New Labour’s Gordon Brown has spent his entire period in high office, first as chancellor, and more recently as prime minister, ensuring that the interests of the global financial sector are inextricably enmeshed with the British economy.
Yesterday he intervened personally on behalf of the gamblers and speculators to postpone European negotiations on trying to regulate the derivatives market until after the forthcoming election. Some 70% of the world’s hedge funds are based in London, with an estimated 80% of Europe’s hedge funds and 60% of private equity firms based in the UK.
Clearly it is they and the capital markets they operate that will determine what happens to the British economy whoever the Queen invites to form the new government in the next few weeks. The hedge funds have the power to make or break governments as they are demonstrating in the case of Greece.
Brown and his chancellor Darling are in cahoots with Timothy Geithner, Barack Obama’s Treasury Secretary in the US, in defending the freebooting masters of the universe. Last week Geithner wrote to EU officials warning that the directive was protectionist and would damage US funds. His letter angered Michel Barnier, EU commissioner for financial services, who said he was not amenable to pressure and would not take instructions "from Paris or London and certainly not from Washington."
Chancellor Darling, who lobbied his Spanish opposite number over the weekend, said Britain would seek more concessions because the current draft directive proposed by Spain threatened blocking international funds from the European market. The chancellor believes that this outcome would be “deeply damaging” to the hedge fund and private equity industries as well as to returns made by pension funds.
So you can see that despite the chorus of calls for regulation that echoed around the world during the worst days of the global meltdown, the interests of the capital markets make powerful governments of whatever political stripe into their servants, willingly or not. And the pressure is building, driving the elected governments of countries and unelected regional blocks into deeper conflict between themselves, but more importantly with their populations.
Brown’s two key interventions in two days – first supporting British Airways against the democratic decision by Unite members to resist the assault on their working conditions and income, and now putting himself between the European Union and the hedge funds, say more about New Labour than the tsunami of words that have already begun to flood the airwaves in the run up to the election.
The capitalist system of production together with the financial sector, its inseparable twin, express their requirements to capitalist governments which carry them out at whatever cost to the people they supposedly represent according to the mythology of “democracy”.
It’s one of the reasons why we call on the people to hang on to your votes in this election. Many people are asking how they can express their opposition when there is no party to represent their interests. In hanging on to your vote, we’re not suggesting that you sit on your hands.
We need to build a new kind of democratic organisation, one that will discuss how to transfer the ownership and control of land, finance, production, food distribution, housing and transport to the people who work in and use them.
To make a start, in response to the EU’s urgent warning to the UK to follow Greece in cutting public sector spending to reduce its debt, People’s Assemblies could organise a mass campaign to defy the financial masters. “It’s not our debt and we won’t pay it!”
That would be a start towards forming an international movement to defeat the power of capital in the form of global corporations and financial institutions in every country, uniting working people around the world against their common enemies.
Gerry Gold
Economics editor
For revolutionary solutions to create a sustainable, not-for-profit economy in place of global capital alongside a real democracy based on People’s Assemblies. Visit our web site at www.aworldtowin.net
Showing posts with label TImothy Geithner. Show all posts
Showing posts with label TImothy Geithner. Show all posts
Wednesday, March 17, 2010
Friday, March 27, 2009
Capitalism can't and won't 'put people first'
While most of the world’s media yesterday focused on the US plan for tighter regulations for the disintegrating financial sector and Gordon Brown’s grand tour aimed at talking up next week’s G20 summit, the real, productive economy was going to hell in a handcart.
Here, the exercise of people’s ability to work generates real value, including profit – at least it did when things were going well for the capitalist class. Not any longer. Now it’s shutdown time, and the actual destruction of productive capacity – including the jobs and prospects of many millions of workers.
The world's second-largest economy, Japan, suffered an almost 50% collapse in exports in February, compared with one year ago. The accelerating global slump drove exports to the rest of Asia down by 46% and to EU countries by 55%. This was the fourth successive month of record export declines, and the sharpest decline in at least 30 years.
Just as in the US and the UK, over-production of cars has intersected with a near-collapse in demand and the industry is grinding to a complete halt. Shipments of motor vehicles were down 64% , with those to the US tumbling 71%. Total exports to America fell by 58%.
The slump has meant that Japan's total industrial production fell by a record 10% in January. Japanese car manufacturers, in the UK and elsewhere, have reacted rapidly to the downturn, attempting to slash their overstocks by cutting output using short-time and no-time working. Union leaders have negotiated wage cuts in a futile bid to save jobs.
The production shutdown isn’t restricted to the oil-burning, climate-wrecking past-its sell-by-date car industry. In the US, electronics giant Agilent Technologies is sacking 2,700 workers – 14% of its staff. The company expects revenue from its electronic measurement and semiconductor businesses to fall between 30% and 50% from 2008 to the lowest in its 10-year history and sees "no prospects for a meaningful recovery in the foreseeable future."
The rate of growth - now decline - of industrial production is the key measure of the health of capitalist production. Without growth, profits decline, investment falls off and jobs are shed. While Timothy Geithner, the US secretary, was talking tough about regulation yesterday, figures released showed that US corporate profits fell at the sharpest pace for 55 years. Meanwhile the number of people continuing to claim unemployment benefits rose by 122,000 to 5.56m, the highest total since tracking began in 1967.
The impact of the global capitalist crisis is being felt everywhere. French president Sarkozy has been in the Democratic Republic of Congo with a raiding party of business leaders. The country’s only industry is copper mining. Exports, especially to the companies producing for the global corporations in China, soared during the explosion of commodity production. Now that it’s all over, tens of millions of Chinese workers have been sent home, whole towns shut down. In the Congo, mining production has been cut in half and 300,000 are without work, or income.
The descent into global slump is fast and furious and suggestions that it will bottom out this year and growth resume in 2010 are clearly off the wall. People without jobs don’t buy things and banks without capital don’t lend, sending demand ever lower. Governments that have over-borrowed (i.e. Britain’s) can’t launch the very “fiscal stimulus” that Brown is urging all other countries to adopt.
Solutions won’t come from telling the G20 to “put people first”, the official slogan of tomorrow's TUC-sponsored demonstration in London. Capitalism can’t change course. The financial and productive sectors are locked in a deadly embrace where the victims are ordinary working people in every country. We must plan for an ecologically-sustainable future, based on co-operation not competition, co-ownership not private ownership, and for meeting social need not the demands of bankers and shareholders. Ending the rule of capital is long overdue.
Gerry Gold
Economics editor
Here, the exercise of people’s ability to work generates real value, including profit – at least it did when things were going well for the capitalist class. Not any longer. Now it’s shutdown time, and the actual destruction of productive capacity – including the jobs and prospects of many millions of workers.
The world's second-largest economy, Japan, suffered an almost 50% collapse in exports in February, compared with one year ago. The accelerating global slump drove exports to the rest of Asia down by 46% and to EU countries by 55%. This was the fourth successive month of record export declines, and the sharpest decline in at least 30 years.
Just as in the US and the UK, over-production of cars has intersected with a near-collapse in demand and the industry is grinding to a complete halt. Shipments of motor vehicles were down 64% , with those to the US tumbling 71%. Total exports to America fell by 58%.
The slump has meant that Japan's total industrial production fell by a record 10% in January. Japanese car manufacturers, in the UK and elsewhere, have reacted rapidly to the downturn, attempting to slash their overstocks by cutting output using short-time and no-time working. Union leaders have negotiated wage cuts in a futile bid to save jobs.
The production shutdown isn’t restricted to the oil-burning, climate-wrecking past-its sell-by-date car industry. In the US, electronics giant Agilent Technologies is sacking 2,700 workers – 14% of its staff. The company expects revenue from its electronic measurement and semiconductor businesses to fall between 30% and 50% from 2008 to the lowest in its 10-year history and sees "no prospects for a meaningful recovery in the foreseeable future."
The rate of growth - now decline - of industrial production is the key measure of the health of capitalist production. Without growth, profits decline, investment falls off and jobs are shed. While Timothy Geithner, the US secretary, was talking tough about regulation yesterday, figures released showed that US corporate profits fell at the sharpest pace for 55 years. Meanwhile the number of people continuing to claim unemployment benefits rose by 122,000 to 5.56m, the highest total since tracking began in 1967.
The impact of the global capitalist crisis is being felt everywhere. French president Sarkozy has been in the Democratic Republic of Congo with a raiding party of business leaders. The country’s only industry is copper mining. Exports, especially to the companies producing for the global corporations in China, soared during the explosion of commodity production. Now that it’s all over, tens of millions of Chinese workers have been sent home, whole towns shut down. In the Congo, mining production has been cut in half and 300,000 are without work, or income.
The descent into global slump is fast and furious and suggestions that it will bottom out this year and growth resume in 2010 are clearly off the wall. People without jobs don’t buy things and banks without capital don’t lend, sending demand ever lower. Governments that have over-borrowed (i.e. Britain’s) can’t launch the very “fiscal stimulus” that Brown is urging all other countries to adopt.
Solutions won’t come from telling the G20 to “put people first”, the official slogan of tomorrow's TUC-sponsored demonstration in London. Capitalism can’t change course. The financial and productive sectors are locked in a deadly embrace where the victims are ordinary working people in every country. We must plan for an ecologically-sustainable future, based on co-operation not competition, co-ownership not private ownership, and for meeting social need not the demands of bankers and shareholders. Ending the rule of capital is long overdue.
Gerry Gold
Economics editor
Wednesday, March 25, 2009
'Cash for trash' is just rubbish
If someone suggested that you spend a sizeable proportion of your income on buying a pile of household waste from the local refuse tip, you would rightly think they were off their heads. That, however, is exactly what’s happening in the United States in what is now being dubbed by some as President Obama’s “cash for trash” programme.
The “rubbish” in this instance are the dodgy “assets” held by the country’s banks, which they can’t get rid of because no one is willing to put a price on them. Once described as toxic, the White House is apparently now describing them as “legacy” assets. Some inheritance for American working people!
The “cash for trash” programme is truly staggering in its complexity but the essence is that private funds will actually receive a subsidy from the US central bank and another state body to buy rubbish assets from the banks. If the asset miraculously rises in price, the funds keep the profits. If they fall in price, the state takes the hit. As one investor put it: “It’s a win win situation.” Up to $1 trillion could be involved in what is euphemistically called the “Public Private Investment Program”.
This mad-cap scheme is a sign of the desperate nature of the financial crisis in the United States and also reflects a growing rage over taxpayer bail-outs to profligate banks and insurance companies who, like AIG, use the money to pay executive bonuses. A Bill is in Congress that aims to impose a retrospective 90% tax rate on AIG bonuses, which Obama is under fire for doing nothing about.
Will it work? Many have serious doubts. New York Times columnist and economist Paul Krugman believes that not only is it the wrong policy but that the political mood is “getting ugly” and that the failure of the “cash for trash” policy will prevent Obama from going back to Congress for more funds.
Similar concerns are voiced by the Financial Times’ most eminent commentator, Martin Wolf who today admits to “becoming ever more worried” by Obama’s lack of decisiveness against a “grim background” of the “worst global economic crisis since the 1930s”. He is also concerned that if somehow if, against all odds, the scheme works, fund managers will make vast returns. “I fear this is going to convince ordinary Americans that their government is a racket run for the benefit of Wall Street.” Looking at the prospects for next week’s G20 summit, Wolf concludes that with the “US at an impasse” the outlook is ”frightening”.
For both Wolf and Krugman, the main issue remains the recapitalisation of the banks. And neither the money nor the political will exists for the state to undertake such a project. Certainly not in Britain, where the governor of the Bank of England yesterday pointedly told the New Labour government that the state is over-mortgaged and can’t spend any more. In fact, steep tax rises and sharp cuts in public spending lie ahead.
It’s not just the US that’s in an impasse. The crisis has already led to the collapse of the Czech government, the departure of the Hungarian prime minister as well as mass student and worker actions in France. There are no magic solutions that will end the global capitalist crisis and for all Gordon Brown’s determination to talk up next week’s G20 in London, it will come up with a big fat zero.
Ultimately, there are just two options: the major economies plummet uncontrollably into deep slump, with mass unemployment, wages cuts and the rest; or we put people first by establishing social control of economic and financial resources as the precondition for creating a more rational system. There is no middle way.
Paul Feldman
AWTW communications editor
The “rubbish” in this instance are the dodgy “assets” held by the country’s banks, which they can’t get rid of because no one is willing to put a price on them. Once described as toxic, the White House is apparently now describing them as “legacy” assets. Some inheritance for American working people!
The “cash for trash” programme is truly staggering in its complexity but the essence is that private funds will actually receive a subsidy from the US central bank and another state body to buy rubbish assets from the banks. If the asset miraculously rises in price, the funds keep the profits. If they fall in price, the state takes the hit. As one investor put it: “It’s a win win situation.” Up to $1 trillion could be involved in what is euphemistically called the “Public Private Investment Program”.
This mad-cap scheme is a sign of the desperate nature of the financial crisis in the United States and also reflects a growing rage over taxpayer bail-outs to profligate banks and insurance companies who, like AIG, use the money to pay executive bonuses. A Bill is in Congress that aims to impose a retrospective 90% tax rate on AIG bonuses, which Obama is under fire for doing nothing about.
Will it work? Many have serious doubts. New York Times columnist and economist Paul Krugman believes that not only is it the wrong policy but that the political mood is “getting ugly” and that the failure of the “cash for trash” policy will prevent Obama from going back to Congress for more funds.
Similar concerns are voiced by the Financial Times’ most eminent commentator, Martin Wolf who today admits to “becoming ever more worried” by Obama’s lack of decisiveness against a “grim background” of the “worst global economic crisis since the 1930s”. He is also concerned that if somehow if, against all odds, the scheme works, fund managers will make vast returns. “I fear this is going to convince ordinary Americans that their government is a racket run for the benefit of Wall Street.” Looking at the prospects for next week’s G20 summit, Wolf concludes that with the “US at an impasse” the outlook is ”frightening”.
For both Wolf and Krugman, the main issue remains the recapitalisation of the banks. And neither the money nor the political will exists for the state to undertake such a project. Certainly not in Britain, where the governor of the Bank of England yesterday pointedly told the New Labour government that the state is over-mortgaged and can’t spend any more. In fact, steep tax rises and sharp cuts in public spending lie ahead.
It’s not just the US that’s in an impasse. The crisis has already led to the collapse of the Czech government, the departure of the Hungarian prime minister as well as mass student and worker actions in France. There are no magic solutions that will end the global capitalist crisis and for all Gordon Brown’s determination to talk up next week’s G20 in London, it will come up with a big fat zero.
Ultimately, there are just two options: the major economies plummet uncontrollably into deep slump, with mass unemployment, wages cuts and the rest; or we put people first by establishing social control of economic and financial resources as the precondition for creating a more rational system. There is no middle way.
Paul Feldman
AWTW communications editor
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