CRISIS? WHAT CRISIS?

There has been a consistent pattern by mainstream commentators for most of this year to imply that the worst of the economic downturn is over and they invariably grasp at some vaguely positive economic indicator to back this ideologically-loaded assertion.

Last week there was the suggestion that the housing market has stabilised and that house pries are not dropping as they fast as they previously were.

Economic commentator Bernard Hickey, who predicted that house prices would fall by thirty percent by the end of the 2010, now says he thinks the drop will 'only' be fifteen percent.

But all these frenzied searches for evidence - any evidence - that the New Zealand free market economy isn't totally stuffed is happening against the backdrop of a global economy still in a steep nosedive.

In two previous posts I mentioned the outstanding work of economists Barry Eichengreen and Kevin O’ Rourke who concluded that 'the world economy is now plummeting in a Great-Depression-like manner. Indeed, production, trade, and stock markets are diving faster now than during 1929-30."

The two economists updated their work in June and there has been basically no change in the dire economic situation.

I also noted in a post last week that unemployment in the crucial United States economy has now reached a twenty six year high - and will continue to rise further.

Liberal US economists, who have every ideological incentive to support Barack Obama’s policies and so claim to see light at the end of the tunnel, are strikingly unanimous in their belief that the crisis is nowhere near over, and that Obama is doing little to change that.

Last week Vice President Joe Biden said that 'everyone had guessed wrong' about the impact of Obama's bailout of US capitalism.

“No one realized how bad the economy was,” Biden said.

Of course not 'everyone' guessed wrong about the impact of Obama's economic package. We socialists certainly didn't. Nor did The prize-winning Columbia University economist Joseph Stiglitz. He warned that the stimulus package was too small and the day after Obama signed it into law he predicted how its shortcomings would quickly make themselves apparent.

Now there is talk of a second 'stimulus package'.

Here in New Zealand the government admits that around 1000 jobs are being shed every week, although the real figure is likely to be double that.

An economy that is supposedly over the worst of the economic 'downturn' does not shed jobs at this alarming rate.

A week or so ago the conservative economists at the National Bank said that the New Zealand economy was still contracting - but at a slower rate.

So, in a nutshell, the only 'positive' thing that mainstream economists and commentators can really say is that is that there are scattered signs that things are getting worse more slowly.

Ordinary New Zealanders are paying the price for this economic crisis - and they have been abandoned to the corporate wolves by a bankrupt Labour Party and, in particular, a trade union leadership that refuses to fight.