When looking for an article to read I always look for a first paragraph that grabs me. In the article entitled ” Why the U.S stimulus package is bound to fail” by David Harvey this exactly what happened. Harvey like a very intelligent man compares the financial crisis to an earthquake.
“Much is to be gained by viewing the contemporary crisis as a surface eruption generated out of deep tectonic shifts in the spatio-temporal disposition of capitalist development. The tectonic plates are now accelerating their motion and the likelihood of more frequent and more violent crises of the sort that have been occurring since 1980 or so will almost certainly increase. The manner, form, spatiality and time of these surface disruptions are almost impossible to predict, but that they will occur with greater frequency and depth is almost certain. The events of 2008 have therefore to be situated in the context of a deeper pattern.”
The thing that truly scares me is that just like an earthquake this financial crisis will eventually go away with time, but also like an earthquake the financial crisis will come back again, stronger than ever.
“But tectonic shifts of this sort do not come about as if by magic. While the historical geography of a shifting hegemony as Arrighi describes it has a clear pattern and while it is also clear from the historical record that periods of financialization precede such shifts”
Later in the article Harvey attempts to take a keynesian point of view explaining that it could never work due to such difficult obstacles in its way.
“In the United States, any attempt to find an adequate Keynesian solution has been doomed at the start by a number of economic and political barriers that are almost impossible to overcome. A Keynesian solution would require massive and prolonged deficit financing if it were to succeed.”
This comes down to the fact that Americans along with other “super powers” across the globe could not be sustained if we went into deficit financing. Therefore this perspective can never happen in this country. One of the reasons why the United States is in such a bad position is due to the amount of money that we owe other countries.
“The problem for the United States in 2008-9 is that it starts from a position of chronic indebtedness to the rest of the world (it has been borrowing at the rate of more than $2-billion a day over the last ten years or more) and this poses an economic limitation upon the size of the extra deficit that can now be incurred.”
In order for the stimulus package to work is if people know and believe what they are told, where the money is actually going and being spent on.
“In order to work, the stimulus has to be administered in such a way as to guarantee that it will be spent on goods and services and so get the economy humming again. This means that any relief must be directed to those who will spend it, which means the lower classes, since even the middle classes, if they spend it at all, are more likely to spend it on bidding up asset values (buying up foreclosed houses, for example), rather than increasing their purchases of goods and services.”
With so many financial uncertainties these days, the American people want to be comforted in knowing about where ones money is being spent, when will this end and how will we become a better nation from our financial mistakes. Once again like an earthquake, we as a nation will come out of this and come back stronger than ever.
