http://www.globalresearch.ca/index.p...t=va&aid=10977



The financial crisis is deepening, with the risk of seriously
disrupting the system of international payments.

This crisis is far more serious than the Great Depression. All major
sectors of the global economy are affected. Recent reports suggest
that the system of Letters of Credit as well as international
shipping, which constitute the lifeline of the international trading
system, are potentially in jeopardy.

The proposed bank "bailout" under the so-called Troubled Asset Relief
Program (TARP) is not a "solution" to the crisis but the "cause" of
further collapse.

The "bailout" contributes to a further process of destabilization of
the financial architecture. It transfers large amounts of public
money, at taxpayers expense, into the hands of private financiers. It
leads to a spiraling public debt and an unprecedented centralization
of banking power. Moreover, the bailout money is used by the financial
giants to secure corporate acquisitions both in the financial sector
and the real economy.

In turn, this unprecedented concentration of financial power
spearheads entire sectors of industry and the services economy into
bankruptcy, leading to the layoff of tens of thousands of workers.

The upper spheres of Wall Street overshadow the real economy. The
accumulation of large amounts of money wealth by a handful of Wall
Street conglomerates and their associated hedge funds is reinvested in
the acquisition of real assets.

Paper wealth is transformed into the ownership and control of real
productive assets, including industry, services, natural resources,
infrastructure, etc.

Collapse of Consumer Demand

The real economy is in crisis. The resulting increase in unemployment
is conducive to a dramatic decline in consumer spending which in turn
backlashes on the levels of production of goods and services.

Exacerbated by neoliberal macro-economic policy, this downward spiral
is cumulative, ultimately leading to an oversupply of commodities.

Business enterprises cannot sell their products, because workers have
been laid off. Consumers, namely working people, have been deprived of
the purchasing power required to fuel economic growth. With their
meager earnings, they cannot afford to acquire the goods produced.

Overproduction Triggers a String of Bankruptcies

Inventories of unsold goods pile up. Eventually, production collapses;
the supply of commodities declines through the closing down of
production facilities, including manufacturing assembly plants.

In the process of plant closure, more workers become unemployed.
Thousands of bankrupt firms are driven off the economic landscape,
leading to a slump in production.

Mass poverty and a Worldwide decline in living standards is the result
of low wages and mass unemployment. It is the outcome of a preexisting
global cheap labor economy, largely characterized by low wage assembly
plants in Third World countries.

The current crisis extends the geographic contours of the cheap labor
economy, leading to the impoverishment of large sectors of the
population in the so-called developed countries (including the middle
classes).

In the US, Canada and Western Europe, the entire industrial sector is
potentially in jeopardy.

We are dealing with a long-term process of economic and financial
restructuring. In its earlier phase, starting in the 1980s during the
Reagan Thatcher era, local and regional level enterprises, family
farms and small businesses were displaced and destroyed. In turn, the
merger and acquisition boom of the 1990s led to the concurrent
consolidation of large corporate entities both in the real economy as
well as in banking and financial services.

In recent developments, however, the concentration of bank power has
been at the expense of big business.

What is distinct in this particular phase of the crisis, is the
ability of the financial giants (through their overriding control over
credit) not only to create havoc in the production of goods and
services, but also to undermine and destroy large corporate entities
of the real economy.

Bankruptcies are occurring in all major sectors of activity:
Manufacturing, telecoms, consumer retail outlets, shopping malls,
airlines, hotels and tourism, not to mention real estate and the
construction industry, victims of the subprime mortgage meltdown.

General Motors has confirmed that "it could run out of cash within a
few months, which could prompt one of the biggest bankruptcy filings
in U.S. history". (USNews.com, November 11, 2008)) In turn this would
backlash on a string of related industries. Estimates of job losses in
the US auto industry range from 30,000 to as much as 100,000.(Ibid).