The central bank in Hungary has put interest rates up by a whopping 3 percent to try and prop up the collapsing forint; Hungary, Belarus and Ukraine are currently in talks with the IMF in the hope of a massive injection of funds to stave off serious economic trouble; Poland’s currency, the zloty, is depreciating against major currencies - so economy minister, Wladamar Pawlak better forget about his call, earlier this month, for rate cuts.
The central bank in Warsaw has got together a “confidence package” to get banks here to start lending to each other again. Despite the fact that these banks do not have the structure of debt that lenders do in the US and much of western Europe, a crisis of confidence has made bankers over- cautious even here in Poland.
And the foreign parents of Poland’s banks - as much as 71 percent of the banking system here is owned by foreign banks - are in trouble. ING has had a bail out from the Dutch government, Fortis and Unicredito look vulnerable, too. Talk is of a sell off of Polish assets to offset massive losses elsewhere.
Suddenly the finance crisis - which was a bit of a spectator sport for the average Pole, as they watched the rich bankers of America and Europe take a spanking - has got a little too close for comfort.
Poland has a deposits guarantee system that promises to cover any losses should a bank fall. Getting confidence in banks is a priority in a country where folk simply didn't have bank accounts until not so long ago. Recently banks have risen the upper limit to calm any lasting fears of losing money overnight. But as the stock market in Warsaw tumbles - the Top 20 index lost over 7 percent of its value today - investors are taking money out of the bourses and putting them in government bonds - a move that one economist recently described to me as the equivalent of sticking all your money under the bed, as the interest you will make on that investment in minimal.
Is this the end of…well, what, actually?
Of course, in the wake of the finance crisis, the commentariat have rushed out to announce the end of Thatcherism, or neo-liberalism, or the free market, is nigh. Some have blamed the “greed” of bankers who lived off the never-never for too long.
But I don’t get the impression that any ideology has ended. Neither do I think the greed of bankers is to blame. Greed thrives in certain circumstances, and those circumstances were the rancid, sluggish nature of modern day capitalism in the highly developed countries in western Europe and the US.
Even though everyone for years has talked about a “boom” in western capitalism, when you look at the growth rates - 2, 3 percent, mostly - they are not that impressive at all. The recent long period of growth in the UK, for instance - 16 years of continuous growth - was a lot less spectacular than many think. In fact, its been a long, slow growth - not a “boom”. What has boomed in those countries is the housing sector. That fooled people into thinking they were getting richer and richer, when they weren’t.
As Asia, much of South America and this part of Europe have been experiencing a high growth rate boom, with real growth in productive forces and manufacturing base, the western capitalist countries have destroyed their manufacturing bases, failed to make real investments in developing infrastructure, and relied on the finance sector - and a weird web of loans and debts between customer and bank, and bank and bank - to keep their economies chugging along.
So it’s not greed that's responsible for this mess, but advanced capitalism itself. That doesn’t mean a socialist revolution is around the corner, because there isn’t really a socialist movement to take advantage of the situation anymore. Capitalism is not in its death-throws. But it does mean that our rulers are going to have to ask themselves some tough questions and come up with some tough and radical remedies.
But I wouldn’t be waiting for those remedies to emerge anytime soon. Our leaders are a fearful, disorientated bunch at the best of times. So expect some kind of tinkering to try to get through and out the other side. But they will still have to ask themselves this: how can western capitalism maintain decent growth rates without a manufacturing base and no other way to keep things going than a system of borrowing that even they don’t understand?
I know! Maybe environmentalism will come to their rescue. Green capitalism!
Carbon credit bond, anyone?

























