Author`s name Timothy Bancroft-Hinchey

It's the double dip recession

It's the double-dip recession heading our way and if 2008-2009 was the worst crisis since the Great Depression, then what is lurking around the corner? The IMF meeting in Japan last week went the financial analysis into a frenzy and the material that flew off the computer keyboards is not pretty to look at. Not at all.

An excellent example of the shockwaves coming out of the IMF meeting is the excellent article in the Spanish newspaper, el País (*) written by Miguel Jiménez. The article paints an apocalyptic picture, giving an 85% chance that there will be a double-dip recession.

What are the signs that lead to this? Firstly, the world's main economies are shaky. The USA is sitting upon trillions of dollars of debt; the European Union cannot get its act together and the countries which received aid are sliding further and further back under inhuman austerity measures (Greece, Portugal), China's growth is slowing and Japan's political instability can spill over into its economy.

The shaky economies in the developed nations will inevitably have an effect upon the developing nations, and this comes on the threshold of another global food crisis. The same article quotes the Global Projection Model Fund, which states that there is an 85% chance that recession will come to the Euro area, a figure backed up by the International Monetary Fund's study, presented last week in Tokyo.

What to expect? The market-oriented approach to economic crisis was bound to create more problems than it solved. Countries were not protected from harassment of their markets, risk factors were slapped onto the hulls of sinking ships by the ratings agencies vultures, poisoning the present, poisoning the future and the severe, inhuman austerity measures imposed upon economies by the main financial institutions (IMF, ECB) stifle economies by taking money out of circulation instead of pumping money in.

If you restrict the supply of money by cutting salaries and increasing taxation then people do not spend, companies cannot sell, they close down, jobs are lost, the State has to spend more on unemployment subsidies, social unrest grows, crime grows, the social cost grows, there is a brain drain, there is a flight of capital, the future is destroyed.

The answer is not tarring all economies with the same brush and imposing measures on them which they can never support. However, this is the reality in a Europe whose economy is the second largest, or the largest, in the world, a Europe where Spain's economy is in free-fall and where Portugal and Greece have become puppets dancing to the blackmail of those who bailed them out.

The scenario in the Eurozone is dire and there is no way an implosion in Europe will not be felt in the USA and Asia. People should prepare themselves for a prolonged and deep economic and social crisis, caused wholly by market-oriented blind capitalism which morphed into the corporatism we see today.

Gone is your butcher, gone is your grocer, only the big corporations are allowed to enter tenders, the man in the street has lost his power, the reactionary forces are once again holding the bread, cheese and knives in their hands. The quandary is that the powerless can gain back power only by taking to the streets.

There are alternatives as regards raising funds while pumping money into the economies, measures successfully undertaken in Latin America. Western leaders will never follow these measures because the political elite has been infiltrated by the cliques who run the show behind the scenes, rendering western-style democracies a sham.

(*)http://economia.elpais.com/economia/2012/10/12/actualidad/1350073421_822517.html

Timothy Bancroft-Hinchey

Pravda.Ru