"We are facing a financial crisis or a crisis of market system?
" We have a decline in almost all types of properties. You can see a decline in house prices in the health of manufacturing in the gain of several companies. There is an increase in the delay of payment on the debts of the cars and the payment of the debts of the real estate. There's more to come "Paulson
is possible that mankind is approaching a large-scale economic depression, while not threatened with the same symptoms of the thirties of the century Last, mark the life of everyone in new ways to address any problems and our daily activities. And from already can be seen, working families are most affected, and are these the workers most vulnerable to define appropriate responses to the crisis they face.
holders of the market economy have brought us the system is based on the principle of individual gain. That what is good for one is good for everyone. The gain has become global as the guide for human activity. Individuals pursuing personal interest in the market society, they can each other achieve wealth, which requires efficiency, productivity and use of economies of scale and innovation in the production process to increase production and economic growth that benefits all. Societies have come to accept this model as the most natural, including those with the least likely to benefit from the system. Believe and have faith, as do many of things supernatural, they will also have potential benefits. The development achieved by a minority is presented as the development of society. The truth is that as new developments are achieved in the economic social, scientific difference between those few who have much and the great majority of society are becoming larger. In every crisis the most vulnerable sectors are always working families But mankind in general are paying expensive that development, frequent economic crises, climate change, destruction of natural resources, for this irresponsible action of market forces that sponsor as the end of this company higher profits.
holders of that market theory tells us that would solve the problem of large differences between the haves and the have nots, whether to implement global policies that have economic growth based on a system market, that is leaving that market forces the solution of economic problems. Growth appreciate by more economic products, bigger houses, more travel and comfort, which would better individuals, more open, more talents and more confidence in the individuals themselves. "The quality of our democracy and ultimately the moral character of American society would be at risk if there is a strong economic growth." In the last decades the emphasis is on achieving a place as economic growth and the extent of the prosperity of societies is determined what percentage of economic growth. It is the clearest sign that organizes the efficiency perspective of a society and individuals. The Washington Consensus did this doctrine the thinking center of the nations, which with rare exceptions has reduced the state's role, becoming a facilitator of market economy.
Now United States of America, which President Lyndon Jo hnson believed they could do everything, as they considered the richest and most powerful country in the world, is currently undergoing a financial crisis , with two wars and other conflicts, with a large deficit, inflated debt with credit and liquidity problems which has forced the bankruptcy of many financial institutions and a market that responds only to the large speculators and has brought ruin to million of working families losing their homes, jobs and pensions, which has shown the inability to resolve it with the participation of other countries.
a greater or lesser extent all countries have been affected by this crisis, financial Corporations tied all global finance. Developing countries relied on the strength of the dollar and set up its international reserves in the American and European markets, used the money from the pension with the same speculative spirit and these have disappeared and the crisis is felt in all regions.
ELEMENTS OF CRISIS:
Unemployment and low wages
Capitalism and the market economy requires a highly consumerist society, it is that large majorities have purchasing power to demand sustainable products. This requires that workers have better wages and access to credit. Trade unions in the past fought and won wages and benefits that allowed workers considered middle class. For workers in the American dream was to have the car of the year, his boat to go fishing a few times, have your credit card to buy your house
Jobs rise and fall depending on the level of crisis that s often and present, wages fall as a result of this crisis and when things improve this wage remains low. During the crisis of the thirties of last century, has implemented economic policies to stimulate demand for products and effect of encouraging producers to resume investments in the production of everyday consumer products as well as durable, and continued to the economy variables until the eighties of last century. The emphasis was employment status to increase demand. When neo liberal theorists manage to change the emphasis in employment and are aimed at promoting production innovation, theorists do not see the need for policies that increase demand through employment and good wages. Was the emphasis on supply of innovations, the focus of economic dynamism and growth. It was believed that new technologies would be sufficient to increase demand nationally and abroad. Wages are only from the standpoint of cost and not as a facilitator of demand for products and services, and therefore no longer a question of seeking full employment and better wages, but in open markets with flexibility in hiring in all your orders and subordinate social policy to change the labor market demand.
L rade unions have been losing their capacity negotiations, have become unable to adapt to technological change and globalization, and of course have been unable to sustain the industry negotiations and accepted the decentralization and fragmentation imposed by employers. This is a direct consequence of the reduction of union membership to such an extent that today, only 10% percent are organized in unions in the private sector, only public employees continue to incorporate the unions. (The leaders of labor unions to political support in exchange for favors to allow them to public sector workers) and in total we have 12% percent of workers organized. The companies that paid better and occupied large number of workers have closed their doors and moved to other countries to reduce costs. The workers who have lost their jobs in some cases were able to be retrained but no longer enjoy the same salary levels. Wages have risen in the last fifteen years for those who have had higher wages, lower wages remain the same or been reduced. For some sectors, these workers have received wage increases less than the level of inflation. In this year more than a million jobs have been lost and unions have been negotiating the level of reduction of wages and benefits to keep some jobs. The situation Auto workers is highly revealing, to give loans to companies organized workers in unions must accept lower wages and benefits. Then there are less demanding of products and all these people who have lost their jobs and all those who have had trouble paying the debt on the house and also credit cards are no longer creditworthy. This is a serious problem in the crisis of the latest market information is known about people losing their homes because they have lost jobs is higher than those who were losing their house because they can not pay your debt or monthly payment .
FINANCIAL CRISIS The adm inistration Clinton was successful in promoting speculative activity. Allowed many companies engaged in business on the Internet, which never produced goods or services, all was to sell shares to the public and the stock market. The news that everyone who invested in the stock market were becoming rich penetrated in all sectors. Some of my friends said that if one had money to put him to work and be doubled easily. They used their savings and even borrowed more money to invest in the stock market. When big investors reached extraordinary levels of profits, they sold their shares and withdrew from the market which made that high-tech market of the Internet collapse, leaving large numbers of people at levels of bankruptcy or debt. In ninety-nine and two thousand and one many lost their jobs.
large investors through the Bank loan will be devoted to buying and selling property. The property prices rose steeply to the extent that in less than a year this rose to one hundred fifty percent. Lenders loosened loans and allowed people who had low wages could buy houses with no investment, offering to pay the fees would be lower than paying rent. Getting rich was only a small problem risk and time. Both the Clinton era as in recent years is given, it seemed that consumerism had no limits in the United States. With the price increase made in the houses, banks gave new loans, loosened credit through credit cards and therefore these could buy more durable goods like cars, travel and make new speculative investments. What we have now is the crisis created by these high investors and speculators.
Some explain the financial crisis with the same evidence used to analyze the Asian crisis of 1987, as a result of excessive investment, which are generated from outside. The same is true of the savings are large national and international capitalists who have created economic bubbles.
Excess Investment:
When investment is greater than the savings the result is excess investment. So the investment is financed with loans or foreign investments. Investments tend to supply the domestic market and some exports. Most of them are speculative investments. Exports have fallen by the lack of competitiveness of U.S. producers, remember that large corporations took manufacturing and service production abroad, abroad to reduce costs. Today though the dollar has lost value this has not been reflected in increased exports that do not have the same ability to export that was several years ago. As exports are not growing, producers and financial institutions have fallen into payment problems causing the bankruptcy of companies and financial institutions which in turn reduces liquidity, employment, which has forced the State to come out in support. Short-term loans have been used to finance long-term investments, which made it difficult for these companies have been able to make accounting adjustments and hence have fallen in big financial trouble.
Large speculators manipulated the stock market and real estate and when the opportunity arose to be able to get the maximum gains and sold off the market and caused the current collapse.
Ah Excess orro:
When the savings are greater than investment, resulting in a savings glut, and this causes the bubble economy. These savings are particularly relevant to the speculative market of securities and lending and real estate purchase. When the price went up disproportionately, they sold, they get their finances in the bank and withdrew. Now he believes there should be regulations so as not to repeat these experiences.
Reduction of the Role of the State:
liberal theory requires the state to allow freedom to individuals so they can realize their full economic potential. As stated before the market system holds that the individual should have the freedom to do what is most advantageous effect of maximum gain. It is assumed that these investments will create more jobs and wealth for the for workers, investors and society in general. The Republicans have based their governance, based on this theory and since Reagan have been dismantling the State, reducing their ability to respond to these crises. Maintaining that individuals know best how to manage money, have reduced taxes. The two wars against the American state has had to resort to borrowing abroad especially increasing debt to unsustainable levels. The deficit is bigger every year This deficit causes many social needs are disregarded, the problem of medical insurance each month is more serious. The war requires twelve billion dollars a month and there is distrust, fear of when this will directly affect those who suffer and yet it also reduces the demand for the whole world now prefers to wait.
LOSS OF DOLLAR VALUE :
El Alto deficit near $ 500 billion, the outstanding external debt, reducing the federal income tax cuts, trade deficits and costly wars in all dimensions, to name a few problems, it was logical value of the dollar would fall.
the past two years the value of the dollar, especially in 2008, dropped to levels that concerned other countries in such a way that they have had to implement measures covert devaluation to maintain competitiveness. The Bush administration tried to take advantage of this de facto devaluation, and tried to promote exports, the trade deficit is high and affects trade relations especially with Asians, but to maintain that U.S. competitiveness requires lower costs and therefore the wages of workers. The de facto devaluation of the dollar and not to modify the cash wages, reduced wages without the workers might realize. These were more the cost of services, petroleum, food and other goods that are imported because they assimilated the dollar has less purchasing power. This also greatly affects the demand and market recovery.
CONCLUSIONS
United States and other industrialized countries now face serious problems in the order listed above, ie lack of liquidity in the financial system affects the ability of banks and other financial institutions to support each other within the system, which affects the ability to pay and that many companies now require state support to operate and that given the strategic importance of the governments of these nations have had to leave to cover their position to avoid bankruptcy and massive layoffs of workers .
forces holding market theories try to ignore the whole issue and focus on the financial situation, the intention is to cover the nature of the market system and that to force the state to go out and put more than one trillion dollars directly benefit them. The solution established by the government does not alleviate the situation of working families living in fear and insecurity and they lose value in their wages and lose his fortune is short-term solution, then all the economic boost provided by the federal government tend to disappear and return to the same. The massive program of public investment in infrastructure in the country have the same effect if you leave the game to the market system remains intact and is basing its goal and give more opportunity for individuals to continue to seek maximum profits. The state can not remain the lender or the insurer of the speculative investors or to banks and financial institutions continue to guarantee the gain to shareholders. The State should become a direct investor and maintain control not only the regulations, in order to reassure employees and investors that their interests are protected.
Each State shall give effect to this investor participation so as to harmonize the social, economic and political under the terms of each. The principle can no longer be that which is good for one is good for all, must be what is good for all is good for everyone.
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