Two of surely the most delusional people on the planet strolled down the red carpet in
night, talking about growth and keeping Greece among the eurozone
countries. No chance on the first, and close to zero on the second.
Francois Hollande, the newly-elected French president, took more notice of the lightning strike on his plane from
to meet Germany’s
chancellor Merkel than the real state of the economy.
had a government, there is no way the European Union/International Monetary
Fund would meet demands, expressed by voters, for a renegotiation of the
draconian bail-out terms. So much for “democracy”.
Europe is in trouble – serious trouble, with the debt contagion claiming
Greece, Spain, Italy
to name just some of the victims in recession. There are serious doubts whether
the euro could survive a Greek exit from the single currency, as seems likely
But what about the so-called emerging countries? In
to by many as the saviour of the capitalist economy, a measure of money supply and a leading
indicator of economic growth six months ahead has contracted since November. They are shrinking
faster that at any time during the 2008-2009 global meltdown, and faster than
State investment in railways has fallen 44%, with an accelerating decline over recent months. Highway construction has dropped 2.7%. "The data shows extreme weakness in the Chinese economy," said Alistair Thornton from IHS Global Insight in
Beijing. Yes indeed it does: eight of the ten
largest shipbuilders in the country have not received a single new order this
year. "A wave of closures in the shipbuilding industry has yet to begin. A
hurricane is approaching," said one official.
Housing sales slumped 25% in the first quarter, and this has fed into a drastic fall in new building, which employs 10% of the Chinese work-force directly, and a further 20% indirectly. Land sales provide 70% of tax revenue to local authorities and 30% to the central government. Or at least they did.
Ambrose Evans-Pritchard, international business editor of the Telegraph, isn’t known for understatement, but his stark collection of data should make everybody’s eyes widen in alarm. “Something odd is now happening,” he says. “The People's Bank said new loans fell from $160bn (£99.5bn) in March to $108bn in April. Non-conventional lending seized up altogether. Types of credit including ‘trust lending’ fell by 96pc, and ‘bankers' acceptance bills’ by 90pc. This is astonishing data,” says Ambrose, and you have to agree.
Evans-Pritchard and his co-thinkers including Willem Buiter, and Ebrahim Rahbari of Citigroup, still call for miracles in the shape of a new globally co-ordinated collective effort by central banks to pump more fountains of cash into the financial system in the faint hope of staving off a world slump.
Merkel holds the ring in
right now, and she’s got no intention of returning to Weimar-style inflation.
So it’s austerity and “restructuring” all round, whatever Hollande may have
promised the French people who elected him.
The Communist Manifesto was published in 1848, the last time there was a Europe-wide revolt against the old order. With Merkel’s party losing heavily in weekend elections, a new showdown is building between the working people of
and a political class that is helpless, hopeless and committed to a capitalist
economy and financial system beyond repair. In their manifesto, Marx and Engels
wrote, the “proletarians have nothing to lose but their chains. They
have a world to win”. That remains the case today.