Socialist Worker
2 June 2010
Recent weeks have seen a massive across-the-board slump in global commodity prices. One commodity index plunged 57% last month (May 2010).
According to Bloomberg.com, the world's most influential economics website, we are seeing "the biggest slump in commodities" since the collapse of Lehman Brothers in September 2008 sparked the Great Financial Crash.
Even formerly optimistic economists are growing alarmed about the implications of this commodities slump.
Typical is Buttonwood's column in The Economist, long the neoliberal cheerleader of economic recovery, who concludes: "The message from the markets is not definitive but is at least suggestive; recession might not be baked in but those hoping for a V-shaped recovery ought to be alarmed by recent developments."
Does the huge commodities slump foretell Phase Two of global economic crisis? A clearer picture should be emerging by this September, maybe sooner.
We must remain alert to commodity price trends because, if they continue to tank, it means that Phase Two would be led by contractions in the real economy, rather than the bursting of speculative bubbles in the world of high finance.
And that scenario could have far greater implications for global capitalism, and all people on the planet, than the economic turbulence of the past two years.
Follow the links below to the two reports from Bloomberg and The Economist referenced in my article.
- Commodities’ Biggest Drop Since Lehman Is Bear Signal by Millie Munshi and Elizabeth Campbell.
- What are commodities telling us? by Buttonwood.
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