PRAGOTI

The global financial crisis must open the eyes of all those who have uncritically supported financial sector liberalisation. They should think about what would happen to the savings of ordinary people, the pensions of working people, and public investment — if India were subjected to the rapacious deregulated financial system prevalent in the United States. Prakash Karat elaborates.

“When you trade pieces of paper for other pieces of paper instead of trading them for real things, one day someone wakes up and realises the paper’s worth nothing.” Therein lies the core of the biggest crisis faced by international capitalism for the last 75 years, to be precise since the beginning of World War II.

Courtesy: Hindustan Times

Global capitalism has now entered a new phase, one that is unprecedented in its history. And the core of the capitalism – the US economy - has certainly entered uncharted territory particularly in the financial sector. The still-unfolding financial crisis has already gone way beyond the predictions of even relatively pessimistic observers, and now threatens actually to cause a financial collapse at the heart of the international economy.

Contrary to its ideology of capitalism and market economy, the US government has, by force of circumstances, taken control of two heavily loss-making American mortgage companies, Fannie Mae and Freddie Mac, on September 7, 2008. By invoking “conservatorship” under a 1992 Law, the Bush administration has effectively passed on the losses suffered by the private companies, to the burden of American taxpayers.