When the economic history of the recent period is written, it may well be that the year 2012 is regarded as having been almost as important as 2008.
The collapse of Lehman Brothers four-and-a-half years ago was the trigger that set in motion the breakdown of the global capitalist system. But the past year has made its own mark. It has seen the destruction of a series of fictions assiduously promoted by the spokesmen of the ruling elites in the wake of the onset of the global financial crisis.
First of all, it has exposed the claim that the world economy would somehow right itself through the operations of the business cycle, and that the “magic of the market” would come to the rescue. But well into the fifth year of the global breakdown, the financial system is being sustained only by the activities of the world’s major central banks, which are providing hundreds of billions of dollars to the major banks and finance houses through various forms of “quantitative easing”—a euphemism for printing money.
Far from creating the conditions for “recovery,” however, these operations are simply financing the accumulation of profits through speculation—the very thing that led to the collapse of 2008—and setting the stage for another crash.
Writing in Monday’s edition of the Financial Times, Mohamed El-Erian, the chief executive and co-chief investment officer of the giant bond trader Pimco, noted that “several asset classes now have highly manipulated prices due to experimental bank activities, both actual and signaled,” and that “this situation is reminiscent of 2006-07.”
The past 12 months have also put paid to the illusion that after a period of financial turbulence, “recovery” was just around the corner. All the data on the world economy point to continuing low growth or recession in all the major countries.