In an extensive interview with "Tareeq Al-Shaab",
the central organ of the Iraqi Communist Party, published on 12 October 2008,
the party leader Mr Hamid Majeed Mousa dealt with a number of pressing
internal issues as well as major recent developments in the international
arena. The following is an excerpt regarding the current world financial
crisis:
Q: The heart of the capitalism is now
witnessing a financial crisis whose consequences are not yet fully borne out,
both inside the US and outside. Can you give the readers of our newspaper your
evaluation of what is going on?
A: What has
happened, and is still going on, stems from the nature of the capitalist
system that is characterized by the emergence of periodic crises, which the
market system cannot avert before it disposes the working people and toilers
of their dearest assets. These are crises that result in maximizing the wealth
of the rich who have fixed assets and reduce to a minimum the purchasing power
of consumers and wage earners. What has happened reflects, in concrete terms,
the dominance of financial capital over the capitalist economy, as
demonstrated by the inflation of the role of financial institutions and
inflated financial circulation at the expense of the real productive economy.
According to the available facts, the financial circulation, which includes
the assets of banks and financing institutions, insurance and stock markets,
is three times what the real finance economy represents in the world. This
means that two-thirds of the global economy is a shadow economy whose owners
grab its profits from the productive economy, but through very complex and
interrelated means, that ordinary citizens cannot grasp their mechanisms,
secrets, complexity and repercussions.
The
problem developed when the U.S. economy, the leader of the world capitalist
economy, faced stagnation and crisis, and millions of people who got loans to
build or purchase houses and real estate were unable to pay mortgage
installments due to the lack of adequate resources because of the stagnation
of economy and the rise in interest rates. As a result, mortgage companies
repossessed more than 10 million housing units. This led to a huge crisis in
liquidity, with these institutions being unable to fulfil their financial
obligations and pay back credits. Their failure to pay back debts led to many
banks declaring bankruptcy.
This cascade of repercussions has led to a major crisis in the U.S.
economy. And the consequences and results are continuing, and more will follow
in the future.
Given
globalization and the role of the U.S. economy in the system of globalization,
the effects of the collapse of mortgage and insurance institutions and banks
will not remain confined to the U.S. market, especially that it controls the
global currency (the dollar). By virtue of dependency, and as a result of
overlapping investments and economic ties, the waves of this quake, that has
its centre in Washington, will cover other capitals. No state or economy will
be spared.
Let
me warn against what some Iraqi economic experts, or Central Bank staff, have
been saying that the Iraqi economy is immune to the economic shocks taking
place in the world. How can this be the case when the cover for the Iraqi
Dinar is mainly the U.S. dollar? How can this be true while the American
market is one major importers of oil? How is it so when we rely on oil prices
that have been affected by the hurricanes for the past two or three months?…
and while we are mainly importing from American markets and other world
markets? Yes, we shall certainly be affected. But we are still reaping the
first waves, and we'll see what happens... We must work to reduce this loss.
Those who attempt to belittle the danger of what is going on risk should think
instead about reducing the negative effects of global shocks on the Iraqi
economy of Iraq, the Iraqi market and the Iraqi Dinar…
instead of claiming that the American quake has no effect on the Iraqi
economy.
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