On the slide?

Consider the following:

Stock markets have fallen worldwide amid concerns about the effect of higher global interest rates on company profits, takeovers and loan defaults.

The US Dow Jones index lost 311.5 points, or 2.3%, to 13,473.57, while the S&P 500 shed 2.3% to 1482.66.

In London, the FTSE 100 closed 203.1 points, or 3.2%, lower at 6251.20.

Many indexes have been trading at their highest levels in recent years, buoyed by low rates that fuelled high levels of consumer and corporate spending.

The concerns are nothing new, and analysts and investors have been warning that a number of factors are combining to create worrying conditions for equity and credit markets.


Over the past few years there has been a boom in company profits, house price increases, and mergers and acquisitions.

Driving this have been low interest rates that have made it cheap for companies and consumers to borrow cash and finance purchases.

That period of cheap cash now seems to been coming to an end with central banks worldwide, including the Bank of England, raising their main rates to slow stubbornly high inflation.

At the same time, oil prices have climbed raising fears that inflation could also pick up again because of the higher energy costs.

Everyone is looking anxiously at the US economy, in particular the housing market.

Sales of existing homes in the US during June fell to the slowest pace since November 2002, giving no sign of an end to the housing slump.

Sales fell 3.8% in June to a seasonally adjusted annual rate of 5.75 million homes.

Figures from the National Association of Realtors also showed that the median price paid for a home rose 0.3% compared with June 2006 to $230,100.

It is the first such increase in average prices for 11 months.

“The past few months have indicated that a bottom has not been reached, which is negative for the economy,” said Richard Dekaser, chief economist at National City Corp in Cleveland.

Workers World has a good article on the crisis:

On July 24 the largest mortgage company in the U.S., Countrywide Financial Corp., reported that its second-quarter losses were much worse than expected and that problems in the subprime mortgage sector reported earlier were now spreading into the prime mortgage market.

Prime mortgages are those loans made to borrowers with solid credit histories. Delinquencies in this area are rising, indicating that the much-discussed problems in the subprime sector were just the first phase of a larger capitalist crisis.

I am reluctant to predict anything from this latest news, like the total collapse of the US economy, as we have been here before. Recall that in 2002, plans were afoot to invade Iraq. And now, five years later, with Blair gone and Bush at his least popular, what chance another war in the Middle East?

Perhaps the prostpects of war are becoming less likely:

Iranian foreign minister Manouchehr Mottaki said Iran would consider meeting the US at deputy foreign minister level, if the US suggested it.

The US and Iranian ambassadors to Baghdad met on Tuesday.

It was only the second direct meeting between officials of this level in almost three decades.

At the meeting, both sides blamed each other for the violence in Iraq.

The US accused Iran of increasing its support for militia groups in Iraq in recent months, but Iran has denied this and said Iraqis were “victimised by terror and the presence of foreign forces”.

However, the two sides did agree to form a security committee, with Iraq, to focus on containing Sunni insurgents.

It would be hard to justify an attack on Iran, let alone a full-scale invasion, so the Empire will stick with rhetoric. What chance a well-timed terrorist attack in the US, with Iran being blamed?

Just asking…

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Thatcher & sons


Last night I watched the documentary Tracking Down Maggie by the inimitable Nick Broomfield. The film, made in 1994, concerns the attempt by Broomfield to secure an interview with Margaret Thatcher, the former British Prime Minister, as she tours the world promoting a book about her time in power.

Alongside this chase by Broomfield is an exposition of the early years of Thatcher, her relationship with her two children, and most importantly, her connections with the arms industry. Not just her connection, her son Mark was (and is?) heavily involved also – and this is years before he got entangled in attempted coup d’etat – and was perhaps involved in the sale of arms to Iraq.

The film has a rather slow pace – indeed, there was a premature voice-over by the announcer, informing the audience of the programme to follow – but I don’t think it has dated too much, despite the absence of Mark Thatcher’s latter troubles with the law in South Africa. Broomfield cannot be blamed for not including future events, but if ever he has the time to update the film, I hope he is able to include footage of Carol Thatcher eating the genitalia of a kangaroo. The cheap shot would be that clip of her pissing in the jungle, but I don’t dislike the woman, and neither does Broomfield, so I hope he lets it slide.

For a bit of background, Broomfield interviews Christopher Hitchens (ahem) who seems to be completely sober, before he opens his mouth, and Francis Wheen (ahem again) who cannot sing to save his soul, may God bless it, though he can tinkle the ivories well enough. The Hitch delivers an anecdote about Thatcher’s sexiness – early evidence of his alcohol problems – and Wheen sings the song of his old school, which he attended with Mark Thatcher.

The appearance of these two ex-leftists amused me. They were leftists at the time, I suppose, though it is such a slow transition that it is hard to demarcate accurately. The Hitch went on to become a fan (and drinking buddy?) of George W. Bush and a keen supporter of the US-led invasion and occupation of Iraq, Wheen has been a little more cautious in this respect – by which, I don’t think he’s actually given the numbskull a pep-talk. Wheen lost my favour (not that he’d be all that bothered) when he came out in support for the “humanitarian intervention” in the former Yugoslavia; nowadays he flirts with the cruise missile left, which is grouped around the Euston Manifesto.

I am not aware if Wheen is still an adherent of Karl Marx, and to be honest, I do not care to find out. He wrote a book on Das Kapital not so long ago, which leads me to suspect he has some remaining interest in Marxist economic theory, but if I recall correctly he loathes Lenin, and so does not care much for imperialism in theory, though he does like the praxis.

Hitchens is now to the right of his brother Peter, who is a Christian traditionalist, and an opponent of the wars in the Middle East. It was the older brother who led young Peter into the Socialist Workers Party, and probably marched him out again. The experience has made no positive impact – Peter is a Tory and Christopher is a wino. Let it be said that I have great respect for Peter these days; he seems a lot saner compared to his elder brother, opposing as he does the wars, the police state measures, and the creation of a centralised European state.

In the documentary, Broomfield highlights the pride which Thatcher has in her spearheading of the Falklands’ War, and fits it into the narrative of the increased productivity and profitability in the arms industry. He fails to contrast this huge growth with the rest of the manufacturing industry, which has been in managed decline for the last three decades. As John Pilger stressed in his documentary on the arms industry, the Tories oversaw the militarisation of the British economy in the eighties.

This trend continues: Des Browne, the Defence Secretary, announced the purchase of two new aircraft carriers yesterday; costing £3.8bn, the construction of the vessels will secure and create a total of ten thousand jobs. These are the figures alleged by New Labour, of course, and thus should be taken with a handful of salt. Another tough and populist announcement was Gordon Brown’s the creation of a border police force – this was debunked immediately, as there was no announcement of additional officers to make up this new force.

The linkage of “defence” and employment does not wash, though. For example, witness the unanimity of opinion against the renewal of Trident in Scotland, despite its supposed employment opportunities. Just as there is no appetite for the revival of military conquest by Britain – to the contrary, support is growing for the disbandment of the British state – few but the defence contractors are keen on a helping of aircraft carriers, no matter how large.

Most people consider that it is far better to concentrate on reviving the productive economy rather than boosting the destructive economy, which is already obscenely bloated.

Brown proves that he is but a physical change from Blair, for the same policies remain in place on a whole host of issues; there was never any chance that Brown would “lurch to the left”, or even meander away from the right by accident. Okay, the super-casinos are out and Brown’s seeking fifty-six rather than ninety days detention – but is that a real change?

Groups and individuals call vainly for a new approach. Yesterday the Federation of Small Businesses called upon the government to intervene in the postal strike, alerting the world of the knock on effects of disrupted services as private sector mail companies are not interested in SMEs. I would support action by the government, on the side of the postal workers, naturally – but this is as likely to happen as Blair being carried through blissful crowds in the West Bank and Gaza.

The government sees the dispute with Royal Mail as key to ensuring that wage demands are kept lower than inflation – as Brown says, “pay settlements must tackle inflation” – and that the Post Office is privatised. Meanwhile, Royal Mail chairman Allan Leighton has been secretly planning to buy BHS, the department store of which he is also chairman; still, Leighton must be hard pressed by inflation, if he has to do more than one job…

Brown doesn’t care about the forty thousand postal workers who will be sacked under the suicidal business plan of the Royal Mail mismanagement; he only mentioned the number of jobs created by the purchase of new arms carriers because they have no other practical use for working people. The strength of support for a public postal service can be gauged by the Department of Work and Pensions, which dumped Royal Mail in favour of UK Mail earlier this year.