Anyone reading this thread wishing to seek real answers for causes of the 2008 Crash and its subsequent downward spiral into the Long Slump , getting beyond the "Peak Oil" red herring constantly promoted by the neo-Malthusian reactionery, Falcon, and a few others, could do worse than read the reviews (the book is too damned expensive !) on Amazon of Yanis Varoufakis's " The Global Minataur". Although this book is by a radical Keynsian, so I can't agree with it all, it at least firmly places the crisis in the real, historically valid, world of capitalism as a dynamic system, and its operational structures and periodic, cyclical, systemic failings. This review summary snippet , below,of the specific features of US politico/economic world hegemony after WWII which led up to the Great 2008 Crash, is particularly powerful - and should remind us that that these periodic crisis and Slumps are an integral feature of capitalism, and the 2008 crisis simply WASN'T sparked by any historically unique world oil shortage - any more than the 1929 Crash was. (basic commodity prices , for oil, iron ore, soya, wheat, coal, etc, etc, ALWAYS peak at the highest point of a capitalist speculative frenzy/production boom period, and do of course help to bring that phase of the cycle to an end - but these temporary price spikes are only a small component of the overall speculative crash - and certainly don't mark the turning point from industrialised capitalism back to an agrarian economy in themselves !).
"from the moment Nixon abandons the US gold standard under the pressure of its now increasingly powerful and rivalrous allies (France, Britain, Japan), a pattern almost the reverse of the former... (ie, the Bretton woods agreement post WWII period)... emerges. After the abandonment of gold standard convertibility and the introduction of the floating exchange rates, the US dollar functions as the world reserve currency almost entirely unbound by gold. It can do this thanks to the immense economic and military power of the US, which makes it a safe guarantee for all creditors. As a result, the United States has an "exorbitant privilege" in being able to print dollars pretty much ad libitum and thereby bankroll its massive trade deficits and its enormous military expansion from President Reagan onwards, at the expense of Europe and the new economic powers of East Asia, including today China, whose trade surpluses are promptly invested in US dollar bonds and assets denominated in US dollars. The United States in this way can run up almost limitless debt and can increase its world position in military and economic terms thanks to the seignorage benefits it accrues in this manner - it becomes the 'global minotaur' which receives tribute from all abroad.
But: it can do this only for as long as it is still the most trusted debtor, effectively. And this leads Varoufakis to his analysis of the crisis, which is perhaps the best part of the book. He explains in a clear and easy to understand manner how the endless flow of capital to Wall Street (and lesser gods parasitical upon it, like Iceland and Ireland) which could not be 'recycled' into productive investment led to the creation of a massive financial bubble of ever more remote derivatives and leveraging, which inevitably popped. From Varoufakis' clear overview, there can be no doubt that we haven't seen the end of the crisis yet and that the systemic responses on the part of the Obama administration as well as the European Commission are essentially just attempts to set the clock back, to return to the financialized system from before the collapse of the bubble without making the least serious effort at implementing reforms to prevent it from happening again. This is an important warning that none of the current governments are actually interested in the human consequences of the crisis or in preventing its future recurrence. Moreover, as the example of Japan discussed by Varoufakis shows, a debt-deflationary cycle can take a very long time to get out of, and may well result in a 'lost decade' or longer of nondevelopment of the economy for most people. The author ends therefore with a discussion of how the main challenge is that of the Chinese against the global minotaur and their attempt to supplant it, but this provides no solution of itself, just a change of the guard."
