Economic Crisis: A Global Slide into Depression
by Andre Damon
June 24, 2012
It is now coming on close to four years since the collapse of Lehman Brothers in the autumn of 2008. The events of the past several months underscore two fundamental features of the crisis that emerged out of the subsequent financial collapse: 1) that it is systemic, not temporary; and 2) that it is global, affecting every country in the world. Globally integrated capitalism has created a globally integrated catastrophe.
This week, a series of economic figures were released confirming this analysis. Hopes from bourgeois commentators that the debt crisis in Europe could be offset by economic growth in Germany, or that weakness in the West as a whole could be counterbalanced by strong production in Asia, are being dashed with each passing day.
In fact, production in both Germany and China is contracting, in large part due to falling exports. According to Thursday’s figures, Germany’s composite purchasing managers index hit a three-year low, falling to 48.5 in June from 49.3 a month before. The HSBC China Manufacturing Purchasing Managers’ Index likewise fell to 48.1 in June, down from 48.4 in May. It was the eighth consecutive month of readings below 50, indicating contraction.
Other major “developing” economies are doing no better. India’s economy grew only 5.3 percent in the first quarter of the year, its lowest growth rate in nine years and down nearly four percentage points from 2011. The Brazilian Central Bank said last week that the country’s economy probably contracted in April compared with a year earlier, the first such yearly decline since late 2009.
In the United States, the center of world capitalism, the Obama administration is seeking to cover over with honeyed words what is clearly a sharp downturn, following a largely nonexistent “recovery.” The Federal Reserve reported this week that all the basic indicators of economic health have slowed since March, but proposed no serious measures in response.
Corporations are freezing hiring and banks are cutting off loans under conditions of mass unemployment. This week, the number of Americans filing new claims for unemployment benefits remained at very high levels. The four-week moving average for new claims is at its highest since December. According to the Labor Department, the number of available jobs dropped by 325,000 in April, the single biggest monthly decline since September 2008.
Europe reels from one crisis to the next. The stock market surge following the bank bailout of Spain hardly lasted a day before the prevailing sense of gloom in financial circles returned. The general sense of political paralysis was compounded by the ill-fated outcome of the G20 summit in Mexico, which was supposed to conclude with a common agreement on Europe, but in fact ended in discord among the major powers.