And now the markets: the good news or the bad news first? (Part Two)

Posted: July 12, 2010 in Media & Journalism, The economy

Part One of this post (10 July) looked at how the media have reported the “markets” since the financial meltdown of 2008. They present to us an unreal world in which this abstract monster called “the markets” appears to suffer from chronic manic-depression: buoyant one day, panicked and plummeting the next. Alarmingly, it sometimes happens on the same day.

Of course, none of that explains anything to us. It simply confirms a sneaking suspicion that this is not a story about some abstract and helpless entity, buffeted by the worst effects of economic climate change. Aren’t these markets to blame for the crisis we’re in? Isn’t it the speculators, mostly institutional it should be said, who manipulate these fluctuations to make their fortunes? And do we hear much debate on the news about what should be done to curb their enthusiasm for targeting national economies like those of Greece or Spain? To find out, I carried out two further google searches with the following results:

Search 4: “Markets to blame for recession”: 1,040,000 results.

Search 5: “Government crackdown on market speculators”: 57,000 results.

Who’s to blame?

So it seems that there is at least a fierce debate out there about the causes of the recession, with fingers pointed at a range of targets from government to economists to private capital. Here’s just a tiny selection of headlines to give you a flavour:

My favourite, though, has to be this from the Washington Independent, 30 June 2009: 

According to The “Oklahoma Citizen’s Proclamation for Morality” the current economic woes are, like Hurricane Katrina, God’s punishment for the moral laxity that prevails in the USA and in the White House, where Obama has scrapped the “prayer breakfast”:

WHEREAS, we believe our economic woes are consequences of our greater national moral crisis; and

WHEREAS, this nation has become a world leader in promoting abortion, pornography, same sex marriage, sex trafficking, divorce, illegitimate births, child abuse, and many other forms of debauchery; and

WHEREAS, alarmed that the Government of the United States of America is forsaking the rich Christian heritage upon which this nation was built; and

WHEREAS, grieved that the Office of the president of these United States has refused to uphold the long held tradition of past presidents in giving recognition to our National Day of Prayer; and

WHEREAS, deeply disturbed that the Office of the president of these United States disregards the biblical admonitions to live clean and pure lives by proclaiming an entire month to an immoral behavior;

This may come as news to many of us and even give us a laugh but in a way it’s symptomatic of a wider sense of social and cultural bewilderment. In the absence of understanding capitalism as anything other than the natural order of things then it’s hardly surprising that so many of us resort to political or religious explanations, even conspiracy theories, when the order implodes. Somehow, it’s not capitalism that robs us of our home and livelihood, it’s the individual or institutional agent, the politician or the government; or if that doesn’t fit our world-view, some mystical being. Powerful interests dictate that we mustn’t ever be encouraged to think of it as a systemic problem that needs to be radically overhauled. Thus do mainstream politics and media play a crucial role.

An illustration of this is how the political and intellectual classes in Britain now see former PM Gordon Brown. When he was steering Britain through the apparent economic boom, roughly from 1997-2007, he was hailed as one of the greatest chancellor’s in British political history. In a continuation of Thatcherism, he downgraded manufacturing, deregulated the financial sector, turned the City into the flagship of the British economy and promised an end to the phenomenon of “boom and bust” (a Tory legacy but never mind these little New Labour contradictions). Everyone was fine with it as long as times were good but then came the crash in 2008 and Britain went broke.  The political classes that adored Brown now turned on him: he had become a political liability and a busted flush.

And even as the country went to the polls in May 2010, the legacy of what he stood for was apparent for all to see. The same banks the government bailed out with public money in 2008 were now giving the public the two fingers, making huge profits and awarding obscene bonuses to their executives, while market speculators, many of them subsidiaries of the same banks, were gambling on the abilities of EU countries to manage and repay the national debt. There was outrage across Europe and the same political classes that created this Frankenstein now wanted it reined in.

 Cracking down on the market speculators

Of course, this kind of political knee-jerk only happens in times of crisis and as such it’s harder to find headlines in which our leaders call for something to be done about those evil speculators who prey on our national wealth. Here’s just a few:


So does anyone say what’s really going on?

It’s now July and things have calmed down. The latest crisis has passed but nothing has changed. It’s hard work browsing through even just a few of the thousands of online newspapers, blogs and think tank sites, looking for an understandable, progressive critique of the system as opposed to mere criticism of particular monetary policy. But I did find this from Henry Liu, of the Franklin and Eleanor Roosevelt Institute in the USA (9 June 2010). In an article headed, “Memo to Deficit Hawks: Let’s Get the Facts Right”, the bold Henry has this to say:

Fiscal deficits across the eurozone are to be reduced by cutting public sector wages and social benefit and subsidy expenditures so that transnational bank creditors will be paid in full while turning a blind eye to blatant tax evasion and avoidance by the rich with non-wage income that contribute to loss of government revenue and fiscal deficits. The dysfunctional disparity of income and polarization of wealth between the wage-earning masses and the financial elite with income from profit and capital gain, are the main causes of overcapacity in the economy. In past decades, the neoliberal response to overcapacity was to shy away from the obvious solution of raising wages, turning instead to flooding the economy with huge mountains of consumer and corporate debt that eventually resulted in a tsunami of borrower defaults that turned into a global credit crisis. Yet repeating the same response to the current crisis will lead only to another global crisis down the road.

 While the culprits of the global credit meltdown of 2008 have been bailed out with the public’s future tax money, the sovereign debt crisis across the globe is blamed on innocent wage earners for receiving supposedly unsustainably high wages and excessive social benefits that allegedly threaten the competitiveness of economies in a globalized trade regime designed to push wages down everywhere.”

Of all the diagnoses I looked at, and I looked at a lot, none put it in such clear and direct terms as that. Most analyses in the mainstream media are couched in so many qualifying clauses that you can almost imagine the authors making their escape over the prison wall.  But we can blame the politicians, the policy makers, the hedge fund managers and the bankers all we want. We can call for tougher market regulation and higher capital gains taxes until we’re blue in the face, but none of it will change the reality of the current system.

Finally, it seems that amidst all this economic turmoil some commodities are recession proof – pizza and chocolates:

It seems that when times are this bad, stuffing our faces with junk food is the only response the vast majority of us can make.


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