Overly pessimistic view ?

["Charles Brown" <CharlesB@xxxxxxxxxxxxxxxxxxxxx>]

Of course,  workers and the poor are the main victims of bad times.

CB

(((((((




>From In Defense of Marxism website (Grant-Woods)

It's still getting worse

The last time I commented on the state of the US and world economy was in
May. The piece was called: "The worst is yet to come".

It's holiday time in the northern hemisphere and things are getting worse
for world capitalism. The US economy is now in "recession", which
capitalist economists define as two consecutive three-month periods when
national output (gross domestic product) falls. The official figures have
not been released yet. We know that in the second quarter of this year, GDP
was down by 0.1% over last year. But we must wait for the third quarter
figures, not released until October, to know for certain that the long boom
of US capitalism, which started back in 1992, is officially over.

There is little doubt that the third quarter figures will confirm the end
of the long boom. For a start, US industrial production has been down for
eight months in a row. That's more than in the great world recession of
1973-74 or in the terrible industrial slumps of 1981-2 or 1990-1. The
utilization of industrial plant and equipment has fallen to its lowest
reading since 1983 and the productivity of American workers had its largest
drop in eight years, falling at an annual rate of 1.8%. At the same time,
more than 3 million Americans filed for jobless benefits in July. That's
higher than any figure since 1992. And in the US, increases in unemployment
usually precede a recession by about seven months. That means the downturn
should begin in the third quarter (and that's where we are now).

What's been different about the end of the long boom this time is that,
while US industrial production has collapsed, the rest of the economy has
apparently continued on its merry way (until now). That's partly because
industry (as defined by the official figures) is now only a small part of
the economy and so has less of an impact on the rest. While the
manufacturing sector has lost 785,000 jobs in the last year, the so-called
service sector has put on jobs (at least until the last month).

The other main reason why the boom has extended beyond the collapse in
industry has been the huge credit and borrowing binge that US households
and corporations have been engaged in, with the connivance of the monetary
authorities represented by the Federal Reserve Bank and its chairman, Alan
Greenspan.

American households, incited by very low interest rates provided by Mr
Greenspan (interest rates are now down 3% since the beginning of the year,
the quickest set of cuts ever), have slipped deeper and deeper into debt to
sustain their spending spree. In June, consumer credit reached a record 22%
of personal income levels, way higher than before the last busts of 1980
and 1990.

This spending spree has kept up demand for cars, electronics gadgets and
other retail items. But above all, it has fuelled a property boom. Last
year, house prices rose by over 8% and home sales continue at an annual
rate of 6 million.

But this binge is coming to an end. That's because the productive sectors
of the US economy have now fallen to their knees and the final blow to the
chin is about to hit them. The reason is clear. The great hi-tech
revolution of the internet that supposedly created a 'permanent boom' has
been exposed as a fraud and the huge bubble of investment pumped into this
sector has not produced great profits, but the opposite, huge losses. As a
result, US company profits are now down 25% on last year and investment in
all sectors of the economy are in free fall.

Full article: http://www.marxist.com/Economy/still_getting_worse801.html