Systemic Failure: Capitalism "Lays an Egg"

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Systemic Failure: Capitalism "Lays An Egg" - by Stephen Lendman

After the 1929 October 24, 28 and 29 market crash, the weekly entertainment industry magazine Variety (on October 30) published its most famous ever headline: "Wall Street Lays an Egg." In October 2008, history repeated, and since the October 2007 peak, equity prices plunged over 50% after the Dow and S & P (in February) posted their second worst ever monthly percentage declines - topped only in 1933 during the depths of the Great Depression. So far, the current market drop matches its 1929 - 1932 pace, and like then, shows no signs of abating.

With world economies collapsing, stocks are still overvalued by every metric - dividends, price to book, sales, free cash flow, or earnings based on GAAP (Generally Accepted Accounting Principals) or "reported" earnings, not "operating" ones, easily manipulated to exclude "write-offs." By the mid-late 1990s, companies switched to the latter method to hide over-valuations. The practice still continues to let expensive stocks masquerade as cheap ones and make the market overall look attractive to the unwary.

After the 1929 crash, newspapers reflected the mood like the Chicago Tribune headlining: "Roaring Twenties grind to a halt and a new era of hard times begins." Variety reported that "Broadway T(ook) the Slap" and New York "nite clubs, speaks & dives (echoed) market cataclysm." Its Cairo correspondent cabled that a "cinema had finally been wired in Alexandria, Egypt, Cleopatra's hometown," so the paper quipped: "Only Sodom and Gomorrah remain(ed) to be heard from."

The comment resonates today on a global scale when never have such best and brightest teams done so much for so few, so little for so many, and so greatly harmed world economies in the process - for eight years under George Bush, now continuing under Obama with no end to it in sight. The result - a likely Great Depression II that will match or surpass the worst of the first one. What Michel Chossudovsky calls "The Great Depression of the 21st Century: Collapse of the Real Economy (affecting) all sectors" globally because solutions are contributing to "further collapse," too many "experts" remain in denial, and bad policies follow failed ones.

On February 28, Warren Buffett told shareholders that 2008 was Berkshire Hathaway's worst year, and he's "certain that the economy will be in shambles throughout 2009 - and, for that matter, probably well beyond...." As for government responses so far, his comment reflected gloom: "Economic medicine previously meted out by the cupful has recently been dispensed by the barrel. These once-unthinkable dosages will almost certainly bring on unwelcome aftereffects."

Perhaps this is what he has in mind: Given current conditions and the pace of continued decline, America and world economies face a possible synchronized global collapse, yet few come out publicly and say it.

Marx did in foreseeing much of what's happening today:

-- the inevitable monopoly control of production, commerce, and finance;

-- a reserve army of exploited low-paid labor;

-- a class struggle between "haves" and "have-nots;"

-- capitalism's internal contradictions: exploiting and alienating the many for the few;

-- its crisis-prone nature: unstable, "anarchic," ungovernable, self-destructive with booms creating bubbles creating busts, then depressions; and ultimately

-- its inevitable decay and demise because a system so corrupted can't endure; a socialist revolution (he believed) will replace it based on greater freedom, inclusion, and equality.

During the depths of the Great Depression, Franklin Roosevelt delivered his March 4, 1933 inaugural address and said what applies to today:

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I am a 72 year old, retired, progressive small businessman concerned about all the major national and world issues, committed to speak out and write about them.

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