A symbol of hope's limitations

Poorer workers, Latinos, Afro-Americans, young urban professionals and women put their trust in Barack Obama. And this morning they are celebrating. But despite their vote of defiance against the rich, right-wing, racist Republicans the euphoria will melt away.

The re-election of Obama for a second term is certain to disappoint the voters as, in the words of historian Simon Schama, the triumph of reality returns to the surface.

The changing demographics of the United States have brought millions into the working, or as they call it “middle” class from across the border. They were attracted by the promise of a better life, drawn in by the expanding economy but now left hung out to dry by the global slump.

The pressing demands of the so-called fiscal cliff of tax and budget cuts towers over the renewed administration. Republicans who control the House of Representatives have pledged to block Obama at every step.

In any case, the power behind the billions of corporate dollars – estimates say $6 billion were spent in support of the candidates – will secure Washington’s allegiance to the future of global capitalist interests.

This came through in almost the first words of his victory speech, with Obama promising to talk to the defeated Romney to see "where we can work together to move this country forward".

And he will have to. Agreements will have to be forged to get federal spending limits raised yet again and budgets passed.

Obama may have demonstrated good intentions and won many votes with his largely frustrated attempts to improve access to health care for the tens of millions who’ve lost jobs and hence health insurance along with their homes, and no doubt he’ll be seen to be trying even harder.  

But the pursuit of growth to secure more jobs will see an accelerating spiral of decline in real incomes as the global competition to attract production back from China and elsewhere intensifies. Inequality will grow even deeper than it is at present.

The president’s watchword is “hope” but the savage programme of cuts that must follow in the attempt to stave off the world’s biggest economy declaring itself bankrupt will vastly overshadow the European austerity programmes which have brought millions to the brink of revolution in Greece and Spain. Romney would have handed the responsibility to the states – many of which are already bankrupt – to do the job. Obama will do it at federal level.

The election pushed fears of a new storm into the background, temporarily. But another was threatening the East Coast even before the effects of Hurricane Sandy which still left more than a million without power had begun to sink in.  Staten Island is still in darkness, and the looters are at work.

These record-breaking, life-shattering storms draw their enormous power from the energy poured into the atmosphere by the corporations that bought the presidency. Neither Obama nor Romney had anything to say about climate change during the campaign. No doubt their corporate backers ruled it out.

With or without Romney, Obama may well authorise spending on improved storm defences, but will continue to break records in oil drilling, tar sand extraction and fracking, and he will approve the northern half of the Keystone XL pipeline. All in pursuit of energy independence and profits for Big Oil.

Obama may seem like a nice enough family man, but, whatever he wants to achieve, he and his administration will intensify the economical, technological and psychological warfare against any and every government or movement that stands in the way of corporate advantage.  The threat of a military strike against Iran mounts, day by day.

Millions voted for Obama in the often desperate hope his election would ward off the ravages threatened by the Republicans. Their support was reluctantly given. Their frustration, their aspirations for a better future will have to find another route if they are to be fulfilled in practice.

Gerry Gold

Economics editor

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

Spooks muscle in

The result of the toner cartridge bomb plot, as with all such individual acts of terrorism, will be to further strengthen, rather than weaken, the anti-democratic arm of the state to use against its own citizens.

Whatever the true nature of the plot, said to originate from an Al Qaeda cell in Yemen, its exposure will be useful for MI5 chief, Jonathan Evans. Evans wants anti-terror legislation introduced by New Labour – 28-day detention without charge and “control orders” in particular - to remain on the statute books.

Before last May’s election, both Conservatives and LibDems attacked New Labour for this open breach of civil liberties. Lib-Dem leader Nick Clegg was particularly outspoken, condemning the “control order regime” and calling for its abolition. Now that Cameron is in office, the spooks have told him they need these laws and apparently he says that if Clegg objects, the coalition is “heading for a fucking car crash".

Cameron yesterday chaired an emergency meeting of COBRA, the committee that takes over in the face of major terrorist or health threats. In parliament he spoke of the need to “cut out the terrorist cancer that lurks in the Arabian Peninsula”.

Evans, along with his fellow spooks in the Office for Security and Counter-Terrorism based in the Home Office, are lobbying the government hard to keep the laws on the books so that they can do what they want with terror suspects.

The intelligence agencies are already virtually the only area of government spending not facing cuts – in fact MI5, MI6 and GCHQ have been awarded an extra £65m on top of their existing £2.4 billion budget to run their 5,700-or so agents, much to the chagrin of Defence chiefs. Counter-terrorism and spying on the population is a greater priority than the armed services, apparently.

The reality is that however much they spend, countries across Europe, and the US, are still vulnerable to terror attacks. The toner cartridge bomb exercise demonstrates that it is relatively simple to construct such devices. As long as there are individuals prepared to risk their lives – and terrorist organisations like Al Qaeda to fund and organise global networks – this cat and mouse war will continue.

Hyping their ability to prevent further attacks through big-power co-operation and more cash for spooks, is just whistling in the dark. Innocent civilians in cities like New York, London, Madrid, Mumbai and Nairobi will be the ones to suffer. And the threat is not only in the west – yesterday 52 worshippers lost their lives in yet another Baghdad bombing.

Governments who continue to fight disastrous and hopeless wars like that in Afghanistan, supposedly to root out terrorism, will never succeed in protecting their citizens from terrorist attacks. Quite the opposite.

But will they listen to the advice of former Soviet leader Michael Gorbachev who said last week that victory in Afghanistan was impossible and that the same militants terrorising Afghanistan and Pakistan today were trained by the US? Of course not.

Fighting the so called “war on terror” and protecting populations from terror attacks – real or imaginary, actual or contrived - is one of few important roles that today’s political leaders can lay claim to – as they set about deconstructing the welfare state.

And the spooks lobby will continue to enjoy government support as long as that is the case, not only for the so-called “war on terror” but also to rapidly resurrect the role they played so enthusiastically in the 1980s, of targeting trade unionists and others fighting the actions of the government. For example trade unionists like the firefighters. many of whose personal details including home addresses, were this week mysteriously leaked to the Sunday Mail.


Corinna Lotz
A World to Win secretary

Toronto is a turning point

The failure of the G20 summit in Toronto to find a common approach to tackling the global economic and financial crisis had an air of inevitability about it. After all, capitalism is not exactly a rational system where sensible men and women come together to sort out an international crisis.

If that were really the case, the 20th century would not have experienced two catastrophic world wars, for example. Nor would the inter-war years have been dominated by the calamity of the Great Depression in Europe and America, which only ended when the major powers took to the battlefields.

In reality, what the Toronto communiqué – which apparently took all of 54 hours to negotiate – heralds is another period of intense competition and rivalry. In an abandonment of the unity of the past three crisis-era Group of 20 summits, the leaders decided to adopt "differentiated and tailored" economic policies for each country. Earlier proposals for a unified approach to limiting the activities of major banks by imposing tighter capital requirements were also put on the back burner.

In other words, it’s every country for itself. Sound familiar?

President Obama’s plea not to start cutting budget deficits too soon because it might harm the “recovery” was simply ignored. All the major economies are cutting deficits – and America won’t be far behind. Obama, it was noted, praised Britain’s “courageous budget” of last week.

He is aware that his stimulation package has failed to revive the US economy. On the contrary, unemployment continues to grow despite an increase in state spending. The recession has wrecked the finances of many states too, which are dependent on local property and sales taxes.

The small southern California city of Maywood is disbanding its police force and firing all public sector employees. Every service is being contracted out. US states have an estimated $200bn budget shortfall, equivalent to 30% per cent of all state budgets. The federal government’s deficit is about $1.3 trillion and rising.

The impotence of the political elites who gathered in Toronto reflects a stark reality of the problematic and contradictory relationship between capitalist nation-state systems and the globalised economy. Masked while the world economy expanded, this conflict has worsened since the 2008 meltdown of the banks.

Modern globalisation has created immense economic and financial forces that are greater in their impact and power than the sum of their parts. They are way beyond the control of even the most powerful states. Take, for example, the financing of government borrowing through what is known as the bond market. This isn’t some single marketplace, with a sign outside the door but is a series of inter-linked buyers and sellers in Europe, Asia and America, trading electronically around the clock.

Participants include commercial and investment banks, hedge funds, insurance companies, pension funds and – of course – the governments that guarantee interest on fixed-term bonds. Identifying all the various buyers and sellers globally is a task in itself; “bucking” this market is virtually impossible because states never know when they might come under attack. Just ask the Greek government.

Toronto, with its insistence on halving budget deficits by 2013, makes the transition from recession to depression much more certain. The political classes in every country are locked in a deadly embrace with economic and financial forces too powerful and inaccessible to cope with. So they take it out on ordinary workers, cutting their wages, pensions, jobs and services.

Remedial, curative action is not an option, just as it wasn’t in the 1930s. Telling the bond markets to take a running jump off a short pier, that they can whistle for their interest payments, for example, requires something quite different and quite revolutionary. The G20's failure at Toronto is a turning point. Now it’s our opportunity to seize the initiative.

Paul Feldman
Communications editor

Drill baby, drill!

You went to bed with President Obama’s “yes we can” ringing in your ears. You woke up to Sarah Palin’s “drill baby, drill” echoing across the land. That must have been how many Americans felt when they heard that the White House had overturned a moratorium on Atlantic oil exploration in place since the 1980s.

In a move that exceeds anything even the oilmen of the Bush administration tried, Obama has announced that drilling will be now allowed off Virginia and much of the rest of the Atlantic coast. Whilst some Alaskan leases were cancelled, the possibility of future exploration was left open, and other previously announced leases will go ahead. Exploration will also be allowed in the Gulf of Mexico and areas of the Pacific.

The justification is that this is what Obama must do if he is to win Republican support for a climate change bill. But the result will be a bill that will have no binding commitment to emissions reductions, just optimistic targets. And it will enshrine previously announced commitments to nuclear and unproven “clean coal” as part of a “clean energy policy”. It will be so compromised that it will make little difference to greenhouse gas emissions whilst giving a boost to the nuclear, coal and oil industries.

The coal industry will continue to destroy landscape and wilderness – and people’s health – with open-cast mining. The drive to restart uranium mining in the Lakota reservations in the Black Hills will be stepped up. Obama has even withdrawn from a previous commitment to overturn a Bush-era law allowing mining corporations to freely dump mined waste on public land.

Lifting the moratorium on drilling drew an angry response from environmentalists. Brendan Cummings, senior counsel at the US Centre for Biological Diversity, said the announcement was “unfortunately all too typical of what we have seen so far from President Obama - promises of change, a year of 'deliberation,' and ultimately, adoption of flawed and outdated Bush policies as his own." He added:

"Rather than bring about the change we need, this plan will further our national addiction to oil and contribute to global warming, while at the same time directly despoiling the habitat of polar bears, endangered whales, and other imperilled wildlife."

Michael Brune, of the wilderness protection organisation, the Sierra Club, said: “What we need is bold, decisive steps towards clean energy – not more dirty, expensive offshore drilling. The oil industry already has access to drilling on millions of acres of America's public lands and water. We don't need to hand over our last protected pristine coastal areas just so oil companies can break more profit records."

As for Obama, the president optimistically claimed: “I know that we can come together to pass comprehensive energy and climate legislation that's going to foster new industries, create millions of new jobs, protect our planet, and help us become more energy independent.” The question is, just how far does Obama have to go to get support from Republicans who have no interest in legislation, because it suits them to believe that climate change is not happening? The answer is, he can never go far enough.

Responding to the announcement on drilling, John Boehner, Republican leader in the House of Representatives, said he couldn’t see why drilling should be banned anywhere, and Senate Republican Leader Mitch McConnell called it a “a step in the right direction, but a small one that leaves enormous amounts of American energy off limits". Obama has opened the door and the Republicans and their friends who run the energy corporations will keep pushing until they get what they want.

Penny Cole
Environment editor

'Rage on the right' threatens Washington

As the Obama administration struggles to get its extremely modest health care bill through Congress, it faces not just a hostile Republican Party that has effectively opted out of the usual bipartisan politics on Capitol Hill, but the menace of far right-wing groups that have found a new lease of life across America.

Their surfacing reflects frustration not just at the political impasse in Washington but the collapse of economic activity in many areas, alongside the phenomenal rate of home repossessions by banks and mortgage companies that recall the hungry days of the 1930s Great Depression.

Undoubtedly, the re-emergence of so-called Patriot Groups – armed militias that see the US government as a threat to civilisation and the “American way of life” (which are not necessarily the same thing) – can also be seen as a response to the extremely aggressive stance taken by the Republican Party against the first African-American president.

Republicans and their supporters in the media like Fox News have routinely denounced Obama as a non-patriotic, possibly even non-American, who is introducing socialist measures that threaten society. Resistance to a health care bill that relies on insurance companies led to Obama losing his two-thirds majority in the Senate at a by-election.

Now he is relying on a simple majority to get the legislation passed by the middle of this month and the fury has gone way beyond the control of the Republican Party.

The Southern Law Poverty Centre (SLPC), one of the most significant civil rights organisations in the country, says in a new report that “the radical right caught fire last year”, adding:

“Hate groups stayed at record levels — almost 1,000 — despite the total collapse of the second largest neo-Nazi group in America. Furious anti-immigrant vigilante groups soared by nearly 80%, adding some 136 new groups during 2009. And, most remarkably of all, so-called "Patriot" groups — militias and other organisations that see the federal government as part of a plot to impose ‘one-world government’ on liberty-loving Americans — came roaring back after years out of the limelight.

The report called “Rage on the Right” is in no doubt that what it calls “seething anger” has its roots in demographic changes to the population, “soaring public debt and the terrible economy, the bailouts of bankers and other elites, and an array of initiatives by the relatively liberal Obama Administration”.

The spectrum includes the "Tea Parties" and similar groups that have sprung up in recent months. These are populist organisations championed by people like Sarah Palin, herself ostracised by the Republican establishment after her failure as a vice-presidential candidate in 2008. With a predominantly middle-class membership, Tea Parties have won support by denouncing bank bail-outs, for example. The SLPC says that they “cannot fairly be considered extremist groups, but they are shot through with rich veins of radical ideas, conspiracy theories and racism”, adding:

“Sixty-one percent of Americans believe the country is in decline, according to a recent NBC News/Wall Street Journal poll. Just a quarter think the government can be trusted. And the anti-tax tea party movement is viewed in much more positive terms than either the Democratic or Republican parties, the poll found.”

The malaise deep in the heart of the American political system is paralleled by the more passive – so far – rejection of traditional politics in Britain, where only 54% say they are certain to vote at the upcoming general election, according to a new survey. Allowing the far right to make the running is impermissible. Developing revolutionary that solutions that enhance democracy in new ways, placing power in the hands of ordinary people has to take centre stage.

Paul Feldman
Communications editor

Risks ignored as Obama leads nuclear charge

President Obama fired the starting pistol for a rush to nuclear power in the US when he announced this week that his government will offer $8.3billion in loan guarantees for two nuclear reactors to be built in Georgia. This puts the US in line with other big powers, where the stampede to build a new generation of nuclear power stations is on.

China has 14 reactors under construction and 35 more planned. India has six under construction and 23 planned. Even Russia, where you would think the safety lesson might have been learned after Chernobyl, has eight under construction and eight more planned. And of course, New Labour recently gave the go-ahead for 10 new plants in the UK.

The result of the expansion programme will be a massive increase in uranium mining, with new operations already being opened up in Namibia and Kazakhstan, which has tripled its uranium output over the past four years and will soon overtake Canada as the world’s biggest producer. Just as with oil, the easy stuff is taken first and then dirtier processes employed to get at the harder to reach ore.

There is no recognition on the part of governments or the nuclear industry of the extensive health and environmental risks at every stage of the nuclear life cycle. As the American organisation Physicians for Social Responsibility says, uranium mining exposes miners and their communities to high levels of carcinogenic radon gas:

“The effects have been so devastating in the United States that the Navajo Nation, upon whose lands sit one of the largest uranium reserves in the world, has outright banned the practice, even as they struggle with crushing poverty. Radio nuclides routinely released in nuclear reactor operations have been linked to developmental problems, birth defects, reproductive problems, cardiovascular disease, leukemia and other cancers. Epidemiological studies of children living near nuclear reactors show a positive association between leukemia and proximity to nuclear reactors.”

We have experience of that in the UK with the identified clusters of childhood leukemia found around Sellafield in Cumbria in the 1980s. There is no safe way of disposing of waste, which also carries significant health risks, particularly associated with leaching into water supplies.

A scandal exposed this week shows the blatant disregard for human health of the nuclear industry. The French newspaper Liberation published photographs of what appears to be nuclear waste from French EDF reactors simply lying in the open, on the ground in a Siberian town to which access is forbidden.

EDF energy, part-owned by the French state and the world’s biggest nuclear operator, admits it is exporting waste to Russia and that only 13% of what it sends comes back reprocessed. What happens to the rest? No comment. EDF is the likely candidate for constructing new plants in Britain.

The question governments can’t answer is why they are doing it? The idea that nuclear is clean and green, and a contribution to reduced carbon emissions is rubbish. The result of extracting the uranium and the billions of tons of cement needed to build all these huge plants will be massive CO2 emissions. It is unlikely any future savings in emissions would offset this early surge over the whole life of a reactor.

A study by the Rocky Mountain Institute, which campaigns for rational use of the world’s resources, says that if every dollar spent on nuclear power were invested instead in energy efficiency measures, it would produce seven times greater reduction in carbon emissions.

But the corporations are not going to get profits from energy efficiency – and people using less fuel means smaller profits for them. The shadow governments of the corporations are pulling the strings for energy planning. For an alternative way to meet energy needs see our Manifesto of Revolutionary solutions.

Penny Cole
Environment editor

Obama delivers - but not for the people

A year ago, Barack Obama was inaugurated as the first African-American president of the United States on a promise that he would deliver “change you can believe in”, the slogan that together with his “yes we can” appeal, swept him into the White House. His supporters eagerly awaited actions that would transform America. How sorely disappointed many of them are today.

It is reflected in his poor approval ratings. Nearly half of all Americans say Obama is not delivering on his major campaign promises, and a narrow majority have just some or no confidence that he will make the right decisions for the country's future. Over a third see the president as falling short of their expectations, double the level registered in April.

Meanwhile, Democrats fear they could lose the normally safe Senate seat of Massachusetts today in an election to find a successor to the late Ted Kennedy. The liberal activist base seems to have given up the ghost in the wake of the failure to deliver on health care, Obama’s weak response to the economic crisis, his ramping up of the war in Afghanistan and the cop-out at Copenhagen.

On health care, the real winners are the powerful insurance companies. While 31 million Americans will now be entitled to cover, Obama was quick to abandon the public insurance option in search of a compromise in Congress. It wasn’t so much an example of “change we can believe in” but “the best we can hope for”.

With former Goldman Sachs executive Timothy Geithner installed as Treasury Secretary, the banks were never going to be made to pay for the financial crisis. The bail-outs begun under Bush continued at an accelerated rate under Obama and the big bonuses have returned, to the anger of many ordinary Americans. Now Obama says he wants the money back. He will have to whistle for it.

While Wall Street boomed, more in the year to October 2009, 2.8 homes were repossessed from people unable to pay their mortgages. More than one in six people in Florida are behind with payments. Although the official unemployment rate is 10%, when discouraged workers and part-time workers who would prefer full-time jobs are included, the so-called "underemployment" rate was over 17% in October 2009.

At Copenhagen, Obama arrived at the last minute and patched up a meaningless form of words with China and a few other counties. They basically agreed to do nothing. Agriculture Secretary Tom Vilsack participated in a panel where he reiterated White House support for biotech crops and agro-fuels as a "green" solution to climate change against all evidence to the contrary.

Obama’s nomination for the Nobel Peace prize was embarrassing to say the least. Peace? Not in the Middle East. Palestinian homes in East Jerusalem are razed to the ground on a daily basis by the Israelis and settlement building continues. Gaza remains blockaded. American financial support to Israel remains unchecked. No peace in Afghanistan either. Obama is a war president, sending another 30,000 troops to prop up the corrupt Karzai regime. In his Nobel acceptance speech, Obama talked of “just wars” to defend his actions.

The election of Obama was viewed by many as a last opportunity to breathe some life into the American political system, which is seen by many ordinary citizens as a plaything of lobbyists, bankers and corporations. A year later and the reality has hit home. For real, transformational change – not just to believe in but actually achieve – a new movement has to be built. It has to be independent of the capitalist state (which includes the Democratic Party) and seek to establish in practice the exercise of power by the people and for the people.


Paul Feldman
Communications editor

Obama the new 'war president'

Today is the moment of truth for the Obama presidency so far as prominent supporters like filmmaker Michael Moore are concerned. If, as expected, the president announces that America is sending another 30,000 troops to Afghanistan, he will burn his boats with many who campaigned on his behalf.

Obama has come under tremendous public pressure from the joint chiefs of staff to despatch tens of thousands of more soldiers and marines. The head of US forces in Afghanistan, Gen Stanley McChrystal, has ignored political protocol and gone public with his demands.

Tonight Obama will use the dramatic backdrop of the West Point military academy to accede to most of McChrystal’s demands. This, according to award-winning Moore, will make him the new "war president". In an open letter to the president, the creator of films like Bowling for Columbine and Fahrenheit 9/11 warns Obama:

“With just one speech … you will turn a multitude of young people who were the backbone of your campaign into disillusioned cynics. You will teach them what they've always heard is true – that all politicians are alike.”

Moore accuses Obama of “throwing bones” to the Republicans and warns that his corporate backers will abandon him “as soon as it is clear you are a one-term president and that the nation will be safely back in the hands of the usual idiots who do their bidding. That could be Wednesday morning.”

Moore’s anguish about the direction of the Obama presidency is heartfelt and reflects a growing disenchantment with a government that, while not as authoritarian as the Bush administration, defers to the same vested interests that always own and run America – whoever is in the White House: the banks, insurance companies and the “military-industrial complex”. This term was first coined by President Dwight Eisenhower, himself a former general. In his farewell address in 1961, he warned:

“In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defence with our peaceful methods and goals so that security and liberty may prosper together.”

Well, the subsequent wars in Vietnam, Iraq and Afghanistan demonstrate who pulls the strings in America. Afghanistan alone has cost about $250 billion so far and Obama’s decision – in defiance of polls which show a clear majority against the war – will add another $35 billion a year – that’s about a million dollars a soldier.

While the unemployed from Chicago will die on a foreign field, others will reap the profits. Millions more will lose their jobs and homes as the recession turns to slump. Better to give the unemployed something to do, even if it is killing Afghans in the name of the neo-colonial aim of “nation building”.

Moore doesn’t say what Americans should do next when Obama – whose opposition to the Iraq war was a key reason for his 2008 victory – sells his soul to the generals. No surprise there. What we are perhaps witnessing is the death of liberal America, which has always pinned its hopes on the Democratic Party as an easy option to building an alternative to the two capitalist parties. The end of the cosy, partisan political system would be no bad thing if the opportunity is seized to build a movement that will truly transform American society and put an end to the military-industrial complex once and for all.

Paul Feldman
Communications editor

Not holding back the tide

US President Obama has re-appointed Bob Bernanke as chairman of the US central bank the Federal Reserve for a second four-year term. You can see why.

Bernanke is an expert on the Great Depression, and has sophisticated views about what he sees as policy errors that brought it about following a catastrophic financial crisis. Sounds familiar?

Bernanke is justly famous for the ideas on monetary policy he adopted from Milton Friedman – Margaret Thatcher’s economic mentor. These ideas were a big factor in the introduction of quantitative easing designed to increase the flow of credit (and debt) once interest rates had fallen to zero. “QE”, as it’s become known, is credited with a slight slowdown in the rate of economic deterioration.

It was back in 2002 that Bernanke referred to the use of the ‘helicopter drop’ of paper money directly into the hands of the population, bypassing the banks as a way of restoring demand. Astonishingly, that policy was used for real during the invasion of Iraq.

The effect of his policies can be seen in the White House’s latest estimate of its budget deficit: $2,000bn – that’s $2 trillion - higher over the next 10 years than it had predicted as recently as March.

As the recession drives US unemployment beyond 10%, those losing their homes through foreclosure have spread from the sub-prime mortgage holders in the poorer areas to the middle classes, and the numbers are increasing. Government income from tax is being hit hard, and the cost of the limited benefits that the US states do provide – food stamps and short-term payments to the newly unemployed - is accelerating.

And, despite optimistic predictions about a recovery, the White House’s near-term revised expectation is for the US economy to shrink by 2.8% this year – far worse than its previous estimate of a 1.2% decline.

It’s not just the White House that got it so wrong. The Congressional Budget Office released sharply higher deficit projections predicting the 10-year deficit would reach $7,140bn, some $2,700bn more than it had thought in March. The newly published figures on the rising tide of debt don’t even include the effect of Obama’s latest plans. Bill Gale, a senior economist at the respected Brookings Institution says taking these into account implies a ‘deeply alarming’ deficit increase way in excess of $10 trillion over the next decade.

The only conclusion to be drawn from the latest US figures is that the economy is way beyond the control of Bob Bernanke. Four decades of globalisation have ensured that the financial and economic juggernaut can not be guided, let alone controlled by the pilot of even the world’s most powerful economy.

As the global capitalist crisis deepens, it exposes the absurd optimism – indeed, the helplessness - of those supposedly in charge of putting things right. Indeed, the pink pages of the financial world’s most prestigious daily, The Financial Times, are sprinkled with perplexed mutterings. On the back of this week’s “Fund Management” review, for example, is the headline: “Time to ditch all economic models”. Writer Vince Heaney argues that the “efficient markets hypthothesis”, - the EMH, has a “lack of relevance to how financial markets actually work”. In other words, the Friedman-Thatcherite-New Labour dogma that market forces must be allowed to prevail has been exposed as a formula for disaster. Heaney goes on to warn of coming “extreme events” in the financial markets.

Bernanke’s middle name is ‘Shalom’. It means peace, but don’t expect it anytime soon.

Gerry Gold
Economics Editor

The audacity of hype

As Barack Obama comes up to his 100th day in office, the limitations of his power to determine the course of events are cruelly exposed, nowhere more so than in relation to the economy.

Yesterday, the once mighty car corporation General Motors put forward a plan to hand over its shares to the government and to the trade unions because it is broke. Thousands of jobs are being shed at plants all over the world but it is not enough to save GM from collapse. There’s a similar story over at Chrysler, where demand for its cars has collapsed.

Unemployment in the US is soaring by over 625,000 a month and the Obama administration is unable to stop the jobs haemorrhage. His “stimulus package” is bogged down at local level, thwarted by Republicans if it is not mired in bureaucracy.

Repossessions of people’s homes rose by 9% in the first quarter of 2009 to over 341,000, despite Obama’s promise to help those unable to pay mortgages. One in every 27 Nevada housing units and one in every 54 California housing units received a foreclosure notice in the quarter. Cook County, Illinois, the second most populous county in the US which includes the city of Chicago, has had to suspend hearings because of a backlog of tens of thousands of cases.

Meanwhile, plans for the greatest redistribution of wealth from the public to the private sector – from taxpayers to the banks – remain the president’s preferred way of trying to end the credit crunch. Relying on discredited advisers from the Bush administration like Timothy Geithner, his treasury secretary, the White House is into yet another bank bail-out after the failure of the previous one.

The Public-Private Investment Programme (P-PIP) is aimed at buying up toxic debts (know renamed legacy assets!) by providing purchasers with a subsidy at an amazing 85 cents per dollar. It allows the banks with the debts to participate in the scheme and to retain any future profits while the state guarantees them against losses on transactions. No wonder critics have dubbed it “cash for trash”. Popular anger continues to mount against the US banks, with the focus now on the Bank of America’s CEO Ken Lewis. A service workers’ union has mounted a campaign to remove Lewis, whose bank has taken $200 billion in taxpayer funds, in a series of actions planned for today.

Supporters of Obama seemed surprised by what has happened and warn that the president risks losing the goodwill that swept him into office. Robert Kuttner, co-editor of The American Prospect, writes, more in sorrow than anger: “The White House seems to view popular backlash against financial abuses as a dangerous force to be bottled up, rather than one to be mobilized to offset the concentrated power of elites.”

Fighting the “power of elites” has, however, never been on Obama’s agenda so he can hardly be accused of betrayal. The Democratic Party historically is a capitalist party, ruling over America in a division of labour with its Republican opponents. It is, therefore, not capable of much more than tinkering around the edges, as Obama’s first 100 days have demonstrated.

Obama rode a tiger of public support to get to Washington as the country’s first African-American president on the promise of change. Yet his administration is being overwhelmed by the impact of the deepest global economic and financial crisis in history and its commitment to restoring capitalism to some kind of health.

The political implications of this are considerable, not to say revolutionary. As the audacity of hope turns into the audacity of hype, the American people will surely have no choice but to take action themselves and create a politics that replaces, rather than offsets, the elites that have wrecked the economy.

Paul Feldman
AWTW communications editor

Should energy go local?

There are many problems associated with retooling how America obtains its energy, more specifically, how it is generated and transmitted to the consumer. Obama is faced with some energy decisions that will affect the shape of the country indefinitely. We created a vast federal highway system that only created suburbia, and more cars, more development, and more “stuff”. The question is: should energy be generated and distributed locally? Or should it follow the same ethos of our current energy infrastructure and build a large energy “back bone” across the country to distribute energy from mega-sources?

These very questions arose in the state of Minnesota. Regulators were considering the construction of new power lines that connected with proposed solar farms in the Dakotas at a cost of $1.7 billion. The thought of all that copper wire and disrupted landscapes makes my head spin. Of course, wind energy investors like T. Boone Pickens were delighted by this prospect, as if his life depends on socking away another billion this year hiding under the cloak of “going green”.

Thankfully, the Minnesota regulators took a step backward and looked at the issue from a different angle. Considering that in modes of bulk transmission around 7% of the energy is lost, and the unbelievable cost of the project, the regulators found a more simple and economic solution. They decided to develop a bunch of small 10-40 megawatt wind farms located within the state, producing about 600 megawatts and able to use their existing grid system.

This model poses an interesting solution to the energy woes in America. Perhaps we have been thinking about energy in the wrong way with large projects that are located in rural areas. We are in the habit of pushing the most unsightly and polluting aspects of urban life into rural or wilderness areas, which raises many social and environmental justice issues. We are not shy about building coal-fired power plants on sovereign Native American lands, while they live without power and sometimes no running water.

In Arizona, for example, it would seem reasonable to build a large solar facility, like the one being constructed south of the Phoenix metro area. It would create jobs and provide a clean source of energy. But on what land is it being built, and how far away is it from the consumer? Conversely, it would also be possible to place those panels on rooftops, so that the citizen has direct access to their energy, almost wirelessly. In this scenario, little to no energy is lost in transmission, and precious metals do not have to be mined from the ground to construct the proposed gargantuan transmission lines. In addition, local economies benefit directly as jobs are created, and not in another state or region.

Although the Minnesota model transcends scale in a way, it is important to acknowledge that this model does not apply to every situation. Some localities, and even some states, do not have the climate or geological conditions conducive to small-scale (or even large scale) renewable energy sources. But overall, the United States has hit the lottery in potential for renewable energy. We have a wide variety of renewable energy potentials. Pushing for our energy to be in the complete control of local entities, or more desirably at the personal level, is a scary thought for many government agencies and energy companies. Imagine taking away the power (social that is) from these companies to operate energy monopolies. There is of course no end of political resistance to such a scenario.

The prospect of the people having the power and not corporate or government interests is heart warming. It is important to resist these pervasive neoliberal agendas. We do not have to commoditise everything, and we do not have to profit from everything. We all have the right to gaze up at the Sun and absorb its benefits.

Colin J. Gardner
A World to Win’s US correspondent

Green shoots in Finaghy

Governments and central banks throughout the world have been struggling with a myriad of unco-ordinated measures to deal with the global financial crisis that has triggered a precipitate fall in output and rising unemployment.

They are trying to lubricate seized-up markets while pouring trillions of their various currencies into the banks to prevent a systemic collapse.

New bursts of credit have been issued to stimulate demand for consumer goods which has all but collapsed. Every announcement of a new rescue package places the price to be paid by future generations further beyond calculation.

The spin is that this is beginning to work and that if you examine the economy for signs of life, you will see “green shoots of recovery”.

But reality has a disturbing habit of disappointing the hopeful. Yesterday, on the same day as Barack Obama’s headlining claim that US government action on the economy was starting to bear fruit, figures were released on consumer spending for March.

Retail sales in the US were much weaker than forecast, falling 1.1%per cent, rather than rising the predicted 0.3 per cent. This takes the decline to 9.4 per cent in a year. Not much sign of an improvement there.

Obama understands, or at least acts as though he understands, that without continuous increases in the volume of credit relative to the value of production, the social system built to service the inbuilt self-expansion of capital would have seized up decades ago.

With a pattern of thought informed by pragmatism, the American version of English empiricism, the argument goes: it - new and expanded forms of credit - worked before to dig us out of the, albeit accelerating reoccurrence of crises towards and after the end of the 20th century, and it’ll work again.

It has to, they say. It always has, always will.

Anticipating the self-created dream of capital’s recovery to profitability, and in the wake of the empty rhetoric from the G20, Willem Buiter, one of the Financial Times’ more forthright, upfront writers had already put it like this a week ago: “The green shoots are weeds growing through the rubble in the ruins of the global economy.”

But even this is hope built upon hope. The potential is for greater damage than the state bankruptcy in the US and the UK that Buiter considers possible. It happened for both countries during the Great Depression of the 1930s, he says, and it could happen again.

Buiter’s analysis too is based on historical precedent, but the last 30 years of credit-led capitalist exploitation of people and the planet have created a deeper and more profoundly damaging, global impasse.

There are a set of inter-related, self-feeding and mutually conditioning crises that are eating away at the ecological, social, political, economic and financial systems and processes of the world.

For example, at the same time as the world’s major banks have actually become insolvent, without the assets to meet their obligations, climate change has already reached a tipping point.

The scale of the current planetary emergency is beyond the capacity of existing measures. Totting up the total overhang of accumulated credit, or even the geometrically accelerating causes and effects of climate change get nowhere near it.

So are there grounds for optimism? Yes there are, but not for Obama or Brown, nor for any of the political or executive representatives of unsustainable capital.

The green shoots can be seen in the wave of occupations that will no doubt follow the example set by Visteon car part workers in the former Ford plants in Enfield, Basildon and on the Finaghy Road, in Belfast.

One Belfast trade unionist, commenting on the ordinariness of where things begin, is reported to have said, “Who’d have thought the revolution would begin in Finaghy… !?”

Gerry Gold
Economics editor

Obama's 'tiger' comes to Washington

The veteran US civil rights campaigner Jesse Jackson has given voice to the deep contradictions that lay behind this extraordinary moment in politics on the eve of the inauguration of Barack Obama as the country’s first African-American president when he declared: “On Tuesday, it will be high noon in our politics, yet it is midnight in our economy.”

Today is Martin Luther King day in America, celebrating the birthday of the black leader who was assassinated in 1968. At that point, King was aiming to unite black and white workers to challenge capitalist interests and had an acute understanding of the class divisions in America.

Jackson says that the greatest challenges to the incoming president are “a financial system choking on its own excesses. Healthcare is broken. There is unaddressed and catastrophic climate change. Gilded age inequality and rising poverty abound”.
Even as vast amounts are being spent on the inauguration, poor Americans like the 2,102 citizens of Moun Bayou in the Mississippi delta, cannot even afford 25 cents to buy a school uniform for their children in thrift shops. Moun Bayou was the first town in the country to be run by black people.

Jackson and Obama are only too aware of the hopes the new president carries and the shoulders of people like King he stands on. Obama pointedly referred to King yesterday Obama as he spoke from the spot where King delivered his “I had a dream” speech. Despite the unprecedented economic and financial crisis, an amazing 79% of Americans are currently optimistic about the incoming adminstration. And if inspiration and talent could resolve America’s problems, there’d be no problem about the future. Many of the country’s best-known and loved musicians, actors, artists and poets are contributing to to create an amazing atmosphere. Aretha Franklin, Stevie Wonder, Bruce Springsteen, Sheryl Crow, Jay-Z, Alicia Keys, Bono, Mariah Carey, Wynton Marsalis and Beyoncé plus noted poets and performers are raising the political temperature.

The New Jersey singer Springsteen, for example, is amongst the politically articulate, noted for his anti-war lyrics and lyrical elegies to America’s rustbelts. He has been one of Obama’s strongest supporters, playing at five election rallies in 2008, saying: “We had a historically blind administration [Bush] who didn't take consideration of the past; thousands and thousands of people died, lives were ruined and terrible, terrible things occurred because, there was no sense of history.”

He summed up the historic meaning of the inauguration and the dramatic change symbolised by Obama’s election: “You proceed under the assumption that you can have some limited impact in the marketplace of ideas about the kind of place you live in, its values and the things that make it special to you. But you don't see it. And then something happens that you didn't think you might see in your lifetime, which is that that country actually shows its face one night, on election night.”

Obama is seeking keep up the momentum from his supporters. Speaking at the pre-inaugural concert in front of the Lincoln Memorial yesterday, he said the election proved that there is “no obstacle that can stand in the way of millions of voices asking for change”.

In steering a populist course Obama will be up against deeply entrenched interests. In a “permanent campaign”, he will seek to keep his 13 million supporters involved by email and social-networking techniques as a counter-weight to the vast power of the military-industrial complex associated with Bush and previous presidents.

As we said before, Obama is riding a tiger. There is no way that the proposed trillion dollar pay-out to the banks and big business will resolve the problems of the US economy, which are rooted in the contradictions of the capitalist system itself and are insoluble in the conventional sense.

As in the UK, the next generation of workers and youth will be made to pay for the financial ruin incurred by bankers and big business. The alternative is for the mass movement that swept Obama to the presidency to be taken forward to re-found the US, and with it the world economy, by carrying through a new American revolution to add to the one referred to by the president-elect yesterday. A World to Win’s campaign to acknowledge the crisis not just of capitalism but of bourgeois democracy itself can take strength from events in the US without falling prey to Obamamania.

Corinna Lotz
A World to Win secretary

Capitalism heads for year zero

Barack Obama yesterday raised the spectre of an irreversible crisis, with the situation getting “dramatically worse”, if his spending plans to boost the US economy were delayed. Is he being alarmist? And will his plans for a $775 billion “shock therapy” package work? 

How can we assess the likely success of these and related measures being proposed by governments around the world? Estimates of the extent of the financial and economic crisis have varied widely, continuing to worsen since the sub-prime mortgage default problem first began to make its appearance in the spring of 2007, an early but ominous sign of something far deeper. 

One closely-watched indicator is the Bank of England’s base rate. Yesterday the BofE cut its rate yet again, one of the other strategies being deployed to prevent the rapidly deepening recession turning into an economic catastrophe. Now at 1½%, less than a third of its level only three months ago, the rate is lower than at any time since the Bank’s foundation in 1694. It is expected to go lower still. People with savings and pensions have already seen the income from their investments drop by more than half. 

On this measure, the turndown takes the economy back to the beginnings of the epoch of capitalist production. The nearer it gets to zero, the more certain is the resort to printing money, and a further devaluation of currencies already weakened by the implosion of fantasy finance. 

Another indicator is falling production. The collapse in September of the global financial services corporation Lehman Brothers - the largest bankruptcy in US history - marked a new phase of the financial crisis, and its impact on production has been dramatic.  With credit markets remaining frozen, the whole developed world is now characterised by a sudden slowdown in consumption and a virtual stop in industrial production, as we reported last week. 

Retail giants are shrinking and closing as sales dry up. The roll call of historic names lengthens day-by day. Nissan in Sunderland, widely regarded as the epitome of efficient modern car plants globally, announced a cut of 1,200 jobs, nearly one in four of its UK workforce. This is just a part of Nissan’s response to demand which has fallen by 25 to 30% already, pushing its stocks of unsold cars to 93,000 in Europe. Estimates put the knock-on effect locally as high as a further 20,000 jobs. 

Nissan’s workers will not trust Lord Mandelson’s pledge to help then find new jobs as quickly as possible. As for their union “leaders”, Unite union joint general secretary Derek Simpson’s offered no resistance, saying pathetically: "The economy will improve and, when it does, Nissan will need these workers' skills again.” Thank you and good night.

The lesson from Obama’s warning on one side of the Atlantic and the flurry of government activity on this side, together with the virtual elimination of interest rates, is that the system is broken at every level and it shows. The US government’s spending deficit is already running at $1 trillion, for example, even before the president-elect’s package is added on. There is, unsurprisingly, a growing reluctance by foreign investors to deposit funds in either the US or UK.  

If the banks can’t and won’t make credit available, if production is being slashed because consumers can’t and won’t buy unnecessary commodities, then clearly there is something fundamentally wrong. In this context, “stimulus packages” make no essential difference.

The alternative is to seize the banks and the corporations, keeping people in their jobs and homes, pending the reorganisation of the economy on rational, not-for-profit, co-operative lines, producing sustainable goods to satisfy social needs. At least we would then have a measure of control over events rather than being passive victims of the unravelling of the capitalist market economy. No one, of course, is suggesting Obama or Brown will do any such thing. They will use the capitalist state to try and save capitalism at our expense. Therein lies the political challenge.

Gerry Gold
Economics editor

Falling out with Obama

Even before Barack Obama takes office as the first African-American president, some American liberals and activists have expressed concern about the direction his administration might take. They point to his choice of Hillary Clinton as secretary of state, the retention of Robert Gate as defence secretary and the selection of James Jones, a prominent hawk who supported John McCain for president, as Obama’s national security advisor.

Those who are disappointed include Stephen Zunes, professor of Politics and chair of Middle Eastern Studies at the University of San Francisco. Writing on the radical news site Alternet, Zunes points out that Clinton has “more often than not sided with the Bush administration against fellow Democrats on key issues regarding America’s international legal obligations, particularly international humanitarian law”.

And, of course, Obama’s rival for the Democratic Party’s nomination infamously supported the invasion of Iraq in 2003. Zunes reminds people that Clinton has a record of dismissing reports by human rights monitors that highlight large-scale attacks against civilians. For example, following systematic assaults against civilian targets in its April 2002 offensive in the West Bank, Clinton co-sponsored a resolution defending the Israeli actions.

Katrina vanden Heuvel, editor of the The Nation – roughly equivalent to the New Statesman – is also rapidly becoming disenchanted with Obama. Writing about the president-elect’s foreign policy team, she says: “This team makes it more difficult to seize the extraordinary opportunity Obama's election has offered to reengage the world and reset America's priorities. Maybe being right about the greatest foreign policy disaster in U.S. history doesn't mean much inside the Beltway [Washington’s orbital motorway] ? How else to explain that not a single top member of Obama's foreign policy/national security team opposed the war – or the dubious claims leading up to it?”

There is an element of hurt in both these articles, of being spurned by the man they backed for the White House. But they also express some deep illusions about a) Obama and b) the American political system. Obama is a populist politician who won the presidency on behalf of one of America’s two major capitalist parties, the Democrats. Major corporations provided at least half of his campaign funds. Nowhere has he indicated that he was preparing to challenge the military-industrial complex that has a grip on American political life, including its foreign policy.

Secondly, the American state – for all its separation of powers and written constitution – is a capitalist state. The institutions of rule at federal and state level exist to maintain the status quo of private property and to come to its rescue in times of crisis. That’s what the financial bail-outs are all about. In this respect, Obama is considered a safe pair of hands and his election has not exactly sent the American ruling classes into a panic. American foreign policy, as ever, will be dictated by the requirements of big business and finance.

The Obama administration will, of course, take power in the midst of the greatest economic and financial collapse in the history of the United States. Anger about having to carry the burden of the crisis through unemployment and repossessions is largely the reason that Obama won in the first place. He mobilised a new generation of voters in a highly effective way under the slogan “change we can believe in”. Delivering on that pledge in terms of jobs and ending the recession will be beyond his presidency. The political crisis that follows the dashing of people’s hopes will provide the conditions for moving American democracy and politics into a renewed, revolutionary period.

Paul Feldman
AWTW communications editor

Shocks to the system

It would be difficult to overestimate the significance of even one of the economic events of the last 24 hours. Fears of a severe recession sent financial markets into freefall once more while retailers launched their January sales two months early in an attempt to tempt now wary consumers into deeper debt.

The price of oil slipped below $50 to a third of the $147 reached earlier this year, a measure of the speed and depth of the slump. Only hours earlier, Robert Shapiro, an advisor to Barack Obama, gave a chilling warning of more financial shocks to come that would shake the system to its roots. Perhaps he had the impending crash of Citigroup in mind, whose planned sacking of 75,000 staff has done nothing to stop its share price from imploding.

Even before Democrats in the US House of Representatives failed to come up with a bail-out plan for the near-bankrupt car producers GM, Ford and Chrysler, another 542,000 workers filed new claims for jobless benefits last week alone, the highest number since the early 1990s recession. More than 10 million American workers are now unemployed.

The big three car makers employ 240,000 in the United States directly and indirectly support more than 4.5 million other workers, including thousands of dealerships and parts suppliers. Up to 3 million jobs could be at stake in a bankruptcy as well as retirement benefits for millions more. The impact of their collapse would be felt everywhere as these are among the giants of the global corporations with manufacturing, distributing and selling operations throughout the world. The crisis has spread to Honda too, which has just announced the closure of its Swindon plant for two months next year.

In Britain, as the Royal Bank of Scotland’s shareholders voted to accept a state hand-out, chairman, Sir Tom McKillop, said he was "profoundly sorry" for the bank's financial difficulties and "sorry" about the human cost that RBS’s troubles have caused. Its demise is a significant point in the history of British capitalism. RBS’s 300 years of operation closely follows the history of capitalist production. The bank’s forerunner, the Equivalent Society, was set up following the 1707 Acts of Union that created the United Kingdom of Great Britain. Now, the once great banking empire is reduced to receiving a £20bn hand-out from New Labour, and, as a consequence it seems, its shareholders will receive no dividends.

Gordon Brown’s dream of getting New Labour to act as a private equity fund by asset-stripping Northern Rock and returning it to private hands has turned into a nightmare as defaults on mortgages held by its previously highly profitable subsidiary Granite have soared, forcing it to stop making payments to the parent company. Repayments of mortgage debt which have fallen 90 days or more behind have risen four-fold since mid-2007. Figures out today have revealed a massive increase in repossessions by the major lenders. They were up by 12% in the third quarter, as another 11,300 were made homeless by the same banks who are guaranteed by the government.

In the midst of all this, the British state’s finances are themselves in dire straits. Borrowing is at unprecedented levels, while tax revenue is plummeting. Tax rises are on the way and the room for manoeuvre is extremely limited. Whichever way you look, the crisis can neither be contained nor solved within the existing political and economic frameworks. This raises the possibility and necessity of a reconstructed system based on not-for-profit finance, servicing sustainable production for need, carried into practice by a new democratic politics as outlined in our book, Unmasking the State.

Gerry Gold
Economics editor

US voters vent their anger

Barack Obama’s historic and clear-cut victory in yesterday’s US presidential election is the result of a mass mobilisation of people and energy by his campaign that will prove all but impossible to contain within the narrow confines of the American political system.

Obama has articulated and unleashed a popular fury against a degenerate system of government based on back-room deals done in Washington with lobbyists representing powerful corporations. His appeal for change united classes and races against the corrupt, undemocratic status quo, winning overwhelming majorities of young voters, new voters, women, blacks and Latinos. It enabled Obama to overcome the country’s racial divides and become the first Afro-American president.

He built an extensive grass-roots movement, using the Internet in new ways to reach people across the country. This movement in turn galvanised voters to turn out in record numbers on election day. Obama created a formidable machine that the Republican Party could not hope to match.

Yet the principal issue cited by voters - the economy - is one that Obama and the Democratic Party will almost certainly be overwhelmed by. Before the collapse of the US financial system in September, which led to the $700 billion bail-out for the banks, Republican candidate John McCain was edging ahead in the polls.

Then came the collapse of Lehman Brothers and other institutions. After that American people who are losing their jobs, pensions, homes and healthcare, turned to Obama to put things right.

Several things stand in Obama’s way. The US economy is in meltdown as a global slump on a far greater scale than the one that followed the 1929 Wall Street crash takes on a momentum of its own. This will be exacerbated by further earthquakes in the financial system as the era of fantasy finance comes to a crashing end.

Finally, the Democratic Party is a capitalist party. Half of Obama’s $630 million in campaign funds came from corporate sources. Challenging the ultimate status quo – capitalism itself – is not considered an option, even though the profit system is demonstrably showing itself as unsustainable in every conceivable way. Fixing American capitalism is what Obama aims to do, bring workers and capitalists together; it is a doomed project.

Obama’s other project – to renew people’s faith in a political system and constitution that has fallen into deep disrepute – will be thwarted if Obama is unable to deliver. People’s expectations and aspirations are clearly sky high, leaving them with a long way to fall.

A period of history has to come a shattering end with the ousting of the Republicans from the White House. The Bush-Cheney regime personified the greed and the lust for power that was corporate-driven globalisation. Their Project for a New American Century (PNAC) led to the invasion of Iraq and Afghanistan and the “war on terror”, which only encouraged would-be Jihadis everywhere and authoritarian rule at home. The crash of 2008 it what finally destroyed the ideological underpinning of this most reactionary of projects and propelled Obama to the White House.

A popular movement against the status quo is now on the march in America and it will encourage others around the world. What Obama has demonstrated is that it is possible to mobilise hundreds of thousands, even millions, of people if they feel they have a leadership to trust and be inspired by. In his acceptance speech, Obama invoked Abraham Lincoln’s Gettysburg address, where he talked of “government of the people, by the people, for the people”. Fulfilling that aspiration means going beyond the US Constitution’s current framework. Obama has started something that others will have to finish. The failed PNAC will have to be followed by the Project for a New American Revolution.

Paul Feldman
Communications editor

Obama is riding a tiger

As the most expensive election campaign in US history draws to a close – candidates have spent over $1.5 billion since the primaries began last year – one thing is certain whoever gets to the White House: the power relations that dominate American society will not change.

Despite Barack Obama’s fine oratory in which he rails against the corporations, chief executives and Wall Street, all they are threatened with is having their feathers trimmed at worst and a rap over the knuckles at best. In fact, John McCain’s speeches as Republican candidate have sounded remarkably similar in their populist appeal to those of his Democratic Party rival. While Obama has raised $300 million in small donations, he has raised an equivalent amount from big business.

As the film-maker and activist Michael Moore, who has campaigned for Obama, has pointed out, his promise to extend health care to ordinary Americans is hedged with conditions, saying: “I don't agree with Senator Obama's health plan. It's not a single-payer universal healthcare plan. It doesn't cover everybody. It's not non-profit. It still sends billions of dollars into the hands of insurance companies and pharmaceutical companies, etc.”

Moore, like many US liberals is hoping beyond hope that Obama is a) playing it cautious to get elected and/or b) control of the US Congress by the Democrats will force Obama to adopt a more radical position and go for universal health care. I heard similar arguments on the eve of the 1997 general election in Britain, when people said New Labour under Tony Blair had played it safe just to get elected and when they got in, everything would change. It sure did – for the worse!

Whoever wins the race for the White House is facing a meltdown in the American economy and a financial system that is on its last legs. General Motors, once synonymous with US manufacturing power, cannot continue without state support; many smaller firms are going to the wall. Tens of thousands of Americans are losing their jobs and homes each month. The government itself is heavily in debt, borrowing like there is no tomorrow to bail-out Wall Street. These are fairly insuperable problems.

If, as seems probable, Obama is the victor tomorrow it will, of course, be an historic event. Electing a black man to the White House will be remarkable for a country where slavery was legal less than 150 years ago and where racial discrimination meant blacks in some states had to sit at the back of the bus only a half a century ago.

Obama has mobilised a formidable grass-roots campaign (his Facebook site has 2,500,000 members!) in virtually every community across the country. Tens of thousands of volunteers have helped create a new political movement in parallel with the Democratic Party. The volunteers are treated as equals inside the Obama machine, given a relative autonomy to go out and build. There are lessons to be learned from this approach, no doubt.

America is undergoing a massive change. The demonstrations against the Wall Street bail-out were only a start in a country where hatred for the power of the corporations and bankers is only second to the contempt many people have for the games played out in Washington. The deeply reactionary Bush years have produced one telling statistic: 90% of Americans think the country is on the wrong course.

The contradiction is this: In the end Obama is a capitalist politician and leader of a capitalist party; yet if Obama triumphs, he will have been swept to power on a tide of social discontent and anger. It will be like riding a tiger – you either succeed or get eaten.

Paul Feldman
Communications editor

Panic in Washington

The chaos in Washington last night, with members of Congress shouting at each other across the table, ignoring President Bush who was chairing the emergency cross-party summit, shows how the frenzy in the crumbling financial system is finding its mirror image in politics.

The meeting of 35 members of the two US parties in the US Senate called and led by the president around the cabinet table in the White House was meant as a show of political unity following Bush’s national TV warning of a panic in the markets if no agreement was reached. John McCain, Republican presidential candidate for the election due in under 40 days, suspended his campaign to attend the meeting and challenged Barack Obama, the Democrats’ candidate, to do the same. The two issued a joint appeal to the Congress to support the outline sketch of a plan hastily scratched together by the Treasury.

But there was no agreement. Members of Bush’s own party accused the president of socialism by bailing out the banks and refused to back the rescue package. Others wanted more direct help to millions of US householders struggling to meet their repayments as the deepening recession multiplies unemployment and drives more and more Americans from their homes.

Even while they were arguing, the crisis deepened on the home front. The mortgage lender Washington Mutual (WaMu) was closed by its regulator, making it the biggest US bank to fail. The Office of Thrift Supervision (OTS) stepped in to shut the mortgage lender before selling its assets to JPMorgan Chase for $1.9bn. The OTS said it was worried WaMu would run out of cash as $16.7bn of deposits had been withdrawn since 15 September.


The idea of the show of unity is/was to convince the markets that there could be an above-politics agreement on the proposed $700 billion dollar bail-out plan for the mortgage markets. The huge sum is larger than the vast US defence budget, and equal to about the value of half of US production. Yet it hardly touches the towering trillions in credit default swaps, the next hurricane about to barrel though the global economy.

The plan, if implemented, means that the US government would borrow this huge sum of money, largely from other governments, and use it to buy parcels of “toxic” mortgages, taking the pressure off the paralysed and nearly bankrupt peddlers of debt who could then return to business as usual. Responsibility for servicing the unpayable debt will then pass to the American people. Estimates put it at more than $2,000 each. All indications suggest that they aren’t happy.

Some commentators, sceptical about his true intentions, say that McCain’s suspension of his campaign – invoking instincts of the need for action in a crisis gained from his military career - is anything but. Instead they see it as another attempt to raise his profile, following his selection of ultra-right wing Sarah Palin as future Vice-President. But there’s another lesson here. Irrespective of the intentions of any of the individuals caught up as actors in it, the financial crisis engulfing politics is an objective process, itself the expression of a deeper crisis in the capitalist global economy.

What little remains of democratic niceties are subordinated to the survival of the system. As Gordon Brown emphatically stated at New Labour’s annual event (hardly a conference) last weekend, he’ll do “whatever it takes” to restore stability to the markets. And that includes following the US attempts at a national coalition, presiding over mass unemployment and homelessness, and cancelling democratic rights. Was it an accident that the new ID card was paraded on the day Brown flew to the US to support the lame-duck Bush? All the more reason to stand up for your rights at the forthcoming festival on October 18.

Gerry Gold
Economics editor