January 2018        

The biggest bubble of all time?

From Junge Welt (Berlin)

Speculators no longer know where to go with their money. The German share index DAX stands at more than 13,000 points; on the eve of the financial crisis, in July 2007, it was 8,000.
     Property prices shoot up; art becomes almost priceless. For $450 million Leonardo da Vinci’s Salvator Mundi was sold in mid-November in New York.
     The neo-liberal counter-revolution made this possible. The boldest dreams of the thought-leader of the economic right, Friedrich von Hayek, are about to be realised; the last relic of state sovereignty—the creation of money—should become a simple speculative object.
     The “cryptocurrency” bitcoin has increased in value by more than 1,200 per cent since the beginning of last year. A fictitious coin cost more than $10,000 last month. According to calculations by the web site coinmarketcap.com, which records the market capitalisation of cryptocurrencies, the value of all bitcoins is now about $180 billion. This makes it almost as expensive as the American soft-drinks giant Coca-Cola, which is valued at about $195 billion.
     But it is not a “general equivalent.” Neither central banks nor states draw money here. The price alone determines supply and demand. Bitcoin is based on the so-called blockchain technology, in which information is stored, forgery-proof, in a database.
     The capitalists are in trouble. Money is not only exchange value but wants to be hoarded by them as well. What if the price crashes by more than 1,000 per cent in the coming year? Who is the lender of last resort? Who is the last to stand up for the debts of others? With money, the fun stops.
     The bitcoin bull market reflects a lack of profitable investment opportunities. Significantly, where the highest profit margins exist, in China, the cryptocurrency has been banned since September. The Chinese government justified this by saying that trade “seriously disturbed economic and financial order.” The Bundesbank (German central bank), however, went to sleep again last week. The price explosion at Bitcoin does not worry them. In Germany there is no indication that the speculation with cryptocurrencies is financed by credit, said the bank’s vice-president, Claudia Buch.
     Incidentally, the same applies to the price explosion in the property market—which is “exaggerated” by up to 30 per cent, but nothing more.
     A hedge-fund manager told Reuters about bitcoin development: “It’s going to be the biggest bubble of our lives.” While he may be right, it doesn’t just affect the computer currency market.

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