What Needs To Be Done: A Socialist View
Today the capitalist economies of the world are in deep trouble. Some economists have theorized that the linkages between the United States and the rest of the world had been weakened as other nations gained more economic autonomy. A decoupling thesis was presented claiming that a crisis in one part of the system (say, North America) would not affect other major parts (say, Europe and Asia). We now know this is not true. Toxic assets were sold around the world, and banks in Europe, Asia, and Japan are in trouble too. Housing bubbles have burst in Ireland, Spain, and many other countries. In Eastern Europe, homes were bought with loans from Swiss, Austrian, and other European banks, payable in European currencies. As the economies of Hungary and other nations in the region, which financed their explosive growth with heavy borrowing from Western banks, have gone into recession, their currencies have suffered a sharp deterioration in exchange rates. This means that mortgage payments have risen sharply, as it now takes many more units of local currency to buy the Swiss francs or euros needed to pay the loans. In some cases, mortgage payments have doubled. | more…