Friday, 30 April 2010

The Weakness Inherent In The System

I am beginning to suspect there may be something fundamentally faulty with the globalised neo-liberal capitalist economic system. The Greek government has failed, for one reason or another, to manage its economy successfully and it now finds that if it wants to borrow money to fund its expenditure it has to offer interest rates on its bonds that it cannot possibly afford to pay.  Consequently, a 'credit rating agency' has categorised Greek government bonds as junk, thereby reinforcing Greece's economic plight so that Greece can't borrow from the usual financial markets and needs help from the European Union and the International Monetary Fund. Stringent austerity measures must obviously follow.
But these financial markets now see the need for EU and IMF support as putting pressure on the Euro currency so that the value of the Euro has consequently fallen, and stocks and shares have likewise taken a serious dip. The financial markets reaction has thus made the situation worse not just for Greece but for everyone. The value of your shares hasn't fallen because the company is badly run or losing money, but because the markets have got the willies! This raises the question of who is actually running the show. It's not the elected Governments within the EU, or the IMF (an international governmental agency). It's the 'credit rating agencies' and the whizz kids operating between extremes of greed and panic in the financial markets! Who voted for them?
Let us not forget that it was the extremes of greed in the globalised financial markets that led to the 'credit crunch' and the need for governmental bail-outs of the financial markets (i.e. the 'banks'). Consequently, the UK and other countries have debts that will be difficult to repay which will no doubt cause the credit rating agencies to downgrade their assessment of government bonds, leading to further uncertainty and making it more difficult to clear the debt.
Confused? I know I am!

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