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27 August 1998 Edition

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Workers in struggle: Ten days that shook the world

It really was ten days that shook the world, another Russian revolution - this time one that has the structures of global capitalism teetering with the world's stock markets and currency exchanges in turmoil.

For the ten days before 21 August Russian currency exchange and stock markets were in turmoil. The financial turmoil was sparked by the realisation that many of the major Russian private sector banks were practically insolvent and that the state central bank would be unable to meet debt repayments on $40 billion of loans.

Rouble devaluation


On 20 August in a meeting with 50 western bankers the now sacked Russian Prime minister Sergei Kiriyenko and central bank chief Sergei Dubinin told the bankers that there would be a 90 day moratorium on debt repayments and that the Russian central bank could no longer prop up the rouble on foreign exchange markets.

The following day, Friday 21 August, stock exchanges across the world, triggered by the Russian crisis, went into free fall. The Dublin Stock Exchange lost £1.3 billion in value. Share values fell in New York, London and most particularly in Germany where commercial banks are owed over $30 billion by Russian banks.

Investors worried about their profit margins sold shares and currencies, sticking their funds into government bonds in the USA, Germany and Britain. The bonds provide a relatively safe haven as they are guaranteed by their respective governments and are the bedrock of global financial markets.

Asian Flu


This week the crisis continues with the rouble still losing value. It dropped 9% in just one day's trading this week. There are also fears that last October's Asian Flu, having spread to the former Soviet Union, is now plaguing financial markets in Central and South America. Currency exchange rates are coming under pressure in Venezuela, Brazil, Mexico and and even South Africa.

Now only North America, Australia and Europe stand alone from the Asian financial crisis. However, commercial banks throughout North America and Europe are exposed to losses in Asia, Europe and South America, making the Asian Flu a global economic crisis.

The implications of the crisis for the global economy and, most importantly, the Irish economy are huge.

The Dublin Government is powerless to stave off the effects of the ongoing financial market turmoil on the domestic economy. The IDA admitted last week that there may already be some minor job losses in the electronics sector and that there will be no more major job announcements this year.

Chip Sales


In the global economy sales of micro chips and semi-conductors have fallen in recent months. This could signal a reduced global demand for computer goods and services. In Ireland it means that many of the multinationals here in the computer industry will cut back output. This could translate into layoffs and redundancies.

This will in turn lead to less demand for domestically produced goods and services, more layoffs and redundancies, leading a spiral into recession.

This might seem like a doomsday scenario for the Celtic Tiger. It is however as likely an outcome for the economy as any other. The key issue for both the Irish and wider global economy is that they are out of our control.

New World Order


It is ironic that the Russian economy is collapsing. It will be nine years this November since the Berlin Wall fell. Communism and socialism as economic systems were pronounced as failures. The Cold War was over. The west had won and the free market philosophy was the only economic agenda permissible.

We all had to embrace the market. Now, nine years later, with free markets the dominant economic ideology throughout the world there are serious questions to be asked about its effectiveness. The last year has shown the market system to be not only out of control but riddled with vested interests.

The free market system doesn't guarantee jobs, protect local and national economies and guarantee a standard of living. It simply supports wealth accumulation in the most blunt, undemocratic and forceful way.

Part of the economic turmoil this week has been also been generated by the US attacks on Sudan and Afghanistan. It is interesting that in the years since the Berlin Wall fell the amount of US military interventions outside its borders has increased dramatically. George Bush termed this the New World Order.

The proponents of free market economics are often also those who support US missile attacks and military interventions with the same uncritical all encompassing endorsement. Maybe it is time - nearly a decade on - to review the performance of the global free market economy and The New World Order.


Two male managers for every female


More women than ever before are at work in the 26-County economy. However, men still outnumber women by two to one as managers and executives. In the period between 1991 and 1996 102,000 women entered the workforce compared to 49,000 men.

Another interesting part of the figures released this week by the Central Statistics Office is that the two to one male-female ratio is reversed in the data on part-time workers. There are 127,570 female part-time workers compared to 63,199 males. Is this an aspect of discrimination in the workplace?

34,000 on hospital waiting lists


``We will end up with less cash next year than we had this year with waiting lists increasing all the time''. This was the warning from the Irish Hospital Consultants Association (IHCA) at Dublin Government proposals to increase health spending by 4% in 1999.

Healthcare cost are increasing by 7% and already 1% of the population of the 26 Counties, 34,000 are currently waiting for medical treatment.

The increases in spending will lead, according to the IHCA, to medical card holders finding hospital services inaccessible and the state is failing to deliver on its commitment to free hospitalisation.

Interestingly the IHCA did not mention how much consultants' wages and the two tier private-public health service they profit from is adding to healthcare costs. Yes, we need substantial investment in the health care system. That investment though must be in the public health care system not in subsidising inequality.

An Phoblacht
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Ireland