Market illusions vs. the reality of capitalist crisis

A month-long upturn in the stock market has sparked a round of optimistic media commentaries and statements by Obama administration officials suggesting that the US economy is on the road to recovery. But any serious examination of the state of both the financial system and the broader economy suggests that such celebrations are unwarranted.

The Dow Jones Industrial Average has risen some 1,500 points since hitting an 11-year low of 6,547 on March 9. The market closed April 9 at 8,083. Far from marking a definitive end to the financial crisis, the recent rise is the third such surge since the crash of September-October 2008 that followed the failure of Lehman Brothers and the federal bailout of American International Group (AIG).

There was a similar 1,500-point run-up during the week that culminated in the election of Barack Obama as US president last November 4, after which the Dow lost 2,000 points over the next three weeks. The average staged another 1,500-point gain in December, triggered by Obama’s selection of Wall Street favorite Timothy Geithner as treasury secretary, before plunging 2,500 points during the first two months of 2009.

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