Geography Reference
In-Depth Information
stock market crash of October 1987 (Wall Street) and the collapse of NASDAQ 1 in
April 2000, which corresponded with the burst of the speculative bubble
surrounding the Internet and the “New Economy”, amply demonstrated the illusory
nature of wealth based exclusively on securities and the vulnerability of a system of
computerized markets interconnected in real time. As a result of several years of
excessive speculation on credit, successive stock market crises, each more serious
than the preceding one (August 2007, January 2008, September 2008, etc.), have
occurred since the decline of the housing prices which began in 2006. The “subprime
crisis” that undermines today's financial markets has, at least temporarily, put an end
to American prosperity, given the large number of households struggling with
insolvency and heavy mortgage debts and the large number of bad loans negotiated in
financial markets. The current crisis is first and foremost a debt crisis, but it is also a
crisis of urban sprawl (housing creep) and it probably brings to term the “neoliberal”
economic and political cycle begun under the administration of President Reagan in
1981. Even so, the territory that we see today is largely the result of decisions that
were taken during the last quarter of the 20th century.
The prosperity of the years 1981-2005 was fostered by a series of contradictions.
The price of food and basic goods and services were long maintained at
exceptionally low levels. This stimulated consumption, while placing manual
workers (farmers, laborers, service employees) in the United States and elsewhere at
a disadvantage. While growth rates continued gyrating, a growing number of
Americans found themselves below the poverty threshold. In fact, growth benefited
only a minority, while the real hourly wage of less skilled workers decreased
[KRU 00]. In Chapter 2 we saw how this policy bled rural America, forcing farmers
to sell their produce at ever lower prices. While massive importing lowered the price
of manufactured goods, it also forced the closure of many factories, or at least very
significant restructuring and downsizing. Many areas whose economies were heavily
exposed to competition from low-wage countries fell victim to economic
restructuring and were forced to adapt or accept economic decline. The textile
industry was the first to go. It was followed by the metallurgical and automobile
industries. Today the computer industry is at risk. The rise of Asian economies is
such that no industry should consider itself immune from competition and products
coming from these countries. Moreover, huge Asian consumer demands are fueling
structural price rises for agricultural products and raw materials that promise a new
era for the global and American economies. We are witnessing today the decline of
American hegemony over the world economy, a decline reflected in the fall of the
1 . The National Association of Securities Dealers Automated Quotations is an American
virtual market for stock of the “new economy” which is based on IT, Internet,
telecommunications, software, etc. It is based in Trumbull, Connecticut, near New York.
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