When people anticipate a future financial crisis, a danger arises similar to that faced by a preacher who bellows passages from Revelations on the street corner. If their promised imminent day of judgement repeatedly fails to arrive, the resultant egg: face ratio will not be a flattering.
However, there are reasons for thinking the economy could be on the brink of a big downturn that are easier to point to and analyse than the vagaries of end-time prophecy.
Crashes seem baked into the global capitalist system, just as Marx laid out in the 1800s. Politicians who claim they can buck this trend often end up looking foolish. Gordon Brown promised “no more boom and bust” in 2006. We experience the biggest bust in 8 decades just 2 years later.
While we might not be about to go off a cliff, there are some big warning signs and structural weaknesses indicating that we could. Corporate media is not wholly ignorant of these, but their instincts are still for justifying the system, not being too alarmist before a crisis, and muddying the waters after one.
Last week saw some sizeable drops in global stock markets. Most attention as usual was on the US and UK. But China, the big growth story in recent years, saw a 9% drop.
In the UK, “fiscally responsible” Conservatives preside over record debt, not just as the public / national level but also in the private / household sphere. Even without the financial risks of Brexit, this is really shaky ground.
Likewise, Trump has doubled the US deficit left from the Obama era, largely with huge tax giveaways to the elite and record spending on the military industrial complex. His growing belligerence on tariffs and trade are feeding the jittery nature of markets, and while much of the recent bubble was inflated by vast amounts of quantitative easing, that policy has now ended. If anything there is more a sense of quantitative tightening in the US – money being sucked out of the system.
Quantitative easing in Europe is set to end by December. It is arguable that this policy has been the main factor in keeping the bubble inflated, in place of allowing depression and stagnation to continue, but the underlying problems were never really fixed.
Separately, interest rates have started to creep back up, from where they have been held artificially and impossibly low for many years.
As Media Alert noted in September, corporate media’s track record for saying on top of this kind of thing is not good. Business and finance correspondents may cover it, but in terms of mass news consumption, most people don’t read the inside pages of broadsheets. For the 2 to 5 minute TV slot, the content is very surface and often skewed to shield us from views that are critical of the system itself.
The size and timing of downturns is varied, but if a nasty one happens fairly soon (say before March next year when we’re scheduled to leave the EU), there’s no reason to think that mainstream coverage will be any more useful than 10 years ago. Perhaps they’ll even wheel out the “no one saw it coming” trope again.
Stephen Durrant
