Effects of the economic crisis on the world stability

The link between politics and economy is beyond doubt. There is a relation of causality between both. In the history of humanity this relation is clearly visible. In periods of economic crisis and extreme unemployment the trend to the violence increases and vice verse, in times of prosperity the trend to peace increases. For example, the two great confrontations of the 20th century, the First World War 1914-1918 and the Second World War 1938-1945 was preceded by a period of severe economic crisis and it may be assured that the two phenomenon’s were essentially a consequence of the economic situation.
The economic ruin fed the animosity feelings of the countries and created radical leaders as Benito Mussolini and Adolf Hitler that incited to the war.
Other local conflicts of the 20 century had the same origin: the poverty, the unemployment and the struggle for the resources.
The 21st century is not an exception and the rule of the history might repeat again.
For that reason the comprehension of the economic reality is something very important, because it let us anticipate what would happen in the world political scenario.
Two decisive facts dominate the global economic situation: the financial collapse and the natural resources crisis. Both phenomena are closely joined and will determine the political future of the humanity, especially the war and the peace between the nations.

This information of Reuters on February 12 2009 is a clear explanation of the situation:

“World economic crisis is top security threat: U.S. Intelligence
By Randall Mikkelsen– 1 hr 41 mins ago

WASHINGTON (Reuters) – The global economic crisis has become the biggest near-term U.S. security concern, sowing instability in a quarter of the world's countries and threatening destructive trade wars, U.S. intelligence agencies reported on Thursday.
"The financial crisis and global recession are likely to produce a wave of economic crises in emerging market nations over the next year," said the report. A wave of "destructive protectionism" was possible as countries find they cannot export their way out of the slump.
"Time is our greatest threat. The longer it takes for the recovery to begin, the greater the likelihood of serious damage to U.S. strategic interests," the report said.
The report represents the findings of all 16 U.S. intelligence agencies and serves as a leading security reference for policymakers and Congress. Besides reviewing adversaries, it also considered this year the security impact of issues including climate change and the economy.
It said a quarter of countries have already experienced at least "low-level" instability, such as government changes, linked to the economy.
There have been anti-government protests in Europe and the former Soviet Union, and growing economic strains in Africa and Latin America, the national intelligence director, Adm. Dennis Blair, told Congress in delivering the report.
"Instability can loosen the fragile hold that many developing countries have on law and order, which can spill out in dangerous ways to the international community," Blair told the Senate Intelligence Committee.
Steps such as devaluations, tariffs and export subsidies were possible from countries desperate to boost economies.”
The report is enough illustrative and do not require more explanations.

Since its birth, capitalism created big crisis

The financial capitalism has dominated the world economy since the last decade of 19th century until the first decade of the 21st century, approximately 120 years. During that time, the financial capitalism accumulated a huge amount of money to build the modern world but it has generated, as well major crisis and losses for millions of people and thousands of businesses around the world who have lost their heritage as a result of its speculative practices. For example, “during the period following the First World War the U.S. banks showed a tendency to abandon the field of real banking business and becoming agents of financial speculation. Instead of extending loans, commercial banks used their short-term deposits to buy long period bonds recommended by the major banks and to buy or sell securities to the public willing to invest their money." (1)
(1) Harry Elmer Barnes. Historia de la Economía del Mundo Occidental.. Unión Editorial Hispanoamericana. México. 1973. Pages 622-623.

Through the so-called "controlled companies" financial capitalism appropriated full productive sectors from where all its actions were executed.
In the twenties led by the voracious American financial capitalism even lowered the wages of the workers to obtain more benefits that, among other errors, destroyed the purchasing power of workers and pushed the country towards the Great Depression.
"From 1920 to 1932 approximately 11,000 banks closed in United States before the "total closure" which occurred in early March 1933. Only 18,800 banks remained open. There is a contrast between the 11,000 banks which broke in the United States which the occurred in the same period in Canada, where only one bank was broken, the Home Bank, that closed their doors in 1932. While in United States by 1920 there were about 30,000 banks, Canada only had 10 banks with about 3,970 branches.”
As it can be seen in the quotations above, the financial capitalism led Capitalism system to its first big trial.(2)
(2) Idem,page 624.

How the American society overcame the Great Depression of 1929
Theoretically one could say that the 1929 crisis was caused in United States for two main reasons: a) the greed of bankers and b) the indifference, the “leisser faire” by the government, which created the conditions for the collapse of the economy. It was a misunderstood economic freedom that put the capitalist system near its end. Through a political action by the government of President Franklyn D. Roosevelt, the United States was able to overcome its most serious economic disruption.
These actions were not only economic but also a political concept known as “The New Deal” in which the state intervention was the main issue. The first thing President Roosevelt did to address the crisis was ---under strict control of the government--- to reopen the financial system—which had closed their doors in March 1933. Through a stringent law stopped the speculation in the stock market, established limits on the excesses of the electricity industry, which had been associated with the predatory practices of financial capitalism; enacted the National Industrial Recovery Act to encourage industry, reorganized the transportation, created the Federal Emergency Relief Administration to provide direct employment to the unemployed, created the Federal Surplus Relief Corporation in October 1933 to provide food, clothing and fuel to the unemployed, began a comprehensive public works program to provide direct employment to workers, revalued the dollar; and through the Home Owners Refinancing Act of June 1933, prevented the seizure of million people who could not pay their mortgages, among other important actions.
History repeats itself. And in the years 2008 and 2009, President Barack Obama took a set of measures similar to those adopted by President Franklyn Roosevelt in the thirties of the twentieth century.

Origin of the Global economic failure 2008

In the decade of the eighties in the 20th century appeared again in the horizon a new crisis that affected the most important industrial countries. In those years the mistakes of the global financial system began to be appreciated; in the precedent decade ---the seventies--- the financial international system gave loans of billions of dollars to the undeveloped countries at usury rates of interest.
The global crisis began when in the eighties the undeveloped countries could not pay their debts. In that moment the financial system employed their power and influence over the governments of the richest countries to impose a new method for recovering the loans and to avoid the bankruptcy.
The method was a new system of political economy that was named Globalization. Globalization is a system based in the principles of the Neo liberalism. The main objective of the new economic system was to impede the banks bankruptcy and to improve their benefits.
Bankers were aware that the debt was not recoverable but they created a formula for maintaining the debt as healthy assets. The formula was very simple: the refinancing of the debts at perpetuity, changing papers by other papers when these expire. Another formula employed by the financial system has been to issue billons of shares and bonds ---the most without real value--- to be negotiated in the Stocks Market of the world. The majority of these shares and bonds are a great risk because are surcharged or do not have any value, because do not have any support.
This has been the procedure used by the financial system and the cause of the main crisis of the 20th century, as the Great Depression of the thirties and the economic disaster of the first years of the 21st century.
In the eighties, the Globalization and the Neo liberalism was adopted as an official policy by the government of Margaret Thatcher in the United Kingdom and Ronald Reagan in the United States, and it was imposed to the rest of the world through the World Bank and the International Monetary Fund.
The mechanism was simple: the World Bank and the International Monetary Fund dictated a series of conditions to the undeveloped countries: a) adoption of the free market policies b) none intervention of the States in the economy of the countries c) privatization of the more profitable public companies to be sold to the international capitals.
These conditions were imposed to the undeveloped countries under a threat. The country that did not accept the conditions would not receive new loans of the international financial system and their debts would not be refinanced.
Of course, all the undeveloped countries accepted because they had no other option.

Political consequences of the Globalization

The results of the Globalization were not the best. The Globalization process was a failure. As a consequence of its imposition, the political panorama of many regions of the world changed.
In many countries the governments that adopted the Globalization model fell. In other countries leftist governments emerged. Latin America is perhaps the best example. Since the decade of the eighties, 10 Latin American countries have leftist governments.
The establishment of leftist governments in Latin America is a direct consequence of the Globalization and the Neo liberalism policies.
In the first decade of the 21st century the countries with left-wing governments are: Argentina, Brazil, Bolivia, Paraguay, Ecuador, Venezuela, Dominica Island, Cuba, Uruguay, Honduras and Nicaragua. In Honduras the situation changed in the year 2009 and a new government of right wing won the elections of November 2009.
The situation of Mexico must be considered in an especial manner, where a leftist candidate ---Andrés Manuel López Obrador--- lost the election in 2006 by very few votes and where there is a strong leftist movement with an important parliamentary force. This means that ---at medium term--- Mexico might fall in the hands of the left-wing. The same is happening in another country of Central America, El Salvador, where the Political arm of the former guerrilla, the “Frente Farabundo Martí”, in January 2009 won the parliamentary elections. In March 2009, the former guerrilla won the Presidency of that country, through Mauricio Funes. In Perú, other leftist, Ollanta Humala participated in the elections of the year 2006 and obtained an important voting.
It is necessary to highlight that Brazil and Mexico are between the major’s economies of the world. The Globalization and the Neo liberalism ---and especially the financial speculation that is the origin of the poverty of millions of persons worldwide--- also leaded these countries towards the left.

A way for promoting the democracy

The best road for promoting and strength the democracy is through the economic success. It is possible to create millions of new employments, to recover the economy and preserving the environment. Only it is necessary the political decision. For example, the creation of a Global Program of Reforestation ---ecological employments--- would be an effective form for combating the jobless and helping the conservation of the nature.
It is necessary to give the appropriate place to the real economy and to understand that the true wealth is not the money but the material production, especially the food, the water, the natural resources.
It is necessary a new ---holistic--- approach of political economy that highlight the supremacy of the real economy.