File spoon-archives/marxism-international.archive/marxism-international_1997/marxism-international.9710, message 460

Date: Thu, 23 Oct 1997 16:43:18 -0700 (PDT)
Subject: M-I: Re: Global Financial Crisis

On Thu, 23 Oct 1997, Siddharth Chatterjee wrote:

> The article "The Global Financial Crisis" by Prof. Michel Chossudovsky
> presents a frightening picture of the crisis of capitalism looming
> ahead. It basically addresses the issue of the conflict between the
> relations and forces of production. Yet, according to others (our own
> Doug Henwood for example), capital is strong and vigorous. How can
> these two diametrically opposite views be understood? That is, what
> does the hard economic data indicate?

The two don't necessarily exclude one another. Certainly
industrial production in many First World countries is stagnant, for
example, but financial and foreign direct investment has boomed, along
with the industrial plant of the Second and Third World. Here are some of
the compound annual growth rates in specific types of credit instruments,
calculated on the basis of the OECD's report on global financial flows in

Instrument     1970-79  1980-89  1990-96
Eurobonds       20%      30%      22% 
foreign bonds   28%      10%      15.6%
Euroloans       37%       4%      18.7%
total loans     37%       5.8%    17.6%

total debt      40%      14%      19.6%

Quite a tidal flood of liquidity, no? Of course, these figures aren't
adjusted for inflation; real credit growth was probably 25% or so in the
Seventies, dipped slightly in the Eighties, due to generalized austerity,
and turned back up again in the low-inflation Nineties, mostly due to the
West German bailout of East Germany and the financing needs of globalizing
Japanese firms (e.g. in the Seventies, non-European bonds grew faster than
the European kind; in the Nineties, Eurobonds were doing better). These
figures suggest that we haven't had a global deflation or credit collapse
because the new metropoles, Europe and Japan, didn't allow one to happen.
They've effectively bonded their way out of a collapse, though that's not
the same thing as financing a boom.

There is further evidence to support this from the bankwatchers over at
Euromoney. If you add up the total banking assets of what I'll call, for
argument's sake, the Anglo-Saxon zone (the US, Australia, Britain, Canada 
and New Zealand), the Eurostate (West and Eastern Europe), and the East
Asian zone (Japan plus the tigers and China), you get the following grand

Anglo-Saxonia      Eurostate          East Asia
$6.24 trillion     $12.41 trillion    $10.80 trillion

Also note that the US makes up half of the Anglo-Saxon total; in fact, the
assets of the German banking system alone, at around $4 trillion, are
larger than those of the US, though Germany has only a quarter of the
population of America. Similarly, the East Asian total consists mostly of
Japanese banks (around $7.75 trillion total; the partly reunified China
weighs in at $1.11 trillion). Also note that the East Asian figure already
takes into account the huge Japanese bubble deflation of the early 1990s,
which probably wiped out $1 trillion in nonperforming loans from the
Japanese system; the remaining credits are probably sounder than anything
in the US banking system. What this means is that the American
Empire's goose is in the late stages of being cooked: the US is outgunned,
outclassed, and even outfinanced by the new metropoles. Sure, we've got $7
trillion of Wall Street liquidity going for us, but that's all
bubble-wealth, and not the same thing as $7 trillion in claims on real

If nothing else, all this tends to suggest that the leading class
struggles of the 21st century are to be fought on the terrain of the
hegemons of the future, namely the Eurostate/Asiastate.

-- Dennis

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