by Raphie de Santos
Darling in an interview in today's Daily Telegraph announced the government is to spend up to £200 bn on buying back government debt. This in effect printing money to try and drive interest rates down by pushing the yield on government bonds down by pushing their price up and pumping cash into the system so that it can be lent out. It's an admission that cutting interest rates has had little effect on the economy and the Bank of England monetary committee may not cut rates as expected this week.
Printing money is a short-term desperate measure as doing this for any length of time is:one,inflationary and two, adds to the public debt which has ballooned from 35% of our economy (GDP) before the out break of the crisis in August 2007 to nearly 48% now. At some point we will have to pay for all this from increased taxes.
Stocks fell again today as the new measures show the desperate weakness of the UK economy. The FTSE 100 touched 3500 at one point. The Left Banker is predicting that the the FTSE 100 will touch the 2000 level over the next 18 months if the stock market reacts in the way it did in the 1974 recession. A full depression will see it hit the hundreds. This of course will have a disastrous affect on working class as a large part of their deferred wages are in their pensions and insurance policies which are invested largely in the stock market - about 80% of the market is indirectly owned by the working class through pension and insurance funds.
Just another manifestation of the crisis of capitalism and how it is pauperising the working class.
More on Left Banker - www.leftbanker.net