People Before Profit blog

Clinton Helps Make Michigan Obama Country

Tue, 30 Sep 2008 04:31:00 +0000

9-29-08, 11:30 am

Grand Rapids, Mich. – An enthusiastic crowd of several hundred people gathered at Central High School here Sat., Sept. 27, for a rally held by Hillary Clinton on behalf of Barack Obama.

In lines that stretched around the the block, a crowd of several hundred mostly white city residents came out to see the New York Senator. Clinton delivered a strong message on the economy and the extremism and failures of the Republican Party under Bush and McCain.

To the delight of the excited crowd, she paraphrased a line that earned her thunderous applause at the Democratic National Convention: 'No way, no how, no McCain, no Palin!'

If you care about the economy, Iraq, health care, education, the environment, she contended, you simply cannot vote for John McCain. 'We cannot afford four more years of the same failed policies,' she said. 'We love this country too much.'

'And no state in the country needs change more than the state of Michigan,' she added. 'I know what Michigan has been through with all of the incredible difficulties with the downturn in manufacturing and the loss of jobs, people moving out of state, families being separated, high unemployment, people losing their homes, not having their health care, retirees going back to work in their 70s and 80s because they don't have enough money to keep body and soul together.'

'There isn't any reason on this earth why anybody in Michigan should want to vote to validate the last eight years, which is why we need to vote for Barack Obama,' Clinton stated to thunderous applause.

Hillary Clinton's efforts for the Obama campaign are one of several reasons Barack Obama appears to be pulling ahead in the latest national polls. A handful of instant polls gave him the edge for his strong performance in the first presidential debates, during which he scored high marks on the economy and held his own on foreign policy and national security issues, especially Iraq, which were supposedly John McCain's top issues.

During the week before the debate as Wall Street and the Bush administration demanded a massive bailout of the financial markets, John McCain appeared to make a series of rash and poor decisions, injecting his campaign into Washington politics only to seem to have disrupted proceedings rather than help broker a deal.

In the presidential debate itself, during the 40 minutes spent on economic issues, McCain sounded shaky, appeared uncomfortable, and had few answers for Obama's challenge that McCain was linked to the economic policy of deregulation and a free hand for Washington lobbyists and Wall Street players that caused the financial meltdown.

Fears about the impact of the Wall Street bailout and anger over George W. Bush's refusal to link the bailout to economic stimulus for Main Street favored Obama. Obama's call for a bailout that addressed the needs of working families as well as Wall Street players resonated with voters enough to earn him a 24-point lead over McCain on economic issues, according to a Washington Post/ABC News poll released last week.

Obama has called for investments in job creation, helping homeowners renegotiate their mortgages in order to keep their homes, and an economic stimulus package that includes a tax break for 95 percent of working families. By contrast, McCain has proposed a new $300 billion tax break for Wall Street, including massive tax cuts for major oil companies.

Obama's strong economic message has boosted his support in key battleground states like Michigan. For example, a Greenberg Quinlan Rosner survey of voters in Macomb County, Michigan, a mainly white, working-class suburb that has previously leaned Republican and has been pegged as a tough place for Obama to win support, suggests his economic message is getting through. Macomb County, gave a one-point edge to Bush in 2004.

Both candidates have made numerous stops in the county, which both campaigns regard as one of the keys to winning Michigan. Prior to the the mid-September collapse of Wall Street, John McCain faired well in the county, with a seven-point advantage.

New data suggests that the race has tightened with Obama winning much stronger support from Democratic voters who leaned either toward McCain or toward Ralph Nader. According to the Greenberg Quinlan Rosner survey, released just this past week, Obama's support grew by about double digits among three key Democratic demographics in the county: non-college whites, moderate or conservative Democrats, and white union members.

But Obama's economic message, the poll showed, hasn't been the only factor contributing to his improved numbers. More and more voters in Macomb County also described Obama as 'on your side' and increasingly viewed Obama as solid on national security issues and the Iraq war.

The latest data from Greenberg Quinlan Rosner also puts Obama at a seven-point advantage in the whole state, improving his chances to claim the state's 17 electoral votes in November.

In addition to Obama's strong economic message and his solid performance during the national security presidential debate, Obama's campaign has out-performed McCain's in Michigan. Excellent grassroots work in the Grand Rapids area, for example, had McCain nervous enough to visit the supposed Republican stronghold in early September, speaking to a crowd of about one-third the size of Obama's last major personal event in the city. Elsewhere, voter registration efforts in Detroit has added at least 30,000 new voters to the rolls, with a goal to add about 500,000 statewide.

Obama's Michigan supporters are not taking the stronger poll numbers for granted. They have pledged to spend the remaining weeks registering voters, talking directly to undecided voters, educating voters on their rights, and getting out the vote on Nov. 4th.

Palestinian Economy: From Bad to Wretched

Tue, 30 Sep 2008 02:01:00 +0000

9-29-08, 9:01 am

The numbers are grim, whether in the West Bank or the Gaza Strip. The Palestinian economy is in one of its most wretched states, and the disaster is mostly, if not entirely human-made, thus reversible.

The World Bank made no secret of the fact that Israeli restrictions are largely to blame, as poverty rates in the Gaza Strip and West Bank have soared to 79.4 percent and 45.7 percent respectively. It concluded: 'With a growing population and a shrinking economy, real per capita GDP is now 30 per cent below its height in 1999.' 'With due regard to Israel's security concerns, there is consensus on the paralytic effect of the current physical obstacles placed on the Palestinian economy,' it added.

With a declining economy, lack of developmental projects and Israeli restrictions, Palestinians are increasingly reliant on foreign aid, which is largely controlled by political interests. For example, the US proved more generous than ever in supporting the Ramallah-based government of Mahmoud Abbas as it led an international regime of sanctions and embargo against the Gaza-based Hamas government. Such funds are often conditioned on such murky concepts as 'cracking down on the terrorist infrastructure', which is duly understood as fighting those who challenge Israel and Palestinian Authority (PA) rule in the West Bank.

Nonetheless, even if the PA had no history of corruption and genuinely intended to invest in a sustainable economy, no truly free and independent economy can flourish under occupation, whose very intention is the disempowerment of Palestinian workers, farmers and the middle class. It is these strata of Palestinian society that have led the struggle to end the occupation on the one hand and to resist local corruption on the other.

Indeed, Israeli restrictions are not coincidental and hardly confined to the classic reasoning pertaining to national security. 'In reality, these restrictions go beyond concrete and earth-mounds, and extend to a system of physical, institutional and administrative restrictions that form an impermeable barrier against the realization of Palestinian economic potential,' the World Bank said. It concluded that more aid would not revive the Palestinian economy, unless the above restrictions are removed.

But these restrictions represent the backbone of Israeli policy; removing them would deny the Israeli government political leverage over Abbas's government. By extension, the US is in no mood to help Palestinians develop a strong economic base and infrastructure, enough to spare Palestinians the indignity of living on international donor handouts.

In the West Bank, Palestinian economic woes are compounded by a terrible water crisis, a nightmare for farmers who are already struggling to endure Israeli water theft and disproportionate water distribution. According to a recent report by the Israeli human rights group B'tselem, an Israeli household consumes on average 3.5 times as much water as a Palestinian household. The group blames Israel for its discriminatory policy and tight restrictions that prevent Palestinians from drilling new wells. One fails to see how Israel's 'security' concerns can ever justify Israel's plundering of Palestinian water using West Bank aquifers while many Palestinian families in cities like Jenin have been denied water since April.

While many farmers found themselves unable to preserve their livelihoods, ordinary people have to spend a significant proportion of their meager incomes buying water. A recent UN report, cited by news agencies, estimated that Palestinians in the hardest-hit communities spend 30 to 40 percent of their incomes to purchase water delivered by trucks. How can a sustainable economy with a sensible growth level be achieved under these circumstances?

If the situation is difficult in the West Bank, it's impossible in Gaza. A report in March sponsored by Amnesty International, Care International UK, Christian Aid, Oxfam and others, described the situation in the Strip as the worst humanitarian crisis since the Israeli occupation of 1967. The report called on Israel to change its policies towards Gaza. A few months following the release of the report, Israel seems to be stiffening its control over the impoverished Strip, rendering its hapless 1.5 million inhabitants more miserable by the day.

According to the report, 80 percent of the Gaza population relies on food assistance. Some 1.1 million people receive their food aid from UN agencies, which are themselves struggling to operate under fuel cuts and the near-total isolation of Gaza.

Unlike the West Bank, Gaza's aim is hardly economic development but mere survival. Gaza's reliance on food aid has increased tenfold since 1999, according to the report. Concurrently, 98 per cent of Gaza's factories are no longer functioning, leaving thousands unemployed and wreaking havoc on the income of numerous families.

Coupled with inner-Palestinian violence, US-led international sanctions and the perpetual Israeli siege and violence are destroying the very fabric of Palestinian society in Gaza while turning the West Bank into a charity-based society, with funds provided largely as political incentives with hardly any long-term vision.

Equally disheartening is that the PA in the West Bank has actively shut down Muslim charities, kindergartens, orphanages and schools in the ongoing tit-for-tat action between rivals Fatah and Hamas. It's intolerable that the animosity between both parties has reached a point of victimizing the most unfortunate in society: orphans, widows and the physically and mentally impaired. Some 82 children didn't return to school this year – they were killed in the previous year. And over one million students will have to negotiate their way around 600 Israeli military checkpoints. With the shutting down of Muslim charity-run schools, hundreds of students will lose their right to education. But this time, Israel is not the one entirely to blame.

Palestinians cannot survive on handouts through a charity- like economic system. They need, and deserve, sustainable economic development, with a long-term vision, one that can overhaul the economies of the West Bank and Gaza and make use of the precious human resources available. Israel will do its utmost to undermine such a possibility, as it has done for decades. This represents the very struggle that Palestinians are undergoing: between their need to break free, and Israel's insistence on maintaining its matrix of control. Without proper channels to empower the Palestinian individual and community, Palestinians will remain economically disadvantaged and thus politically handicapped. This is hardly a recipe for an equitable, lasting peace with justice.

--Ramzy Baroud (www.ramzybaroud.net) is an author and editor of PalestineChronicle.com. His work has been published in many newspapers and journals worldwide. His latest book is The Second Palestinian Intifada: A Chronicle of a People's Struggle (Pluto Press, London).

Dangers of Backyard Fire Pits for the Environment

Tue, 30 Sep 2008 01:59:00 +0000

9-29-08, 8:59 am

EarthTalk From the Editors of E/The Environmental Magazine

Dear EarthTalk: Backyard fire pits have become the latest must-have gardening feature. How bad are they on the environment? -- Michael O’Laughlin, Tigard, OR

With Fall setting in and the mercury starting to drop, many of us want to extend our time outdoors, and sitting around a backyard fire pit has become one of the most popular means to do so. But even though it may be fun—s’mores anyone?—it is not good for the environment, especially during times when air quality is already poor.

It’s hard to assess the larger impact of backyard fire pits on local or regional air quality, but no one questions the fact that breathing in wood smoke can be irritating if not downright harmful. According to the U.S. Environmental Protection Agency (EPA), so-called fine particles (also called particulate matter) are the most dangerous components of wood smoke from a health perspective, as they “can get into your eyes and respiratory system, where they can cause health problems such as burning eyes, runny nose and illnesses such as bronchitis.”

Fine particles also aggravate chronic heart and lung diseases, and have been linked to premature deaths in those already suffering from such afflictions. As such, the EPA advises that anyone with congestive heart failure, angina, chronic obstructive pulmonary disease, emphysema or asthma should steer clear of wood smoke in general. Children’s exposure to wood smoke should also be limited, as their respiratory systems are still developing and they breathe more air (and air pollution) per pound of body weight than adults.

Geography and topography play a role in how harmful wood smoke can be on a community-wide level. People living in deep, steep-walled valleys where air tends to stagnate should be careful not to light backyard fires during smog alerts or other times when air quality is already poor. Lingering smoke can be an issue even in wide-open areas, especially in winter when temperature inversions limit the flow of air.

The Washington State Department of Ecology reports that about 10 percent of the wintertime air pollution statewide can be attributed to fine particles from wood smoke coming out of wood burning stoves. While a wood stove may be a necessary evil as a source of interior heat, there is no excuse for lighting up a backyard fire pit during times when you could be creating health issues for your neighbors.

Another potential risk to using a backyard fire pit is sparking a forest fire. Some communities that are surrounded by forestland voluntarily institute seasonal burn bans so that residents won’t inadvertently start a forest fire while they are out enjoying their backyard fire pits. If you live in one of these areas, you probably already know it and would be well advised to follow the rules.

If you must light that backyard fire pit, take some precautions to limit your friends’ and family’s exposure to wood smoke. The Maine Bureau of Air Quality recommends using only seasoned firewood and burning it in a way that promotes complete combustion—small, hot fires are better than large smoldering ones—to minimize the amount of harmful smoke. The moral of the story: If you need to burn, burn responsibly.

CONTACTS: U.S. Environmental Protection Agency (EPA), www.epa.gov; Washington State Department of Ecology, www.ecy.wa.gov; Maine Bureau of Air Quality, www.maine.gov/dep/air/.

GOT AN ENVIRONMENTAL QUESTION? Send it to: EarthTalk, c/o E/The Environmental Magazine, P.O. Box 5098, Westport, CT 06881; submit it at: www.emagazine.com/earthtalk/thisweek/, or e-mail: earthtalk@emagazine.com. Read past columns at: www.emagazine.com/earthtalk/archives.php.

Number of Cholera Cases in Iraq Nearly Doubles

Tue, 30 Sep 2008 01:57:00 +0000

9-29-08, 8:57 am

Original source: IRIN News

BAGHDAD, 28 September 2008 (IRIN) - More than 300 confirmed cholera cases have been registered in central and southern Iraq since an outbreak began on 20 August, with almost 50 percent of the cases occurring in the past week, the health ministry's cholera unit has said.

'The number of cholera cases has reached 327 in nine provinces: Babil 200 cases, Baghdad 61 cases, Basra 29 cases, Karbala 26 cases, Anbar four cases, Najaf three cases, Diwaniya two cases, Diyala one case and Maysan one case,' said Ihsan Jaafar, director-general of the public health directorate and spokesman for the ministry's cholera control unit.

Jaafar told IRIN that no new cholera-related deaths had occurred to add to the already registered five fatalities: a 10-year-old girl and a 61-year-old man in Babil province; a three-year-old boy in Maysan; and an adult and child in Baghdad.

However, he said dozens of new suspected cases were being tested.

On 21 September, Jaafar anticipated that new cholera cases would continue to occur in the country until the end of October - as the disease peaks in August, September and October - despite ongoing awareness and medical campaigns.

According to Richard Finkelstein, co-author of Medical Microbiology, the disease occurs primarily during summer, possibly reflecting the increased presence of the organism in the marine environment during those months, as well as the enhanced opportunity for it to multiply in unrefrigerated foods.

The Iraqi Health Ministry and the World Health Organization have blamed the country's rundown water and sanitation infrastructure for the outbreak.

Cholera is a gastro-intestinal disease typically spread by contaminated water. It can cause severe diarrhoea, which in extreme cases can lead to fatal dehydration. It can be prevented by treating drinking water with chlorine and by improving hygiene conditions.

Book Review: Lockdown America, by Christian Parenti

Tue, 30 Sep 2008 01:52:00 +0000

9-29-08, 8:51 am

Lockdown America: Police and Prisons in America by Christian Parenti New York, Verso, 2008.

Original source: Morning Star

Over 1.7 million US citizens now live in prison, a 300 per cent increase since 1980.

In some US cities, one-third of all Black men are in jail, while spending on prisons has overtaken allocations for higher education in California.

Christian Parenti's new book Lockdown America establishes the connection between these stark facts and the right-wing social and economic counter-offensive that began in the early 1980s.

Parenti marshals a vast array of evidence to underline the connection between the damage wrought by Ronald Reagan and Margaret Thatcher to the substructure of US and British society in the early 1980s and the effects that have consequently devastated working-class communities on both sides of the pond.

He shows that Reagan's reactionary social engineering, in the form of 'monetarist austerity' and a 'deregulatory war on labour,' led to interest rates shooting up from 7.9 per cent in 1979 to 16.4 in 1981, plunging the US economy into the worst recession since 1929.

Parenti observes that then chairman of the Federal Reserve Paul Volker's 'cold-bath recession' resulted in unemployment shooting up to 10 million by 1982, putting immense downward pressure on wages, as it was designed to. He quotes Thatcher's chief economic adviser Alan Budd, who submerged Britain in his very own 'cold-bath recession.'

In retrospect, Budd wrote candidly that 'rising unemployment was a very desirable way of reducing the strength of the working classes.

'What was engineered - in Marxist terms - was a crisis in capitalism which recreated a reserve army of labour and has allowed the capitalists to make high profits ever since.'

In the US, the real average weekly wage fell more than 8 per cent between 1979 and 1982.

'Overall,' Parenti writes, ''Reaganomics increased class and racial polarization destroyed inner cities, sacked public education and public health services, created epidemic homelessness, increased exploitation of workers and caused the intensified spatial concentration of a permanently unemployed class.'

The same is true of Thatcherism and its new Labour legacy here and it is the 'social wreckage' and 'social dynamite' left in the wake of the ruling-class offensive that the modern criminal justice crackdown seeks to regulate and contain.

Petty gangsterism, drug peddling and the associated violence that corrodes formerly industrial working-class communities in Britain and the US today are, in Parenti's eyes, the 'natural' result of economic decline and the ongoing metamorphosis of the welfare-into-police-state.

Parenti traces the origins of today's macho, militarized Special Weapons And Tactics (SWAT) teams to the armed units of spooks and police that killed off the Black Panther leadership in the late 1960s.

Once established, these expensive attack teams became self-perpetuating. 'Big budget outlays compel police departments to show 'good use' - that is, to deploy their SWAT teams wherever possible,' he explains.

Today, paramilitary police units are increasingly 'called out to execute petty warrants, conduct traffic stops and round up non-violent suspects or, more commonly, conduct raids in place of detectives doing investigations.'

In Greensboro, North Carolina, the public library's bus-sized 'bookmobile' was retired, along with its card catalog, 2,000 volumes and two librarians, due to lack of funds.

Shortly thereafter, the bookmobile was converted into a mobile command-and-control centre for the Greensboro police department's elite 23-man SWAT team.

While the business counteroffensive of the 1980s and '90s helped to restore profits, it also 'invigorated the perennial problem of how to manage the surplus, excluded and cast-off classes.

'This then is the mission of the emerging anti-crime police state,' he argues.

New Labour vowed to get tough on crime, tough on the causes of crime in 1997, the same year that Gordon Brown supposedly set the Bank of England free.

Back then, Britain's incarceration rate stood at 120 per 100,000.

Today, it is 148 per 100,000, putting Britain above China, Turkey and India in the imprisonment league table.

It is a source of pride to Britain's working-class movement that the Prison Officers Association and the National Association of Probation Officers are in the forefront of the campaign to oppose new Labour's plan to build three US-style super-Titan prisons.

What follows from Parenti's unflinching analysis is that the only durable alternative to new Labour's emerging anti-crime police state is a socialist state which prioritises a crackdown on social injustice.

Venezuelan Government and its Allies Respond to Human Rights Watch Report

Tue, 30 Sep 2008 01:48:00 +0000

9-29-08, 8:48 am

Original source:

Over the past week, Venezuelan government officials, labor union leaders, and journalists criticized what they say are inaccuracies in the report on Venezuela that the NGO Human Rights Watch (HRW) published last Thursday. They also accused HRW's Americas Director José Miguel Vivanco, who was expelled from the Venezuela, of being an agent of imperialism.

According to a statement from the Venezuelan National Assembly last Friday, the HRW report 'aims to promote a national and international matrix of opinion that favors a climate of instability, anxiety, and precariousness in the population in order to justify a coup d'etat.'

A communiqué from the Ministry of Communication and Information (MINCI) said the HRW report is biased because it focuses on specific cases regarding labor, the media, and the judicial system while ignoring that 'the majority of the guarantees in the Constitution of 1999 have been implemented, particularly in relation to the fundamental needs of citizens, such as the right to food, health, education, housing, social security, work, and political participation.'

The MINCI communiqué emphasized that Venezuela's progress on all of these fronts has been recognized by various international organizations, including the United Nations, the World Bank, and the Organization of American States (OAS).

Responding to HRW's assertion that the Venezuelan government has violated labor union autonomy, Labor Minister Roberto Hernández emphasized the historical context, saying that past governments 'divided the labor movement by way of murder, torture, and jailing. There are fifty years of division that we are trying to reconstruct.'

At a rally of labor organizations and the United Socialist Party of Venezuela (PSUV), PSUV leader Alberto Muller Rojas said the current administration of President Hugo Chávez has a clear policy of promoting free union organization. He accused HRW of serving the interests of its funders, transnational businesses and their allies who oppose the Chávez administration's alliance with leftist labor organizations.

In contrast, Orlando Chirino, a coordinator of Venezuela's largest union federation, the National Workers Union (UNT), which critically supports the Chávez administration, told the Independent Media Center Tuesday that 'in Venezuela labor rights are violated in the private and public sectors,' and concluded that 'this is the norm in capitalist countries, and Venezuela is no exception.'

Nonetheless, Chirino rejected the HRW report and said HRW is an organization of 'mercenaries of the imperialism of North America and multinational companies.' He grouped HRW together with the International Monetary Fund, the United Nations, and the South American free trade organization MERCOSUR.

'To avoid any misunderstanding, I'll add that the workers should never team up with imperialists or private owners in order to defend our rights... I am not going to be used as a weapon against the revolutionary process,' said Chirino. The HRW report featured a labor dispute Chirino was involved in as one of its examples of labor rights violations in Venezuela.

In response to HRW's assertion that judicial independence is threatened in Venezuela, the president of the Venezuelan Supreme Tribunal of Justice (TSJ), Luisa Estela Morales, said the laws governing the judicial system establish more stringent prerequisites for judgeship than in the past and guarantee transparency in the process of judge selection, which is consummated by a National Assembly vote.

'We have an autonomous judicial branch and the majority of those who are in it were judges and had judicial careers. There are no politicians here,' said Morales.

After studying the HRW report, Morales said 'I think it is not necessary to give it more relevance. There is a large quantity of inexactitudes that make us think that this report does not reflect enough serious and profound investigation to give it importance.'

A group of journalists named the Necessary Journalism Movement, who sympathize with the Chávez government, rejected HRW's allegation that there is a lack of freedom of expression in Venezuela. The journalists pointed out that the private opposition media still operates in the majority of the airwaves, and has not been censored despite its numerous offenses of journalistic norms of decency, accuracy, and respect for democratic order.

The report 'appears to us to be an act of provocation and evident falsification of the facts, an act waged by HRW against a government and a people enveloped in a process of deepening democracy,' said the journalists.

Echoing this, Venezuela's ambassador to the Organization of American States (OAS), Roy Chaderton, said the HRW report is a 'propaganda device' with electoral intentions.

'Vivanco has repeated his routine of visiting Venezuela two months prior to each electoral process, obeying a strategy when the polls indicate an advantage for the political currents that support Presidetn Hugo Chávez,' Chaderton explained.

Meanwhile, five leaders of the Chilean Socialist Party called on Chilean President Michelle Bachelet to denounce the HRW report, and said that the fact that Vivanco is of Chilean nationality should not be used to foment division between Chile and Venezuela.

In a formal statement, the party leaders expressed solidarity with Venezuela with regard to the recently foiled plot to assassinate President Chávez and overthrow the government, of which the HRW is suspected to be a part. 'The aggression and provocation that [the Venezuelan] government suffers today are the same they sought to impose 35 years ago on the process of democratic transformation... led by Salvador Allende,' they said.

Bailing Out Capitalism

Tue, 30 Sep 2008 01:46:00 +0000

9-29-08, 8:46 am

Original source: The Guardian (Australia)

The financial bomb that exploded last week saw three of the five largest financial institutions on Wall Street collapse within a 24-hour span. Billions of dollars were wiped off the value of shares around the globe, and fears of a total break down of the global financial system took over. In other recent collapses private banks, insurance companies and investment houses have moved in with loans, merger or take-over proposals to secure stability; but not this time — this was too big.

The speed at which it all happened and the magnitude of the potential losses of these powerhouses was too much. So serious was the situation that the US Federal Reserve (central bank), US Treasury (government) and central banks in the European Union, Britain, Switzerland, Canada and Japan and elsewhere stepped in to provide $US180 billion ($A225 b) liquidity.

These massive rescue packages involving loans, company restructuring, sales of assets, etc, served to shore up confidence and stabilise the situation for the time being. They brought together some of the most powerful imperial rivals, who put aside their separate interests to serve an overriding common interest — the bailing out of capitalism. The present crisis is a crisis of capitalism; the global financial crisis is a critical part of it.

New World Order

The present crisis did not come out of the blue, it has been in the making for decades, accelerated by deregulation, privatisation, and other economic rationalist policies (neo-liberalism), globalisation and the domination of larger and larger and ever more powerful monopolies. The most powerful and greedy, the most parasitic and non-productive of these were the giant financial conglomerates. They built the shaky house of cards that spans the globe and is crumbling today.

Nobody is daring to predict the outcome of the present financial crisis, not even how many years it might take to work through. With foreign sovereign funds lined up to take the pickings and massive new debts accumulating to foreign central banks and more takeovers in the wings, the control and ownership of private investment capital is set for a very substantial restructuring and with it considerable shift in economic and political power.

Spending more on the military and starting more wars will not restore the US as the sole super power. US imperialism looks set to be substantially weakened as an international power, although not any less dangerous or desperate to assert global domination.

China is on the ascendancy, and other economic centres including, India and Russia, pose serious threats to US imperialism. Europe also poses a challenge, but it remains to be seen how well it can shore itself up against US developments.

Such shifts in power have been in process for some time; this financial crisis could see them take a new leap forward.

Nothing socialist about rescue operations

The US Treasury threw the world’s largest insurer, American International Group (AIG) a $US5 billion ($A107 b) lifeline loan as news of its collapse reverberated around the world. Its debts run into hundreds of billions of dollars. Merrill Lynch was saved from the bankruptcy courts by Bank of America’s $US50 billion takeover. On September 15 New York investment bank Lehman Brothers filed for bankruptcy protection with estimated debts of over $US450 billion — the largest in US history.

Morgan Stanley and Goldman Sachs remained standing but scarred, as investors lost confidence. On Wednesday last week, the market value of Morgan Stanley plunged almost 25 percent. Goldman Sachs’ share prices fell by almost 14 percent. Rumours abounded, fuelling fears as nobody trusted anybody any more. Who is hiding what?

The credit squeeze continues with banks having abandoned previous flexible practices of lending to each other to ensure liquidity (adequate supplies of accessible money).

Prior to that, the US government had taken control of the two mortgage giants Fannie Mae and Freddie Mac — not to help the people who had been lured and tricked into unpayable loans, but to shore up the private housing sector. Before that there was the government’s part in the rescue of big banking name Bear Stearns.

The Federal Reserve already had, since the sub-prime mortgage crisis hit over year ago, been handing out a steady stream of loans — around $US50 billion a month according to some estimates.

The various media outlets are packed on a daily basis with blow-by-blow descriptions of share price movements, corporate collapses, etc. However, very little is said about the millions of innocent people, losing homes, losing jobs, and sharp losses in retirement savings in the process. Nor mentioned are the cuts the US federal and state governments will now need to make to public health, education, welfare, etc in order to continue subsidising these corporate bail-outs?(not to mention maintaining payments on its huge military bills).

The value of retirement savings with KPMG, alone, is reported to have fallen by $500 billion. Australian workers are in the throws of receiving their annual statements from their superannuation funds. Unless they are over 55 and wish to retire, their money is locked in to superannuation.

Those who are retiring now could find that their savings have shrunk over the past 15 months, by how much depends on the performance of their fund and the choice of products they may have made. Workers take all the risk; there is no government compensation for losses in superannuation funds. The size of the losses in super funds for the last financial year varies considerably, and the news since June 30, 2008 has been bleaker. Industry funds fared better.

The relatively long stretch of economic growth was built on an unsustainable bubble of rising share prices, surplus liquidity and domestic and corporate debt.

As though determined to repeat history the regulatory and other measures adopted in the decades following the 1930s’ Great Depression were wound back by successive governments in the US, Australia, Europe and elsewhere. Analysts are now saying that the combined crashes of three of the largest financial institutions in the world last week has culminated in the worst crisis since the Great Depression. That may prove to be an understatement.

The underlying basics of the capitalist remain — its parasitic, corrupt and exploitative nature; the process of monopolisation and power of the financial sector; the attempts by capitalism to resolve crises by transferring losses onto the backs of the working class. There are also significant differences in the functioning of capitalism and the financial system since then, meaning that the financial and economic crisis which is unwinding will be very different to that of the 1930s.

The financial system itself has undergone a massive transformation since then. These changes include: Almost instant communications and?circulation of money. Monopolisation and increased global domination of all sectors of economic activity by financial conglomerates. Integration of stock brokers, banks,?insurance companies, investment houses, etc. New, highly speculative investment products that are far removed from the real economy. (There is even a product that trades bets on whether particular borrowers will default!) Huge amounts of capital and operations?(in secrecy) of hedge funds. Shift in risk from financial institutions?and capitalists to workers whose retirement savings are now a major source of investment capital.

Private profit, public risk

Last week’s bail-outs by the Federal Reserve Bank and Treasury in the US demonstrated how seriously the government and financial sector treat the current situation and that they are prepared to go to great lengths to prevent the financial system descending into total collapse and to defend the most powerful citadels of the capitalist system.

They have brought a short-term reprieve, halting the downward plunge on stock markets and partially restoring some of the most recent losses. This relatively small lift in share market indexes should not be taken as an indicator that the worst is over, as suggested by some economic commentators attempting to talk up the economy.

This was confirmed last Saturday, September 20, when the Bush administration announced that it was seeking a blank cheque from Congress of up to $US700 billion to buy up distressed mortgage-related assets from private firms. To put that amount into perspective, it is more than the annual budget for the Pentagon — more than $2,000 for every man, woman and child in the US (comparisons from New York Times, 21-09-08).

This is the same administration that preaches the free market gospels and says government has no role in social welfare. When it comes to the financial gods, Bush’s 'no bail-out' policy was thrown out of the window, and the dollars gushed out of the corporate welfare tap.

'This is a big package because it was a big problem,' Bush said in defence of the $US700 billion proposal. He made the point that 'the risk of doing nothing far outweighs the risk of the package, and that, over time, we’re going to get a lot of the money back.' There are, of course, other ways of doing nothing!

The Democrats have agreed to support the Bill when it hits Congress this week, on one condition: that the Bill also provides help for ordinary people in the form of an economic stimulus package. Democrat House president Nancy Pelosi said the 'Democrats will work with the administration to ensure that our response to events in the financial markets is swift, but we must insulate Main Street from Wall St and keep people in their homes.' Ms Pelosi said that the Democrats would insist on 'enacting an economic recovery package that creates jobs and returns growth to our economy.'

Bush portrays the bail-out of the financial sector as helping every American. In reality, it is a scheme to transfer the losses of the financial conglomerates onto American taxpayers.

Australia not immune

Australia is not immune from developments in the US and elsewhere, and sectors of the economy have the appearance that they are declining into recession. The booming resources sector is only as good as China and world commodity mineral and resource prices hold out. China is in a far stronger position to withstand the global crisis, having retained a large degree of control over its financial sector, but its massive volume of exports to the US means that China is not fully immune from developments on Wall Street either.

In Australia the Rudd government is attempting to talk down the seriousness of the crisis and its likely impact on Australia, yet at the same time it is taking measures to protect Australia’s major financial institutions and minimise political fallout from possible bank and insurance company collapses here as well. The government’s fear of a panic and a rush on savings is a very legitimate one, as there is a very strong psychological element with people living in fear of making big losses or losing everything. A number of the corporate casualties of the crisis were in themselves operating as sound businesses, and could have continued that way if they had not been hit by the credit squeeze or the reckless borrowings of an overseas parent company.

The government is introducing legislation to provide up to $20,000 compensation to customers of collapsed banks and credit unions and also pay claims from general insurance policy-holders if their insurer collapses. This might prove to be of some comfort for a pensioner with meagre savings, but for retirees and others with larger deposits it means losing virtually the lot. Many people at present are under the impression that governments guarantee bank deposits. This is not true. The Commonwealth Bank and other state-owned banks did carry government guarantees, but they have all been privatised and their customers lost that protection as a result.

The $20,000 is peanuts compared with the millions that the financial conglomerates can expect in corporate handouts from government and the Reserve Bank if they collapse.

The new 'nation building funds' (for infrastructure, etc) created by the Rudd government in the 2008-09 budget along with the $60 billion Future Fund, bring the total held to around $100 billion — minus what losses they may have experienced on the markets. Treasurer Wayne Swan noted in Budget Statement No 3, 'One indicator of the government’s longer term financial position and ability to withstand adverse economic shocks is its available stock of financially liquid net assets'.

These funds came from the sale of Telstra and budget surpluses at a high social cost to the people of Australia. Such funds held by governments are known as sovereign funds. As recently as last week PM Kevin Rudd was reassuring the public that these funds provided a buffer for Australia against economic collapse.

There can be no doubt as to whose class interests are being served by last week’s bail-outs and the latest proposal for another $US700 billion worth. The bail-out policy approach towards the financial crisis does not help the real victims of these collapses — the ordinary people and communities whose assets go up in smoke, who lose their jobs, are thrown out of their homes, cannot afford private health services. It not only throws buckets of money at the real criminals who created this situation but fails to take any serious measures to address the causes.

What about the people!

Why weren’t the hundreds of billions of dollars in assistance directed to the victims of the crisis, the ordinary people of America? Why are there no serious plans to tightly regulate the financial sector and take control of economic policy out of the hands of the market forces, the transnational corporations? Why aren’t the US or Australian governments nationalising the major financial corporations? Why aren’t our governments outlawing the many highly speculative products that are pure gambling and bear no relationship to the real economy?

What plans are there to deal with the totally unaccountable, secretive hedge funds? There are rumours that some of them have deliberately taken destabilising measures to pave the way for rich pickings.

The answer to these questions lies in the very nature of the capitalist system which is driven by the pursuit of private profit derived from the exploitation of workers.

The People’s Weekly World Editorial on last week’s financial earthquake said it all with the question: 'The government is injecting billions to bail out failed financial companies. Don’t the nation’s communities and working families deserve the same so they don’t fail?'

Canada: 33 Excellent reasons to Defeat the Harper Tories

Tue, 30 Sep 2008 01:44:00 +0000

9-29-08, 9:40 am

Original source: People's Voice (Canada)

Yes, we know there are hundreds of excellent reasons to banish the Conservatives to political oblivion. But we only have one page for this list...

1. The Conservatives have expanded Canada's role in the bloody military occupation in Afghanistan, which is now extended until at least 2011. To date, 97 Canadians and thousands of Afghans have died in this tragic war, which has cost Canadian taxpayers an estimated $8 billion.

2. Harper has boosted military spending by $5.3 billion over the next five years, while cutting $1 billion from Canada's frayed social safety net.

3. The federal government's 'Green Plan' relies on 'intensity targets' that allow total greenhouse gas emissions to rise for years. The plan does not account for the enormous expansion of the tar sands industry, which produces over a million barrels of crude oil ever day, most of it exported to the US.

4. The anti-scab Bill C-257, legislation to ban the use of scabs during labour disputes in the federal sector, was defeated in 2007 when 29 Liberal and 20 Tory MPs who had voted 'yes' on Second Reading switched to a 'no' vote at Third Reading.

5. Ottawa's 'no-fly list' raises serious alarm bells about privacy and individual liberties. The names are shared with Washington, and many are on the list due only to similarities with the names of alleged security risks.

6. On several occasions Harper has made racist remarks about immigrants. In January 2001, he said that ridings held by Liberals west of Winnipeg are comprised of recent Asian immigrants who 'live in ghettos, and who are not integrated into western Canadian society.'

7. Canada's sovereignty is being jeopardized by NAFTA and by the Security and Prosperity Partnership of North America, a plan that seeks to 'harmonize' some 300 critical areas of legislation and regulation, mostly in accordance with US standards.

8. Stephen Harper supported the U.S.-led Iraq War in 2003. Since becoming PM, he has refused to criticise the disastrous military occupation which has led to one million deaths and millions of refugees.

9. Despite a House of Commons resolution supported by the majority of MPs, the Harper government has begun deporting U.S. war resisters who refuse to fight in the illegal and immoral war in Iraq.

10. Even after Israel's July 2006 bombing of the village of Qana in Lebanon and the Israeli killing of a Canadian military observer, Canada refuses to call on Israel to desist from acts of aggression against neighbouring states, to respect the rights of Palestinians, and to withdraw completely from the territories occupied since 1967, in violation of international law and numerous UN Security Council resolutions.

11. The disinformation campaign against Iran has escalated towards threats of US and Israeli military action, which would spark a catastrophic regional conflict. But the Harper government has refused to criticize this threat of aggression.

12. Corporate pre-tax profits now account for a record-high share of Canada's national income - 14.6% of GDP compared to a 25 year average of 10%. Yet the corporate tax-rate was cut from 28% in 2000, to 21% in 2006.

13. Like the Liberals before them, the Tories refuse to use the Canada Health Act to stop the attack on universal Medicare led by several provincial governments. This is rapidly creating two-tier health care, which allows the rich to buy their way to the front of the line.

14. Rejecting the overwhelming support from the medical community and the public at large for Vancouver's InSite drug users facility, the Tories refuse to grant InSite a long-term federal licence. Closure will result in higher numbers of deaths, and the faster spread of communicable diseases such as AIDS and hepatitis-C.

15. After revelations that prisoners captured by Canadian troops were later tortured by Afghan police, the Conservative government dismissed the reports as 'rumours and allegations.'

16. Stephen Harper cancelled the Kelowna Accord, negotiated between First Nations and the previous Liberal government. Despite shortcomings, such as its failure to address the urgent needs of off-reserve Aboriginal people, the agreement represented the largest payout to First Nations in Canada's history.

17. The Harper government killed the initial progress towards a national child care system, leaving hundreds of thousands of working people with no access to affordable care for their children.

18. The Harper government's 2007 budget disproportionately rewarded married couples where one partner earns most or all of the income. This policy encourages women to stay out of the workforce, and even rewards partners who work part time for quitting to stay at home.

19. In the fall of 2006, after the Conservatives lost their bid to reopen the same-sex marriage debate, some anti-equality religious leaders called for a Royal Commission On Marriage And The Family, claiming that gay parents are 'hazardous to children.' This idea may re-surface under a Harper majority as a way to set the stage to reverse same-sex marriage rights.

20. Jean-Guy Fleury, chair of the Immigration and Refugee Board, resigned in March 2007 after the Conservatives stacked the board with Tory partisans. Before Harper took power, IRB members were not appointed by politicians, but now such policy is at the discretion of the Prime Minister's Office.

21. In the last election, dozens of far-right religious fundamentalist Conservative candidates were on the ballot. If Harper wins a majority, the religious right could be in an extremely powerful position.

22. In 2004, Stephen Harper told a CTV interviewer that 'A Conservative government in its first term led by me will not be bringing in abortion legislation or sponsoring an abortion referendum.' If Harper wins a second term, watch out for reproductive rights.

23. Stephen Harper was conspicuously absent when 20,000 activists, scientists and politicians descended on Toronto on Aug. 13, 2006, for the largest AIDS conference ever held.

24. When Harper made his first billion dollars in cuts, the budget of Status of Women Canada was slashed by $5 million, or 40 percent, and the Conservatives announced that funding would be barred for SWC projects that include advocacy for equality.

25. Health and legal experts warned that Bill C-22, which raised the age of consent from 14 to 16, will create extra barriers to accessing contraceptives, abortions and sexual health information for young people. Judging by Conservative rhetoric, there may eventually be legal efforts to raise the age of consent to 18.

26. The Harper government axed the Court Challenges Program, which allowed cash-strapped organizations to launch language and equality appeals based on the Charter of Rights and Freedoms.

27. The manufacturing sector has shed over 250,000 jobs over the past five years, and the number of Canadians who want to work but do not have a job stands at well over one million. The Tory response? 'The economy is strong.' Yeah, right.

28. Former child soldier Omar Khadr remains the only citizen of a Western country still imprisoned at the Guantanamo Bay concentration camp, and the Harper government refuses to demand his return to Canada.

29. On May 10, 2007, Conservative MPs shut down parliamentary hearings on the Security and Prosperity Partnership and stormed out of the meeting, after Prof. Gordon Laxer testified that Canadians will be left to 'freeze in the dark' under plans to integrate energy supplies across North America.

30. Tory budgets have emphasised the authoritarian side of the capitalist state, with huge spending increases for the military, spy agencies, prisons and police.

31. A Supreme Court ruling ordered Parliament to amend 'Security Certificate' provisions which allow the Canadian state to imprison foreign nationals as 'suspected terrorists'. The changes adopted by Parliament do not eliminate 'Security Certificates,' and suspects are still not allowed to see the evidence against them.

32. Despite the Supreme Court victory by the Communist Party of Canada in the Figueroa case, which banned discrimination against small parties, Parliament and the courts still refuse to allow parties which receive less than 2% of the vote in federal elections to receive the $1.75 per vote which goes to the larger parties.

33. Despite the parliamentary defeat of a bill that would strip the Canadian Wheat Board of its single-desk authority, the Tories refuse to halt their attack on the CWB.

Bush's Self-criticism

Tue, 30 Sep 2008 01:40:00 +0000

9-29-08, 8:40 am

In a brief 15-minute speech [Sept. 24], the President of the United States made some assertions that, had they come from the mouths of any of his adversaries, they would have been described as atrocious and cynical slanders against the economic system of his country which he named “democratic capitalism.”

After dramatically appealing to Congress to allocate an additional 700 billion dollars to cope with the crisis, he cited, among others, the following reasons:

– This is an extraordinary period for America’s economy.

– We have seen terrible situations in the U.S. economy.

– The aim is to preserve the country’s overall economy.

– I have declared that our global economy remains regulated largely by twentieth century laws and we must update it to the financial structure of the twenty-first century.

– Banks have restricted credits.

– Many lenders have approved loans without examining ability to pay.

– How did we reach this point? What does this mean for the country’s financial future?

– Economists suggest these are problems that have developed for more than a decade.

– Most economists agree that the problems we’re witnessing today developed over a long period of time.

– Many entrepreneurs got loans to start businesses, buy houses and cars. There were many negative consequences, particularly in the housing market.

– Many mortgage lenders approved loans for borrowers without carefully examining their ability to pay.

– Many people assumed they would be able to pay their mortgages, but it was not so.

– All this had effects far beyond the housing market.

– Securities are sold to investors around the world. Many assumed these securities had a tangible value.

– Many companies like Freddie Mac borrowed enormous sums of money and put our financial market at risk.

– The large banks found themselves saddled with large amounts of assets they could not sell.

– Other banks found themselves in similar situations and available credit dried up.

– Many believed they were guaranteed by the federal government and put our financial system at risk.

– The situation became more precarious by the day.

– I’m a strong believer in free enterprise.

– The decline in the housing market set off a domino effect.

– I believe companies that make bad decisions should pay for it. Under normal circumstances, I would have not followed this course. But these are not normal circumstances.

– The market is not functioning properly. There has been a widespread loss of confidence.

– The government’s top economic experts warn that, without immediate action, the country could slip into panic, more banks could fail, there would be negative effects on the retirement accounts, foreclosures would rise and millions of Americans could lose their jobs.

– The country could experience a long and painful recession. We must not let this happen.

– Many are asking, how would a rescue plan work?

– It should be enacted as soon as possible.

– The federal government would put up to $700 billion to inject liquidity.

– The government will try to have the markets back to normal as soon as possible.

– We have seen how one company can grow so large that its failure jeopardizes the entire financial system.

– The government should be authorized to take a closer look at the companies to ensure that their growth does not threaten the global economy.

– Democratic capitalism is the best system ever devised.

– I know that Americans sometimes get discouraged, but this is a temporary situation.

– History has shown that, in times of real trial, its leaders unite to rise to the occasion.

– Tomorrow, in the White House, Obama, McCain and other congressional leaders will meet.

He concluded with thanks.

Some have pointed out that his eyes did not for one minute move away from the teleprompter and that he was frowning.

Yesterday, George W. Bush did not only confess these truths; he launched a new sort of Alliance for Progress.

The first of them all was the colossal farce at Punta del Este in 1961, conceived by Kennedy after the Cuban Revolution.

The one before the last, as we know, was Bill Clinton’s and it was called the Free Trade Area for the Americas (FTAA), which was signed in 1994. This one received its coup de grâce in Mar del Plata in the year 2005.

On the same day of his “self-criticism”, Bush launched the Pathways to Prosperity in the Americas Initiative. What a ridiculous name.

After checking the list of the ten Latin American countries committed to the Initiative in New York, I realized the absence of Brazil, Argentina, Uruguay, Paraguay, Bolivia, Ecuador, Venezuela and Nicaragua; in other words, almost all of South America and one from Central America, whose former Chancellor, Miguel D’Escoto, a Sandinista and a priest who favor the Theology of Liberation, is now presiding over the United Nations General Assembly.

According to Bush’s recurring fantasy, this project which is being discussed by the news cable agencies, as expressed by the President when he addressed the governments of the ten countries present, “would permit us to work to ensure that the benefits of trade are broadly shared.”

“It will deepen the connections among regional markets. It will expand our cooperation on development issues.”

“It is a good idea to continue opening up new markets, especially in our own neighbourhood.”

Such events constitute excellent study material for the ideological battle.

What kind of progress can imperialism guarantee for any Latin American country, with its atomic weapons, its arms industry, its escorted fleets of nuclear aircraft carriers, its wars of conquest, its unequal exchange and permanent pillaging of other peoples?

Self-criticism is not a category under “democratic capitalism”. Anyway, we shouldn’t be ungrateful or impolite: we should thank Bush for his brilliant contribution to political theory.

Cuban News Agency

Finances and the Current Crisis: How did we get here and what is the way out?

Mon, 29 Sep 2008 02:32:00 +0000

9-28-08, 9:32 am

If there were such a thing as a perfect economic storm, I would say we are close to it.

The housing crisis continues and shows no sign of ending; credit and money markets are either churning or freezing up; the stock market is gyrating; unemployment is leaping upward (sharply so in the communities of the nationally and racially oppressed); poverty is up and wages are down; oil and food prices are climbing; the value of the dollar is falling sharply compared to other currencies; the level of indebtedness is astronomical and will be difficult to unwind in the near term. And we sit on the edge of a financial collapse with all the accompanying dislocation and hardship that it would bring.

Falls on working people

While we are for the stabilization and the restoration of the orderly functioning of financial markets, we advocate a plan that not only restores market liquidity, but also addresses the pressing crisis on Main Street and revives the overall economy.

Unfortunately, I don’t think that such a plan is in the offing. A bargain appears to have been struck between Bush and Paulson and leaders of both parties. It is better than what was initially proposed, but does little to stimulate the economy or attend to the crisis of everyday living experienced by millions of ordinary Americans — who, it should be said, played by the rules. In fact, the plan goes in the opposite direction — it asks the American people to pony up to the tune of $700,000,000,000 even though they had no hand in causing this crisis.

The main opposition at this point is from conservative Republican House members and John McCain who, quiet as it is kept, propose in their plan to give billions to Wall Street in the form of tax breaks and are allergic to stiff regulatory measures. Few Democrats and especially progressive Democrats, including Barack Obama, are happy with the outcome, but they don’t see any alternative at this point.

Whether Democrats should have held out for a better deal will certainly be debated. I believe they should have, but from their viewpoint a gun was at their head; the elections, which they are likely to win, are in a few weeks; and the possibility of a complete meltdown of our financial markets can’t be simply ruled out.

Despite the opposition, I expect that a final settlement will be reached soon. In the meantime, the labor-led people’s movement should press its views and organize protest actions. It is obvious that McCain, standing on the grounds of “putting the country first,” will try to exploit the understandable anger of millions of Americans in hopes that this anger will propel him into the White House. Thus the larger movement must continue to expose his demagogy, as we struggle for a far better settlement.

In any event, the struggle continues.

One line of needed action is to contain the housing crisis. As long as it continues, the overall economy will continue its slide downward and markets will continue to churn. The easiest thing is for the government to announce and enforce a moratorium on forecloses, debt forgiveness, and a renegotiation of mortgage terms going forward.

Another is to pass a stimulus bill of a half trillion dollars, paid for by repealing the Bush tax cuts and a special tax on financial transactions and institutions.

Still another is to impose a new regulatory environment on financial markets, including making illegal certain kinds of financial instruments and financial players, like hedge funds.

A fourth is to rapidly end the Iraq war and to initiate a peace process in Afghanistan that helps the people of that country. The Afghan people are exhausted by endless war and at the same time the American people are learning again that occupations don’t work and are very costly.

Finally, a debate over the merits of public takeover of our financial and energy complex is in order. Can our country, given the challenges we face now and into the 21st century, afford to allow these industries to remain in the hands of profiteers? Wouldn’t our country be better served if they were in the public trust and operating in the interest of the public welfare?

Only a single skirmish We should see this struggle over the bailout package as a skirmish, albeit an eventful and seismic one, but a skirmish nonetheless in a protracted struggle that labor and its allies can win. We should also appreciate the new ideological and practical opportunities obtained at this juncture of the class and democratic struggle.

Indeed, it is fair to say that the prevailing ideologies and practices that have driven U.S. capitalism for the past three decades have run up against their own contradictions and conjured up new and old oppositional forces both domestically and internationally. Viewed broadly, what we are seeing is a massive ideological, political and economic defeat for U.S. capitalism.

Financialization, financial-led globalization and neo-liberalism are not yet corpses. But their future is very problematic, although I would add that history tells us that discredited ideologies and practices never exit from the stage voluntarily. They have to be pushed, and pushed by a new political coalition that commands broad-based support, is united in action, and possesses the skills to construct a people’s alternative. But isn’t such a coalition, of which we are a part, forming before our very eyes?

Moreover, this coalition is ready to strike the first and absolutely necessary blow in a few weeks, that is, to elect Barack Obama and bigger majorities in the House and Senate by a landslide.

If people haven’t enough reasons to join this effort, the current implosion on Wall Street and the new constraints it will place on the federal budget should give them reason to roll up their sleeves and get the job done on Election Day. Let’s be clear — the importance of this election has exponentially grown because of events of recent weeks.

From another angle (and I am not going to develop this point here), the implosion of U.S. financial markets has delivered a debilitating body blow to the hopes of U.S. imperialism for unrivaled hegemony in the 21st century. When combined with the Iraq disaster, the worldwide anger over global neo-liberalism and structural adjustment policies, and the emergence of new global powers in nearly every region of the world — China in the first place, it signals a new stage in the hegemonic crisis of U.S. imperialism and the final chapter of a unipolar world.

Giovanni Arrighi, a world systems theorist, says that at the end of what he calls a systemic cycle of capitalist accumulation, leading hegemonic states invariably pursue a path of financial expansion, and its aim is to re-inflate its declining powers. The Dutch pursued this path in the 17th century to be followed by the British in the 19th and early 20th century — successfully for a while, but in the end to no avail. Both eventually lost their leading position in the world capitalist economy and were replaced by another hegemonic state that established the rules, conditions and institutional framework for capital accumulation and system-wide governance.

Much the same fate, according to Arrighi, now awaits U.S. imperialism. The only question that Arrighi doesn’t answer is: will U.S. imperialism adapt peacefully to new world realities or will it engage in, to use his words, a policy of “exploitative domination” to maintain its standing in the world? Bush tried the latter, but failed and will leave the White House in January completely discredited.

Interwoven with longer-term processes While the present turbulence was triggered by mountains of borrowing on thin capital reserves, predatory lending, dubious and risky financial products like credit default swaps and collateralized debt obligations, deregulation, a shadow financial market and bubble economics, it is also the outgrowth of longer-term processes that account for the new dynamics of financial markets and go back to the mid-70s.

At that time, the U.S. economy was stumbling along, battered by the combination of inflation, high unemployment, slow economic growth and a declining rate of profit across U.S. industries. The confluence of these conditions prompted Paul Volcker, then chairman of the Federal Reserve Bank, to drive up interest rates (the Volcker shock) to nearly 20 percent (the Russians were not the first to experience shock therapy). Not surprisingly, this spike in interests rates reined in inflation, restored confidence in the dollar (investors are adverse to holding dollars when inflationary pressures are eroding its value), and attracted mobile capital around the globe to U.S. financial and real estate markets.

It also generated an unprecedented shift of wealth in favor of the very wealthiest families and financial institutions and set off an explosion in the financial sector in terms of its size, scope of activities, debt obligations and players.

At the same time, rising interest rates slowed down the economy, big swathes of industry shut their doors permanently, union jobs were lost, wages stagnated, the social safety net was hollowed out, entire communities nearly collapsed, non-financial corporations were weakened, and the working class and labor movement were thrown on the defensive and have remained there since. Not since the Great Depression has productive capital been destroyed, living standards driven down, and the relative strengths of competing financial and non-financial corporations reshuffled so fast and so broadly.

Much the same was occurring in the newly industrializing countries and the global South. In these countries finance-led globalization was responsible for massive drops in living standards, astronomical indebtedness to U.S. banks, privatization of industries and services, currency devaluations, and unconscionable poverty. It was the convergence of these conditions that set into motion the eruption of political movements in Latin America that are either winning or contesting for state power.

Of course, it took more than shock therapy in the form of high interests rates to effect changes of this magnitude. If Volcker struck the first blow, it was the Reagan administration entering the White House less than a year later that was the main political agent of this upheaval in ideology, politics and economics.

The Reagan counterrevolution

At the ideological level, the Reaganites said that government is best that governs least; that markets are self-correcting, efficient and a fair distributor of wealth; that income inequality is a good and natural thing; that deregulation and privatization are the best fix for what ails the private and public sector; that we lived in a post-civil-rights era where affirmative action had no place; and that tax cuts for the rich trickle down to working people, thereby lifting all boats.

At the political level, the Reaganites framed the agenda of struggle and employed state power in its varied forms with a ruthlessness seldom seen. Remember PATCO — the air traffic controllers union that Reagan crushed early in his first term.

Finally, at the economic level, the Reaganites dismantled much of the old Keynesian model of capital accumulation and economic governance at the state and corporate level — a model that had its origins in the New Deal and was sustained and expanded by successive administrations in the next three decades. It rested on a measure of class compromise, societal obligations, formal equality and expansive macro economic policies that favored broadly shared prosperity.

In its place, they constructed a new model of accumulation and economic governance, popularly called neo-liberalism. In contrast to the preceding model, its main features included flexible production networks on a global scale, union busting, deregulation, low-wage labor, low inflation, the free flow of goods, services and capital, the shrinkage and privatization of the public sector, the re-embedding of racist and sexist practices into the economy and state, the restructuring of the state’s role and functions (not withdrawal from the state, as some incorrectly suggest), and, not least, the reassertion of finance.

It is against this backdrop that I will discuss financialization in Part 2 tomorrow.

Sam Webb (swebb @ cpusa.org) is chairperson of the Communist Party USA.

Inflating Your Tires with Nitrogen?

Mon, 29 Sep 2008 02:30:00 +0000

9-28-08, 9:30 am

EarthTalk From the Editors of E/The Environmental Magazine

Dear EarthTalk: Is using nitrogen to inflate my car’s tires really better for the environment than using air? And if so, how? -- Roger Mawdsley, Abbotsville, BC

Whether or not it makes environmental sense to inflate car tires with nitrogen instead of air is a matter of much debate. Proponents of nitrogen say the element is a smart choice for the environment primarily because it leaks from tires at a slower rate than air, so tires stay inflated longer at full capacity, which helps a vehicle attain maximum fuel efficiency, i.e. better gas mileage. According to the Get Nitrogen Institute, a Denver-based non-profit which advocates for replacing the air in our tires with nitrogen, under-inflated tires inadvertently are a big contributor to global warming as they cause drivers to waste fuel.

Although auto experts recommend checking your car’s tire pressure weekly, studies show that the majority of drivers rarely if ever check to see if their tires are properly inflated and usually only add air when a tire is visibly low or beginning to go flat. A recent study by the European division of tire maker Bridgestone found that 93.5 percent of cars in Europe have under-inflated tires, wasting some 2.14 billion gallons of high-priced, polluting fuel every year. Analysts believe that a similar percentage of North Americans are driving around on under-inflated tires as well.

While properly inflated tires certainly promote better fuel efficiency and are thus good for the environment, not everyone is convinced that filling tires with nitrogen instead of plain ol’ air makes a difference. Terry Jackson, who writes the influential “Driving for Dollars” column for the Bankrate.com website, points out that air is composed primarily of, you guessed it, nitrogen; some 78 percent of the regular air you put in your tires is nitrogen, with oxygen making up most of the remainder. “So going to pure nitrogen only squeezes out a small amount of the oxygen molecules that nitrogen proponents argue are so detrimental,” relates Jackson.

Nitrogen proponents may quibble that it’s the oxygen in the mix that causes problems, though, as oxidization can start to degrade the rubber inside tires while corroding the interior of the wheels as well. But Jackson counters that tires and wheels will have been long worn out on the outside before any oxygen-induced interior damage causes them to come apart. Also, he adds that a lot of the leakage from tires happens because the wheel and the tire do not line up perfectly, and air (or nitrogen) escapes accordingly.

Another factor, of course, is cost. Nitrogen-equipped service centers will fill up your tires with nitrogen for something like $10 per tire, which is a far cry from the couple of quarters (if even that) it takes to trigger the air machine at your local gas station. “When it comes down to a dollar decision, it’s hard to argue that spending as much as $40 for nitrogen in a set of tires is a good fiscal move,” writes Jackson.

“Save your money and just keep an eye on your tire pressures,” he concludes.

CONTACTS: Get Nitrogen Institute, www.getnitrogen.org; Bankrate.com, www.bankrate.com

GOT AN ENVIRONMENTAL QUESTION? Send it to: EarthTalk, c/o E/The Environmental Magazine, P.O. Box 5098, Westport, CT 06881; submit it at: www.emagazine.com/earthtalk/thisweek/, or e-mail: earthtalk@emagazine.com. Read past columns at: www.emagazine.com/earthtalk/archives.php.

What the Banking Crisis Really Means?

Mon, 29 Sep 2008 02:28:00 +0000

9-28-08, 9:28 am

What is happening in the bank crisis, what are the likely outcomes, and what should we who are activists in and for peoples democratic movements begin to do about it?

First, “greed” and “corruption” are not the main or even significant characteristics of this crisis. Both are endemic in all class-divided systems and usually become more prevalent, more visible and less tolerable to the masses of people when a system is in general decline.

This crisis specifically is not the result of 'irresponsible' people who went into debt to purchase or refinance homes (John McCain’s initial response), or even the “predatory lenders” who got them to do so. Debt means interest and interest is and has always been a major source of capitalist profit.

Debt is also a way to permit capital to carry out its cycle of reproduction (to keep the system going) without raising workers wages enough to sustain consumers purchase of its increased production. (Installment plan interest also enables finance capital to retrieve much of the wage increases that workers do receive.)

Anyone who has bought a car of a house on the installment plan knows how this works. For example, a number of banks have owned my mortgage and put different kinds of fees and penalties on it, along with manipulating escrow funds to their own advantage. Mine and everyone else’s payments are interest payments for many years, meaning that I must pay off perhaps 75 percent of the principle on a 30-year mortgage if I wish to sell the house after owning it for about 50 percent of the mortgage’s term.

And I am not by any means at the bottom of the system. I am, even with my own mortgage and credit card debt, a “solid middle class citizen,” as long as I keep working and my TIAA-CREF supplemental pension doesn’t go the way of the mutual funds in the Great Depression (a real possibility).

I don’t take any pride in the fact that I am relatively better off than tens of millions of low and lower income families, because I understand that ultimately, as they go, I go. That is something that large numbers of “middle-class” people understand intuitively, but do not yet connect it to an understanding of why polices supposedly designed to reduce their taxes and increase their financial assets have both reduced their real incomes and put them in such danger today.

In an unregulated or deregulated system, creditors routinely manipulate people of low and moderate incomes, often desperate people, to take loans which they then sell to those higher on the financial food chain, creating a house of cards based on quick profits gained from such manipulation. No one is safe, including the investors in the institutions at the top of the financial food chain, those in the higher professional and managerial strata with income significantly higher than most of the people who think of themselves as “middle class.” This dynamic creates a political economy which, to paraphrase the 17th century Philosopher Thomas Hobbes, encourages a war of all against all.

Crises of this kind, that is, instability rooted in the anarchic drive of capital to find ever bigger markets, drive out competitors, commodify all goods, services, and social relations, is the heart of the capitalist system. Each crisis grows greater with capitalist consolidation and expansion.

This specific crisis is peculiar to the capitalist system as it has evolved into bank-controlled monopoly or finance capital. In recent decades this system, or state monopoly capitalism, has substantially done away with the regulatory reforms whose purpose was to save it from itself, devolving or deregulating itself into a speculative market jungle, but one where the state funds are still available to protect speculators.

In the last few decades, “financialization,” meaning that capital itself is both defined and merchandised as a consumer product, bought and sold by banks and brokerage houses the way supermarkets or, to be more precise, importing capital the “superstores” like Wal-Mart import foodstuffs, hardware, appliances, clothing, virtually everything from the “world market” has come to characterize much capitalist development in the US.

Money is made not by creating new productive capacity in a national economy(which the old Robber Barons, with all their horrors, did do), but by financial piracy and loan sharking, manipulating stock prices, reducing dividends to general shareholders, merging companies, cutting jobs, cannibalizing pensions to repay the debts created such activities and walking away with super-profits.

At the bottom of the system, this has meant taking the personal property of people in the form of mortgage foreclosures and the way “repo men” for generations repossessed the automobiles, appliances, even household furniture that low income people purchased on the installment plan. The millions who suffer, who get hurt, who “feel the pain” don’t matter until the money stops, as it did under the 'old' capitalism in 1929 and the majority of people get seriously hurt.

In many respects this crisis signals is a return for the majority of people to the “old” capitalist economy that Upton Sinclair wrote about in The Jungle or the capitalist economy that Theodore Dreiser looked at from the top in the Cowperwood Trilogy and from the middle in Sister Carrie.

It was this “old” capitalist economy that 20th century regulatory reforms, particularly those enacted in the 1930s, in response to Communist and left-led labor and other peoples social movements, were in principal supposed to contain. It was this “old” or perhaps “born again” capitalist economy which the “Reagan Revolution” has brought back with a vengeance over the last three decades, seen in real life in declining living standards, lost jobs, a mountain of debt, and homelessness. Today's economic crisis is the new social jungle which we can see in Oliver Stone’s Wall Street and Tom Wolfe’s Bonfire of the Vanities works which update Sinclair and Dreiser in popular fiction media.

Until the last decades of the 20th century, there was an understanding in both advanced and developing capitalist countries that the development of large national and international corporations and banks required forms of state economic intervention and regulation to maintain stability. Economic “liberalism,” or the mixture of laissez-faire capitalism and Social Darwinist theories of human relations of the “old capitalism” were simply irrelevant to modern industrial society

Woodrow Wilson most succinctly described this as learning to “face the economic facts of life.” Wilson also said he was for big business but against the Trusts. His political enemy, Theodore Roosevelt, tried to distinguish between good productive big businesses and bad ones, “malefactors of great wealth.” Those who continued to support laissez-faire principles were seen as hopelessly out of date, “rural Tories,” as Theodore Roosevelt called them more than a century ago.

The question of course was what kind of state intervention and regulation would be advanced, and in whose interest or combination of interests, large corporations and big banks, small business owners and creditors, farmers, manual workers, professional employees? Except among old fashioned ideologues, it was not whether or not there would be intervention, although conservative Republicans routinely attacked “special interests” and “government bureaucracy” while they supported other government interventions like high tariffs to keep foreign goods out of the country in the interest of domestic manufacturers and a banking system that supported high interest rates which benefited large banks and domestic and foreign creditors.

In the 1930s, labor and social movements, the New Deal government, and the reformist theories of economist John Maynard Keynes interacted to produce major changes in the interest of the people. Keynesians saw “compensatory fiscal policies” to maintain mass purchasing power (employment, wages, labor based subsidies in the form of public education, housing, transportation, health care, and energy policies) as necessary to “bail out” the capitalist system from its periodic and deepening economic crisis.

Such “bailouts” were an important part of the New Deal program. The banking legislation of 1933-1935, for example “saved” most of the banks, but also established the FDIC to protect depositors. It established a much higher level of regulation and separated depository banking from investment banking so as to criminalize the sort of stock market speculation, margin buying and “short selling” which everyone saw as a significant immediate cause of the great stock market crash. Public works programs like the Works Progress Administration “bailed out” millions of unemployed workers. The National Labor Relations Act often literally “bailed out” trade unionists by protecting their right to organize and strike, actions that in the past often resulted in their imprisonment.

The crisis of capital was more than an accident or a cycle. It was a structural crisis that would continue and eventually worsen even with these forms of positive state regulation. Certainly it took World War II to end the depression. It also took a greatly strengthened labor movement, which both helped to create New Deal political majorities and which New Deal policies then strengthened, to raise general U.S. living standards from the 1940s to the 1970s. Even with Cold War repression and general economic expansion producing rightward general trends in labor and government, the regulatory reforms remained in place and served to prevent any major financial crisis

But what has occurred over the last three decades has been a standing on its head of most of the economic theory and social policy of the whole 20th century.

Instead of the rational contention that large corporations like General Motors and General Electric, banks like Bank of America, and brokerage houses like Lehman Brothers require sophisticated and constantly updated forms of regulation, the dominant ideology and state policy has been to foster “deregulation” in order expedite “economic growth.”

Instead of contending that mass production industries require a high level of employment and consumption in society, and that government must act to ensure that with public sector investments, the dominant ideology and state policy has been to “stimulate” high employment and consumption through the undermining of all forms of progressive taxation, (which reduces rather than increases public sector investments) to assume that large increases in the wealth of upper income groups and institutions at the expense of lower income groups and public sector activities would be invested wisely and efficiently for the good of all.

We are dealing with an economic philosophy, that to this day has people in power who challenge both historical record and human experience by proclaiming that markets are “self-regulating,” that there is no contradiction between large concentrations of capital and competition, that what most people call “greed” is a necessary and positive force for general economic development.

We are dealing with an economic philosophy that looks at “the markets” the way medieval theologians looked at God or Gods. Today, I heard one Republican “spokesman” on CNN supporting the Bush-Paulson bailout with the contention that “the markets are telling us that something has to be done immediately” as if he were having a séance with some spirit named Market. Other Republicans on TV today, balking at the Bush bailout out as a violation of “free market” orthodoxy, were saying that that the markets are “reviving” and would not be helped by a bailout(“markets help those who help themselves”?)

Markets like commodities have no life of their own. Economy is political and social, shaped by social interactions and relationships in political contexts. Nothing is pre-ordained. Commodities and “markets” do not control human beings, who must sacrifice to them, and “feel pain” when they are angry. Human beings create and control markets and commodities. How they do that depends on their class interests and and the structures of political economic power in the system in which they live.

Since we are not fatalistic economic fundamentalists of the left, waiting for the capitalist system to collapse of its own deepening contradictions, meaning I am not the flip side of free market fundamentalists, we can begin to demand serious reforms in the interest of the working class, the whole people, and non-monopoly sections of capital.

First, we should dispense with the facile argument that business or investor “confidence” has anything to do with the crisis. The “confidence” that conservatives are talking about today is essentially the “confidence” of speculators and confidence men who talk others into risk without end.

Thirty years of this kind of “confidence,” or “deregulation” in the interests of the capitalist class, calls for “regulation” in the interest of the working class, the repeal of Gramm-Leach and the dismembering of the whole “deregulation” policies since Reagan.

We should begin to craft a new National Banking Act to update the largely eviscerated 1935 act. It should reform the Federal Reserve system in the interest of workers, small business owners, connecting and coordinating the Federal Reserve system to and with state fiscal policy aimed at instituting full employment, increased mass purchasing power, and reducing crippling consumer debt. This would make monetary policy an enabler of public fiscal policy not a substitute for it, as the application of “Friedmanite” monetary policies has long functioned under right-wing governments in the US, other countries, and through the IMF and World Bank.

In that regard, it is time to as part of a new National Banking Act make the chair of the Federal Reserve Board a cabinet member who serves at the pleasure of the administration, not a quasi-economic Czar whose term of office overlaps administrations and whose “independence” from the elected government limits what government can do in developing economic policy.

There should be an immediate ban on home foreclosures, and a tax policy that rewards employers who maintain both jobs and wages and punishes those who profiteer in the crisis by layoffs and wage cuts.

“Economic Democracy” is an old and largely forgotten slogan, used most famously by the Wisconsin Progressive Robert La Follette, Sr. We should begin to revive it in this crisis and in this presidential campaign.

McCain's Health Care Plan: Destruction Masked as Reform

Mon, 29 Sep 2008 02:26:00 +0000

9-28-08, 9:25 am

When politicians start to bandy about buzzwords, you know we're in trouble. And when it's McCain talking about health care and the buzzwords are 'consumer choice' and 'competition,' that trouble is deep, very, very deep. In a nutshell, McCain's plan, a dusted-off interpretation of Bush's proposals, rests on three key provisions: ending the tax exclusion for employer-provided insurance (i.e. taxing workers' health care benefits), creating a health insurance tax credit of $2500, and effectively deregulating the health insurance industry (by pushing people to buy individual insurance across state lines).

McCain's plan has three main likely outcomes, over a few years: a dramatic increase in the number of uninsured as employers drop this benefit and/or lower-wage workers cannot afford it, higher insurance costs for those who seek individual coverage and less coverage for those who manage to remain insured. These consequences flow directly from what will become an insurance industry run wild.

Let's take a look at a few of these details. First, taxing health benefits is said to be more fair, since higher wage workers, in higher tax brackets, save more and, beside, workers will be more aware of how much their employers are paying for this (as if their constant reminders are not sufficiently clear). In fact, it is estimated that when employers lose this incentive to provide coverage, easily 17 percent fewer workers will even be offered health insurance on the job. Add to this those who won't be able to afford the benefit once it's taxed.

Second, McCain proposes a tax credit of $2500 for those who buy their own insurance in his new, competitive market, $5000 for a family. That sure isn't much when you look at premiums of easily $1000 per month for decent coverage in the non-group market. Compared to group plans, these often have higher deductibles (about $2750 vs. $1000) and higher co-pays ($30 to $40), and cover fewer services. Finally, perhaps the most pernicious detail is the encouragement of 'competition' by 'allowing' people to buy health insurance across state lines. This effectively eliminates state regulations such as minimum coverage and consumer protections.

What would be lost as insurance companies locate in states with the most lax regulations? Not all states require insurance companies to cover cervical cancer screening and breast cancer reconstructive surgery, demand mental health parity or cap rates for 'higher-cost consumers' (i.e. sick people).

A look at McCain's health care package brings to mind the glorious Medicare prescription drug benefit, another program that promised the sun, moon, and stars and delivered a donut. Only in the Bush and McCain world is it a good idea to get rid of the quantity discount.

As employers are wooed (and pushed) away from providing health care insurance to their employees, as group insurance is undermined and disappears from the scene, all the advantages of scale ... lower cost, clout in negotiating with powerful insurance corporations ... are lost. Your employer might not be cutting the best deal in the world right now, but imagine trying to negotiate with Humana, Blue Cross, or Aetna or on your own – in an unregulated market! How convenient for McCain's new and improved insurance industry!

While it is arguably true that health care should not be tied to employment, until we, as a nation, are ready to embrace health care as a fundamental right and provide it to all, ripping apart the means to access of the majority of workers is simply not a solution to the crisis. We cannot let this man anywhere near our health care or other employee protections or services, such as the right to organize or paid vacations; imagine what damage he would wreak with existing entitlements, such as social security and public education!

It is hard to imagine anything more cynical than McCain claiming this is all for the sake of cost containment and quality. We cannot afford four more years.

For more information, see 'Experts Critique McCain and Obama Health Plans,' Health Affairs, press release, September 16, 2008; 'Cost and Coverage Implications of the McCain Plan to Restructure Health Insurance,' by Thomas Buchmueller, et al, Health Affairs, September 16, 2008; ',' by Jonathan Oberlander, The New England Journal of Medicine, August 21, 2008; '2008 Presidential Candidate Health Care Proposals: Side by Side Summary,' The Henry J Kaiser Family Health Foundation, Health08.org.

--Annie Fox is co-health editor of Political Affairs. David Lawrence, co-health editor of Political Affairs, contributed to this article.

The End Of The Illusion

Mon, 29 Sep 2008 02:22:00 +0000

9-28-08, 9:22 am

Original source: People's Democracy (India)

Neo-liberalism specialized in selling an illusion, namely that the unfettered functioning of markets, both commodity markets and financial markets, constituted the best economic arrangement for a society. This illusion had been buried in the 1930s, by the experience of the Great Depression, and by the theoretical endeavors of John Maynard Keynes, a British Liberal and Michael Kalecki, a Polish Marxist. But it was resurrected to serve a specific purpose. This resurrection had nothing to do with any theoretical demonstration of the invalidity of the Keynes-Kalecki propositions. True, the Keynesian prescription for the rescuing of capitalism had turned out to have been problematical, as indeed one would expect with any Liberal panacea for capitalism; but this is not the same as saying that the Keynesian analysis of the ills of capitalism had been proved wrong. The resurrection therefore was a theoretical sleight-of-hand.

Behind this resurrection were financial interests, re-acquiring hegemony in a new incarnation, after the setbacks faced by them during the Depression, war and immediate post-war years. Keynes had called for the “euthanasia of the rentier” and the “socialization of investment.” In his view the basic fault of the market mechanism was that it could not distinguish between “enterprise” and “speculation”, so that the unfettered functioning of markets made the livelihood of the common people dependent on the whims of a bunch of speculators. Capitalism, whose survival he had wanted, could not, in his view, survive if this grievous fault was not rectified through the institutionalization of State intervention in crucial spheres relating to its functioning. Resurgent finance capital, in its new “globalized” garb, starting from the late sixties, took its revenge on Keynes, and decided to put the clock back. It “sold,” or imposed through agencies like the IMF and the World Bank, its free market ideology all around the globe. While Keynes had wanted finance to remain national, so that nation-States could have the autonomy to pursue employment-promoting policies, “globalized” finance forced nation-States to open their doors to its unfettered movements, and justified it by invoking the illusion of an efficient free market.

OUTCOME OF SPECULATION

This illusion is now over. Two momentous recent developments, coming one after the other, have finished it off, though only one of these has caught serious attention. And this is the threat of collapse of the US financial system, and with it an unprecedented financial crisis in the capitalist world. But the other was no less serious, and that related to the unprecedented upsurge in oil prices (and, associated with it, food prices). Both developments are the outcome of speculation, in one case speculation that made some financial paper worthless, in the other case speculation that caused a flight from financial paper as such into commodities, viz. oil futures (that had a spill-over effect on foodgrains). In what follows we shall look only at the first of these developments, since that is currently in focus.

This crisis, a fall-out of the sub-prime lending crisis in the United States, is exceedingly serious. Alan Greenspan, the former boss of the Federal Reserve, calls it the crisis that happens once in a century. His successor, Ben Bernanke, has frankly admitted, “we have no control any more.” The top five investment banks in the US have ceased to exist in their previous forms: Bear Stearns got taken over through government facilitation some time ago; Merrill Lynch was taken over by the Bank of America under the government’s benign supervision; Lehman Brothers, an investment bank with a 158 year old history, declared itself bankrupt; and Goldman Sachs and Morgan Stanley have decided to transform themselves into ordinary deposit-receiving banks. Investment banking as a phenomenon in Wall Street is over. Two other financial giants, Fannie Mae and Freddie Mac have got nationalized to prevent their collapse; and, AIG, the world’s largest insurance company, has survived for the present through the injection of funds worth $85 billion from the government, but this is meant only to give it time during which it liquidates some of its assets to restructure itself into some sort of viable existence. These developments, any single one of which represents a severe tectonic disturbance, have all occurred within a few days of one another. Little wonder then that the world of international finance capital is rocking. The question naturally arises: why has this happened?

EXPLAINING THIS FINANCIAL EARTHQUAKE

The capitalist world is invariably punctuated by financial crises, which necessarily accompany the cyclical crises, irrespective of whether the latter are caused by financial or non-financial factors. So, the fact of there being a financial crisis in which some financial firms go under is not in itself surprising. But there are three additional factors which have been at work in the recent period, each of which contributes towards making the financial crisis potentially far more debilitating, and hence in their totality explain the financial earthquake we are currently observing.

The first of these relates to the short-sightedness of speculators. During any asset price boom, the belief that it would go on for ever gradually gathers momentum; as a result the awareness of risk comes down, and more and more risky positions begin to be taken. Hence instead of such an asset-price boom getting truncated early, in which case the potentially-destabilizing impact of such truncation on the financial sphere would also be limited, it persists, making the financial system more and more fragile, until the end of the boom catches the entire financial system in an acute crisis.

The sub-prime crisis illustrates this point. As the real estate boom in the United States got underway, the euphoria about it began to increase. Financial firms became more and more reckless about supporting it. Credit was available to all and sundry, at one point up to the full value of the property being acquired, which itself was never carefully assessed.. To say this is not to argue that credit-giving institutions should be conservative in accommodating borrowers, but merely to underscore the fact that they are swayed by speculative considerations which make them reckless. They give credit in anticipation of rising house prices, since they expect this rise to continue. And when, for one reason or another, the rise in house prices reaches a plateau, the borrowers are caught short. To pay back their loans many of them are then forced to sell their property which brings down property prices. Finally, the time comes when the value of the assets against which the loans are given is way below the magnitude of the loans themselves. This is when the financial papers representing, directly or indirectly, claims upon real estate, are worth only a fraction of their face value, and the financial world gets into a crisis.

The second factor relates to the emergence of a vast “derivatives” market. A loan, say, for the acquisition of a piece of housing property, is typically thought of as a bilateral arrangement, between the lender and the borrower. In a modern financial sector however the risks associated with any loan are no longer borne exclusively by the lender but themselves become a marketable commodity. These risks are passed on to others through the “derivatives” market, who in turn pass them on to still others and so on. All this however does not mean that the risks themselves disappear or diminish; what it means is that there is a systematic undervaluation of risk since nobody quite knows what the risk associated with his/her portfolio of assets actually is. This piece of “financial innovation” therefore has the same effect as the first factor mentioned above, namely it leads to an underestimation of risk during any boom in asset prices, which makes such booms more prolonged and more pronounced, and the subsequent collapse in the asset prices more precipitous, and hence more calamitous for the world of finance.

The third factor has to do with government intervention. Whenever such a financial crisis, involving giants in the American financial market, looms large on the horizon, the government steps in to bail out these giants. Such government action may well be dictated by the desire to avoid a recession, but the awareness that the government will provide a bail-out also works in the direction of making financiers reckless, making them underestimate risks, and hence promoting speculative bubbles in the asset-price markets, whose bursting becomes even more debilitating than if financiers had been more cautious and less confident of a government bail-out. Economists refer to this as the “moral hazard” problem. Government intervention compounds the “moral hazard” problem.

Saying this may give the impression that since government intervention compounds the problem, the problem lies with such intervention and not with the market itself. But the failure of the market lies precisely in the fact that it provides the government with such a “catch-22” situation, where if it does not intervene then it has to tolerate a recession, but if it does intervene then it makes things worse for the future.

In short, the tendency of capitalism to face crises because of speculators’ behavior, which Keynes had written about, has got greatly accentuated in contemporary capitalism. Such speculation has the eventual consequence of making financial papers of one sort or another close to worthless, and this fact threatens not just a few financiers but the entire system through a “domino” effect. Till now we have seen financial crises brought on by such speculative behavior occurring in particular parts of the world, in East Asia, in Russia, in Latin America etc.; in other words, financial papers, relating to these countries, had become near-worthless. Now, we are seeing a financial crisis arising from the fact that financial paper relating to a sector within the metropolis, namely the housing sector, becoming close to worthless. The implications of the latter of course are far more serious, but the taste of the problem is something which the world has already had.

CHIDAMBARAM'S IRRESPONSIBLE BRAVADO

The illusion of the market being “efficient” may have been given up in the metropolis, but in India brave attempts are being made to make it persist. The importance of government intervention is being played down. But the simple fact remains that government intervention has become absolutely necessary for sustaining the system that has become utterly fragile because of the free run that speculators enjoyed in a free market. And this intervention takes the form of the government’s buying, or providing loans against, certain financial papers at values that the market would not accord them, for, if this was not the case, then there would be no “bail-out.”

The Indian finance minister’s attitude has been quite striking. While claiming that India will not face the damaging consequences of the financial crisis, a fact for which it is not Chidambaram but the opponents of “financial liberalisation,” notably the Left, that should take credit, he goes on to add that India’s drive towards “financial liberalization” will continue! Here we have an obvious case of irresponsible bravado, which becomes possible precisely because his statements carry not an iota of analysis.

In the US itself, even though the government is “bailing out” the financial giants, it will be under popular pressure to inflict some punitive measures upon them, in the form of a change of management and possibly ownership. But the “bailing out”, even if it manages to prevent a severe financial crisis, will certainly not prevent a recession which appears to have already set in. The state of credit will continue to be difficult for sometime to come, which will only worsen the recession. Even the financial crisis will not be over with the current “bail-out” package. After the Bear Stearns episode every one thought that the worst was over, but it wasn’t. The same perhaps is true of the present. The system of course will recover, but the form in which it will do so is unlikely to be the same as before. And this will open up new possibilities of praxis.

Mysterious Viral E-mail Generates Huge Donations for Planned Parenthood

Sun, 28 Sep 2008 12:35:00 +0000

9-27-08, 7:34 pm

A viral e-mail of unknown origins urging recipients to donate to Planned Parenthood 'in honor of Sarah Palin' generated more than 31,000 donations totaling over $800,000 for the women's health and family planning organization this past week, a press release from Planned Parenthood announced.

Republican vice presidential nominee Sarah Palin, known for her opposition to a woman's right to choose, even in cases of incest and rape, energized women's health and pro-choice activists since her unexpected addition to the McCain campaign in August.

Cecile Richards, president of the Planned Parenthood Action Fund, said, “I want to personally thank the tens of thousands of individuals who responded. As a trusted health care advocate for millions of women across America, Planned Parenthood knows firsthand the importance of promoting and protecting women’s health and well-being.”

Describing the viral e-mail as 'the ultimate in grassroots activity,' Planned Parenthood also stated that the e-mail did not originate in that organization and the group does not know who began to circulate it.

The e-mail asks individuals who are unhappy with Palin’s selection as a vice-presidential candidate to donate to Planned Parenthood. The Planned Parenthood website includes a standard webpage where individuals can make a contribution in honor of a person of their choosing.

John McCain and 'Alternate Energy': Fact Checking the Presidential Debate

Sun, 28 Sep 2008 01:46:00 +0000

9-27-08, 9:46 am

During the presidential debate, Sept. 26, John McCain claimed, “I voted for alternate fuel all my time… No one can be opposed to alternate energy, no one.” But John McCain's own record suggests he may be confused about how he has voted, not just once or twice, but 23 times against renewable energy.

In 1992, McCain voted against ending debate on the Energy Bill, which included provisions to encourage energy conservation and increase domestic energy production. (In other words, McCain supported an attempt to filibuster that bill along partisan lines.)

A few years later in 1999, McCain used Senate procedures to oppose an amendment that would have increased funding for energy supply and research and development activities for renewable energy sources.

In May 2001, McCain voted with George W. Bush against establishing tax credits for investments in renewable energy technologies, incentives for new energy efficient residential construction, and tax deductions for increased energy efficiency in commercial buildings.

The following year, McCain voted again with George W. Bush against an amendment to require utilities to generate 10 percent of electricity from renewable energy facilities by 2020. In that same energy package on a different measure, McCain voted for an amendment that would allow retail electric suppliers to avoid strong federal renewable energy standards. In addition to these actions, McCain voted to allow states to waive federal standards on renewable electricity use. That same year, along party lines and in line with George W. Bush's policies, McCain opposed a measure that would overhaul the nation's energy policies, restructure the electricity system and provide for $14.1 billion in energy-related tax incentives – in the wake of the Enron scandal. As part of that bill, McCain's opposition included a rejection of funding for ethanol production. Two days later, McCain again agreed with George W. Bush when he voted to kill provisions in the 2002 energy bill relating to alternative vehicles and fuel incentives. Two days later, McCain voted against the passage of a bill that would overhaul the nation's energy policies, restructure the electricity system and provide for approximately $15 billion in tax incentives for 'alternate energy.' The following year, McCain voted three times to find various excuses to allow states to avoid investing in renewable energy sources, again in line with George W. Bush's views on the matter.

In June 2003, McCain voted a number of times against expanding the use of ethanol and other renewable energy as an alternative to gasoline. McCain even voted against a measure to eliminate the use of the carcinogenic pollutant methyl tertiary butyl ether (MTBE) and to apply tougher standards on air pollution. Again, on these matters, John McCain voted along partisan lines and in sync with George W. Bush's position.

That same year, when McCain voted against the 2003 Energy Bill, he did so because it set higher fuel-economy standards and sought increased use of renewable fuels.

In 2004, McCain voted against a measure that would require that gasoline sold in or introduced into the US contain renewable fuel. He voted twice the following year to continue to allow the use of MTBE and against higher standards on air pollution caused by burning gasoline. Even as the need to fight global warming by investing in renewable energy sources became increasingly a public demand in 2005, McCain sided with Republican ideologues in his party who pretended global warming wasn't real when he voted against a mandate on the use of renewable energy sources. McCain rejected a measure that would have required the use of at least 10 percent of the electricity sold by electric utilities to be from renewable energy sources by 2020. That same year, when he had the chance to take a maverick position on energy legislation that would have provided tax incentives for renewable energy sources, McCain chose to vote instead with George W. Bush and the Republicans.

Again in 2005, when McCain had the chance to prove that he supported 'alternate energy,' he failed to do so when he voted to slash the popular and successful Renewable Energy and Energy Efficiency program for farmers, cutting it from its current $23 million to only $3 million.

And in 2006, when it became clear that George W. Bush and the Republicans were on the losing side of the public debate on alternative energy investments, McCain still voted with his president and party against investments in renewable energy research and development in cellulosic ethanol, wind, solar, geothermal, and hydropower energy sources.

John McCain is right, 'No one can be opposed to alternate energy, no one.' But McCain's record shows that he has been one of those 'no ones' for a very long time.

Who Do You Want to be President When You Get Sick?

Sun, 28 Sep 2008 01:40:00 +0000

9-27-08, 9:40 am

As many as 27 million American workers can expect to lose their employment-sponsored health care benefits if John McCain's health care proposals become law, a new report by the Economic Policy Institute's Policy Center showed this week.

The main element of McCain's health plan that would cause this dramatic loss of health care benefits is a proposal to eliminate the tax incentive employers get for providing health insurance to their employees. In fact, McCain would impose taxes on health care benefits, which will cause employers to be less likely to offer them and force workers and their families to seek benefits alone in the insurance market.

According to the report, 'A large share of those losing employer coverage will have no choice (absent being uninsured) other than to seek coverage in the individual market.' Because larger risk pools, such as those created in the employment-sponsored system, would no longer exist, premiums are likely to be higher, along with higher out-of-pocket expenses and deductibles. In such a system, the report suggests, individuals in the private insurance market are less likely to be able to afford the same coverage they would get in an employment-based plan.

'This part of the McCain proposal makes it more expensive for employers to provide health coverage to their employees, so we will see more of them dropping this benefit,' explained Elise Gould, one of the authors of the report. 'Many employees and their families will be forced into the individual market, where high-quality plans are harder to obtain, especially for those who are not young and healthy.'

Since 2000, the employment-based health care system has shrunk by more than five percent, according to the report. In its state-by-state analysis, the EPI report estimates that New York would see about 1.6 million people kicked of the employment-sponsored insurance rolls. California, as many as 2.4 million.

But the big states won't be the hardest hit. More than 14 percent of Kansans would likely lose their health care benefits as a result of John MCCain's plan. Connecticut and Washington, DC would see an even higher proportion, as would Vermont and Rhode Island, according to the estimates put forward in the report.

Voters in battleground states like Michigan might be interested to learn that under John McCain's plan, almost three-quarters of a million of them could lose their job-based health benefits. About 375,000 people in Indiana could find themselves scrambling to find affordable health care coverage on the individual private insurance market. Three-quarters of a million people in Florida and almost 1 million Ohioans could lose their benefits if John McCain wins the White House, according to data provided by the Economic Policy Institute.

“It’s hard to think of any other change that could do more harm than this one to a health care system that’s already weakened,” commented co-author Josh Bivens. “It will cost millions of Americans their current employer-based health insurance, and it provides no alternative source of coverage that matches the protections offered by employer plans.”

Financial Crisis: Fact Check on Presidential Debate

Sat, 27 Sep 2008 14:41:00 +0000

9-26-08, 10:41 am

In linking the meltdown in the financial sector to George W. Bush's economic policies of deregulation in banking, Barack Obama, during the presidential debate, Sept. 26, said that the crisis 'is a final verdict on eight years of failed economic policies promoted by George Bush, supported by Senator McCain.'

But, during the debate, John McCain refused to share in any responsibility for the Bush economic philosophy of deregulation and reduced oversight that reigned over the financial debacle that hit Wall Street in recent weeks and insisted that he didn't agree with Bush's views on economic policy. John McCain's own past words, however, tell a different story.

For the past eight years, John McCain has boasted that his economic philosophy is based on deregulation. In 2000, while running for the Republican president nomination, McCain said, 'I am a proud Republican conservative with a 17-year record of voting ... for less regulation.'

Three years later, in a Senate Commerce committee hearing, which he chaired, McCain repeated, “I have a long voting record in support of deregulation.” Again that same year, McCain told CNN that “I am a deregulator. I believe in deregulation.”

During this presidential primary campaign, McCain described the issue of deregulation as a fundamental difference between himself and Barack Obama. “I think the important thing is that there will be stark differences between either Senator [Clinton] or Senator Obama and me [is] … whether we have more regulation or less regulation.”

Just prior to the failure of Bear Stearns, the first major US bank to collapse in the current systemic crisis, McCain told the Wall Street Journal, “I am fundamentally a deregulator. I'd like to see a lot of the unnecessary government regulations eliminated, not just a moratorium.”

Even as economists warned that the housing crisis would harm the financial sector last March, John McCain insisted on CNN, “I’m asked all the time are we in a recession or not in a recession.... Let’s reduce it. Let’s reduce regulation.”

After Bear Stearns failed and a massive financial crisis loomed, McCain again called for deregulation and reduced oversight of the activities of Wall Street players. In late March, McCain stated in a speech that 'Our financial market approach should include encouraging increased capital and financial institutions by removing regulatory, accounting and tax impediments to raising capital.”

And when McCain's vice presidential nominee Sarah Palin was asked this week to cite a single effort on McCain's part to reform the banking industry, Sarah Palin 'seemed stumped' and couldn't respond, according to one account.

What is also a point of fact is that John McCain's campaign manager, lobbyist Rick Davis, continued to take payments from Freddie Mac, one of the largest lenders in the country that failed in recent weeks. According to a recent New York Times story, Davis's lobbying firm took $500,000 through August of this year from Freddie Mac on top of the $2 million Rick Davis took in payment up through 2005 from both Fannie Mae (also failed in recent days) and Freddie Mac to head a group called the Homeownership Alliance.

Former officials at Freddie Mac told the New York Times that the Homeownership Alliance was created to combat regulatory efforts aimed at examining the activities of the two large lenders in the housing market. The Homeownership Alliance was dissolved in the wake of major lobbying scandals that involved some officials affiliated with the lenders. After its dissolution, Davis asked for and received additional payments from the Freddie Mac, according to the Times.

So far, little media scrutiny of this affair has tried to determine if the Freddie Mac payments to McCain's campaign manager purchased access to the McCain campaign or attempted to get McCain as a Senator or a potential president to protect its interests.

At the very least, the revelations contradict John McCain's pledge to not have paid lobbyists on his campaign.

McCain's Campaign Stunt Shows 'Reckless' Side

Sat, 27 Sep 2008 06:27:00 +0000

9-26-08, 2:25 pm

In his speech to the nation Wednesday, Sept. 24th, George W. Bush blamed homeowners and lenders for the current financial crisis in explaining the origins of the financial crisis on Wall Street. Bush went on to use near-apocalyptic terms to drive home the need for an immediate $700 billion bailout of Wall Street bankers and lenders.

Most working-class organizations didn't buy it, and demanded that no bailout should pass without preconditions, including an economic stimulus package and other demands.

For an upcoming Political Affairs podcast, Sam Webb, chair of the Communist Party USA, emphasized that while it is important to find a workable solution to stabilize the financial markets, what Bush offered, and even the McCain alternative, are simply more handouts to the Wall Street CEOs who caused the problem in the first place.

'It takes some chutzpah to blame homeowners for this crisis given all we know about how the housing crisis developed and the role of predatory lenders,' Webb stated.

Webb argued that Republican Party ideology and the actions of Wall Street players created the mess. They created 'a casino,' he said. 'It's nothing but gambling, most of it. It has no connection to the real economy, for the most part.'

After decades of making tons of money without a regulatory watchdog, the system is now collapsing. 'Of course, that endangers every person on Main Street,' he added. 'The problem is that when the [financial system] is controlled by the financiers and their supporters in Washington, then we get in a pile of trouble.'

Webb also chastised John McCain for his role in the bailout crisis this past week. 'It was a big publicity stunt,' Webb said. He cited McCain's declining poll numbers and floundering campaign as the reasons for McCain's stunt.

'I think they were hoping to exploit this,' Webb said. 'What he's tried to do is really politicize this issue and turn it into an issue he can exploit.'

Webb predicted the maneuver would backfire, but suggested McCain probably sees no other path to the White House. 'I think it's falling flat, but it does show the reckless nature of McCain. And it does show his ultra-right character,' he added.

Readers will be able to listen to the full interview soon on an upcoming Political Affairs podcast.

Afraid to Debate?

Sat, 27 Sep 2008 01:49:00 +0000

9-26-08, 9:49 am

John McCain sought to cancel the first presidential debate scheduled for Friday, Sept. 26, ostensibly to work on the financial crisis. Before the phony campaign suspension, McCain was at Morgan Library and Museum 'preparing' for his Friday debate, New York Times reporters Elizabeth Buhmiller and Michael Cooper write, 'which, by coincidence, is where J. Pierpont Morgan bailed the country out of the Panic of 1907 by locking the leading bankers of the day in his library and forcing them to come up with a rescue plan.'

Unless I earned my Ph.D in history in vain, that isn't remotely what happened in 1907, although there are a few grains of truth. Morgan the leading finance capitalist intervened over and over again between October 19th and November 2nd, 1907, to get bankers to pump money into a crisis ridden banking system. He also met with and worked with Treasury Secretary George Cortelyou, representing the government of his political enemy, President Theodore Roosevelt, who deposited $25 million in treasury funds into endangered banks. Morgan's greatest capitalist rival, John D. Rockefeller, himself the head of the second leading finance capitalist syndicate in the country, threw in $10 million and phoned the Associated Press that he would 'pledge' half of his wealth to preserve the banking system.

But as this crisis ended, with the leading syndicates of finance capital and the government both pouring in funds, a new one began almost immediately as a a major Wall Street firm was threatened with collapse if it did not sell the Tennessee Coal and Iron Coal Iron and Railroad Company. Morgan seized the opportunity to have the United States Steel Company buy Tennessee Coal and Iron, even though that violated all of Theodore Roosevelt's anti-trust principle and commitments , since US Steel controlled 60 percent of the market. Roosevelt yielded.

For socialists, the crisis and its resolution showed as nothing else did who had the power in the capitalist system. It also helped to radicalize the non-socialist progressive movement in its demands for far-reaching regulatory reforms and real anti-trust policies. It also led the representatives of big capital in Congress, led by Republican Senate leader Nelson Aldrich (coincidentally John D. Rockefeller's son-in-law), to establish a 'National Monetary Commission' to study 'reform' of the national banking system.

I haven't written this to be pedantic or to stick it to two New York Times reporters for spreading capitalist myths. The Morgan and Rockefeller syndicates and their allies 'saved' the unregulated banking system and profited from the crisis mostly with their own money. The Bush administration is proposing to save the 'deregulated' system with public money and no real benefit for the people. The 1907 crisis was a textbook case of the anarchic nature of advanced finance capital. The 2008 crisis is a textbook case of the anarchic nature of a more advanced finance capital.

John McCain, who has in the past often invoked the name of Theodore Roosevelt as a role model, has represented from the 1980s on positions of domestic economic and social questions very far to the right of the positions that Theodore Roosevelt represented from the 1880s on.

McCain wanted to withdraw from a debate with an intelligent and able presidential candidate to whom McCain will in all probability lose. The policies of George W. Bush and McCain's Republican Party stand behind the crisis. As Rep. Barney Frank (D-Mass.), who is representing House Democrats in negotiations on the 'bailout,' said of McCain's move, 'It is the longest Hail Mary pass in the history of either football or Marys.' Frank's comment may have been over the head of 'Honest' John McCain, boning up in the Morgan Library when he really thought that he would be preparing to play John Wayne in his first debate.