It can only end in tears

[Louis Proyect <lnp3@xxxxxxxxx>]

US capitalism: Digging a deeper hole
By Michael Roberts

There's a story about the Great Depression of the 1930s. A distressed
American banker decided to end it all by jumping out a window on the 12th
story of the old Maryland National Bank building in Baltimore. As he was
going by the 5th floor, he was heard to remark: "Well, I'm all right so far."

That was the consensus coming from the economic pundits in the US and UK
until just a few weeks ago. But now the mood is changing. This last weekend
the papers are full of worry and concern with headlines like "Capitalism is
sick" or "It's all gone bear-shaped". The capitalist pundits are worried
that the US and world capitalist economy is not recovering as they
expected. And stock markets around the world are plummeting.

The experts are beginning to agree with what we said last October in this
column: "Indeed, there are four bubbles. The first was hi-tech investment
in dot.com and internet companies. That has well and truly burst. The
second was the collapse of the stock market that financed all those
internet start-up companies. Share prices around the world are now down
30-60% from their peaks in March 2000. But there's further to go. The third
bubble is still expanding: namely, the property market. American and
British households, in particular, having had their fingers badly burnt by
investing in the stock market, continue to push cash and borrow more to buy
bricks and mortar - the safe investment. That bubble has still to burst.
And further down the road is the bubble of paper currencies, in particular,
the dollar.

Now the dollar is falling and the papers are full of concern about how long
the expanding balloon of property prices can go on without bursting.
Stephen Roach is the leading economist at the US investment house, Morgan
Stanley. He comments that the world economy is on "an inherently unstable
path that can only end in tears."

full: http://www.marxist.com/Economy/digging_a_deeper_hole.html

Louis Proyect
Marxism mailing list: http://www.marxmail.org



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