To the economists on the list
wwchi at enteract.com
Mon Sep 17 19:46:48 MDT 2001
From: Gary MacLennan <g.maclennan at qut.edu.au>
To: marxism at lists.panix.com <marxism at lists.panix.com>
>Questions from a total economic illiterate:
>How serious are the falls on Wall Street?
Not so bad yet, but this was after they spent a week trying to persuade
everyone not to sell, that everything would be ok, going so far as to send
spam e-mails to a large section of the American public urging them to buy
stock as a patriotic act; and after they pumped some huge amount of reserve
funds into the market to support the prices of shares; and after they cut
the Federal Reserve interest rate as an economic stimulus.
>Will all this panic on the Exchange plunge USA into a recession (and with
No. It's the other way around. The inevitability of the recession is
causing the panic on the Exchange.
The recession was already pretty much inevitable before Sept. 11 because of
standard capitalist crisis-of-overproduction factors - for our Fred
Goldstein's analysis see this article which was written days before the
But then you add to that the death or unemployment of some huge number of
workers, maybe 100,000, maybe more, in New York; and the insurance losses
which could total from $50 thousand million to $100 thousand million (see
http://news.independent.co.uk/business/news/story.jsp?story=94373 ), and the
financial disaster for the airline industry, and the costs of the war
themselves, and the fall in 'consumer confidence', and the uncertainty about
oil prices - and it turns out that a recession in the U.S. is as certain as
anything can be in finance. And the U.S. was being counted on to pull the
rest of the imperialist world out of the economic doldrums.
>Don't the rate cuts now risk undermining the US dollar?
Not only the rate cuts, but the abrupt return to deficit spending by the
U.S. government. Japan is already terrified to see the dollar falling
against the yen.
>Don't they give the impression that Greenspan is panicking?
>Is he panicking?
I don't think they're panicked. I think they are rationally grasping at
>Will the war preparations help the USA economy?
They will help the weapons sector, but not the economy overall. Weapons are
not very labor-intensive. As the national product is redirected from more
labor-intensive stuff into weaponry, there will be more layoffs and the
spiral will continue. Such is my take, anyway.
>How low can the Stock Exchange go in Tokyo without producing some kind of
>melt down in the Japanese economy? I thought 13 000 was the figure but
>yesterday the index went below 10, 000.
Stock exchange plunges reflect a fall in the rate of profit, rather than
causing it... I think the meltdown has largely taken place, but things can
always get worse. But as to exactly how, I'm no expert.
What it comes down to is that workers everywhere would be well advised to
put together some sort of emergency program of demands to protect their
basic economic survival, because the storm seems to be about ready to hit.
But then I'm not a professional economist either. Am I wrong on any of
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