Wednesday , 16 August 2017


Is This Pessimistic Outlook For the World Economy Likely to Unfold?

The almost universal consensus, even among mainstream orthodox economists, is pessimistic regarding the world economy. Even though their predictions understate the scope and depth of the crises, there are powerful reasons to believe that we are heading toward a steeper decline than what was experienced during the Great Recession of 2008 – 2009…[Let me explain.] Words: 1656 

So says James Petras (http://lahaine.org/petras) in edited excerpts from an article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited below for length and clarity – see Editor’s Note at the bottom of the page. (This paragraph must be included in any article re-posting to avoid copyright infringement.)

Petras goes on to say, in part:

Many of the major institutions and economic relations which were cause and consequence of world and regional capitalist expansion over the past three decades are in the process of disintegration and disarray. The previous economic engines of global expansion, the U.S. and the European Union, have exhausted their potentialities and are in open decline. The new centers of growth – China, India, Brazil and Russia – have run their course and are de-accelerating rapidly and will continue to do so throughout the year.

The Collapse of the European Union

Specifically, the crises wracked European Union will break up and the de facto multi-tiered structure will turn into a series of bilateral/multi-lateral trade and investment agreements.

  • Germany, France, the Low and Nordic countries will attempt to weather the downturn.
  • The UK…will sink into negative growth, its financiers scrambling to find new speculative opportunities among the Gulf petrol-states and other ‘niches’.
  • Eastern and Central Europe, particularly Poland and the Czech Republic, will deepen their ties to Germany but will suffer the consequences of the general decline of world markets.
  • Southern Europe (Greece, Spain, Portugal and Italy) will enter into a deep depression as the massive debt payments fueled by savage assaults on wages and social benefits will severely reduce consumer demand.
  • Depression level unemployment and under-employment running to one-third of the labor force will detonate year-long social conflicts, intensifying into popular uprisings. Eventually a break-up of the European Union is almost inevitable.
  • The euro as a currency of choice will be replaced by, or return to, national issues accompanied by devaluations and protectionism. Nationalism will be the order of the day.
  • Banks in Germany, France and Switzerland will suffer huge losses on their loans to the South. Major bailouts will become necessary, polarizing German and French societies, between the tax-paying majorities and the bankers.
  • Trade union militancy and rightwing pseudo ‘populism’ (neo-fascism) will intensify the class and national struggles.
  • A depressed, fragmented and polarized Europe will be less likely to join in any…US-Israeli military adventure against Iran (or even Syria).
  • Crises ridden Europe will oppose Washington’s confrontationalist approach to Russia and China.

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The U.S.: The Recession Returns with a Vengeance

  • The U.S. economy will suffer the consequences of its ballooning fiscal deficit and will not be able to spend its way out of the coming world recession, nor can it count on ‘exporting’ its way out of negative growth by turning to previously dynamic Asia, as China, India and the rest of Asia are losing economic steam… Moreover, the Obama regime’s military policy of ‘encirclement’, its economic policy of exclusion and protectionism, will preclude any new stimulus from China.
  • The U.S. and the U.K. will be the biggest losers from the Iraqi post-war economic reconstruction. Of $186 billion dollars in infrastructure projects, US and UK corporations will gain less than 5% (Financial Times, 12/16/11, p 1 and 3). A similar outcome is likely in Libya and elsewhere. US imperial militarism destroys an adversary, plunging into debt to do so, and non-belligerents reap the lucrative post-war economic reconstruction contracts.
  • The U.S. economy will fall into recession [by the end of] 2012 and the “jobless recovery of 2011” will be replaced by a steep increase of unemployment in 2012. In fact, the entire labor force will shrink as people losing their unemployment benefits will fail to register.
  • Labor exploitation (“productivity”) will intensify as capitalists force workers to produce more, for less pay, thus widening the income gap between wages and profits.
  • The economic downturn and growth of unemployment will be accompanied by savage cuts in social programs to subsidize financially troubled banks and industries. The debates among the parties will be over how large the cuts to workers and retirees will be to secure the ‘confidence’ of the bondholders.
  • Faced with equally limited political choices, the electorate will react by voting out incumbents, abstaining and via spontaneous and organized mass movements, such as the “occupy Wall Street” protest.
  • Dissatisfaction, hostility and frustration will pervade the culture. Democratic Party demagogues will scapegoat China; the Republican Party demagogues will blame the immigrants. Both will fulminate against “the Islamo-fascists” and especially against Iran…

China: Compensatory Mechanisms in 2012

China will face the global recession of 2012 with several possibilities of ameliorating its impact.

  • Beijing can shift toward producing goods and services for the 700 million domestic consumers currently out of the economic loop. By increasing wages, social services and environmental safety, China can compensate for the loss of overseas markets.
  • China’s economic growth, which is largely dependent on real estate speculation, will be adversely affected when the bubble is burst. A sharp downturn will result, leading to job losses, municipal bankruptcies and increased social and class conflicts. This can result in either greater repression or gradual democratization. The outcome will profoundly affect China’s market – state relations. The economic crisis will likely strengthen state control over the market.

Russia Faces the Crises

  • Russia’s election of President Putin will lead to less collaboration in backing US promoted uprisings and sanctions against Russian allies and trading partners.
  • Putin will turn toward greater ties with China and will benefit from the break-up of the EU and the weakening of NATO.
  • The western media backed opposition will use its financial clout to erode Putin’s image and encourage investment boycotts though they will lose the Presidential elections by a big margin.
  • The world recession will weaken the Russian economy and will force it to choose between greater public ownership or greater dependency on state funds to bail out prominent oligarchs.

The Transition 2011 – 2012: From Regional Stagnation and Recession to World Crises

  • The year 2011 laid the groundwork for the breakdown of the European Union. The crises began with the demise of the Euro, stagnation in the U.S. and the outbreak of mass protests against the obscene inequalities on a world scale.
  • The events of 2011 were a dress rehearsal for a new year of full scale trade wars between major powers, sharpening inter-imperialist struggles and the likelihood of popular rebellions turning into revolutions.
  • The escalation of…war fever against Iran in 2011 [and to date in 2012] promises the biggest regional war since the US-Indo-Chinese conflict.
  • The electoral campaigns and outcomes of Presidential elections in the U.S., Russia and France will deepen the global conflicts and economic crises….
  • A major trade war will unfold. Washington will aggressively pursue policies limiting Chinese exports and investments. The White House will escalate its efforts to disrupt China’s trade and investments in Asia, Africa and elsewhere.
  • We can expect greater US efforts to exploit China’s internal ethnic and popular conflicts and to increase its military presence off China’s coastline. A major provocation or fabricated incident in this context is not to be excluded [which could]…lead to rabid chauvinist calls for a costly new ‘Cold War’. This will be seen as a desperate effort to prop up US influence and strategic positions in Asia. The US military “quadrangle of power” – US-Japan-Australia-South Korea – with satellite support from the Philippines, will pit China’s market ties against Washington’s military build-up.

Europe: Deeper Austerity and Intensified Class Struggle

The austerity programs imposed in Europe, from the UK to Latvia to southern Europe will really take hold [this year].

  • Massive public sector firings and reduced private sector salaries and job opportunities will lead to a year of permanent class warfare and regime challenges.
  • The ‘austerity policies’ in the South will be accompanied by debt defaults resulting in bank failures in France and Germany.
  • Britain’s financial ruling class, isolated from Europe…will insist that the Conservatives ‘repress’ labor and popular unrest. A new tough neo-Thatcherite style of autocratic rule will emerge; the Labor-trade union opposition will issue empty protests and tighten the leash on the rebellious populace.
  • In a word, the regressive socio-economic policies put in place in 2011 have set the stage for new police-state regimes and more acute and possibly bloody confrontations with workers and unemployed youth with no future.

The Coming Wars that Ends America “As We Know It”

  • To undermine Iran, Washington is expanding clandestine military and civilian operations against Iranian allies in Syria, Pakistan, Venezuela and China. The key to the US and Israeli bellicose strategy toward Iran is a series of wars in neighboring states, world- wide economic sanctions , cyber-attacks aimed at disabling vital industries and clandestine terrorist assassinations of scientists and military officials…During 2011, economic sanctions, which were designed to create domestic discontent in Iran, were the principle weapon of choice…
  • 2012 will likely see a “surprise” aerial and maritime missile attack by US forces on Iran based on a concocted pretext of an “imminent nuclear attack”… It will be a destructive, bloody, prolonged war for Israel; the U.S. will bear the direct military cost by itself and the rest of the world will pay a dear economic price.
  • The war will convert the current recession…into a major depression by the end of the year and probably provoke mass upheavals.

Conclusion

All indications point to this year being a turning point year of unrelenting economic crisis spreading outward from Europe and the U.S. to Asia and its dependencies in Africa and Latin America. The crisis will be truly global. Inter-imperial confrontations and colonial wars will undermine any efforts to ameliorate this crisis. In response, mass movements will emerge moving over time from protests and rebellions, to social revolutions and political power.

*http://www.veteranstoday.com/2011/12/27/a-doomsday-view-of-2012/

Editor’s Note: The above article has been has edited ([ ]), abridged, and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.

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