Friday, August 31, 2012

World Bank policies help drive global hunger

The World Bank has issued a global hunger warning after food prices soared by 10% in a single month from June to July. But this is disingenuous to say the least since the agency’s own policies backing corporate greed, are major contributors to hunger.

Maize and soybeans reached all time peaks due to an unprecedented summer of droughts and high temperatures in the United States and Eastern Europe, according to the World Bank’s latest food price watch report.

From June to July, maize and wheat rose by 25% and soybeans by 17%. The lives of millions of people are threatened, particularly in Africa and the Middle East. For example maize prices rose 113% in Mozambique in July and sorghum by 220% in South Sudan.

Drought in the US damaged crops of maize and soybeans, for which it is the world’s largest exporter. The dry summer in the Russian Federation, Ukraine, and Kazakhstan reduced the productivity of wheat.

“We cannot allow these historic price hikes to turn into a lifetime of perils as families take their children out of school and eat less nutritious food to compensate for the high prices,” said World Bank Group president Jim Yong Kim. “Countries must strengthen their targeted programmes to ease the pressure on the most vulnerable population, and implement the right policies.”

But this is hypocritical since the Bank’s own policies, supporting the requirements of the corporations and the rest of the global élite, are major contributors to hunger.

For example, the global land grab is entirely endorsed by the agency’s free market approach. Instead of bringing in rules to end this new brutal colonialism, the Bank and the UN developed a code of practice to facilitate it.

Governments are supported to treat traditional lands as state land with the right to sell it off to the highest bidder. Their own people are driven off to work for low wages from the new masters or to join the populations in the slums and barrios of the cities.

The mono-crops grown for export, using large quantities of water and fertilizer have negative effects on local markets. Water is being pumped to support the new large-scale agri-businesses, leaving family allotments, often planted by women, without adequate supply. And when the land is bled dry – literally – the land grabbers will move on, using investment funds from corporations like Goldman Sachs, to buy cheap somewhere else.

So far over 83 million hectares of land have been part of the global rush for land - 56.2 million hectares in Africa, 5% of the continent’s total agricultural land. Worldwide, 20 million hectares of land are growing crops to feed people who live a thousand miles away or more. And of course these intensive farming methods, clearing scrub land and pumping it full of fertiliser only serve to add to greenhouse gas emissions.

The World Bank’s much-vaunted focus on developing drought-resistant grains is all about profit – these will be grown on grabbed land and then exported to feed the beef that ends up in globo-burgers, or to burn up as bio-diesel.

La Via Campesina, the global movement of peasant farmers, sums it up by saying that the so-called agrarian reform supported by institutions like the World Bank, is all about sustaining capitalism:

“Because of the global crises, taking control of the earth’s remaining resources – land, water, forests, biodiversity – has become crucial to the survival of capitalism and the corporations. At the recently concluded Earth Summit in Rio de Janeiro, Brazil, this resource grab has been institutionalised under the label of ‘green economy’.”

Ending hunger means returning the land to the people to work in ways that mitigate the impacts of climate change that are now unavoidable. That would certainly involve abolishing capitalist agencies like the World Bank in favour of  democratic local, regional, national and international assemblies. Scientists could then help the majority develop ways to maintain themselves by sustaining the eco-systems they are a part of.

Penny Cole
Environment editor

Wednesday, August 29, 2012

Unsold goods pile up as crash takes its toll

In the wake of the Olympics, countless millions of pairs of trainers lie unsold in warehouses. Thousands of Chinese companies from property developers to car manufacturers sit atop mountains of products surplus to a hoped-for demand that never materialised.

China became the low-wage manufacturing centre of choice for corporations during the credit-induced 30-year frenzy of growth that preceded the crash. The belief that its burgeoning internal market would absorb an ever increasing volume of production added multiple stories to the house of cards that now lies in ruins.

With the global slump worsening and austerity economics stalking the globe, real incomes are dropping fast, so few are spending and consumers are hard to find. The unsold mountains of electronics and white goods are Himalayan in scale.

Earlier this month, China’s main retailers descended into a competitive price war, when online trader announced that it would sell home appliances at a zero profit margin. For capitalist companies zero profit is the end of the line. Clearly only the strongest will survive.

The global economy is spinning out of control tearing apart political and social relations with an unstoppable power that is only equalled by the severe climatic events that are devastating the Midwest and Gulf of America, Myanmar, the Niger, Japan and Korea.

These may appear as random acts of nature but they too are intimately connected to the frenzy of commodity production that has been the feature of the intense, carbon-driven globalisation of the world economy.

Meanwhile, weak demand in the United States and Europe has hit exports of IT services and manufactured goods from India. The credit ratings agencies Fitch and Standard & Poor's have threatened to downgrade the country’s sovereign debt to junk

The European Union, formed as an economic defence against American and Asian competition is now wracked with multiple crises that are tearing it apart. The collapse of unsustainable debt has set a centrifugal force at work between the central richer countries with Germany in the forefront and the poorer peripheral neighbours including Greece, Spain and Portugal and Ireland

It is also at work within the sovereign countries themselves. Catalonia is the second of the 17 autonomous communities calling for a bail-out from the central government. Spain’s economy is shrinking fast – at an annual rate of 3.9% in the second quarter. Its banks are seeing a flight of capital, losing €1 out of every €20 deposited with them in July alone as savers see the writing on the wall..

Whilst the countries bankrupted by bailing out the banks are forced to borrow from the money markets at impossibly high rates, cash rich are investors moving their money to the relatively safe havens of Germany, Finland, Denmark, Switzerland, Austria and the Netherlands. But they have to accept negative interest rates and watch the value of their investments fall.

The retreating tide of the global capitalist economy reveals not just mountains of unsellable products, but millions upon millions of workers, now also surplus to requirements.

Employment in Spain rose 4.6% percent over the 12 months that ended June 30, representing the loss of more than 800,000 jobs, taking unemployment to 25%; the speed at which jobs are being destroyed quickened in the second quarter.

As the economic conditions become impossible, many in the country are turning to alternative, social-money projects according to Peter North, a senior lecturer at the University of Liverpool.

“Instead of just being a desperate way for people to survive a horrible economic crisis, this is part of the cooperatives, credit unions, community banks, organic farms and recovering factories — the alternate economy — that the Occupy movement is groping towards.”

There are now more than 325 time banks and alternative currency systems in Spain involving tens of thousands of citizens. Collectively, these projects represent one of the largest experiments in social money in modern times. Harnessing their power and momentum to speed a democratic transformation of political economy along not-for-profit lines would be a tremendous, revolutionary step forward, and not only for Spain.

Gerry Gold
Economics editor

Tuesday, August 28, 2012

Money can't buy Obama or Romney love

In the 2008 election which brought to power America’s first black president, 131 million people went to the polls – five million more than before, most of the new votes coming from Black and Latino communities.

Barack Obama’s victory raised huge expectations. They have been largely dashed as the 2012 race for the White House hots up with this week’s nomination in Tampa of Republican candidate Mitt Romney.

Despite around $6 billion being spent on the US elections, the latest Washington Post-ABC opinion poll reveals that US voters are hardly budging in their voting intentions.

Disenchantment and concern over the economy has produced a doldrums in the electoral sphere. Around 47% of registered voters support Romney and Obama has 46%. Obama has maintained his base largely by portraying his opponent as simply a rich businessman, bereft of charisma or personality.

Romney’s appointment of fiscal right winger Paul Ryan from Wisconsin as his running mate is of course a sop to red neck Republicans who see Romney as too “liberal”.

Ryan’s claims about Obama’s economic policies have earned him a high place in the porky-pie stakes. So much so that the Washington Post has added him to its “Pinocchio Tracker”, which monitors candidates’ distortions and lies.

And Republican representative Todd Akin’s reprehensible remarks about “legitimate rape”, for example, have been seized upon by the Democrats in an effort to win women’s votes. (And Akin is of course, only one of many “pro-life” Republicans who seek to boost their support by appealing to the religious right.)

But the irony is of course, that only 2% of American voters are likely to change their party affiliations in any case. So how much does that add up in spending per vote? As blogger, Don Lichterman notes, the only states that really matter for the outcome of the election are the “swing states”, so it adds up to millions of dollars per vote.

Obama’s spokespeople are excusing his performance by saying that “people’s expectations were too high”.  And they blame the Republican-dominated Congress for blocking his policies.

But, although there are indeed differences between Republicans and Democrats over how to deal with America’s $16 trillion debt, the reality is that Obama has continued where the previous president George W. Bush left off, particularly with regard to foreign policy.

He backs the Pentagon’s drone war strategy on the Afghan-Pakistan border in which people are killed on a daily basis, many of them innocent civilians. He has, as democracy campaigner Amy Goodman notes, “presided over more deportations than any president before him, and the targeting of Muslims by undercover agents”.

Guantanamo remains open for business despite a pledge to close the detention camp and the persecution of serviceman Bradley Manning and Julian Assange of WikiLeaks are also happening on Obama’s watch.

In reality, Americans’ greatest concern is the state of the US economy – and their own poverty and lack of opportunity. This is hardly surprising considering that income inequality in the United States is deepening rapidly. United Nations health economist  and statistician Howard Friedman, comparing the United States to 13 other wealthy nations in health, education, safety, democracy and equality, concludes the US has fallen far behind in most of these areas.

The US health care system, he has found, ranks 37th in the world by the World Health Organisation and America also has the lowest life expectancy of the world’s 13 wealthiest nations. The figures say it all: the bottom 40% of Americans, own 0.3% of the wealth; 0.3%, almost nothing, whereas the top 20% own about 84% of the wealth.

Neither the Republicans nor the Democrats – both capitalist parties in their origin and practice – can or will address the true interests of voters concerned about rampant banks, gross inequality, unemployment, healthcare and extreme weather resulting from climate change. Perhaps four in 10 won’t vote in November.

The economic and financial disaster that signals a turning point in America’s fortunes and position in the global economy is running parallel with an historic crisis of democracy. The US political system is broken and whoever wins in November won’t fix it.

Corinna Lotz
A World to Win secretary

Friday, August 24, 2012

Sea ice melt puts ecosystem in jeopardy

Normally by this time of year the Arctic sea ice summer melt would be over. But it’s still melting at a rate of 100,000 metres per day and by the weekend, middle of next week latest, a larger area than ever before will have thawed. A halt to the melting process is now not expected for several weeks.

Climate change has kicked in with a vengeance, producing dramatic changes that are take only a few days to manifest. Pictures from the NASA earth observatory show “an extreme melt event” on the Greenland ice sheet with some degree of melting across its entire surface.

On average in the summer, about half of the surface melts, but this year has seen a dramatic jump. Satellite data shows an estimated 97% of the ice sheet surface thawed at some point in mid-July.

Researcher Son Nghiem of NASA's Jet Propulsion Laboratory first noticed that most of Greenland appeared to have undergone surface melting on July 12. He says: "This was so extraordinary that at first I questioned the result: was this real or was it due to a data error?"

Then other researchers confirmed the findings. It all happened really quickly, with satellite pictures on July 8 showing about 40% of the surface had melted – by July 12, it was 97%. There has been a strong ridge of warm air, a “heat dome”, over Greenland, one of a series since the end of May, each stronger than the one before.

As the ice sheet and sea ice melt, the planet’s air conditioning system is undermined. Ice reflects the sun’s heat back into atmosphere. Life on earth is not possible without this effect. The functioning of the present ecosystem is thereby put in jeopardy.

This summer has seen extreme weather across the globe. America’s eastern seaboard has suffered ferocious heat and storms, and there is a new dustbowl developing in Texas. In the UK, heavy rains and lack of sunshine have brought flooding and damaged crops. The picture is the same everywhere. Another global food crisis looms, with spiralling prices leaving the poorest to starve.

But not one political leader has commented on what’s happening in the Arctic – not Obama, not Cameron, not Hu Jintao, not Putin. They are variously indifferent, in a rush to exploit the changing conditions or simply tied closely to the fortunes of energy corporations.

Obama is locked in a race to the bottom with Republican presidential candidate Mitt Romney, to see who can offer the coal industry the easiest ride. New mining permits are being handed out to Koch Industries and other coal barons, and approvals made for coal-fired power stations with no commitment to carbon capture and storage.

Russia’s Gazprom is cashing in on the Arctic melt, stepping up oil drilling as is Norway. A Chinese icebreaker just sailed from the Bering Straits to northern Europe opening a new, cheap trade route. China, the biggest coal burner, has just one experimental carbon capture project, proceeding at a snail’s pace and with no evidence that storing CO2 in spent oil or coal seams will work.

There is some progress with carbon capture. A project in Canada is extracting food grade CO2 from flue gas using an organic solvent and feeding it to greenhouse grown plants. All that is left is a carbon free vapour which is safely released into the atmosphere. 

The problem is the same as with all new technologies, including new types of tidal energy generation – it is small scale, experimental and not immediately profitable. So governments and corporations won’t invest to speed up progress. And that exposes the main stumbling block in tackling climate change.

Production for profit, regardless of the consequences, is the main driver of climate change. Only production on a not-for-profit, sustainable basis can unleash the potential that exists both to mitigate the now unavoidable impacts of climate change and reduce harmful greenhouse gas emissions.

That requires a democratic revolution to establish a social system where the majority, organised in local national and global assemblies, plan to meet the needs of everyone on the planet whilst conserving and improving our ecosystem.  

Penny Cole
Environment editor

Wednesday, August 22, 2012

Osborne caught in glare of global recession

For the global economy, the only way is down. Britain shows where things are heading. A  deepening recession intensified by austerity has created a spiral of decline in public finances. More brutal assaults on living standards are sure to follow.

Unusually low tax receipts from North Sea oil and gas production sent the UK government’s finances further into the red in July. With manufacturers reporting falling orders, it marked a further deterioration to add to nine months of recession. The rapidly worsening crisis has turned public sector finances from a £2.8 billion surplus in July last year to a deficit close to £600 million.

The decline in tax income is a self-inflicted blow by the Coalition’s chancellor, George Osborne. It is the opposite to what he’d intended in last year’s budget when he fished for a £2 billion tax rise from producers. They responded by cutting production in the already aging fields.

This contradictory outcome neatly shows the limits of political power in the global recession. Despite the ritual claims that austerity is needed to cut the deficit and bring about a return to growth, the ConDems are forced to submit to the powerful forces of contraction which have been at work in the global capitalist economy since the 2007-8 crash.

The UK has now joined the club where managing contraction is de facto policy. Spending cuts are as much about keeping borrowing costs down as anything else (yesterday the government  sold £1.35 billion of 17 year inflation-proof bonds at effectively below zero interest). Naturally, austerity measures only deepen a recession that engulfs every economy.

Japan's exports slumped in July as sales to Europe and China dropped. The 8.1% annual fall far exceeded economists' 2.9% forecast. Exports to the European Union tumbled by 25.1% from a year earlier.  

"Europe's debt crisis is the first factor to pull down exports, and the pace of decline is striking. This is comparable to the post-Lehman situation," said Masayuki Kichikawa, chief Japan economist at Bank Of America Merrill Lynch in Tokyo.

Exports to China, Japan's largest trading partner, fell 11.9% from a year earlier, the biggest decline in five months, due to lower shipments of semiconductors, electronics and car parts. "We hoped domestic demand in China would support Japan's economy, but the story is different," said Kichikawa.

Reflecting the sharp decline in overall exports, the Ministry of Finance figures showed Japan swung to a larger-than-expected trade deficit of 517.4 billion yen ($6.5 billion).
Japan is not alone. China has shown economic growth failing to pick up after six straight quarters of decline despite two interest rate cuts and reductions in banks' required reserves.

Exports from Taiwan, a key part of the global technology supply chain, fell for a fifth straight month in July. Orders for Taiwan's exports, a predictor of demand, slumped 4.4%  in July over the previous year, far more than expected. And South Korea, home to major carmakers, computer chip and flat-screen producers, recorded its sharpest fall in exports in July in nearly three years.

The deepening slump in Asia is intensifying competition for declining markets in the region. It is adding to the simmering tensions between Japan and China over the disputed Senkaku/Diaoyu islands and has provoked the biggest anti-Japan protests in seven years in cities across China in recent days.

Labourites like former chancellor Alistair Darling, backed by business and trade union leaders, are calling on Osborne to abandon austerity and “go for growth”. Wilfully or otherwise, they completely fail to grasp the systemic nature of the crisis.

There is a global surplus of productive capacity. In this context, contraction and not growth is the absolute tendency which neither Osborne’s austerity nor Obama’s spending programmes can overcome. The system of production for profit is the problem and no amount of tinkering will change that.

Gerry Gold
Economics editor

Monday, August 20, 2012

ANC gets rich while miners live in poverty

When police gunned down striking Marikana platinum miners, killing at least 34 and wounding many more, they also blew apart the façade of post-apartheid politics in South Africa.

Despite 18 years of black majority rule, the country remains among the most unequal in terms of wealth in the world alongside Brazil. Nearly 40% of the population lives on less than $3 a day.

The elite in the ruling African National Congress have, by contrast, enriched themselves beyond their wildest dreams. Khulubuse Zuma, the president’s nephew and Zondwa Mandela, the former president’s grandchild, and many others with close family ties to politicians have become mining tycoons overnight.

So too have the present and former leaders of the National Union of Mineworkers who went from fighting the employers under apartheid to siding with the state against the workers after the ANC came to power.

Mine owners Lonmin, whose shares trade on the London stock exchange, felt confident enough yesterday to issue an ultimatum to the 3,000 striking workers to return to work today or face the sack. A former NUM general secretary sits on the corporation’s board.

The present secretary Frans Baleni is close to the Chamber of Mines and is a strident opponent of nationalisation. Baleni, was awarded a salary increase of more than 40% last year and his total salary package is over £8,000 a month.  

Platinum sells for about $1,440 an ounce but a worker drilling underground at tonnes of rock face to extract it makes less than $500 a month. With the NUM refusing to fight for proper wage rises, workers at Marikana formed the Association of Mineworkers and Construction Union to represent them. The demand for a substantial wage rise won massive support for the AMCU.  

Throughout South Africa, the ANC regime unashamedly deploys state force to enforce its political rule. Critics like Ayanda Kota, chair of the Unemployed Peoples' Movement in Grahamstown, are arrested on trumped up charges, beaten and detained for months.

Commenting on the Marikana Massacre, he insisted: “South Africa is the most unequal country in the world. The amount of poverty is excessive. In every township there are shacks with no sanitation and electricity. Unemployment is hovering around 40%. Economic inequality is matched with political inequality. Everywhere activists are facing serious repression from the police and from local party structures.

“Mining has been central to the history of repression in South Africa. Mining made Sandton [wealthy area of Johannesburg] to be Sandton and the Bantustans of the Eastern Cape to be the desolate places that they still are. Mining in South Africa also made the elites in England rich by exploiting workers in South Africa. You cannot understand why the rural Eastern Cape is poor without understanding why Sandton and the City of London are rich.”

Kota described South African society as one “based on each according to his political connections with the elite that has captured the ANC and its alliance partners”.  

As the global crisis hits firms like Lonmin – demand for platinum is falling, along with the price of the metal – so the crackdown on workers intensifies. The South African state machine remains the same as it was before apartheid. It serves capital, with the only difference that the majority of its personnel are black.

Justice Malala, journalist turned political analyst, noted that the AMCU is also organising among poor workers and their shack dwellings. “For these settlements, this is a strike against the state and the haves, not just a union matter.” President Jacob Zuma’s reaction bears him out. He tried to reassure investors their money would be safe, saying at a tour of the Marikana mine on Friday: "We remain committed to ensuring that this country remains a peaceful, stable, productive and thriving nation."

His words, and the actions of the police, surely indicate that it is time to renew the South African revolution, giving it the social and economic dimension that was blocked by the ANC.

Paul Feldman
Communications editor

Friday, August 17, 2012

Why Ecuador stands shoulder to shoulder with Assange

Ecuador’s defiant decision to grant Julian Assange political asylum shows how far the country has come in shaking off shackles that not so long ago had reduced it to a plaything of the United States.

From 1960, the Central Intelligence Agency plotted and planned to destabilise the elected populist government led by José María Velasco Ibarra because it refused to break off links with Castro’s Cuba and crackdown on the left.

Philip Agee was a senior CIA officer in Ecuador during that period. Years later, after denouncing the CIA, he blew the whistle in a book called Inside the Company. Agee revealed how the CIA organised the infiltration of trade unions, political parties and social organisations at the highest levels in Ecuador. Where no suitable organisations existed, the CIA created them, complete with headed paper and committees.  

Agee's account shows how the CIA used bribery, intimidation, bugging and forgery. He spent four years in Ecuador penetrating Ecuadorian politics and, by his own admission, subverting and destroying the political fabric of an already wretchedly poor and unstable country.

“CIA financing of conservative groups in a quasi-religious campaign against Cuba and ‘atheistic communism’ helped to seriously weaken Velasco's power among the poor, primarily Indians, who had voted overwhelmingly for him, but who were even more deeply committed to their religion,” says William Blum in his Killing Hope: US Military and CIA Interventions Since World War II.  

“CIA agents would bomb churches or right-wing organizations and make it appear to be the work of leftists. They would march in left-wing parades displaying signs and shouting slogans of a very provocative anti-military nature, designed to antagonize the armed forces and hasten a coup.”
A series of interventions by the armed forces that began in November 1961 culminated in a coup in July 1963 when the presidential palace in Quito was surrounded by tanks and troops. Civil liberties were suspended, leftists arrested and the 1964 elections cancelled. At the local CIA headquarters, champagne corks popped. It wasn’t until 1979 that civilian rule was restored.
Today’s president, Rafael Correa, has repudiated the country’s foreign debt and has placed the country in solidarity with other radical regimes in South America like Bolivia and Venezuela. The decision to give Assange asylum is consistent with Ecuador’s determination to assert its political independence from Washington.

The foreign minister’s statement that insists Assange is in danger from the United States (while rejecting the UK’s threat to storm its embassy) is well founded. Washington would like nothing better than to extradite Assange to the US to face trial for espionage alongside Bradley Manning, the soldier who allegedly collaborated with WikiLeaks.

Key figures have cleared the path. Australian prime minister Julia Gillard has denounced fellow citizen Assange for publishing previously secret cables that exposed America’s crimes in Iraq and Afghanistan. Several senior US senators have called for Assange to be tried for publishing the cables sent by American embassies.

Washington's aim is to put Assange on show trial with Manning. By having them both in the dock at the same time, the US/FBI hope to "prove" a conspiracy between the two men and have them convicted for treason - with a sentence of life (until death) in jail.

Shortly after the dramatic video of the 2007 Baghdad airstrike which killed Iraqi journalists was released by WikiLeaks in 2010, Assange was in Sweden where he applied for residency. After sexual relations with two women, an arrest warrant was issued but soon withdrawn. He was questioned by police and allowed to leave the country. Within 10 days, the investigation was reopened by another prosecutor and upgraded to alleged rape. His residency request was denied soon afterwards.

Assange is not charged but wanted for questioning. Following his arrest in Britain last year, Assange volunteered to present himself for questioning at the Swedish embassy in London. This was rejected by the country’s right-wing government. Who can doubt then that if he reaches Stockholm, Assange will be questioned about the sex accusations and then handed over to the Americans who, by then, will have an arrest warrant?

Paul Feldman
Communications editor

Wednesday, August 15, 2012

Unrest grows as crisis spins out of control in France

Angry confrontations between police and young people on housing estates near Amiens are a sign of growing social unrest in France as the recession, highlighted by the threatened Peugeot plant closure, deepens.

Amiens has often experienced unrest, but the prefect's office said there had never been violence "as serious as this". After just 100 days as president, François Hollande made his position clear, with a statement that could have come from his right-wing predecessor, Sarkozy: “The state will mobilise all its means to combat these violent acts. Security is not only a priority for us, it is an obligation."

There were riots here during the nationwide disturbances in 2005 across France, but economic and social conditions have greatly intensified in the wake of the global financial meltdown of 2007-8. Massive upheavals in the Middle East, North Africa, Greece and Spain and riots in cities in the UK are indicators of social turbulence on a transcontinental scale.

Unemployment is already as high as 40% amongst the mostly immigrant youth on the estates surrounding French cities, and now the deepening slump is driving corporations onto the offensive throughout Europe. Growth in the eurozone has turned to contraction, so workers and unemployed people throughout the whole continent are being driven into action against employers and the state.

With no possibility of any recovery in demand for mass market cars, car maker PSA Peugeot Citroen has announced plans to close its Aulnay-sous-Bois factory in the suburbs of Paris. Other cut-backs are certain to follow.

Sergio Marchionne, the chief executive of Chrysler and Fiat, two of the world’s biggest car companies, and president of the European Automobile Manufacturers’ Association, warned in April that the industry needed to cut capacity in Europe by 20%.

Translated into jobs that would hit close to half a million workers in an industry directly employing 2.3 million people in Europe, including sub-contractors. Economic conditions have worsened since Marchionne’s forecast, so the assault on jobs is likely to be much worse than his prediction.

The crisis is echoed in steel production – one of the car industry’s main inputs.  World crude steel capacity utilisation was running at 80.4% in May, down 2.5% on last year.

No part of the world is exempt from the global contraction. Its impact is reflected in a crisis in shipping where disappearing credit and overcapacity interacts with falling demand. The second-hand ship market has collapsed. Both bulk ships and tankers are trading at lower levels today than during the worst moments of the 2008-09 crisis.

Clarkson’s ClarkSea Index for maritime freight rates has halved since mid-2010, and fallen by 80% since 2008. This includes the wildly volatile Baltic Dry Index for bulk freight, which has crashed by 90% to post-Lehman depths.

Responses to the Aulnay-sous-Bois planned closure have been mixed, to say the least. Jean-Pierre Mercier, head of the CGT union at the factory targeted for closure said: "We have the power to make Peugeot back down, to preserve our jobs." He told a crowd gathered by its gates. "We are a political bomb, a social bomb, and we intend to detonate."

The union is planning a long-term campaign of protest, including marches on the company headquarters, to keep the plant open. Other unions are more intent on extracting improved redundancy terms for workers. Gerard Segura, Aulnay’s Socialist Party mayor, has ordered Peugeot to find a new industrial employer for the site, threatening to expropriate the factory grounds if it fails.

Closure would wreck the town's finances. It would lose taxes from the company and from hundreds of families that would have to rely on social services. Already deep in the red, its debt payments have doubled in the past four years to €90.4 million euros in a budget of €226 million.

These attempts to preserve jobs, attract a new employer or even win improved redundancy conditions only serve to hide the impact of the unfolding economic holocaust. Conflict is certain to sharpen when French car workers return from their August holidays.  

Gerry Gold
Economics editor

Monday, August 13, 2012

The real way we can 'inspire a generation'

Now that the raucous closing ceremony has brought down the curtain on the London 2012 Olympics, it’s time to cut through the hyperbole and the rhetoric surrounding the games.

This is especially so of the much-trumpeted slogan of London 2012, “Inspire a generation”. From whatever side you examine this imperative, it rings hollow for the vast majority of the present as well as the next generation.

If you are one of a million young people without a job in Britain, living on next to nothing or on hand-outs from hard-up parents, there’s little inspiration to be drawn from the amazing achievements of the athletes from 204 nations who competed in London.

The highly-successful British squad formed an elite group, supported by a range of sponsors, public money in the form of lottery funding and, for many, the benefit of a quality resources provided by a fee-paying school.

And then they have had the backing of teams of coaches, advisers, psychologists, doctors, sports scientists and access to the best facilities.

For the unemployed of the present generation it’s another story. They are very much on their own. In their case, the state harasses you, cuts your benefits without hesitation, sends you on cheap labour “work experience” schemes and generally gives you a hard time.

As to the idea that school students will now take up sport as a result of being inspired by the Olympics, the problem is that funding for such activities was cut last year by the ConDem education secretary Michael Gove. And successive governments have allowed local councils to sell off playing fields for commercial gain, limiting opportunities in another direction.

With the present recession on the edge of becoming a full-blown depression, the most real prospect is not of inspired but lost generations, abandoned by a society that can organise a global sporting event but cannot deliver on a simple desire for a job at a living wage.

The reason for this is not hard to fathom. London 2012, like all modern Olympics, was a business venture first and a sporting event second. From the corporate sponsors whose logos were on every shirt and running shoe, to the exorbitant prices charged for tickets, these were a games designed to make us love capitalism and country.
The BBC played its part, like the faithful dog that it is. Endless references of people “being proud to be British” as well out-of-control commentators had you reaching for your nearest sick bag.

That the games did not on the whole come over like that was due in no small part to the cosmopolitan citizens of London, who cheered everyone regardless of their country, the 70,000 volunteers and the supreme combined efforts that went into the opening and closing ceremonies.

London 2012 then was a contrast as sharp as any in contemporary British society, where extreme wealth and dire poverty often live in parallel streets in the same city.

The collective efforts of ordinary people as well as talented directors, performers and musicians was a powerful testimony to what shared endeavour can produce. They exposed as hollow and shallow the posturing of the political class as they tried to play catch up.

If there is a “legacy” coming out of London 2012, then it surely has to achieved along this road. A co-operative, pooled effort could and should put the corporations and banks where they really belong – into the hands of ordinary people.

The looming catastrophe of slump, depression and international conflict could then be avoided and the resources of society put to sustainable and creative use.

That would truly inspire a generation.

Paul Feldman
Communications editor

Wednesday, August 08, 2012

Worsening economy behind Coalition crisis

All the indications are that the British and European economies have now been drawn into the deepening contraction of global capitalism:

  •   The Bank of England today slashed its forecast for UK economic growth in 2012 to zero from its May estimate of 0.8%.  Governor Sir Mervyn King said recovery hopes had consistently been dashed.
  •   Last night, S&P cut Greece's outlook to from “stable” to “negative”. The ratings agency said the economy in the already crisis-hit nation was worsening.
  •   The Banque de France, the country’s central bank, said that its preliminary figures show that gross domestic product will be down 0.1% in the third quarter, which ends on September 30. The bank had already predicted that GDP would fall the same amount in the second quarter.
  •   German exports slowed by a more than expected 1.5% in June. Imports dropped 3%, against a 2% prediction.

The Cameron-Clegg Coalition’s current austerity programme of spending cuts and tax increases was based upon an unrealistic expectation of growth, which has now been replaced by the certainty of its opposite. This – and the crisis within the Coalition itself, spurred by the virulently anti-Cameron Old Tories - underlies the sharpening of tensions as the Tories abandon plans for reform of the House of Lords to focus attention on the economy.

As BBC economist Stephanie Flanders puts it, we are experiencing: “ by some measures “the worst four-year period for the UK, outside wartime, in at least 100 years - worse than what happened in the 1920s and 1930s, and worse than anything in the 1970s and 1980s”.

People in the UK face the same challenges as the rest of Europe in battling assaults on public services, jobs, pensions and benefits and the loss of their homes. Amongst the worst-hit countries is Spain, where unemployment amongst young people stands at around 50%. In Greece, the Orthodox Church has set up emergency feeding centres for hundreds of thousands of people who have lost everything. They include formerly well-paid professionals – architects, engineers, information technology specialists who hardly know what has hit them.

The contraction means demand is dropping fast, so exports, imports and production must follow. Government revenues from tax continue to drop, so “unaffordable” public services have to broken up and those parts that can be made profitable handed to the private sector. Then, as the spiral of recession deepens, comes the competitive elimination of surplus productive capacity – the mothballing of factories, boom-year housing estates left empty, infrastructure left to decline and rot, millions upon millions of people driven from their jobs and homes, left without food, abandoned to their fate.

In country after country people have protested, marched and even occupied workplaces.  The Trade Union Congress in Britain is calling for another demonstration in October. But the experience of its last national anti-austerity protest in the spring of 2011 showed that it changed not a whit of the Coalition’s policies. 

Thus resistance must be transformed into preparations to replace the broken system of capitalist social relations dominated by the giant global corporations. It is these which have undermined the legitimacy of the state and hollowed out the old forms of parliamentary democracy.

New forms of fully inclusive, participatory, direct and representative democracy are needed. They can learn from the experiences of those who’ve worked in not-for-profit institutions like the National Health Service, housing, education and social services as well as the workers’ co-operatives, credit unions, food coops and community shops that have spread around the world as people try to protect themselves against the worst effects of the crisis. These need to go further to develop policies and strategies to replace capitalist social relations.

A World to Win believes that a global network of People’s Assemblies can provide this framework. You’re invited to join the discussion at

Gerry Gold
Economics editor

Monday, August 06, 2012

Olympic dream and reality

It’s exactly a year since inner-city riots swept London and other parts of the country. They were sparked by bottled-up anger at the arrogance of the police and rapidly spread into a brief orgy of looting and general destructiveness that took many, including the police, by surprise.

As the medals stack up, politicians backed up by the tabloids are hailing the London Olympics as a great British success story draped in endless Union Jacks. So does the hiatus as millions are drawn into the spectacle mean that the alienation which lay behind the riots has been replaced by a new sense of community, as some would have it?

It’s true that the London Olympics are a showcase for aspects of the British character and mass behaviour not normally apparent in the hardscrabble struggles of daily life. In addition to the prowess of the athletes, thousands of young people have made it as a chance to be friendly and helpful to visitors.

It may be asked where has this great surge of sporting talent and determination, which saw British athletes win six gold medals in one day, come from?

It all starts with an inherent desire in people to excel and to prove that the extraordinary can be achieved. Add to this the support of an enthusiastic home crowd which helped lift some athletes to excel beyond expectations.

Incredible dedication is vital to take part in the Olympics, let alone win a medal. But determination on its own is only half the story. A huge amount of long-term team-work is required, involving coaches, psychiatrists, dieticians, sports medics, good facilities and – last but not least financial resources.

The chief medal successes so far are in rowing and cycling. These sports are based on a hot-house regime involving a scientific approach to training. Much of this was financed by the National Lottery.  So, behind the fantasy of a “level playing field” where all you need is talent and determination are more complex and often harsher realities. 

The top medal winners tell a different story of countries and sponsors prepared to dedicate serious money for sporting achievement. Poor countries like Bangla Desh and most of Africa simply don’t get a look in. “Blade Runner” Pistorius is indeed an inspiration – but he attended a historically white school with lavish playing fields.

It is far from being down to some mythical British work ethic and “sense of belonging” as The Guardian’s Jackie Ashley believes. The Olympics have cost some £9.3bn of taxpayers’ money. This is an amount that many small nations could not even dream of. It has been lashed out by successive governments at a time when the prime minister says austerity cuts could last until 2020 and beyond.

The Olympics do offer a glimpse of the unlimited nature of human potential and brilliant organisation. But it is a limited operation which applies only for a short time. The reality of austerity and economic crisis has not gone away. Italy’s prime minister Mario Monti has warned of a “psychological break-up of Europe” due to the Eurozone crisis even while the Chinese economy continues to slow down.

For the global corporations the Olympics are purely and simply a desperately needed form of marketing. Seventeen-year-old US gymnastics champion Gabrielle Douglas, for example, was signed by Procter and Gamble before the London Games. Soon to be the face on Kelloggs Cornflakes boxes, she is seen as “having the potential to earn millions” by sponsorship consultants. Jessica Ennis’ website says she is “is proud to be sponsored by several popular brands” – they include BP, Adidas, Omega and British Airways.

Behind the conditions that produced last year’s riots was a general contempt for the political system. State institutions and the custodians of law and order are seen as preserving the status quo of corporate power. The Olympics will do nothing to give them credibility.

Corinna Lotz
A World to Win secretary

Wednesday, August 01, 2012

Food as a commodity sends a message

As two-thirds of the United States suffers from the largest drought to hit the country in 50 years, food crop prices rocket and speculation is rising on the financial markets.

Corn and soybeans, essential for feeding large swathes of the planet’s population, stand at record highs. Corn has jumped between 30 to 50 per cent and soybeans are up 60% since last December.

For investors in food as commodities, of course, it’s great news. The Fiscal Times, for example, put matters like this:

“Agricultural commodities have handily beaten most other asset classes so far this year as a place where investors have been able not only to generate positive returns but capture gains of 20 percent or more, depending on their ability to buy into the right contract at the right time, and roll that contract over when it approaches expiry".

Thus, big consumers of grain from Egypt and Morocco to South Korea and Taiwan are facing a renewed bout of food inflation as cash rich gamblers on the commodity exchanges drive food inflation far beyond the limits of supply and demand.

In fact, it seems that economic, social and political effects of the sharp rise in agricultural commodity prices have barely begun. And with the increased cost of food, memories of the world’s recent food crises abound.

In 2007-08 rapidly rising food prices triggered riots around the world. In 2011 wheat prices were a major factor in pushing Egypt’s masses onto the road to revolution.

This time around, in Indonesia, the tofu industry has threatened to strike over rising soyabean prices; in Mexico, the cost of corn tortillas is on the rise; and Iran last week witnessed a rare protest over the cost of chicken.

Now, sharply rising food prices are intensifying the already existing impact of austerity measures imposed by governments since 2008.  Austerity measures are of course part of the effort to pass the responsibility for debts accumulated in bailing out the banks onto already beleaguered populations.
The World Bank is one of many agencies of the global capitalist class that are worried. Africa is their last hope of a source of profitable growth for corporations in the deepening global depression.

“Certainly there is a lot of reason to worry’ says Mthuli Ncube, Chief Economist and Vice President of the African Development Bank (AfDB).

“It is a threat … if they (the food prices) keep rising, again we will have social upheaval that will threaten economic growth in Africa

Another global food price spike will squeeze net food importers in Africa. It will combine with the euro zone crisis in Europe and the continuing slowdown in China’s growth to negatively impact African exporters of oil and other commodities.

But, naturally, the Bank’s first and only concern is to return to profitable growth – the self-vicious circle of profit-fuelled commodity production process that has culminated in the present crisis.

The ways in which abnormal weather conditions like the US drought interact with global warming and climate change is extremely complex. But even Brad Plummer of the mainstream Washington Post is now warning about the effects of climate change on US farmers.

He has concluded that the Intergovernmental Panel on Climate Change’s (IPCC) 2012 report on extreme events, which brings together existing investigations, concluded that it was probable that droughts would “become more intense in many parts of the world if the planet keeps heating up — a trend that could disrupt the world’s food supply”.

The use of land and food production to generate profit and for speculation is fundamentally incompatible with feeding the world’s population.  Breaking the vicious circle between the corporate profit system, climate change and the threat of starvation for millions on the planet is most urgent.

A global network of People’s Assemblies can remove break the cycle by seizing control of the land, factories, offices and infrastructure and setting out on a path to sustainable production replacing the chase for profits with the interests of the planet and those who live on it.

Gerry Gold
Economics editor