translates into an annualised rate of 16 per cent. That is almost three times the rate of decline in the US and Britain and steeper than most estimates of the economic collapse during the worst years of the Great Depression.

It’s not just Germany. The OECD revealed at the end of May that the combined GDP of its 30 member countries fell 2.1 per cent in the first quarter when compared with the last quarter of 2008.

This is the biggest quarterly contraction recorded since the OECD started collecting such figures in 1960.

Significantly there was only one country, France, where the contraction did not accelerate in the most recent quarter. In itself, this statistic knocks on the head speculation that the downturn is bottoming out.

The US stock market has risen substantially this year, but it is increasingly clear that this rise was built on hope and hype, rather than any solidly based expectation of a revival.

Retail sales figures continue to decline, in spite of expectations to the contrary. Housing “starts” are still falling dramatically – down 12.8 per cent from the previous month in April.

There are counters to the trend – for example mineral imports into China have held up, partly a result of its continued high level of steel production. But that production is not sustainable.

There is no market for Chinese steel – it is simply being stockpiled at an extraordinary rate. This cannot go on forever.

Underpinning the optimists’ predictions, at every stage of this crisis, has been the illusion that the problems in the world economy are accidental or incidental, rather than systemic.

But the reality is that what we are going through is a deep-seated crisis of profitability in world capitalism, one that was put off, but ultimately made much worse, by the huge levels of credit pushed into the economy which sustained the boom for many years.

The unravelling of the bad debt in the system is still, despite everything we have seen, in its early stages. Credit-related losses since the start of 2007 already total more than US$1.3 trillion, but according to IMF estimates could ultimately reach around US$4.1 trillion.

So that means two-thirds of these losses are still hidden in the financial system.

You only need to think in this context about the calamitous effects of the flow-through so far from the financial system into the real economy to get a sense of how off the wall talk of an early recovery is.

Add to that the fact that many of the remedies being put forward by governments could actually make things worse. There is already increasing concern about the effect of countries printing money to finance huge bailout packages.

Even the US dollar has declined as fears about the security of the world reserve currency grow. The situation is much worse for small economies, which face a real risk of massive devaluation and hyperinflation.

The flip side to this is that one of the factors deepening the recession in Europe is that individual countries tied to the euro cannot print money or devalue their currency to write off debt.

The world economy has not disintegrated, as some feared it would last September.

But it is in a downward spiral with no end in sight.

No government or section of the capitalist class has a credible plan to revive either a section of world capital or the world economy as a whole.

And many of the measures taken so far are only creating problems for the future that have the potential to drag the crisis out for at least a decade to come.

If you want a moronic sounding catchphrase to sum up the state of things, forget “green shoots”. Try Chk Chk Boom.

This article, by Corey Oakley, first appeared in this month’s Socialist Alternative.

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Comments

Comment from Arjay
Time June 3, 2009 at 9:21 am

Where does all this debt money come from?It is the fractional reserve system of banking whereby banks can conjure into existence 9 times the amount of money they have in reserve.It dilutes everyone’s wealth through inflation.We cannot counterfeit money,so why should banks be allowed to do so?

The power to create currency should always be in control of the people since it is they who produce real weath and not the financial fantacy land that feeds off it’s own expectation.