from Stephen Morgan in Brussells"
The BBC, the Telegraph, Wall St Journal, Reuters and a host of other bourgeois journals are ringing the emergency bells over a crisis developing in China, which has largely been overshadowed by Greece, but with which it has now become entangled and which is filling the international bourgeoisie with horror.
Problems in China have been mounting in the last month, but in the past few days, Chinese markets have gone into freefall, worsened by the failed negotiations in Europe. Economists are saying that China is in a "meltdown" and are drawing serious comparisons with the Great Depression, warning of a looming "Chinese 1929".
There has been a 30% fall in the Chinese stock market – "a loss of value roughly equivalent to the UK’s entire economic output last year." says the Telegraph. The BBC reports that some 1,300 companies have stopped trading on China’s two main indices, that's about 50% of the total, and $3 trillion has been wiped off the value of companies. "I've never seen this kind of slump before. I don't think anyone has. Liquidity is totally depleted," said Du Changchun, an analyst at Northeast Securities.
Some economist are "looking on the bright side" and predicting it will "only be" as bad as another 2007-2008! But others say the parallels between the US economy in the run up to 1929 are uncanny. Interventions by the Chinese government have so far failed to halt the hemorrhaging, despite what one journalist described as throwing the kitchen sink at it with virtually no results.
For this reason the US and Japan have intervened in the Greek crisis to put pressure on the EU to find a compromise solution.
Tsipras has bent over backwards to accommodate the European capitalists. A report by Credit Suisse today shows that, apart from VAT subsidies for the islands, he has agreed to all their conditions for a deal, and that the only differences between the two sides is the issue of the timing of their implementation.
However, Deutsche Bank says the EU will now ask for even harsher concessions and will not even respect the previous negotiations. Merkel remains intransigent. It seems that Germany and its lapdogs can see no further than Europe, myopically content with its contingency plans for a Grexit should the Greeks not cave in. They appear to have dismissed the potential implications of a Grexit on the world economy.
This is causing divisions at the top in Europe. France has now announced it will act as mediator between Germany and Greece - a clear split between the EU's two main powers. Splits mean crisis, and divisions between the two main powers will further undermine market confidence in the viability of the Euro.
On top of that, Morgan Stanley says that "A perfect storm of events has hit oil markets." Crisis in China, the threat of a Grexit and Euro crisis, and turmoil on world markets means we may well be on the edge of an economic crisis far worse than 2007-2008, and even 1929.