M-TH: Credit

[rakesh bhandari]

Very smart people keep on telling me to pay attention to the role of credit
in modern capitalism. John Holloway and Werner Bonefeld analyze its role in
their edited volume Global Capital, National State and the Politics of
Money. An essay by the right business observer George Melloan in today's
WSJ (14 April), comenting upon the recent adjustment in the American stock
market, finally allowed me to grasp the significance of credit (though it
was the recent "adjustment" which  has actually allowed me and Melloan to
begin to see beyond the fascade of the current credit-induced prosperity).

I'll just share some of his comments:

"If the US has been on a credit binge, it of course has not been as obvious
as it was during the wild credit-financed bull market of the late 1920s.
The markets certainly are better protected against such craziness today.
But the role of creit in fueling both the markets and the economy can
hardly be ignored. Mr Richenbacher [an economist from Frankfurt] notes that
Ameircans are burdened with 1.2 trillion more debt than in 1992, and that
the amoount they have taken on has exceeded the increasie in their income
in that period. Recent sharp rises in personal bankruptcies and credit card
deliquencies suggest that more and more Americans are in over their heads
and that the credit financed economic recovery of the 1990s could be
running out of steam."

Rakesh




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