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Thursday, 1 May 2014

World economy: Conditions for another crash taking shape

Nick Beams  RINF Alternative News

Almost six years after the eruption of the global financial crisis, it is becoming clear, even to those normally associated with boosting the wonders of the “free market,” that there is something fundamentally amiss in the workings of the capitalist economy.

A recent article in the Wall Street Journal, entitled “Sluggish economic recovery proves resilient,” is typical of a growing stream of commentary on the US economy in the financial press.

It began by noting that: “The recovery from the recession has been nasty, brutish and long. It is also shaping up as one of the most enduring.”

According to the National Bureau of Economic Research, which stipulates the beginning and end of recessions in the US, the American economy resumed its expansion in June 2009, following the financial collapse of September 2008. This means that the “recovery,” already at 58 months, is set to exceed the average length of expansionary phases in the post-war period.

As the article points out, however, this “recovery” bears little resemblance to past episodes. “[A]fter almost five years, the recovery is proving to be one of the most lacklustre in modern times. The nation’s 6.7 percent jobless rate is the highest on record at this stage of recent expansions. Gross domestic product has grown 1.8 percent a year on average since the recession, half the pace of the previous three expansions.”

After canvassing possible reasons as to why this might be the case—from the after-effects of the financial crisis to the onset of “secular stagnation”—the author is only able to conclude that, for whatever reason, the present economic situation is far from the “typical recession.”

He is not alone in his incapacity to provide any understanding of what is clearly an economic breakdown, rather than a conjunctural fluctuation. No bourgeois academic economist or financial commentator has been able to do any better.

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