[News] Fidel: The Global Financial Crisis

Anti-Imperialist News news at freedomarchives.org
Wed Mar 11 17:08:54 EDT 2009

Havana. March 9, 2009

cu/ingles/ 2009/march/ lun9/reflexiones 4..html

Reflections of Fidel

A meeting that was worth it

AT the end of the Globalization and Development 
event, with the presences of more than 1,500 
economists, outstanding scientific figures and 
representatives of international organizations 
meeting in Havana, I received a letter and a 
document from Atilio Boron, a Doctor of Political 
Science, senior professor of political and social 
theory, director of the Latin American Program 
for correspondence courses in the social sciences 
– PLED, as well as other important scientific and political responsibilities.

Atilio, a firm and loyal friend, had participated 
on Thursday the 6th in the "Roundtable" Cuban 
television program together with other eminent 
international figures who attended the Conference 
on Globalization and Development.

I found out that he was leaving on Sunday and 
decided to invite him to a meeting at 5 p.m. the day before, Saturday, March 7.

I had decided to write a reflection on the ideas 
contained in his document. I will use his words in the summary.

We find ourselves facing a general capitalist 
crisis, the first of any magnitude comparable 
with the one that broke out in 1929 and the 
so-called `Long Depression' of 1873-1896. A 
crisis that is integral, of civilization and 
multifaceted, whose duration, profundity and 
geographical reach will surely be of a greater 
scope that the ones that preceded it.

"It is a crisis that goes far beyond financial 
and banking aspects and is affecting the real 
economy in every department. It is affecting the 
global economy, and goes far beyond the borders of the United States.

"Its structural causes: it is a crisis of 
overproduction and at the same time of 
under-consumption. It is no coincidence that it 
broke out in the United States, because this 
country has been living for more than 30 years 
from external savings, from external credit and 
these two things are not infinite: companies got 
into debt over their heads; the state also got 
into debt over its head in order to deal with not 
one but two wars, and not just without increasing 
taxes, but cutting them. Its citizens are 
systematically pushed, by way of commercial 
publicity, into getting into debt in order to 
sustain exorbitant, irrational and wasteful consumerism.

"But in addition to these structural causes 
others should be added: the accelerated 
financialization of the economy, the irresistible 
tendency to foray into increasingly risky 
speculation operations. With the discovery of 
capital's "fountain of youth," thanks to which 
money generates more money based on the value 
given to the exploitation of the workforce, and 
taking into account that enormous masses of 
fictitious capital can be achieved in a matter of 
days — or weeks, at the most — capital's 
addiction is leading it to set aside any c alculations or any scruples.

"Other circumstances favored the outbreak of the 
crisis. Neoliberal deregulation and 
liberalization policies made it possible for the 
most powerful actors roaming the markets to impose the law of the jungle.

"Enormous destruction of capital on a world 
scale, characterizing it as a `creative 
destruction. ' On Wall Street, this `creative 
destruction' meant the devaluation of companies 
listed on that market to reach almost 50%; a 
company that was previously worth $100 million in 
capital on the market now has $50 million. A fall 
in production, prices, wages, purchasing power. 
`The financial system as a whole is about to 
explode. We already have more than $500 billion 
in banking losses, a billion more is to come. 
More than a dozen banks have gone bankrupt and 
hundreds more are expecting the same fate. At 
this point, more than $1 billion has been 
transferred from the FED to the banking cartel, 
but $1.5 billion more will be needed to maintain 
the liquidity of banks in coming years.' What we 
are seeing is the initial phase of a long 
depression and the word recession, so much 
utilized recently, does not capture what the 
future holds for capitalism in all its dramatic dimension.

"Ordinary Citicorp stock lost 90% of its value in 
2008. The last week in February, it was worth $1.95 per share on Wall Street!

"This process is not neutral, because it will 
benefit the largest and best-organized 
oligopolies, which will oust their rivals from 
the markets. The `Darwin ian selection of the 
fittest' will clear the way for new mergers and 
business alliances, sending the weakest into ruin.

"Accelerated increase in unemployment. The number 
of unemployed in the world (some 190 million in 
2008) could rise by another 51 million throughout 
2009. Poor workers (who earn just two euros 
daily) will number 1.4 billion; that is, 45% of 
the economically active population on the planet. 
In the United States, the recession has already 
destroyed 3.6 million jobs, half of them in the 
last three months. In the EU, the number of 
unemployed stands at 17.5 million, 1.6 million 
more than one year ago. By 2009, it is projected 
that 3.5 million jobs will have been lost. 
Because of their close ties with the U.S. 
economy, several Central American states such as 
Mexico and Peru, will be hard hit by the crisis.

"A crisis that affects every sector in the 
economy: banking, industry, insurance, 
construction, etc. and that is spreading 
throughout the international capitalist system as a whole.

"Decisions that are taken in world centers and 
which affect the subsidiaries of the periphery, 
generating massive layoffs, interruptions in the 
chain of pay, a fall in demand for supplies, etc. 
The United States has decided to support the Big 
Three (Chrysler, Ford, General Motors) of 
Detroit, but only to save their plants within the 
country. France and Sweden have announced that 
they will condition aid to their automotive 
industries: only the centers located in their 
respective countries will be able to benefit. The 
French minister of the economy, Christine 
Lagarde, stated that protectionism could be `a 
necessary evil in times of crisis.' The Spanish 
minister of industry, Miguel Sebastián, is urging 
`Buy Spanish products.' Barack Obama, we would 
add, is promoting `Buy American!'

"Other sources of the propagation of the crisis 
in the periphery include the fall in prices for 
commodities exported by Latin American and 
Caribbean countries, with their recessive consequences and higher unemployment.

"A drastic diminishment in remittances from Latin 
American and Caribbean emigrants in the developed 
countries. (In some cases, remittances are the 
most important item in international hard 
currency income, over and above exports.)

"The return of emigrants, depressing the labor market even more.

"This is combined with a profound energy crisis 
that requires the replacement of the current one, 
based on the irrational and predatory use of fossil fuel.

"This crisis coincides with growing awareness of 
the catastrophic scope of climate change.

"Add the food crisis, sharpened by capitalism's 
attempts to maintain an irrational pattern of 
consumption, which has led to taking land 
suitable for producing food and allocating it for producing agro-fuels.

"Obama admitted that we have not yet touched 
bottom, and Michael Klare wrote recently that `if 
the current economic disaster turns into what 
President Obama has called the lost decade, the 
result could be a global landscape full of convulsion caused by the economy.'

"In 1929, unemployment in the United States 
reached 25%, as agricultural and raw material 
prices fell. Ten years later, and despite radical 
policies implemented by Franklin D. Roosevelt 
(the New Deal), unemployment remained very high 
(17%) and the economy could not climb out of the 
depression. Only World War II put an end to that 
stage. And now, why should it be shorter? When 
the 1873-1896 depression, as I explained, lasted 23 years!

"Given this background, why would we now come out 
of the current crisis in a matter of months, as 
some Wall Street publicists and `gurus' predict?

"We will not come out of this crisis with a 
couple of G-20 or G-7 meetings. If there is any 
test of their radical incapacity to solve the 
crisis, it is the response of the world's stock 
markets after each announcement or each law 
passed for a new bailout: invariably, the 
response of `the markets' is negative.

"As George Soros attests, `the real economy will 
suffer the secondary effects, which are now 
gaining force. Given that in these circumstances 
the U.S. consumer can no longer serve as the 
driving force of the world economy, the U.S. 
government should stimulate demand. Given that we 
are facing the threatening challenges of global 
warming and energy dependence the next government 
should direct any stimulus plan toward energy 
savings, by developing alternative energy sources 
and building environmentally- friendly infrastructure.

"A long period of tug-of-war and negotiations is 
opening up to define how to get out of the 
crisis, who will benefit and who will pay the price.

"The Bretton Woods Agreements, which originated 
in the framework of a Keynesian stage of 
capitalism, coincided with the stabilization of a 
new model of bourgeois hegemony, which, as a 
product of the outcome of the war and 
anti-fascist struggle, has as a new and 
unexpected backdrop the strengthening of the 
gravitation of trade unions, leftist parties and 
states' regulating or intervening abilities.

"The USSR is gone; its sole presence and the 
threat that its example could spread westward 
tipped the balance of negotiations in favor of 
the left, popular sectors, trade unions, etc.

"Currently, China holds an incomparably more 
important role in the world economy, but without 
reaching a parallel importance in world politics. 
The USSR, in contrast, despite its economic 
weakness, was a formidable military and political 
power. China is an economic power, but with 
little military or political presence in world 
affairs, although it is beginning a very cautious 
and gradual process of reaffirmation in world politics.

"China may come to play a positive role for the 
re-composition strategy of countries on the 
periphery. Beijing is gradually reorienting its 
enormous national energies toward its internal 
market. For many reasons that would be impossible 
to discuss here, it is a country that needs its 
economy to grow at an annual rate of 8%, whether 
as a response to the stimulus of world markets or 
to those that originate in its immense — only 
partially exploited — internal market. If that 
turn were to be confirmed, it is possible to 
predict that China will continue to need many 
products from Third World countries, such as oil, 
nickel, copper, aluminum, steel, soy and other raw materials and foods.

"In the Great Depression of the 1930s, in 
contrast, the USSR had a very weak insertion in 
world markets. China is different: it could 
continue to play a very important role, and like 
Russian and India (although these to a lesser 
extent), to buy the raw materials and foods that 
it needs, as opposed to the case of the USSR in 
the times of the Great Depression.

In the 1930s, the `solution to the crisis was 
found in protectionism and world war. Today, 
protectionism will come up against many obstacles 
due to the inter-penetration of the great 
national oligopolies in different spheres of 
world capitalism. The formation of a global 
bourgeoisie, rooted in gigantic companies that, 
despite their national base, operate in a 
countless number of countries, causes the 
protectionist option in the developed world to 
have scant effectiveness in North-North commerce, 
and policies will tend — at least for now and not 
without tensions — to respect the parameters 
established by the WTO. The protectionist card 
appears to be much more probable when it is 
applied, as it surely will be, against the global 
South. A world war driven by `national 
bourgeoisies' of the developed world ready to 
fight amongst them selves for market supremacy is 
virtually impossible, because such `bourgeoisies' 
have been displaced by the rise and consolidation 
of an imperial bourgeoisie that periodically 
meets in Davos, and for which the option of 
military confrontation is a phenomenally stupid 
thing to do. That does not mean that that global 
bourgeoisie does not support, as it has to date 
with the military adventures of the United States 
in Iraq and Afghanistan, the realization of 
numerous military operations in the system's 
periphery, necessary for the preservation of the 
profitability of the U.S. military-industrial 
complex and, indirectly, for the great oligopolies of other countries.

"The current situation is not the same as the one in the 1930s. Lenin (said):

`Capitalism does not fall without a social force 
that makes it fall.' That social force today is 
not present in the societies of metropolitan 
capitalism, including the United States.

"The USA, UK, Germany, France and Japan settled 
their struggle for imperial hegemony on the military field.

"Today, hegemony and domination are clearly in 
the hands of the USA. It is the only guarantee of 
the capitalist system on a world scale. If the 
USA fell, it would produce a domino effect that 
would cause the collapse of almost all 
metropolitan forms of capitalism, let alone the 
consequences in the system's periphery. If 
Washington were to see itself threatened by a 
popular insurgency, they would all rush to its 
rescue, because it is the last bastion of the 
system and th e only one that, in case of necessity, can help the others.

"The United States is an irreplaceable actor and 
unquestionably the center of the world 
imperialist system: only it has more than 700 
military missions and bases in some 120 
countries, which constitute the system's final 
reserve. If all other options fail, force will 
appear in all its splendor. Only the United 
States can deploy its troops and its war arsenal 
to maintain order on a planetary scale. It is, as 
Samuel Huntington said, `the solitary sheriff.'

"This `shoring-up' of the imperialist center has 
the invaluable collaboration of its other 
imperial partners, or its competitors in the 
economic realm and even the majority of Third 
World countries, which accumulate their reserves 
in U.S. dollars. Neither China, Japan, Korea or 
Russia — to mention the largest holders of 
dollars in the world — can liquidate their stock 
in that currency because it would be a suicidal 
move. Of course, this is also a consideration 
that should be made with much caution.

"The conduct of the markets and savings-holders 
throughout the world is strengthening the U.S. 
position: the crisis is deepening; the bailouts 
are demonstrating their insufficiency; the Dow 
Jones on Wall Street is falling below the 
psychological barrier of 7,000 points — falling 
below the mark it fell to in 1997! — and despite 
that, people are seeking refuge in the dollar, 
with the value of the euro and gold falling!

"Zbigniew Brzezinski has said, `I a m worried 
because we are going to have millions and 
millions of unemployed, many people really having 
a difficult time. And that situation will be 
present for some time before things eventually improve.'

"We are in the presence of a crisis that is much 
more than an economic or financial crisis.

"It is an overall crisis of a model of 
civilization that is economically unsustainable; 
politically unsustainable, without appealing 
increasingly more to violence against the 
peoples; environmentally unsustainable, too, 
given the destruction, in almost all cases 
irreversible, of the environment; and socially 
unsustainable, because it degrades the human 
condition to unimaginable limits, and destroys the very fabric of social life.

"The answer to this crisis, therefore, cannot 
just be economic or financial. The ruling classes 
will do exactly that: use a vast arsenal of 
public resources to socialize the losses and set 
the great oligopolies afloat again. Occupied with 
defending their most immediate interests, they 
lack even the vision to conceive of a more comprehensive strategy.

The crisis has not touched bottom," he says. "We 
find ourselves facing a general capitalist 
crisis. There has not been a larger one. The one 
that took place between 1873 and 1896 lasted 23 
years; it was called the Long Depression. The 
other, more serious one was the one of 1929. It 
also lasted no less than 20 years. The current 
crisis is all-embracing, of civilization, multifaceted. "

He immediately adds, "It is a crisis that goes 
far beyond the financial and banking aspects and 
is affecting the real economy in every department.."

If anyone were to take this summary and carry it 
in his or her pocket, read it over once in a 
while or learn it by heart like a small Bible, he 
or she will be better informed about what is 
happening in the world than 99% of the 
population, where citizens live under siege from 
commercials and saturated with thousands of hours 
of news, and real or false soap operas or fiction films.

Fidel Castro
March 8, 2009
11:16 a.m.

Translated by Granma International

Freedom Archives
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San Francisco, CA 94110

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