DESPITE the announcement of various stimulus packages intended to reboot the World Economy, the saga of boom and bust continues, spurred on by growing awareness of the structural inequalities that have been built into the so-called free-market. There is rising anger at the “pork-barrel” spending in the US to save industries mired in a bizarre addiction to debt that has lead to the absurdity of binge-spending, over-weight executives and complete disregard for value on the triple bottom line i.e., economics, ecology and social consequences.
It is as if the whole world, (that’s us) are all now being asked to fund the spending habits of a few executives and to pay the resulting bill for engaging in no-holds-barred capitalism, with more capital (an increase in the money supply) while half of the world lives on $1 a day.
The questionable Keynesian policies being rolled out by Big Government in the interest of Big Business ignores the simple problem – exactly what is it that is going to be stimulated, and what will the consequences be of saving the banks, corporates and industrial oligarchies in the West that have lead us all into the mess in the first place?
TREVOR MANUAL will come to rue the day he chose to support the Dollar and devalue the Rand. South Africa’s entry into financial markets has literally cost every man, woman, and child R6000*. In an instant we have wiped out the gains of the last five years, pushing the currency back to levels that are dangerously close to the devaluation which occurred during the mid-nineties. The Reserve Banks activity in buying the Greenback shortly before the devaluation should become a subject of public inquiry, since in so doing, we have allowed our country to yet again become the slave to Wall Street Bankers.
The recent crisis in capitalism comes after the market in derivatives based upon junk bonds was allowed to get out of hand, forcing the collapse of several banks including US Treasury’s Fannie Mae and Freddie Mac. To call it a “sub-prime” crisis is to miss the point about junk bonds. The continued use of complex derivative schemes that leveraged assets that did not exist, or had little worth in the real world from an equity perspective remains. The problem of what Joseph Stiglitz calls “the phantom economy” , in other words, a false economy, is the result of the abandonment of financial regulations in favour of a wholly deregulated market – George W Bush’s supposed radical reforms. The role of the South African Reserve Bank in the critical period before the devaluation needs to be to be investigated, but is not all that surprising, since the Bank has continued to allow itself to be drawn in as a guarantor of last resort, even for debt that it does not own, propping up the system with tax-Rands.