Capitalist pyramid scheme may come crashing down

Latest

April 9, 2020, San Antonio, Texas: 10,000 people wait in their cars for the San Antonio Food Bank to begin food distribution. The need for emergency food aid has exploded due to the pandemic. It is estimated that 130 million more people worldwide face starvation. There is plenty of food. Food is a basic human right. The government must guarantee that everyone in this country has food.
PHOTO/ © William Luther San Antonio Express-News via ZUMA

 
‘There will be no recovery. There will be social unrest.’
The economy was on thin ice even before the virus hit. Wall Street commentators said all it would take to push it over the edge was a “black-swan” event — something unexpected that came from the sky.
The coronavirus is that event.
Since the 2008 financial crisis, central banks (including the U.S. Federal Reserve) have been pushing trillions of dollars into the capitalist economy to keep it afloat. They have put huge amounts in cheap loans into the hands of banks, corporations, and speculators.
While the rest of us have struggled to make ends meet, these capitalists have been using that money to make more money, widening the class divide.
But robotic production has been lowering both wages and profits in industry, so there have been few places for that cash to go productively.
Instead, corporations have used it to buy back stock, thus artificially inflating stock prices. Hedge funds have thrown billions into the stock market, too, further driving up prices. And they have thrown billions into buying the “junk” bonds that zombie corporations issue to keep themselves afloat.
Speculators also flowed billions into the one thing they could still reap profit from — real estate. They drove up rents and housing prices, sucking the last remaining dollars out of working-class pockets.
Now, that pyramid scheme seems about to come crashing down.
“The risks have been building in the financial system for decades,” the Financial Times wrote in early March. “most striking in the U.S., where corporate debt has risen from $3.3 trillion before the financial crisis to $6.5 trillion last year.”
With businesses laying off and shutting down due to the pandemic, they foresee a domino effect — corporations defaulting on their bond payments, speculators (who used bank loans to buy those bonds) also defaulting, thus throwing a wrench into the whole banking system.
With the whole capitalist system in collapse, it would be worse than 2008 — by far. Even Trump administration officials now predict 20%-30% unemployment. It could be much worse.
What happens then? One of Europe’s biggest capitalists, industrialist Jacob Wallenberg explained. “There will be no recovery,” he said. “There will be social unrest.”
In effect, it will be a brave new world, one in which, as the old song says, we the people “bring to birth a new world from the ashes of the old.”
Not a bad outcome, when you think of it.

+ Articles by this author

Free to republish but please credit the People's Tribune. Visit us at www.peoplestribune.org, email peoplestribune@gmail.com, or call 773-486-3551.

The People’s Tribune brings you articles written by individuals or organizations, along with our own reporting. Bylined articles reflect the views of the authors. Unsigned articles reflect the views of the editorial board. Please credit the source when sharing: ©2024 peoplestribune.org. Please donate to help us keep bringing you voices of the movement. Click here. We’re all volunteer, no paid staff.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Featured

Pregnant Teen Died: Seeks Care in Three Texas Emergency Rooms

Nevaeh Crain cried in pain, too weak to walk, blood staining her thighs. Vomiting and feverish at her baby shower, the teen went to two different emergency rooms, returning home, worse than before. Pregnant women have become untouchables.

No, Immigration Is Not Making Housing Less Affordable

Despite politicians' claims to the contrary, immigration is not making housing unaffordable. In fact, immigration can be part of the solution.

Make Your Vote Count 

This 2024 election is gaining on us and the pressure to get to the ballot box is intense and...

Michigan’s Prescient Lesson: Vote While You Still Can!!! 

Michigan's non-elected Emergency Manager dictatorship made Flint's water crisis possible. Pay attention to the danger of losing our Democratic rights as we’ve known them in this election. Vote while you still can!

US Doctors Tell Biden, Harris They ‘Witnessed Crimes Beyond Comprehension’ in Gaza

US doctors who visited Gaza tell Biden, Harris they've never seen such horrific injuries, on such a massive scale, with so few resources, that our bombs are cutting down women and children, and that a ceasefire must be imposed.

More from the People's Tribune