Behind latest eruption of global financial instability

‘Green shoots’ nipped in bud by capitalist contraction

BY BRIAN WILLIAMS

The latest eruption of global financial instability—marked by volatile swings in stock market prices, a downward spike in interest rates on long-term U.S. bonds, and a surge in gold prices—is rooted in a deep-going crisis of capitalist production and stagnating expansion of plant, equipment, and jobs.

Standard & Poor’s downgrade of the U.S. government’s credit rating and the banking crisis sweeping Europe—from Greece, Ireland, and Portugal, and now to Italy, Spain, and beyond—are symptoms of an ongoing worldwide contraction, not its cause.

Since 2008 any small uptick in monthly national income figures or employment has been pictured by capitalist governments, politicians, and the media as “green shoots” of a coming end to the crisis. But reality keeps nipping these shoots in the bud.

“Europe’s plan was to have growth fix the problem. America’s plan was to have growth fix the problem. And that’s not going to work,” lamented Harvard economics professor Kenneth Rogoff in the New York Times in early August.

The U.S. unemployment rate most widely publicized by Washington declined by one-tenth of a point to 9.1 percent in July. But that was mainly because 193,000 workers stopped looking for jobs that month. Peering more closely at Department of Labor figures, 117,000 jobs were added in July while some 25 million workers were seeking but unable to get full-time jobs. The so-called “U-6” jobless rate, tucked away toward the back of the department’s monthly report, was above 16 percent. (And counted the way the Labor Department used to before the Clinton administration gussied up the U-6 calculations in 1994, the jobless rate is close to 25 percent.)

The average duration of unemployment in the United States rose to an all-time high in July, above 40 weeks. This is now double where it was when President Barack Obama took office in January 2009. For those between the ages of 55 and 64, the average duration of joblessness is now more than a year.

In fact the longer you’re out of work, the harder the employing class is making it for you to get a job. “It is really a buyer’s market for employers right now,” Harry Holzer, an economist at Georgetown University and the Urban Institute, told the Times. “One consequence is that the long-term unemployed will rack up even more weeks of unemployment,” the paper noted.

Pointing to another indication of the truth about joblessness in the United States, Times columnist Paul Krugman reported August 5 that as recently as June 2007, shortly before the latest “official” recession began, some 63 percent of adults were employed. “In June 2009, the official end of the recession, that number was down to 59.4,” he wrote.

“As of June 2011, two years into the alleged recovery, the number was: 58.2.”

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