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Stable instability

In the socio-economic life of the planet, one after another is a series of extraordinary events: the bombings in the Moscow metro, the death of the Polish delegation, the national uprising in Kyrgyzstan, a volcanic eruption in Iceland, an environmental catastrophe in the Gulf of Mexico. The dramatic events occur in the financial markets. At the end of last year it seemed that the situation is normalized. Nothing foretold catastrophic consequences. However, once again having problems with confidence in investment banks around the world (the scandal with the bank Goldman Sachs).But what is most important - challenges in the euro area. All this led to a drop in global indexes - the pulse of the global economy.

However, this investigation - not the causes.

Show goes on!

Pandora's Box of European finance is already open. Events in Greece showed the second stage of the global economic crisis. Under the blow fall all the world's capital markets. "There is a risk that the European crisis will turn into something more" - so described the problem of official U.S. Fed Daniel Tarullo.

As it turned out, Greece, only the first link in the chain of countries on the brink of collapse. Following Greece staggered Spain. State Bank of Spain receives control over the regional savings banks CajaSur, losses exceeding 600 million euros. According to various estimates, to clean up its balance sheet may be required from 500 million to 2 billion euros.

The clouds are gathering, and over the larger players. According to the Wall Street Journal, the second-largest bank, Spain's Banco Bilbao Vizcaya Argentaria has difficulties in refinancing short-term loans worth $ 1 billionApparently, this is only the beginning, in that rather transparently hinted Spanish Finance Minister Elena Saldago. Commenting on the situation, she noted the inevitability of such transactions in the near future. As a result, the number of Spanish banks may be reduced by half.

This month, EU countries agreed to a drastic reduction of state spending: total should be cut down 300 billion euros. The main ideologue of fiscal discipline came Germany, which adopted a plan to reduce budget spending by 80 billion euros.

It will not help

It is necessary to stipulate that the second phase of a global depression is, first and foremost, a European headache. The problems of other countries are not comparable with the problems within Europe itself. However, optimists tend to believe that a weak euro could be beneficial to restore production in the euro area.

It is believed that due to the depreciation of the euro could increase European exports. Especially in the U.S.. But here is not so simple. On the one hand, indeed, European exports - to the United States, China, in Russia - could grow due to the fact that it becomes cheaper.But on the other hand, most of the exports of the euro area (approximately two-thirds) are in the very same Europe: some European countries export their goods to other European countries.

And in these other countries introduced austerity. They would be happy and maybe buy more goods from its neighbors, but the money really. So in general the growth of European exports, and, consequently, domestic production, a big question.

Moreover, the weakening of the euro will have a negative impact on non-euro countries.At the beginning of 2010 approximately 27% of all gold reserves of the world were nominated for it in euros. Accordingly, now the country will remit a portion of these reserves into other stable currencies. At first it dollars, pounds sterling, yen and Chinese yuan. And this is already happening.

USA

The established with great difficulty during the first round of crisis U.S. financial system could be dragged into new trouble. European and American banking systems are very interconnected.Problems of European banks may have an impact on the U.S. economy through the deterioration of asset quality and reduced shareholders' equity of U.S. banks.

In the field of view of controlling bodies hit the U.S. the largest financial corporations suspected of creating and working with "toxic" assets (without security). The claims are the five U.S. and four European banks. Federal prosecutors, as well as representatives of the stock exchange regulators have begun a preliminary clarification of the role of banks JPMorgan Chase, Citigroup, Deutsche Bank and UBS in a deal on mortgage securitization and sale of derivative securities to investors.

If the European measures to prevent the debt crisis may be efficient in the near future, the same problems in the U.S. national debt had not even surfaced. Chances are that in the second half of investors will recall the U.S. budget and debt problems are just as sharp. Recall that in this fiscal year in the U.S. budget deficit laid 10,6%.This is almost 2 times larger than the projected deficit in Greece this year.

It is already obvious that the restoration of the U.S. economy slows, as foreign and for domestic reasons. Major trading partners in Europe and Japan are experiencing weak demand. Moreover, in these countries while unsuccessfully trying to deal with deflationary trends. Under strict government savings, reduce costs at the corporate level, as well as in the consumer sector, U.S. companies will inevitably face a lack of demand for their products.

Global Challenge

Issues of public debt and budget deficits affect not only the eurozone.This problem can not be solved by governments around the world. In late June, the Heads of Government "Big Twenty» (G20) devoted to this summit. The issue was discussed in the traditional plane - the powers that agreed to reduce its budget deficit by half of the year 2013.

Of course, such a decision was taken to the fighting in difficult circumstances.Many countries (mainly countries of the Third World ") insisted on the state support the demand in their economies. It should be noted that previously the economies of these states (in the first place, such as China, Brazil, Argentina), fueled by demand in developed countries (Europe and USA). But the crisis of government debt, "catch" the economy "first world". Newly industrializing countries will have to rely on domestic demand.

Acute theme of the summit in Toronto was "building a more sustainable and socially equitable models of the global economy."At first it was planned by establishing a new global economic order, in particular through the introduction of a universal tax on financial speculation. However, progress in this matter was not there.

However, depression in the global economy continues. The head of the IMF Dominique Strauss-Kahn confirmed that 2011 would be less efficient than the current one. "Next year, growth will be lower, but they are far from the indicators of recession", - said the head of the IMF.Note that last week the IMF forecast adjusted in terms of global GDP. In 2010, the forecast adjusted upwards to 4.6% in April instead of the predicted 4.2%. Forecast GDP growth in 2011 stands at 4.3%.

Not as distant prospects

World governments were "flooded" the first wave of money. And spent on measures to rescue the financial market money went to the new inflation bubbles. Speculative overheated economy could destroy any adverse event.Investors are very shy by nature, but with the beginning of this complexity, they become fearful triple. Even someone who was not a speculator, becomes one of fact.

It is now clear that in previous recipes do not work. The EU has already announced no plans to provide financial assistance to Spain. According to European bureaucrats, Greece is a unique and special case for the EU. However, the summit in Toronto showed that "the world's pilots" there is still no answer to new challenges. They can not even impose a minimum tax on speculative finance (not all!).

Economics is boring science? Do not believe it - it's fun! The probability of a second wave of the crisis is very high.If it happens, then we most certainly do not overtake. The specifics of the current situation that likely will not turn of the sharp declines in output than the typical "standard" economic crisis. But belt tightening, weak consumer demand and as a result, depression in the production will continue.

Typically, the capitalist system from such situations are by unleashing a global war ...

Source

Links:

"Long Depression": interview with Karl-Heinz Roth on the world crisis

"Global Capitalism ostaetsya, at best 20 years .."

Fear gives birth to a bright future

Karl-Heinz Roth.New class relations and prospects of the Left

Karl-Heinz Roth. WorldCrisis? World proletarianization?

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