I came across this article in zmag.org. It gives a great breakdown of the financial crisis and its links way beyond the mortgage and insurance agencies and banks. This recession is due to our economic system as a whole.
As Bello writes, this has been a downward spiral process that mainly took foot in the seventies with the push for further liberalization of the markets and Reagonomics. Neo-liberalization made overproduction an aspect of the free-trade market. This caused a great amount of competition in the market which “limited the growth of purchase power and demand, thus eroding profitability,” as Bello says. This even relates to the subsidies that Western nations use in the market to lower the costs of their agricultural products which make their products cheaper to consume than those same products in other countries that are forbidden to have subsidies under Structural Adjustment Program agreements with the World Bank and the International Monetary Fund. In addition, the powerful rich countries are also able to dictate the supply and demand of the market which causes a decrease in value of foreign products due to overproduction. The system is wasteful in many ways.
Obviously neo-liberalization only encourages this overproduction. By removing state constraints and rulings, corporations are able to to as they please which means moving wealth from the poor to the rich. By bringing many countries into this liberalized economy, the world becomes dependent on these wealthy corporations and banks and governments to dictate their lives. Finally Bello links all this to financialization which is the culprit of this credit crisis. This has to due with the greedy investments by these banks and corporations that pushes the stock market over the edge. They fabricated money when it wasn’t their which turned this system onto itself.
It is amazing how big this system is and how it links to everyone. I just read that the economy of Iceland collapsed today and is probably going to look towards the IMF for a loan (something that is just part of this endless spiral). Deregulation has not worked in the past and is not working now. Until this is challenged and there are not free money giveaways to corporations, maybe the problem can be dealt with. Use the 700 billion for social and environmental infrastructure instead…these are the areas that need it.
Dreaming Fish 