FINANCIAL CRISIS: BEINDING AND BREAKING

The state takes the wrong path to stop the depression

By Robert Kurz

[This article published 11/20/2008 is translated from the German on the World Wide Web, http://www.lebenshaus-alb.de/magazin,005372.html.]




The governments still strike the pose of successful crisis management. “Unorthodox” state guarantees are said to cushion the core meltdown of the global financial system. Presumably only a “targeted” program with cost-neutral measures is lacking to avoid a profound crash of the economy.

Officially this is still a mild calculable recession defined by a zero- or minus-growth over two or three quarters. In reality the state has only given promises without cushioning anything. The expectation that “trust-building” could arise in this way making all guarantees unnecessary is implausible. The guarantees can be recalled after the due date. However the so-called real economy has long been a component of financial capital. The current Opel crisis is not an isolated case caused only by the sharp decline of the mother company General Motors. The banks beautify the balance sheets of all auto-companies. The leasing divisions of the auto-banks are precarious as well as their involvement in the financial bubble economy.

This is true for industrial corporations altogether. In the 1980s, Siemens was ironically described as a “bank with an electronics division.” While the credit crash in the banking system is imminent, the financial crisis now seizes industrial corporations by degrees. To only revitalize the balance sheets, the state must go to the limit of its credit capacity. However nothing is done to promote even the sale of one new car, power plant or computer. The deficit economy of the past years has lived from the credit bubbles that are now bursting. When the International Monetary Fund (IMF) predicts the greatest global collapse since 1945, this amounts to a depression that breaks the mild recession paradigm and makes thinking in quarters ridiculous. That the finance-capitalist revitalization-Keynesianism-credit money is poured in the black hole of insolvent banking- and industrial corporations is not enough any more.

In the expert opinions of the “economic wise men,” it sees this revitalization of the financial system has already been achieved. On the other hand, the government is criticized for its inadequate economic program. State investments and assistance for private investments should now be resolved without regard to deficits. Given the repressed real situation, this will only be possible through an inflation triggered by monetary policy. Therefore the hope for a return to the socio-political Keynesianism of the 1970s is illusionary.

Not surprisingly the “experts” will simultaneously intensify the neoliberal labor market policy. Protection against unlawful termination should be dismantled; the pitiful beginning of the minimum wage should be liquidated. Unemployment benefits I should be cut and the extension for older employees withdrawn. Capital assistance is made a priority and the climate goals of the European Union are cut conforming to the demand of business associations. Instead of raising mass income, the state financing of capital investments should liven up the domestic economy.

The points are set for a state-sanctioned survival of neoliberalism through bending and breaking. If an adventurous financial policy is unavoidable, why should it be at the expense of the ever larger “working poor”? The political class faces legitimation problems since the growth slump that is hard to calculate strikes this class in the super-election year 2009. If a depression should occur, no classical clientele concessions will be possible any more. Therefore the “people’s parties” flee to an imaginary “middle” who one hopes will tolerate a rigid anti-social crisis management for the sake of their own survival with clenched teeth…

The general political situation is shifting. The system-rescuers form a bipartisan rightwing emergency coalition that practices the paradox of a “neoliberal financial Keynesianism” to the bitter end.