Another Market Panic

 

‘Oil prices have experienced a significant decline, with Brent crude falling below $65 per barrel and WTI crude dropping below $62 per barrel as of Friday, April 4, 2025.This drop is primarily due to the announcement of new U.S. tariffs and the decision by OPEC+ to increase oil supply more than expected, which has raised concerns about a potential global economic slowdown and reduced demand for oil’. Internet.

The below is from the Socialist Standard April 2020

'At the time of writing, the world’s stock markets have been in near free-fall with many of them entering ‘bear market’ territory (defined as falling 20 percent or more from their recent high). This has been in response to the concern around Covid-19 coronavirus, as human fright turns into financial panic. It is essentially because investors are fearful that ‘lockdowns’ in countries like Italy will negatively impact on company revenues and profits. Obvious candidates like airline companies and events management agencies have been especially hard hit, though the financial contagion has spread far and wide to nearly all sectors.

There are a number of elements to this financial panic. One is that when market sell-offs occur, the actions of dominant financial players tend to exacerbate them, as they did in the financial crisis of 2008. Many operate automatic trading systems driven by algorithms which will trigger further sales of shares when certain low prices are reached. These traders also tend to deploy ‘short positions’ to protect themselves from falling markets, which involves profiting from betting that certain shares will fall — but thereby making their falls all the steeper. This has been illustrated by what US asset management firms like Fidelity have said has been happening during this panic — that asset management firms and hedge funds have been on the sell side of most trades, while private investors have disproportionately been on the other side of the trade, buying for the longer-term (in the view that there’s a sale on). The Financial Times (7 March) reported that since 1960, of the 13 most volatile stock market periods, seven of them have happened since 2007.

Investors have been especially concerned that the coronavirus scare will lead to recessions in the countries affected (and even others too). This is on the back of investor suspicion that some of the world’s major economies have most likely been on the brink of a recession anyway. A good indicator of this has been the recent inversion of the yield curve in the world’s largest economy, the US. This happens when interest rates for tying up your money for longer (e.g ten years) are lower than for short periods (e.g two years). It is the opposite to the usual situation, and indicates fear in the government bond markets as investors move from investing in riskier assets to the safe haven of long-term government bonds, pushing their prices up and their yields down. This happened in the US late last year and is usually one of the best lead indicators of a coming recession there is, also reflecting the fact investors believe future interest rates will fall (as they do doing recessions). During the current panic, the yield on 10 year US Treasuries has reached the lowest it has been in history, at the time of writing 0.7 percent, i.e less than inflation and therefore effectively paying the US government for the privilege of taking your money.

Another factor in the market panic has been the oil price.  Some of those hardest hit on the stock markets have been oil majors like BP and Royal Dutch Shell as the oil price collapses, falling at one stage by a third in a single day (to around $30 a barrel for Brent crude). This has been because the major oil producer states, dominated by OPEC, have failed to agree with another major oil producer, Russia, to limit production and therefore push up prices. There is a suspicion that Russia won’t play ball as it hopes a falling oil price will drive a lot of newer US companies producing oil and gas from shale deposits out of business altogether — a tactical ploy that is exacerbating the panic.

Despite this current chaos, the crisis will of course pass and lower interest rates and lower commodity prices like oil will be among the motor forces for this. In the meantime the traders will scream and shout as they try to assess the real extent of the underlying economic crisis – seemingly unable to leap out of a roller-coaster ride that’s been scarier than usual for them, and for some good reasons.’

DAP

https://socialiststandardmyspace.blogspot.com/2020/04/market-panic-capitalist-hysteria-2020.html

Yemen: Trump gloats.

 

Donald trump has posted on his X account: ‘These Houthis gathered for instructions on an attack. Oops, there will be no attack by these Houthis!  They will never sink our ships again!’ The tweet is accompanied by a video of a group of Yemenis standing in a circle and then being obliterated by a drone, a 3 MQ -9 Reaper?

Leaving aside, difficult though it is, the glee by the President of the USA of seeing a number of human lies being blotted out -Trump has obviously never read John Donne, ‘Any man's death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee’- X carries a photograph of a group of Yemenis in a similar formation who were at a gathering at the end of Eid al-Fitr celebration.

In Orientalism, Edward said, an American-Palestinian academic, wrote, ‘the Other" is a term used to describe how Western societies construct and define themselves by contrasting themselves with those they perceive as different or inferior, often referring to the East or the Orient’.

The raison d'etre for this and other attacks on Yemen is the actions in disrupting shipping in the Red Sea in opposition to Israel and in support of the Palestinians.

We reiterate, the World Socialist Movement takes no sides in capitalist conflicts going on in the world which result in the maiming and death of many working class lives.

Moral indignation and disgust at one of the most power nations on earth attempting to destroy one of the poorest nations on earth butter no parsnips.

It’s reported that the current three week campaign has already cost the US a billion dollars. Exterminating other human beings doesn’t come cheap. There is only one solution to the horrors perpetuated by capitalism and that is it replacement by socialism. How long before the majority wake up to this fact?

How long before ‘leaders’ stop gloating over the eradication of other human beings?

The below is from the Socialist Standard July 2017

‘The poorest country in the Middle East, Yemen (part of which was the former British colony of Aden) has endured years of instability and poor governance. After the 2011 revolution toppled President Ali Abdullah Saleh who had been in power for more than 30 years, a new president, Hadi, was sworn in with international backing – but he was never able to fully establish authority. Yemen descended into civil war in September 2014 when the Houthis, a Shi’ite sect, seized power. A coalition assembled by Saudi Arabia launched an air campaign in March 2015, to restore the exiled government of Hadi. The Saudi-led bombardments have resulted in massive loss of life, and damage to infrastructure and millions have been driven from their homes. 10,000 people have been killed, many more thousands injured. In addition, many more are indirect victims of the conflict, including those who suffer from chronic diseases, including high blood pressure and diabetes, and are unable to get treatment. Fewer than half of Yemen’s health facilities are operational as aid agencies struggle to access war-torn regions with lifesaving medicine, and around 1,000 children die every week from preventable diseases like diarrhoea and respiratory infections.

The Houthis are endeavouring to take complete control in what is what Boris Johnson has confirmed is a proxy war between Saudi Arabia and Iran. In his words: ‘There are politicians who are twisting and abusing religion and different  strains of the same religion in order to further their own political objectives... That’s why you’ve got the Saudis, Iran, everybody, moving in, and puppeteering and playing proxy wars’ (Guardian, 8 December). Saudi Arabia and its regional partners have used the spectre of Iran to justify an extensive bombing campaign over the country. Despite the extent of suffering, the war in Yemen receives less media attention than conflicts in Syria, Iraq, and Afghanistan. Many people in the UK are still unaware of the extent of the bloody civil war there and the wide-scale bombing by Saudi Arabia.

Arms sales

Back in early 2016, it was revealed that British military personnel were embedded in the command and control centre for the Saudis. Naturally, this carried the standard disclaimer that the UK’s guidance was to assist the Saudi regime to comply with international humanitarian law. Advice that, if it was given, has been ignored in view of the regime’s bombing of civilians and hospitals, dropping internationally-outlawed cluster bombs (made in Great Britain). Cluster bombs release dozens of small ‘bomblets’, which often lie unexploded and can cause horrific injuries long after the initial attack. When ‘our’ allies commit war crimes, a convenient blind eye is turned to it by the government which remains complicitly silent. Parliament’s International Development Committee has said the evidence is ‘overwhelming’ that the Saudi-led coalition fighting the Houthi rebels violates humanitarian law. ‘We are shocked that the UK government can continue to claim that there have been no breaches of humanitarian law by the coalition, and continue sales of arms to Saudi Arabia. We are convinced that there is more than a clear risk that weapons sold to Saudi Arabia might be used in the commission of serious violations of international humanitarian law. The evidence that we have heard is overwhelming that the Saudi-led coalition has committed violations of international law, using equipment supplied by the UK.’

There is a reluctance by the UK or its media to condemn the military intervention of the despotic Wahhabi dictatorship. Imagine a boat full of innocent refugees, men, women, and children, being machine-gunned by a helicopter gunship, leaving dozens dead and many more wounded. Wouldn’t that make the headlines in the media and lead to very vocal condemnation by the government? Not in the UK. Could the reason be that the perpetrators of the crime happened to be one of Britain’s biggest weapons customers.

Theresa May continues a policy of bending over backward (or is it forwards?) to cosy up to the corrupt Saudi sheiks in order to sell weapons. ‘Riyadh is a key trading partner,’ says George Joffé, a research fellow and professor of Politics and International Studies at the University of Cambridge. ‘The main answer as to why the United Kingdom supports the coalition is as simple as it is shameful: contracts’.

Since the bombing began in March 2015, Britain has licensed sales of arms to the regime that are worth billions. Raytheon’s factories in Essex and Scotland produce the Paveway IV guided bomb which, according to its manufacturer, has proved itself ‘time and again, as the weapon of choice by the end users’. One enthusiastic end user is Saudi Arabia, bombing hospitals, schools, markets, grain warehouses, ports and a refugee camp to turn Yemen into a living nightmare.

Britain doesn’t just sell arms to those dictatorships – it sells its diplomatic silence as well. While Saudi Arabia pulls the trigger, it is Britain and the US which ever-faithfully reloads and replaces its weapons. Calls to suspend arms sales to Saudi Arabia over war crimes have been ignored. The UK has given political cover to the Saudi regime by preventing various resolutions and investigations from happening. Under UK arms export law, it is illegal to sell arms or munitions to a state that is at ‘clear risk’ of committing serious violations of international humanitarian law. To date, the United Nations has recorded coalition attacks that have violated international law, many of them including shelling civilian installations such as hospitals, schools, mosques or markets. However, the British government is firmly opposed to an arms embargo against its ally, claiming there is no conclusive proof of human rights violations. It also blocked a proposal by the Netherlands that the UN Human Rights Council set up an independent inquiry into war crimes in Yemen.

Oxfam has said the UK has violated the International Arms Trade Treaty, which regulates the transfer of conventional arms to ensure there are no violations of international humanitarian law. Governments who sign the arms treaty are obliged to review their weapon sales and ensure that they are not being used for human rights violations. Oxfam accused British politicians of being in ‘denial’ over the selling of arms to Saudi Arabia for use in the war in Yemen. Penny Lawrence, Oxfam UK deputy chief executive, told a conference. ‘It has misled its own parliament about its oversight of arms sales and its international credibility is in jeopardy as it commits to action on paper but does the opposite in reality.’ Addressing MPs in the House of Commons, Minister for the Middle East, Tobias Ellwood, dismissed evidence from a UN report that the Saudi-led military campaign in Yemen had targeted innocent civilians as predominantly based on hearsay and may have been falsified by Houthi rebels. UN Security Council resolution 2216 reads as if Saudi Arabia is an impartial arbitrator rather than a party to the conflict with no mention of the Saudi-led intervention. There was similarly no call for a humanitarian pause in the fighting or safe corridor for aid.

Civilians pay the price

After two years of civil war, the country is on the brink of famine, of Yemen’s 25.6 million people, almost 19 million are in urgent need of assistance. Almost seven million are severely food insecure, meaning they need food aid immediately. UNICEF has calculated that a child is dying every 10 minutes from a preventable illness. Two million children are acutely malnourished. Less than half Yemen’s hospitals are functioning at all, and those that are face daily shortages of staff, medicines, and electricity. Humanitarian groups struggle to deliver aid to large parts of the country. Not only are people starving. Those who try to alleviate the situation are prevented from doing so. ‘Clearly, Yemen is one of the hardest places in the world today to work – massive security concerns, escalation in the fighting and the violence across the country.’ WFP’s Deputy Regional Director Matthew Hollingworth said several medical facilities have been damaged or destroyed. While arms sales to the warring factions are thriving, the key port of Hudaydah, which aid agencies describe as ‘a lifeline’ for Yemen, is now virtually closed, due to a naval blockade by coalition forces and the destruction of its cranes in air strikes is proving devastating for the civilian population in a country that depends heavily on imports of foodstuffs. Imports are essential as only 4 percent of the country’s land is arable and only a fraction of that is currently used for food production.

This Saudi economic strangulation is preventing the import of food and medicine and the targeting of vital infrastructures such as roads and bridges has contributed to the dire situation Yemenis are now facing. ‘If restrictions on the commercial imports of food and fuel continue, then it will kill more children than bullets and bombs...’ said UNICEF’s spokesman, Christophe Boulierac.

The Western states are showing that they value the profits of their weapons industries over the lives of Yemenis, otherwise they would immediately stop providing the bombs, the bombers, the armoured cars and tanks, the Apache attack helicopters, the missiles, the howitzers, the training, the refuelling, and all other military support to the Saudi coalition. The reality is that the Saudi Air Force, roughly half UK-supplied and half US-supplied jets, could barely function without the ongoing assistance from Washington and London. Without a ceasefire between Houthi factions and the Saudi Arabia-led coalition, and the opening of sea-ports and airports so vital supplies can enter the country to allow for the rebuilding infrastructure, the crisis is unlikely to let up, and it will be civilians who pay the price.

Saudi Arabia does not operate on its own but receives logistical support from Britain and the US. European manufacturers also contribute to the armaments orgy. The media looked the other way when Saudi Arabia blackmailed the United Nations by threatening to pull funding if the country was not dropped from the secretary-general’s ‘list of shame’ of states that kill children. A UN report had revealed that the Saudi-led coalition is responsible for over 60 percent of the children killed in the conflict. Yet the country was able to use its position on the UN Human Rights Council (how they got there when there’s no pretence in Saudi Arabia is a mystery) to thwart an investigation into violations committed in Yemen. David Wearing, a researcher on UK-Saudi-Gulf relations with the Campaign Against the Arms Trade report, said: ‘Successive governments of all political colours have prioritised arms sales over human rights. The toxic UK-Saudi alliance has boosted the Saudi regime and lined the pockets of arms companies, but has had devastating consequences for the people of Saudi Arabia and Yemen. For the sake of those people, the UK government must finally stop arming and empowering the brutal Saudi monarchy.’

Britain supplies the Saudi dictatorship with weapons and it provides the diplomatic smokescreen to protect the mediaeval Saudi regime’s war-crimes. The current Defence Secretary Sir Michael Fallon shamelessly backs arms manufacturer BAE to sell more weapons to the Saudi Arabian government. ‘Are we supporting them? Absolutely.’ A past foreign secretary Philip Hammond pledged to ‘support the Saudis in every practical way short of engaging in combat.’ Nor should we forget that about 100 Labour MPs failed to support a motion moved by shadow foreign secretary Emily Thornberry to withdraw support for the Saudi regime. Thornberry was subjected to interruptions from Labour MPs. Labour MP John Woodcock, for instance, who claimed that British support is ‘precisely focused on training Saudis’ to improve their targeting, so as to ‘create fewer civilian casualties’, was parroting the official government line. The idea that the Saudi regime’s ‘widespread and systematic’ attacks as stated by the UN on civilian targets are just a series of well-meaning errors is one that lacks credibility. And if decades of training provided by Britain to the Saudi pilots hasn’t prevented these supposed errors by now, it seems rather unlikely that it will in the future.’

ALJO

https://socialiststandardmyspace.blogspot.com/2017/07/the-civil-war-in-yemen-britain-supports.html

SPGB Meeting Friday 4 March 1930 GMT +1. ZOOM

Friday 4 April. 1930 (GMT + 1). ZOOM 
*ONE WORLD, ONE PEOPLE*
An AI reading of our manifesto for the 1966 general election
(postponed from last month)

*To* join the meeting click https://zoom.us/j/7421974305

The fallacy of free trade

 

Trump tariffs the whole world.

From the February 1999 issue of the Socialist Standard

‘The illusion that is peddled by sharp-suited government spokesmen on television about the benefits of the free market system is just that—an illusion. Every government in the world is in favour of free trade when their owning class is in a favourable position to compete and in favour of protectionism when some competitor from another country has the drop on them.

The British toadies of capitalism are bad enough but, in the USA the hypocritical posturing of the worshippers of the market system is truly nauseating. As the foremost industrial and commercial power in the world, the USA is loud in its praise of free trade as the cure-all for social problems. In practice, though, it often favours the strictest protectionism and some recent examples from the Press starkly prove this.

The notion that it is the soundest economic wisdom to “buy in the cheapest market” may be all very well for American academic economists to expound in the ivory towers of university and business schools, but in the USA when they find that their home produced commodities are being undercut in price the capitalists appeal to their government to protect US products from “unfair” competition. They call any competition at which they are losing “dumping”:

“Anti-dumping duties are a frequent recourse of the US government when faced with a trade problem. As the US trade deficit has mounted, pressure for duties has mounted, pressure for duties has increased rapidly and 36 petitions for anti-dumping have been received by the government so far in 1998, compared with 16 for the whole of last year. Most concerned imports of steel products . . . Ominously, William Daly, the US Commerce Secretary, has invited US manufacturers to make his anti-dumping staff ‘the busiest people in town’ . . . .” (Independent on Sunday, 22 November.)

The US exporters of Chiquita bananas, produced in Central America, used their political muscle to combat the European Union’s favourable trade terms for Caribbean bananas, and got the US government to slap 100 percent duties on such products as sheep’s cheese from the EU to the US. The American Financial Group, who own Chiquita, have recently given $1 million to Democratic and Republican politicians to fight the Caribbean preference which the they claim has lost Chiquita $1,000 million in earnings since the EC ruling of 1983 in favour of Caribbean bananas.

Behind the threats and counter-threats of a trade war the US and the EU are playing for higher stakes than are represented by bananas and sheep’s cheese:

“Andrew Hughes Hallett, professor of economics at Strathclyde University, believes we need to peel back the skin on this row to understand it. ‘I suspect it isn’t about bananas at all and it isn’t about protecting poor farmers either in St. Lucia or Honduras. It’s about political pressure in Washington and Brussels . . . In the EU this dispute is tied up with the power of the agricultural lobby. It’s like a bargaining chip. France is prepared to support Britain which is keen to get a favourable deal for its former colonies, so Britain will be more supportive of France on other issues affecting French farmers’.” (The Herald, 24 December.)

All over the world the US government pursues a policy of free trade or protectionism, whichever is most beneficial to US economic interests, but it is from New Zealand that we learn of the naked power of the US being used to force its products down the throats of unsuspecting consumers.

As the world’s biggest producer of genetically modified food, the US does everything in its power to protect the global ambitions of the agri-chemical firm Monsanto. It is increasingly concerned about European reluctance to accept genetically modified foodstuffs without proper labelling and testing.

In reply to criticisms of the British government that it was being pressured to accept US-produced genetically modified foodstuff, Tony Blair hid behind the cloak of secrecy when he replied:

“By convention it is not the practice of governments to make information on such meetings, or their contents, publicly available.”

In New Zealand no such convention applies and it was revealed in cabinet minutes that economic pressure was being applied to the New Zealand government to accept genetically modified food:

“The Cabinet Minutes, dated 19 February 1998, state: ‘The United States, and Canada to a lesser extent, are concerned in principle about the kind of approach advocated by Anzfa [part of the Australia New Zealand Food Standards Council], and the demonstration effect this may have on others, including the European Union. The United States have told us that such an approach could impact negatively on the bilateral trade relationship and potentially end any chance of a New Zealand-United States Free Trade Agreement.'” (Independent on Sunday, 22 November.)

So there you have it. Blatant economic threats, undisguised self-interest, and no recourse to such fine rhetoric, so beloved by US politicians, as the “free world”, or hypocritical cant about “democracy and the freedom of choice”.

Capitalism is a horrible society—let’s get rid of it.’

Richard Donnelly

https://socialiststandardmyspace.blogspot.com/2018/10/usa-fallacy-of-free-market-1999.html

The poor are still here

 'Even before the Labour government’s cuts to welfare spending, it was clear that poverty in the UK has been increasing (Guardian 27 March).

In April 2024 a record 4.5 million children were living in poverty, a hundred thousand more than the previous year. More children than before lived in families reliant on food banks, and were in food-insecure families.

The Domestic Poverty Lead at Oxfam said, ‘We live in the sixth-richest country in the world where billionaires alone saw their wealth soar by £11bn last year. It is morally repugnant that children, disabled people and carers are the ones who are taking the hit.’

This is life under twenty-first century capitalism!'

https://www.worldsocialism.org/spgb/

Socialist Sonnet No. 188

 Financial Statement

 

The chancellor stands to address the House,

Facing the vehemently disinclined,

Self-righteous, ambitious critics behind,

Knowing this financial statement must douse

Any ambition that needs might be met,

The reform fallacy will be laid bare,

Once again, the money is just not there,

No matter the targets set and reset.

Then some rogue state prepares to hinder trade,

Profits and growth begin to be expunged

And around the world stock markets have plunged,

Negating any financial plans made.

The chancellor, the statement completed,

Sits down again, utterly defeated.

 

D. A.

April 2025 Socialist Standard Now Available Online. FREE.

https://www.worldsocialism.org/spgb/socialist-standard/2020s/2025/no-1448-april-2025/