History will judge the left on how we rose to the crisis

by Grant Morgan 27 November 2008 We are one year into the global economic crisis. It is two months since the narrowly averted international financial meltdown sparked by the collapse of Lehman Brothers. And guess what? At long last, leaks from within the corporate hierarchy are giving notice that, no matter what actions are taken by governments, the world will face continuing economic chaos of one sort or another. That is made clear in the article below by The Telegraph's Ambrose Evans-Pritchard, one of Britain's most sober mainstream economic analysts. Evans-Pritchard quotes Tom Fitzpatrick, Citibank's chief technical strategist, who in a leaked memo has this to say about the frenzied moves by governments to pump liquidity into financial corporations: "The world is not going back to normal after the magnitude of what they have done. When the dust settles this will either work, and the money they have pushed into the system will feed though into an inflation shock. Or it will not work because too much damage has already been done, and we will see continued financial deterioration, causing further economic deterioration, with the risk of a feedback loop." The only two choices on offer, says Fitzpatrick, is either inflation shock (which will swallow the pay of workers) or an even worse economic deflation (which will swallow the jobs of workers). As Fitzpatrick notes, "this will lead to political instability". In other words, the centre will not hold. There will be movements to the left and to the right away from the centre which, typically in most advanced economies today, is crowded out by the main parties of the market. How should the left in New Zealand relate to this historic global shift? First, the left must understand that market politics in this time of crisis will deliver only inflation shock or economic deflation. Second, the left must get this understanding out to the grassroots by every means possible. Third, the left must work with the grassroots on a plan to protect the people from economic crisis by rolling back the market. Fourth, the left must make sure this people's plan also tackles global warming since economic sanity hinges on ecological salvation. Fifth, the left must start now, since momentum is all-important in political warfare. In a few days time, newly elected prime minister John Key will unveil his cabinet's economic stimulus plan. Under cover of tax cuts and a "relief package" for redundant workers, Key will take his first steps towards protecting the corporate market at the expense of the grassroots majority. The left must start preparing a response. We must be ready to "go to the masses" with an alternative strategy. The crisis, not the election, is the real test for the left in New Zealand. History will judge us on how we rose to the crisis.

Citigroup says gold could rise above $2,000 next year as world unravels by Ambrose Evans-Pritchard from Telegraph.co.uk 26 November 2008 Citibank said the damage caused by the financial excesses of the last quarter century was forcing the world's authorities to take steps that had never been tried before. This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold.

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