Welcome

Dennis Jones is a Jamaican-born international economist, who has lived most of the time in the UK and USA, and latterly in Guinea, west Africa. He moved back to the Caribbean in 2007. This blog contains his observations on life on this small eastern Caribbean island, as well as views on life and issues on a broader landscape, especially the Caribbean and Africa.

*NEW!!! LISTEN TO BLOG POSTS FEATURE ADDED!!!*

*PLEASE READ COMMENTS POLICY--NO ANONYMOUS COMMENTS, PLEASE*

*REFERENCES TO NEWSPAPER OR MEDIA REPORTS ARE USUALLY FOLLOWED BY LINKS TO ACTUAL REPORTS*

*IMAGES MAY BE ENLARGED BY CLICKING ON THEM*

*SUBSCRIBE TO THIS BLOG BY E-MAIL (SEE BOX IN SIDE BAR)*


______________________________________

**You may contact me by e-mail at livinginbarbados[at]gmail[dot]com**

Monday, October 13, 2008

Rally Round the Bull Flag. Are We All Comrades Now?

The weekend was amazing for producing one of those rare occasions when nations put aside many political differences and somehow manage to collaborate, or at least appear to do that. Crisis or the belief that there is one tends to lead to extraordinary human acts. When people realized that the stock market correction appeared to be worse than in 1929 that sent more than a few shivers down politicians', financiers' and ordinary citizens' spines.

After a weekend waiting to see if the well-couched words of the major international political financial masters would make investors forget that they were gripped by panic, I could see from Sunday night in Asia that at least for a day, all would be right with the world. We don't have many details but many trillions of money will be involved in calming those jagged nerves.

I wont bore with the details of today's market activity but most equity markets liked what they had seen and heard--and it seemed that almost everyone in the industrial world would be bailed out or nationalised--and decided that it was time to buy again. The Japanese, bless them, took their annual "health and sports" holiday and wont get in on the act till tonight. Banzai! I guess they needed some R&R more than most as their stock market has been in decline for the best part of the past 20 years, since it hit an all-time peak in 1989.

Well, all of the rest of the world could not match my homonym, the DJ, as the Dow (up nearly 950 points) and S and P roared to their biggest one day advance in 70 years; that's before either John McCain and Joe Biden joined the US Senate, and well before Obama and Palin were born.

I knew that things would be a bit special when my currency strategist giving the web-inar mentioned that the closing charts from Friday--when there was an amazing rally into the close, indicated a rare formation, called an "abandoned baby", which is a strong signs that prices will reverse--not that they will do so immediately, but that they will likely not go down any more. In recent times that's enough to stoke a monster "relief rally" and so it did--again with the best action in the last hour of trading. This is what the little urchin looks like, stuck at the bottom and left behind as the market turns. Doesn't like like much, eh? But people in financial markets take much notice of these chart indicators.

There is so much uncertainty going around these days that no one has a good sense of what the next day will bring in these wild financial markets. Some people like that uncertainty, but others do not and cannot live with it for practical reasons.

Once all the financial dust has started to settle there will be a very different world of international finance, with most of the world's major banks owned or largely controlled by the State.I'm fascinated by what Karl Marx would have thought of all this. His thesis was that capitalism would produce internal tensions which will lead to its own destruction. He then believed that capitalism itself would be displaced by communism, a classless society which emerges after a transitional period called "socialism"; then all would be controlled by the State in what he described as the revolutionary dictatorship of the proletariat.

Is this what the USA and most of western Europe are embarking on? I could understand this move to socialism in Europe, but in the USA?

1 comment:

Caroline said...

In my course for the next two weeks we are asked the following: analyse the structural context of the current situation in the US and try to respond to the question "what should American people do?"
I'm looking forward to read your ideas about it, Dennis and your fellow blog readers.

The background ideas given to us as a starting point can be found at the following link, an article of Johan Galtung "The US Economic Crisis: 10 proposals", dated 29 September 2008.
http://www.transcend.org/tms/galtung_editorial_archive_detail.php?article_id=119