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Currency turmoil signals new phase of global economic crisis

From World Socialist Web Site - February 1

Whatever the immediate outcome of the turbulence sweeping through the financial systems of so-called “emerging market” economies, it represents a turning point in the global economy as a whole. The roots of the crisis lie in policies of “quantitative easing”—the pumping of trillions of dollars into the world financial system by the US Federal Reserve and other central banks—initiated in response to the 2008 breakdown that was sparked by the collapse of US investment bank Lehman Brothers.

Much of this money flowed into “emerging markets,” seeking higher profits as share prices in these countries boomed and the rates of return on other financial assets rose. But now the bubble has started to deflate and volatile capital is rushing for the exits, sending currency exchange rates plunging.

A series of central banks, including in South Africa, India, Brazil and Turkey, have raised interest rates significantly. But these actions have so far failed to stem the outflow.

Obama’s low-wage “recovery”

From World Socialist Web Site - January 31

President Obama’s State of the Union address this week coincided with the release of several year-end profit reports. Profits for the firms listed on the S&P 500 stock market index jumped 11 percent in 2013, in large part because of declining wages and the increased exploitation of American workers.

In his national address Tuesday night, Obama acknowledged that “corporate profits and stock prices have rarely been higher, and those at the top have never done better. But average wages have barely budged. Inequality has deepened.” The “cold, hard fact,” he added, “is that even in the midst of recovery, too many Americans are working more than ever just to get by—let alone get ahead.”

As is his wont, the president posed as an innocent bystander, suggesting that some sections of the population had unfortunately missed out on “four years of economic growth.” In fact, the explosion of social inequality the president paid lip service to is the product of quite deliberate policies spearheaded by his administration.

State of the Union: A bankrupt ruling class talking to itself

From World Socialist Web Site - January 30

President Barack Obama’s State of the Union speech was a cynical propaganda piece, filled with fraudulent claims and promises that no one, least of all his audience at the US Capitol, believes in the slightest.

The annual address has long since become an ossified ritual, a kind of national pep rally into which social and political reality seldom intrudes.

With Obama’s speech Tuesday night one had more than ever the sense of the president as chief representative of the financial aristocracy that rules America, speaking to a house filled with millionaire congress members and bought-and-paid-for representatives of big business.

It has more and more come to resemble a political echo chamber, in which the ruling establishment celebrates and talks to itself in utter indifference to the needs and concerns of the country’s working people, the overwhelming majority of the population.

The danger of war in Asia

From World Socialist Web Site - January 29

An editorial in the Financial Times last week, entitled “End drift to war in the East China Sea,” highlighted the growing alarm in ruling circles about the prospect of a conflict between Japan and China. “The possibility of war,” it declared, “is rapidly emerging as one of the biggest security risks facing the world,” and the two governments “are doing nothing to make conflict less likely.”

The FT focussed on comments by Japanese Prime Minister Shinzo Abe at the World Economic Forum in Davos, Switzerland, in which he explicitly drew the comparison between the current rivalry in East Asia and that between Britain and Germany prior to World War I. “For Japan’s prime minister to allow any comparison with 1914 in Europe is chilling and inflammatory,” it stated.


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