We Are All Socialists Now Between October 2008 and January 2009, the federal government provided about $160 billion in capital and infusions and debtMessage 1 of 1 , Mar 1, 2009View Source
We Are All Socialists Now
Between October 2008 and January 2009, the federal government provided about $160 billion in capital and infusions and debt guarantees to the Bank of America, which had a total net worth in late January of only a small fraction of that amount. The rest had gone down the rat hole.
We are experiencing one of the greatest robberies in history.
The robbing of public funds to bail out private capital is now on a scale probably never before seen. A politicized, organized working class capable of understanding and reacting to that theft, and choosing thereby to restructure society, to meet real social, egalitarian needs is what is now to be hoped for. The title of a recent cover story *Newsweek* declared: "We Are All Socialists Now." As it turned out, *Newsweek*'s editors were simply referring to the increase in public spending now taking place -- hardly an indication of socialism. But the fact that this is said at all in the mainstream media points to the fact that we are in a different historical moment
in which radical forces have the possibility of moving forward.
The socialization of losses of financial institutions occurred while leaving untouched the massive gains still in the hands of those who most profited from the whole extreme period of financial
"From 1990 to 2002, for each added dollar made by those in the bottom 90 percent [of income] those in the uppermost 0.01 percent (today about 14,000 households) made an additional $18,000."
Neoliberalism promoted incessant breaking of unions, forcing down wages, cutting state social welfare spending, deregulation, free mobility of capital, development of new financial
Insurance companies, real estate, and mutual funds all provided infusions into this financial superstructure, as did the state. All limits were removed. Under these circumstances workers were encouraged to use their houses like piggy banks to finance consumption, credit cards were handed out to teenagers, subprime loans were pushed on those with little ability to pay. Individual retirement packages were shifted toward IRAs that were tied into the speculative financial system.
To get an idea of what is happening, one has to understand that the federal government, as I have already indicated, has committed itself thus far in this crisis $9.7 trillion in support programs primarily for financial institutions. The Federal Reserve (together with the Treasury) now has converted itself into what is called a "bad bank." It has been swapping Treasury certificates for toxic financial waste, such as collateralized debt obligations. As a result the Federal
Reserve has become the banker of last resort for toxic waste with the share of Treasuries in the Fed's balance sheet dropping from about 90 percent to about 20 percent over the course of the crisis, with muchof the rest now made up of financial toxic waste.
Whether the federal government is forced eventually toward full nationalization (that is, assuming direct control of the banks) is a big question. But one has also to remember the system of power -- both economic and political -- that we are dealing with at present. The classic case of full bank nationalization was Italian corporatist capitalism of the 1920s and '30s, and was carried out by the fascist regime. Without suggesting that we are headed this way now, it should be clear from this that nationalization of banks itself is no panacea.
The financial crisis is quickly turning into a political crisis. Already governments in Iceland and Latvia have collapsed and the global slump is just beginning to accelerate. Riots and street
violence have broken out in Greece, Latvia, and Lithuania and worker-led protests have become commonplace throughout the EU. As unemployment skyrockets and economic activity stalls, countries are likely to experience greater social instability. Social struggles on a major scale are occurring in emerging economies such as Brazil, Mexico, and India. China itself is experiencing unrest, due to corruption and growing gab between the rich and poor.
The election of the Obama administration has confused progressive forces, leading to absurd notions that the Democrats under Obama are going to create a (New) New Deal without renewed pressure arising from a revolt from below. Meanwhile, under Obama's watch, and with the help of his chosen advisers, vast amounts of state funds are being infused into the financial system to benefit private capital.
What is needed in the United States today, we argue in *The Great Financial Crisis*, is a renewal of the classic concept of political economy (with its class perspective), whereby it comes to be understood that the economy is subject to public control and should be wrested from the domination of the ruling class. The bailing out of the system right now is going on with taxpayer funds but without the say of the public. A revolt to gain popular control of the political
economy is therefore necessary. There has to be a great revolt from below on at least the scale of the industrial unionization movement of the 1930s that created a new political force in the country.
As István Mészáros explained in his *Beyond Capital*, that the radical politics opened up in this historical moment not be diverted into attempting to save the existing system, but be directed
at transcending it. As Mészáros wrote: "To succeed in its original aim, radical politics must transfer at the height of the crisis its aspirations -- in the form of effective powers of decision making at all levels and all areas, including the economy -- to the social body itself from which subsequent material and political demands would emanate."
The obvious weak link of the whole political, ideological, and economic structure in command in the United States today is that the system has clearly failed to meet peoples' real needs. Rather than addressing these pressing needs in the crisis, the emphasis of the economic overlords is to bail out private capital at virtually any cost.
The best economists and financial analysts are now saying that when the recovery from this crisis begins, perhaps in 2011, pointing toward long-term stagnation as in the depression decade.
In the United States a primary goal of any radical politics should be to cut military spending, which is the imperial iron heel holding down the entire world, while corrupting the U.S. body politic and diverting surplus from pressing social needs.
We must educate the American citizens that we can not supply the needs of people and improve their lives, unless we reduce the population. Capitalism works when there are enough resources, but we have reached the point where sustainability of the earth is reaching a tipping point.
Source: INTERVIEW OF JOHN BELLAMY FOSTER ON THE GREAT FINANCIAL CRISIS
By Mike Whitney
Gary Locke: Militant (and Misguided) Free Trader
February 27, 2009: It is frequently suggested that the Democratic Party, once fairly divided on the issue of trade policy, has moved in recent years toward the fair-trade camp. As such, while most Republicans continue to preach the free-trade orthodoxy of the 1990s with all the associated fantasia about a coming boom for U.S. manufacturers and farmers, relief of global poverty and the certain spread of democracy, Democrats are supposed to be the realists who recognize the failure of the North American Free Trade Agreement, granting permanent Most-Favored Nation status to China and other trade-related missteps of the Clinton years.
But for the critical position of Secretary of Commerce, which has a significant role in both the framing and advancement of trade
policies, Obama has nominated former Washington Governor Gary Locke.
Obama says that Locke will be "a trusted voice in my Cabinet" on
economic issues, while Locke says he'll make the Commerce Department -- which has traditionally been the corporate bastion in Democratic and Republican administrations -- an "active and integral partner"in shaping and promoting Obama's economic agenda.
Unfortunately, to the extent that Obama has expressed a desire to
develop trade policies that are more responsive to Main Street than
Wall Street, there is little reason to believe that the Commerce
nominee is on board.
Locke has long been one of the Democratic Party's most ardent
advocates for free trade agreements that get high marks from multinational corporations but are condemned by human rights groups and labor, farm and environmental organizations.
As the Wall Street Journal gleefully notes: A lawyer by training, Mr. Locke moved to an international law firm, Davis Wright Tremaine LLP, focusing on Chinese trade. Mr. Locke long has been an advocate of free trade, supporting former President Bill Clinton's effort to make China a member of the World Trade Organization, and supporting the North American Free Trade Agreement.
Back in the days when Clinton was hustling to attain permanent
normalization of trade relations (PNTR) with China, human rights
groups objected that this would harm their ability to advocate for
better treatment of Tibetans and other ethnic and religious
minorities, as well as for labor rights in China.
Locke countered those arguments and others with the since-discredited argument that free trade would help bring more democracy and equity to China. Indeed, Locke was in the forefront of efforts to get congressional Democrats to stop listening to the human rights and labor advocates and embrace free trade. Among other things, he helped organize a letter from Democratic governors that was delivered to Congress shortly before the spring, 2000, vote and read in part: "We call on Democrats to put aside past conflicts over trade and come together on a dual strategy of expanding markets while expanding the 'winners' circle' -- to join President Clinton in his campaign to put a human face on the global economy, enabling workers both at home and abroad to improve their lives."
When Democrats continued to meet with and echo the concerns ofChinese human rights campaigners, Locke and his allies wrote to House Minority Leader Dick Gephardt, D-Missouri, with the specific purpose of countering the concern that passage of the PNTR legislation would be a setback for the cause of freedom. "This move will strengthen the rule of law and accelerate domestic reforms in China," read the letter signed by Locke, whose status as one of the nation's most prominent Chinese-American officials carried a good deal of weight. "The long-term political and social impacts of China's accession may even exceed the commercial benefits."
Locke has been proven wrong -- not merely by the yawning U.S. trade deficit with China but by the last report from the United Nations on human rights abuses in that country.
According to the State Department report, which was released
Wednesday: The [Chinese] government's human rights record remained poor and worsened in some areas. During the year the government increased its severe cultural and religious repression of ethnic minorities inTibetan areas and the Xinjiang Uighur Autonomous Region (XUAR), increased detention and harassment of dissidents and petitioners, and maintained tight controls on freedom of speech and the Internet. Abuses peaked around high-profile events, such as the Olympics and the unrest in Tibet. As in previous years, citizens did not have the right to change their government. Nongovernmental organizations (NGOs), both local and international, continued to face intense scrutiny and restrictions. Other serious human rights abuses included extrajudicial killings, torture and coerced confessions of prisoners, and the use of forced labor, including prison labor. Workers cannot choose an independent union to represent them in the workplace, and the law does not protect workers' right to strike.
The government continued to monitor, harass, detain, arrest, and imprison journalists, writers, activists, and defense lawyers and
their families, many of whom were seeking to exercise their right under the law. A lack of due process and restrictions on lawyers
further limited progress toward rule of law, with serious consequences for defendants who were imprisoned or executed following proceedings that fell far short of international standards. The party and state exercised strict political control of courts and judges, conducted closed trials, and carried out administrative detention.
Individuals and groups, especially those deemed politically sensitive by the government, continued to face tight restrictions on their freedom to assemble, their freedom to practice religion, and their freedom to travel. The government failed to protect refugees adequately, and the detention and forced repatriation of North Koreans continued to be a problem. Serious social conditions that
affected human rights included endemic corruption, trafficking in persons, and discrimination against women, minorities, and persons with disabilities.
Source: The Nation
A Swiss Bank Is Set to Open Its Secret Files
February 18, 2009 UBS, the largest bank in Switzerland, agreed on Wednesday to divulge the names of well-heeled Americans whom the authorities suspect of using offshore accounts at the bank to evade taxes.
Prosecutors suspect that from late 2002 to 2007, UBS helped American clients illegally hide $20 billion, letting them evade $300 million a year in taxes.
In a striking admission, UBS said that from 2000 through 2007, some of its private bankers and managers had "participated in a scheme to defraud the United States" and the I.R.S. by helping American clients set up and conceal offshore accounts. The scheme involved falsifying or not properly obtaining or filing certain tax forms required of both the bank and its clients. UBS earned $200 million annually from the business.
UBS's offshore private banking business once employed some 60 private bankers in Lugano, Zurich and Geneva. Prosecutors claimed UBS referred clients to lawyers and accountants who set up secret offshore entities to conceal assets from the I.R.S.
UBS urged some American clients to destroy records and to stash watches, jewelry and artwork that they had bought with money hidden offshore in safe deposit boxes in Switzerland. The bank also encouraged them to use Swiss credit cards so the I.R.S. could not track purchases. In a statement on Wednesday, Peter Kurer, the chairman of UBS, said that "UBS sincerely regrets the compliance failures in its U.S. cross-border business that have been identified by the various government investigations in Switzerland and the U.S., as well as our own internal review. We accept full responsibility for these improper activities."
Internal Revenue Service Commissioner Doug Shulman warned U.S. taxpayers hiding money overseas that it was time to come clean with Uncle Sam.
"People who have hidden unreported income offshore need to get right with their government. They should come forward and take advantage of our voluntary disclosure process," Shulman said.
Sen. Carl Levin, D-Mich., has estimated that abusive tax shelters and hidden offshore accounts cost the U.S. government
nearly $100 billion a year in lost tax revenue.
Group of Rich Americans Sues UBS to Keep Names Secret in Tax Case 25 Feb 2009 UBS was sued on Tuesday in a Swiss federal court by wealthy American clients seeking to prevent the disclosure of their identities as part of a tax-evasion investigation by the United States Justice Department. The lawsuit accuses UBS and Switzerland's financial regulator, the Swiss Financial Market Supervisory Authority, or Finma, of violating Swiss bank secrecy laws and of conducting what Swiss law considers illegal activities with foreign authorities.
February 26, 2009 The U.S. institution that had the most direct responsibility for preventing the debacle - the Federal Reserve - has taken little heat for its own failures. There has been no congressional hearing in which Fed officials have been treated to anything like the grilling the division chiefs of the Securities and Exchange Commission received three weeks ago.
The FED saw credit getting excessively loose, and leverage piling up, but comforted us with assurances that if there was a bubble, the Fed knew how to clean up after it burst, principally by cutting interest rates. It championed letting the shadow financial system grow without oversight and shied away from doing anything about highly risky mortgages.
They knew that various financial innovations were designed to let banks make more money without being required to put up more capital, but they did not figure out that meant the capital that was there might be inadequate.
It was the Fed that encouraged Bank of America to buy Merrill Lynch without much due diligence. And it was happy to see Citigroup offer to buy Wachovia, a deal that thankfully was not completed. Only months later, it appears that the regulators seriously underestimated the financial risks faced by both Citigroup and Bank of America.
Questions Congress might want to ask before it gives the Fed a broad mandate to expand its authority. What reforms are needed in the Fed's own regulatory operations? Would such reforms have enabled regulators to see what was happening in time to at least reduce the damage?
Source: International Herald Tribune
February 20, 2009
With Russia at its back door, Europe has been divided on its ability
to work within a U.S.-dominated NATO. The lines were drawn during the
Cold War -- though, since the fall of the Soviet Union, NATO has
expanded and pushed right up against Russia's borders. This has
complicated the issue and caused a rift among the European members of
the alliance on how to handle Moscow. The larger European NATO
members have teetered between wanting a united stance against Russia
on one hand, and wanting to prevent any confrontation on the other.
Beijing said Friday that one of its big state-owned banks, China Development Bank, agreed to lend Petrobras, the Brazilian oil giant, $10 billion in exchange for a long-term supply of oil.
That investment came after similar deals were signed this week with Russia and Venezuela, bringing China's total oil investments this month to $41 billion.
This month, Aluminum Corp. of China, the largest Chinese aluminum producer, agreed to invest $19.5 billion in Rio Tinto of Australia, one of the world's biggest mining companies. And on Monday, China Minmetals bid $1.7 billion to acquire Oz Minerals, a huge Australian zinc mining company.
Venezuela got a $6 billion loan from China and agreed to increase its oil exports to the country, bringing China's total investment in the country to $12 billion. In Brazil, China signed a $10 billion "loan-for-oil" deal that guaranteed the country up to 160,000 barrels a day at market prices.
China has built up nearly $2 trillion in foreign currency reserves, giving the country easy access to capital.
Drought to Cut Off Federal Water to California Farms
Garance Burke, The Associated Press: "Federal water managers said Friday that they plan to cut off water, at least temporarily, to thousands of California farms as a result of the deepening drought gripping the state. U.S. Bureau of Reclamation officials said parched reservoirs and patchy rainfall this year were forcing them to completely stop surface water deliveries for at least a three-week period beginning March 1. Authorities said they haven't had to take such a drastic move for more than 15 years."
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