AFSCME Local 444, retired
“Not only can we manage very well without the interference of the capitalist class in the great industries of the country, but their interference is becoming more and more a nuisance.” Frederick Engels.
Things have been looking up a little bit profit wise lately, or as the business press puts it, “markets have thawed a little”. The top five Wall Street banks made $23 billion in the first six months of 2009, not quite as high as the $49 billion or so they made in the first half of 2007, right before the crash, but it is enough to make them forget the recent past. These coupon clippers make money not by creating anything but by managing money, charging fees and trading.
Those of us that maintain this blog: http://www.weknowwhatsup.blogspot.com point out that the cause of crises is the system itself, not individual character flaws or the existence of greed in the abstract. The capitalist system exists by exploiting Labor power. Capitalists buy the life activity of human beings and use it for their own ends paying less for the use of this unique commodity than the value its use creates; this is the source of their profit, the goose that lays the golden egg.
Capitalism is a state of war, a life and death struggle for supremacy in the marketplace. The present crises, a product of the inherent contradictions within the system itself is paving the way for further and more destructive crises ahead as Marx explained many years ago. The rulers of the world were, for a brief moment, driven closer together by the terrifying fear of a global collapse of the system; they now talk of the need for more regulation more government oversight and capitalism with a more humane face if the system is to avoid further damage. President Obama, cognizant of the hatred in US society of bankers and the CEO’s warned the swindlers in January, “There will be time for them to make profits” “..there will be time for them to get bonuses…….now’s not that time.”.
But talk is one thing, action another. Even this precarious and limited improvement in the situation reveals how it is the system itself that determines their actions regardless of their subjective desires. The potential for profit making increases the risky and reckless behavior that most economists blame for the present crisis; in fact, this behavior has never really stopped. The head of Wall Street’s self regulating agency, the National Association of Securities Dealers warns that Wall Street “Has tiptoed back in to the pond, they have short memories.”
It would come as no surprise to most workers that Wall Street “self regulates”. In other words, the fox guards the henhouse, and the fox is turning a blind eye; as one banker put it, “There’s no fundamental change in the way banks are run or regulated, there’s just fewer of them” *. When, in response to the anger and hatred they felt at the onset of the crisis Congress was forced to wage a war on CEO bonuses, most of the culprits, including BofA and Citigroup, recipients of billions in public funds, “opted to pay larger salaries” says the Wall Street Journal; “Where there’s a will there’s a way” as they say.
In his speech to Wall Street on Monday, President Obama continued the trend, urging the coupon clippers to start changing their own behavior at the same time affirming his faith in the primacy of free markets. But if it looks like a fox and acts like a fox then a fox it is. Wall Street’s return to more speculative exploits terrifies the US’s competitors abroad. Germany’s Merkel along with Sarkozy of France and Britain’s Brown have published an open letter to the world’s leaders warning of the dangers. But the US capitalist class will remind them that they own Wall Street and they can do what they like notwithstanding warnings from the likes of Paul Volcker for increased regulation, by the Federal Reserve of course.
The coupon clippers determine the health of an economy based on economic indices, not the health of the population. The end of a recession for them is two consecutive quarters of positive growth, the health of the population, mass access to education, transportation and leisure time, these are not given the importance that GDP figures and profit ratios receive in such calculations. But the future is wrought with danger for the US economy. Notwithstanding the unemployment rate, commercial real estate is potentially the next subprime and prime loans, those to borrowers with “good” credit, are on the rise. Prime loans accounted for 58% of foreclosures, up from 44% last year according to the Wall Street Journal and some states have as many as half their borrowers with negative equity, two thirds of them in the case of Nevada.
More than 100 banks have failed and more are on the way. This opens up great prospects for the healthier banks that are salivating on the sidelines waiting for deals that will be on offer as their political representatives use public money to buy more toxic stuff and then sell it to them at bargain basement prices, much like they did in the aftermath of the Savings and Loan debacle.
Another possible bailout recipient is the FDIC, which insures deposits. The FDIC has some $10 billion in its fund yet insures deposits worth trillions of dollars. The US taxpayer, we must remind ourselves, is the insurer of last resort. The government’s figures of $9 trillion in deficits over the decade do not include the cost of potential bailouts like the FDIC.
California, which represents some 13% of the US economy, is likely to continue to be a major drag on it nationally. Housing contributed some $24 billion to the Southern California economy in 2008 (double the revenue from Hollywood movies) but the LA region lost almost 100,000 construction jobs in the last year **. The market might have “thawed” for Warren Buffet but for most workers it’s downright cold and close to freezing over altogether.
Last night I was at a local WalMart store handing out the Facts For Working People and some information on how to fight foreclosures from the Campaign For Renter’s Rights.
One man, an African American about 50 years old took a flier and mentioned that he had been evicted. He is one of the millions but his experience was particularly interesting. He was in hospital for 6 weeks due to a vertebrae fracture, a very painful experience. A few years prior to this he had by-pass surgery so his health was not good. He lost his job and was living in a section eight (government aided) housing with the city picking up two thirds of the rent.
But when he came out of hospital he found that the owner had been foreclosed on and he was evicted. He told me that he lost half his furniture. In the US, living in an assisted rent situation is a stigma in itself, you are branded worthless, a failure. But leaving hospital after a major illness and finding your shelter and much of your possessions gone is the final nail in the coffin. It’s no wonder people go off and end up drinking themselves to death, drug addicted or taking it out innocents around them.
What a brutal country the land of the free is.
• Wall Street Journal 9-9-09
** Wall Street Journal 8-10-09