The Wall Street Journal now accepts that the state, that is US Tax payers, take stakes in the top US banks. $250 billion is to be pumped in. As it pockets the money it whines. "For those who believe in free markets these interventions are unpleasant....yet now they are necessary." Where have the great free market principles gone. Where has the thundering Wall Street Journal editorial writers gone. Their system was faced with collapse so all else was forgotten and they now pocket the tax payers money.
An article on the first page of the Wall Street Journal today described what happened at a meeting in Washington on monday afternoon of this week. On one side of the table were the executives of the country's nine biggest banks. On the other side Treasury secretary Paulson Fed Chair Bernanke and FDIC Chair Bair. The bank executives were summoned to come and not even told the agenda in advance.
When there they were given a paper to sign that committed them to agreeing to the state taking stakes in their banks. They were not allowed to negotiate. They were told it was for their own and the country's good that they sign and if they did not and had to come back for help at a later date then their refusal to sign would be remembered and they would not be treated so generously. Paulson told them: "The public has lost confidence in the banking system, the system needs more money, and all of you will be better off if there's more capital in the system."
In spite of their bleating the bankers were not forced to accept any onerous terms with this money. Executive pay controls and dividend pay outs were left pretty much up to the banks. Vague aspirations were announced but no strict controls or supervision. Also the shares that the state took for their handing over the money are non voting shares so they do not have any say. And the banks can keeping paying out dividends to their shareholders. It is another bail out.
Inspite of the weakness of these aspects of the buy/bail out this step by the US government and state is a huge change in their policy. In the 1930's in the midst of the great depression Roosevelt took measures against the banks and the corporations. He was faced with a system that was in prolonged crisis and with a radicalizing workers movement in the form of the rise of the Congress of Industrial Organizations and the wave of mass occupations of workplaces and the flood of US workers into left organizations. The Communist Party reached 100,000 members at that time. So Roosevelt took measures to regulate capitalism, as he said to save capitalism from itself.
US capitalism has been trying to undo Roosevelt's regulations and reforms ever since. This effort was stepped up with the rise of the Reagan era. This present Bush said his objective was to finish undoing what had been given in the 1930's and the 1960's. But what has happened?
Here we have the extreme right wing regime of Bush taking over part of the banking system, increasing the involvement of the state in the economy more than at any time since the 1930's. When Paulson was announcing his partial take over of the top nine banks he was almost crying. It is easy to see why. This is a major defeat for his class and the Bush regime. The crisis and fear of collapse of their own system, the fear of what would happen on the basis of a world depression in terms of the rise of a new and radicalized workers' movement, these are what forced Bush and Wall Street swindler Paulson to call in the financial tops of their own class and give them an ultimatum and increase the role of the state in the economy.
We in Facts For Working People have forecast this development. We wondered was the bias again Hilary Clinton in the bourgeois media during the primaries because they worried that she might be more inclined to take Rossevelt type actions on the basis of a slump than Obama. We recognized that on the basis of a deep depression or the threat of financial collapse that capitalism would have no choice but to revert against all its wishes to take Roosevelt type actions again. This is a major defeat and setback for the US capitalist model and for its arrogant reign around the world.
Paulson almost sobbed into the TV cameras when he was announcing the deal. He whined: "Government owning a stake in any private US company is objectionable to most Americans, me included." Why did you do it then Paulson? It was because your system was, as the headline in the Wall Street Journal said, on the edge of the precipice.
There are many problems facing this action. The same bad management who got the banks into their present crisis are still in charge. The banks can still use this money they are now getting from the state to pay dividends to their shareholders. The problem of falling house prices and foreclosures in the US remains. The world and US economy seems to be on the verge of a depression which will hurl the banks into a new crisis.
Look at the problems that exist. inequality is at an all time high. 1% of the US population own 20% of the country's wealth. $2 Trillion has been lost from workers 401k's in the past 15 months according to the Congressional budget Office. 10% of Americans owned shares in 1980 but they were pressurized and conned into the stockmarket until before the sell off in September this figure had gone up to 60%. Over 1 million jobs will have been lost in the US economy in 2008. And the other shoes of corporate debt, derivatives, falling corporate profits, corporate bankruptcy all have yet to fall.
US share holder type capitalism which they held up as a model for the world has been dealt a fatal blow.
Look at the depravity and cruelty of this system. Look at the cruelty and depravity of the people who run this system. They are mass murderers, these silk suited swindlers of Wall Street and the worlds stockmarkets and capitals. They have the blood of tens of millions on their hands. The UN spokesperson for Asia says that the $700 billion US bail out would feed the world's poor for 100 years. The UN estimates that in two weeks at the height of the financial crisis 44 more people in south east Asia were pushed into poverty.
This crisis has only started. we are at the end of an era when world capitalism went on the offensive to free capital from all regulations and weaken the working class in every way possible. Part of this offensive are the wars and foreign occupations internationally.
If it were not for the crisis of leadership of the working class an international mass movement against capitalism would be surging across the globe. But the union leaders are cowed by capitalism, they see no alternative and so they support it and hold back movements against it, They also live well in their privileged positions within the system. Their refusal to lead must be pointed out and opposition must be built in all the unions to their refusal to take on capitalism. Like the capitalist class by bringing their system to its knees have forfeited the right to rule, the union leaders by their refusal to lead have forfeited the right to hold their positions. we have to build a fighting anti capitalist democratic socialist opposition in all unions and workplaces.
At the same time activists, community organizations, union bodies must come together to fight the affects of the capitalist crisis on the ground. "Hands off our Homes" committees should be built in the neighborhoods, these should be based on the communities and union locals and workplaces in the neighborhood and linked together to fight the evictions, foreclosures and also oppose the job losses and pay cuts. They can also be linked to the struggle against the wars and foreign occupations which cost so much. The money spent on these wars and occupations could transform the lives of working people in the US and internationally, instead of filling the bank accounts of the military industrial complex and protecting profits and power of the oil companies and all US corporations and their cronies abroad.
Sean.
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