thinking person's New Left Review Nothing could be more ridiculous than the claim that the pound's nosedive 'did not reflect the real economy.
At the same time as the financial markets were smashing the pound, the news came through that 40,000 people joined the dole queues last month. Only an imbecile could imagine that there is no link between economic recession fail in value of the pound.
The dominant world currencies today are the dollar, the deutschmark and the yen. Selfevidently, this reflects the fact that these countries are substantially the most economically powerful. The decline in the pound reflects the accelerating decline of British capitalism.
The currency speculators could pick off the pound because the attempt to link it with the much more powerful German currency through the ERM was unsustainable. So much everyone agrees. But what lies behind the huge speculative movements of capital and Britain's economic decline?
Turmoil in the financial and currency markets is itself a reflection of prolonged international economic recession. During the 1980s there was a huge growth both in the generation of speculative capital, and fictitious capital as in the US junk bonds' boom. This is typical ot a period of crisis.
Today it is not only banks and investment houses which play the speculative market, but also giant multinational corporations.
As the rate of profit declines, more and more companies discover that they can make more money through lending capital and currency deals, than through actually investing it in production. The Tories are in deep financial doodoo. At one parhcular Trot rae based in London N4 the picture ain't exact ly rosy either. Our bank balance is only marginally less in the red than our politics Don't you hate when it when every time you pick up a lefty periodical some dickhead chimes in with cliches like unlike the bosses' press, a workers paper cannot rely on millionaire Tory backers and rich advertisers, and depends on its readers to stay afloat?
Well, while Socialist Outlook generatly avoids cliches like the plague, we cannot rely on millionaire Tors backers and rich advertisers, and depend on our readers to stay afloat.
26 Sept, 1992 NO. 26 Not a lot to laugh about This trend was tremendously fuelled by runaway the US budget deficit, especially under Ronald Reagan. This pushed up interest rates internationally. The certainty of a return on a short-term loan to the US government was much more profitable than longterm investment in new plant and equipment.
Currency speculators make a killing from selling a currency as it goes down, and then re-buying when it hits the undermined its currency, this link was broken. but with no fixed reference point. domestic crisis. buck. for capitalism Help build Socialist Outlook - the handed and troz its readers. Militant wanis lot. Mislewise aheady a better floor. People who played the market right last week increased the value of their stake by up to 15 per cent, making billions. But why was the British currency a suitable target? Put simply the pound in the ERM was overvaluea against the real strength of the British economy. Britain's economic decline is an old story. But the 1980s crystallised important changes in the structure of British • THE CURRENCY crisis is itself a symptom of the crisis of capitalism. Until 1971, the world's main reserve currency, the dollar, was linked to a fixed exchange rate with gold. As US economic domination was eroded in the 1960s and the costs of the Vietnam war • Since then, repeated efforts have been made to 'peg' currencies against each other, • Each of these agreements reflects the political and economic balance of forces at that point of time, but comes under pressure as each bourgeoisie wrestles with its own • This leaves the determination of the 'value' of a currency dependent on the whims and 'confidence' of speculators and bankers, shopping round for the quickest available • With the pound, the lira and the peseta already devalued, and the franc, the Irish punt and the Swedish krona now under siege, there is little prospect of any short-term stability Strialiss Worker is out to extort a