February
24, 2009 - No. 40
Globe and Mail's Labour
Cost Obsession
- K.C. Adams -
• Globe and Mail's Labour Cost Obsession, Part Two
- K.C. Adams
• Dispatches from the Front Lines
of Economic Crisis
- Stephen Lendman, Countercurrents.org
Globe and Mail's Labour Cost Obsession
- K.C. Adams -
Part Two
The Necessity to Challenge Capital-Centred Theory
or Fall Unwittingly into its Quagmire
 An anecdote from
the old slaveholding U.S. south will introduce this part, mostly to
reflect on the contradiction of a ruling class within an unequal social
relation complaining of the costs to the owners of slaves of the human
factor they dominate but which in the end produces all the wealth.
Whether
chattel labour or chattel slaves produce the new value, owners of the
productive forces within the unequal social relation are loath to see
any part of that added-value "wasted" on what they consider slave or
labour costs.
Similar in many ways to the pages of the Globe
and Mail, where complainers of the cost of labour constantly
vent their spleen, slave plantation owners would regularly meet in
Savannah under the warm Georgia winter sun to gorge on pork BBQ, sip
mint juleps and grumble about slave
costs and the economic crisis caused by global competition.
"My field slaves can't stop eating," slurs a
portly man chewing on a greasy rib. "If I cut down on their rations,
they slow down in the fields no matter what I threaten. They're going
to eat me out of my plantation. I had to buy two new slaves just to
provide enough scraps for those rascals." Nodding
slowly in agreement another growls in disgust, "Mine all came down with
some sort of phoney illness last week. Every last one of them coughin'
and spittin' up blood just to impress me. They said it was the night
cold and damp caused it. I suppose they'll soon want to sleep in my
house. At any rate, I'll end up spending
a fortune to repair their huts; at least four of them will have to be
taken out of field work to patch up the roofs. I told them their
accommodations were their own responsibility but they said they have no
time or material. Those northern Yankees complain about their workers
costing them more than they can afford
but they don't have to put down a small fortune to buy them, and once
the working day is done or they don't need them, their workers go home
and that's that. They only pay them for when they're working. We've got
to buy the damn slaves and then look after them or we lose our
investment." "The market price
of cotton these days has fallen so low I can't make ends meet," another
says excitedly, spilling mint julep on his white coat. "I tell you,
slave maintenance has become so damn expensive it might be better to
reduce costs to the bare minimum, let them die in the fields and buy
new ones every seven or so years. It's
the fault of those British and their colonies in Asia and those damn
new-fangled machines. They can produce cotton cheaper than we can no
matter what our slaves are costing us." Back to the future in Toronto,
the ruling elite not only gather in their private clubs to complain of
labour costs but do so publicly in
the mass media. It has become something of a national bourgeois pastime
to howl from a public tribune against the cost of labour and demand
concessions as a solution to the economic crisis.
And so, the actual producers of wealth must bear
the insults of the ruling classes whether slaveholders or owners of
capital. These days the fury of the kindred spirits of Savannah
slaveholders is expressed in the pages of the Globe and Mail
not against the price and cost of maintenance
of chattel slaves and the competition of British colonies and machines
but the labour cost of workers, the global competition of monopolies
and collapse of markets.
This time, chattel slave cotton pickers are not
the centre of abuse but the cost of those who sell themselves as
chattel labour especially autoworkers and those among them who are now
too old to work yet beyond the comprehension of owners of capital
continue to receive a wage. Imagine the indignation
of owners of GM, Ford and Chrysler capital who now carry "legacy"
obligations to pay into pension and health funds for their retired
workers.
What happened to the good ole days when we only
paid them for their time at work, they complain in the pages of the Globe
and Mail. And now, we're supposed to continue to pay them
even when we can't sell our cars and when our Japanese competitors have
hardly any retirees in North
America! How ridiculous is that?!! The economic crisis and the entire
ideological worldview of capital is crashing down on the heads of
autoworkers and no one in official circles is defending their rights,
not even their own trade union leaders, who have fallen wittingly or
unwittingly into the quagmire of capital-centred
theory. It may not be the price of cotton and slave costs today's
ruling elite are complaining about but it is the same old story. The
productive class must make concessions to the owners of capital if the
rich are to survive this crisis with most of their wealth intact.
"The Canadian Auto Workers union would have to
reduce wage, benefit and pension costs by more than $500-million
annually at General Motors of Canada Ltd. to match labour costs at the
highest-paying Japanese assembly plant in the United States," the Globe
and Mail surmises in its
best aristocratic manner.
The Globe echoes the
Savannah slaveholder and his response to the crisis of the old slave
south: "It might be better to reduce costs to the bare minimum, let my
slaves die sooner and buy new ones every seven or so years." Out of
anti-social theory and practice of both slaveholders and
owners of capital, Canadians are led to believe that all will be well
with the auto industry, if only the government gives the auto
monopolies oodles of public money, workers make concessions, reduce
their standard of living and working conditions, and watch passively as
their means of production and subsistence
are abandoned and wrecked. Well, messieurs of the Globe and
Mail, driving slaves into an early grave did not save the
chattel slave system and the old south plantations, and robbing the
public treasury and demanding concessions from workers and throwing
them out of work are not going to pull capitalism
out of this crisis either. It will make things worse.
The Globe writes: "GM has
prepared a 'shopping list' of demands that it has made verbally, said
Chris Buckley, president of CAW local 222 at GM's Oshawa, Ont.,
operations... If GM can't reach an agreement with Ottawa and Ontario on
loans and the CAW doesn't reduce labour costs,
'there's a very real possibility that GM could choose to wind down
their Canadian operations,' Mr. Buckley said." The U.S. Empire and its
owners of monopoly capital have spoken regarding this crisis and all
must obey: Pay us Canadian public funds to continue, give us
concessions on wages, benefits and pensions
of Canadian chattel labour or we will destroy the means of production
Canadians have built and cease all or most production in Canada.
 The demands of GM
are so outrageous they should simply be scorned and ridiculed across
the country. The U.S. monopoly in addition to all the handouts it has
already received wants $7.5-billion from the federal and Ontario
governments for the right to destroy production of social product at
existing
plants from a level of work-time of 20,000 Canadians in 2005 down to
the work-time of 7,000 workers by 2010. Plus, GM demands concessions to
reduce the claims of active workers on the wealth they produce and to
lower the pensions of tens of thousands of former autoworkers. GM
demands Canadians finance
the destruction of their standard of living and the work-time and means
of subsistence that has been used to support our health, education and
other social programs! These are the demands of old-fashioned U.S.
robber-barons! The Globe and other mass media
make the point perfectly clear with constant
repetition and assertion: the existing unequal social relation
determines the solution to the crisis. Whether it solves the crisis or
not is irrelevant. Owners of monopoly capital through the pages of the Globe
and the mass media generally declare without equivocation: We own
workers when you are at work.
We own your labour capacity and more importantly everything your labour
capacity produces. You workers are chattel labour and we the owners of
monopoly capital will determine the cost of the labour you sell and
whether we want to buy it now or in the future. We bear no social
responsibility towards workers
and their chattel labour other than its cost. Away from the workplace,
chattel labour is not our social responsibility. How could it be? Our
responsibility is to the things we own. You workers can fend for
yourselves. As far as we are concerned, your chattel labour is only
necessary if it can expand our capital. Our
means of production are only necessary if they can expand our capital.
If not, both chattel labour and means of production are unnecessary and
useless. If we the owners of monopoly capital deem the cost of chattel
labour and its labour capacity is too high then we have the political
and economic power to reduce
it to the point of depriving you of a livelihood and any means of
subsistence. We have the power of life and death over you and your
communities in a similar manner to slaveholders who held life and death
control over their slaves because we own the means to life itself in
the modern socialized world. We own
Mother Earth and all her potential bounty and we own the machines and
all other means of production and subsistence necessary for workers to
transform raw material into social product. You workers are not allowed
to use our machines and the potential bounty of Mother Earth unless you
can expand our capital.
And that is that.
Workers view the economic crisis a consequence of
a failed system. The solution to this failed system cannot be the
denial of their rights as human beings and denial of their rights as
the actual producers of all use-value. Any solution to the crisis must
begin by defending the rights of workers as human
beings and their specific rights as workers. The anachronistic line of
viewing workers as a cost of production denies the central importance
of the human factor/social consciousness in modern socialized
production. Without recognizing the central decisive importance of the
human factor/social consciousness in the
socialized economy and its rights as human beings and the actual
producers, no problem can be solved.
Just as it was structurally impossible to solve
the crisis of the old south slave plantation system by continually
reducing the standard of living of the slaves, it is structurally
impossible to solve the problem of the modern socialized economy by
continually reducing the standard of living of workers. This
will not solve the problem of global monopoly competition. This will
not solve the problem of a collapse of the market for what is produced.
This will certainly not solve any of the social problems confronting
society or the problems of nation-building in opposition to
empire-building as the foundation of a self-reliant
sustainable economy.
Workers have to stop viewing themselves as chattel
labour just as chattel slaves in the United States refused to accept
their unequal social relation and constantly fought for better working
and living conditions and their eventual emancipation. Workers should
look beyond their unequal position within
the existing social relation and imagine themselves in control of the
socialized economy within a free association of workers.
Workers are not a cost of production and should
not negotiate with the owners of capital on that basis. Workers have a
legitimate claim on what they produce and that claim continues
throughout retirement at the same standard. The problems in the auto
industry are not caused by the claims of workers
no matter what their level. The crisis originates in the structure and
aim of the capital-centred political economy, which divides the
socialized economy into competing privately-owned parts. Each part
constantly falls into contradiction with other privately owned parts of
the socialized economy. The modern economy
requires harmony amongst all its interrelated parts but this is
impossible because the aim of each private part is to defend and expand
its hoard of capital at the expense of competing parts and the working
class. This situation is made worse in Canada as the economy is annexed
into the U.S. Empire and has become
extremely disjointed, uneven, dependent on exports and largely
underdeveloped, especially in adding value to unfinished commodities.
The owners of auto capital and the ruling establishment refuse to move
beyond this structure to an industry and arrangement that serve the
Canadian economy and society as a whole.
Fine, workers are stuck with the U.S. Empire and
the unequal social relation for the time being. But recognition of the
narrow basis on which the auto industry exists does not mean that
workers should deny their rights as human beings and the actual
producers of wealth. New arrangements must be
found that restrict monopoly right and disentangle the sector from the
U.S. Empire, which may involve changing the direction of the auto
sector and what it produces. Concessions on wages, benefits, pensions
and livelihoods will not solve the crisis; it will prolong the crisis
and make it worse. How will a denial of
responsibility for auto pensioners for example solve the auto crisis?
It will put some extra money in the pockets of owners of capital,
extend their existence as very rich people and deprive many pensioners
of the retirement they agreed to but it will not solve the crisis.
Besides, if the auto monopolies are not to assume
the social responsibility for their retirees then why should they
continue to play such a dominant role in the economy? Another
arrangement could be found such as prorating responsibility for auto
worker retirees throughout the industry based on vehicles sold,
including imports, not on who bought the chattel labour
at any particular time. If workers do not fight for a pro-social
arrangement then abandoning pensioners and giving other concessions is
similar to the "solution" of the slaveholders to have a quick
succession of unhealthy worker/slaves living short unbearable lives.
This is unacceptable. A pro-social arrangement must
be fought for that includes defending the means of subsistence that
Canadian workers have built and defending Canadian-standard living and
working conditions.
 A first step for
workers in defending themselves is to reject the plans, actions,
proposals, theories and thinking of the owners of capital. Out of that
rejection and the elaboration of human-centred plans, actions,
proposals, theories and thinking of the working class emerge the
possibilities to defend workers'
rights, the rights of all and to change the direction of the economy.
It means rejecting all the blather about concessions and bailouts as
solutions to the crisis. Bailouts to the owners of monopoly capital are
not a solution; stop paying the rich! Concessions and layoffs are not
solutions to the economic crisis! Unite
and organize to defend the rights of all and Canada's means of
subsistence! Workers must reject capital-centred theory; you are not a
cost of production. You have rights by virtue of being human and by
virtue of being the actual producers of all material blessings.
Solutions to the economic crisis come from
defending the human factor and upholding social responsibility.
(For Part One: Globe and Mail's
Objective Position as an Anti-Worker Social Relation, see TML Daily, February 16, 2009 - No. 34)
Dispatches from the Front Lines of Economic Crisis
- Stephen Lendman*,
Countercurrents.org, February 23, 2009 -
The more they do, the worse it gets, and world
headlines confirm it. Recent ones include:
- The New York Times,
February 17: "After Manhattan's Office Boom, a Hard Fall;"
- Washington Post, February
17: "Obama signs $787 billion stimulus bill; Dow Jones industrial
average drops nearly 300 points;"
Dow theorist, Richard Russell, called it "one of
the damnedest closes I've ever seen," within one point of the November
20 low, and added: "I thought President Obama outlawed torture in the
U.S. Wall Street is not listening."
The next day both the Dow and Transportation
averages hit new bear market lows. For Dow theorists like Russell and
others, it's confirmation of lower ones to come.
 - The Financial Times (FT):
February 17:
"California dream turns into nightmare" given the housing collapse,
slumping economy, and return of "widespread poverty;"
February 18:
"Taiwan's GDP plunges more than 8%;" earlier, Japan reported a 12.7%
annualized decline, its steepest drop in 35 years;
February 18: ILO
says "Asia's jobless may hit 23.3m in 2009," three times last month's
7.2m estimate as regional woes deepen;
- Wall Street Journal:
February 18: "GM
Seeks $16.6 Billion More in U.S. Aid; Plans to Slash 47,000 Jobs;" may
need $100 billion or more if forced into bankruptcy; "Chrysler Mentions
Bankruptcy Option for First Time;" asks $5 billion more in aid:
February 18:
"Banks Reel on Eastern Europe's Bad News" of a full-blown "economic
crash."
February 20:
"Market Hits New Crisis Low; Analysts Warn They See Few Signs of a
Bottom."
Market Watch:
February 20:
"GM's market capitalization dips below $1 billion....touching levels
not seen in 71 years."
February 20:
"Citigroup, Bank of America spiral further downward.... to all-time
(intra-day) lows....the KBW Banking ETF, which tracks the banking
industry, also reached all- time (intra-day) lows."
February 19: for
the week ending February 14, first-time jobless claims were unchanged
at 627,000; continuing ones jumped 170,000 to 4.98 million in the week
ending February 7, a 27-year high; the four-week continuing claims
average rose 92,500 to 4.83 million, also a 27-year high as job losses
keep mounting; according to economist John Williams, true unemployment
is 18% when discouraged and part-time workers are included. According
to Williams and economist Jack Rasmus, around 800,000-1,000,000
monthly job losses have occurred since November with no signs of letup
in sight.
February 18:
"Housing starts plunge nearly 17% to a record-low 466,000 rate," far
below the weakest post-WW II levels, and at this rate "would fall to
zero" by year end; annualized building permits of 521,000 also hit a
record low.
 Since construction peaked in 2005, starts are down
around 77% and for single- family homes nearly 80%. Obama's mortgage
relief plan (the Homeowner Affordability and Stability Plan) provides
little help at best, nothing for second mortgage holders, or for
millions of underwater homeowners and
many more at risk as property valuations keep plunging. It's also
limited to borrowers whose mortgages are owned or securitized by Fannie
Mae or Freddie Mac.
The plan may cost up to $275 billion. According to
the Wall Street Journal (WSJ),
$200 billion is for Fannie and Freddie and $75 billion "to encourage
(but not require) lenders to modify loan terms for people at risk of
foreclosure or already in foreclosure proceedings" who
qualify. Many millions don't.
The idea is to lower monthly payments to 31% of
household income, add the residual owed to principle, create a greater
burden as property valuations fall, and postpone a likely default for
later. The plan takes effect March 4 when its provisions and rules are
published.
The WSJ says it will
"prolong the housing downturn and make financing a home purchase more
difficult for future borrowers." It also won't slow the decline in home
valuations. Observer comments included:
- UBS saying: "Obama Speaks, Market Listens, Sells
Off;"
- another observer: U.S. mortgage lending is "the
biggest racket since Al Capone," and Obama plans to subsidize it; and
- housing and consumer finance expert Mike Larson:
"Taxpayers could ultimately get soaked here if
home prices don't rise in the coming few years (and so far there's
little chance they will)....Furthermore, the plan doesn't (address) the
principal reduction issue head on," so lenders can add on unpaid
balances as a tradeoff for lower rates and term extensions
making the solution worse than the problem. Without principal
reductions required, "redefault rates (on modified mortgages) will
remain extremely high."
"With (millions of) borrowers deeply underwater,
the new refinance standards....won't help. Nor will the (proposed)
small incentive payment encourage many to stay put. Result: We're going
to see tons of 'walk-aways' and 'jingle mail' -- homeowners abandoning
their homes and mailing their keys to
their lenders -- despite the Obama plan."
It will have no effect on home prices. They'll
"continue to fall this year and into 2010, given the very large
(property) overhang and rising unemployment." As the saying goes,
Obama's plan is mostly "show," little "dough," and more betrayal for
the money trust he represents.
Increasing Talk about Nationalizations
Deepening gloom has even Republicans thinking the
unthinkable -- nationalizing insolvent banks with Senator Lindsey
Graham (R, SC), on February 15, telling ABC's This Week:
"This idea of nationalizing banks is not
comfortable. But I think we've got so many toxic assets spread
throughout the banking and financial community, throughout the world,
that we're going to have to do something that no one envisioned a year
ago (and) no one likes....I'm very much afraid any program
to salvage the banks is going to require the government....I would not
(rule out) the idea of nationalizing the banks."
In the Chicago Tribune on
the same day, writer Frank James headlined: "Nationalizing banks gains
GOP steam? What's....astonishing is for a (conservative)
Republican....like Lindsey Graham (to suggest it). And he wasn't alone.
Rep. Peter King (R, NY) also allowed for this possibility."
Then on February 18, the FT
headlined: "Greenspan backs bank nationalisation....on a temporary
basis to fix the financial system....facilitate an orderly
restructuring (and) restore the flow of credit....I understand that
once in a hundred years this is what you do." At the same time, he
wants
bailouts for senior debt holders to "anchor" the financial system.
This from the maestro of misery:
- free-market capitalism's high priest;
- responsible for engineering the 1990s and
post-2000 bubbles and greatest ever wealth transfer from the public to
the rich until Paulson, Geithner, Bernanke, and Summers bettered him or
at least aim to;
- the man who just weeks before the 2000 market
peak claimed: "the American economy was experiencing a
once-in-a-century acceleration of innovation, which propelled forward
productivity, output, corporate profits and stock prices at a pace not
seen in generations, if ever;"
- who enriched Wall Street while tripling U.S.
debt on his watch;
- who takes no responsibility for today's turmoil
and claimed he never saw it coming in spite of providing generous
liquidity and no restraints to curb it;
- who still derides critics and champions
deregulation;
- he's the Fed's second longest ever serving
chairman who'll be remembered as its worst unless the current incumbent
outdoes him.
In his latest February 17 column, the FT's
Martin Wolf highlights the fallout by comparing Japan's "lost decade"
and early 1980s America to today. He calls similarities with the latter
misguided:
- in 1981, U.S. credit market debt was 123% of
GDP; by third quarter 2008, it was 290% and is now around 350% or
double its 1929 level; 2007 household debt equalled GDP compared to 48%
of it in 1981 and interest rates were mirror opposite -- 20% then, zero
now.
As rates in the 1980s dropped, borrowing and
economic activity rose. Chances of a surge in borrowing now are nil.
As for Japan, it had a "lost decade" but no
depression. America may not be as lucky given the importance of its
financial system, how it affects the overall economy, the fact that
huge debt accumulations were by households and the FIRE sector, not
non-financial corporations. Today's crisis is global
and growing, and proposals out of Washington "look hopeless."
"It is, for this reason, fanciful to imagine a
swift and strong return to global growth. Where is the demand to come
from? From over-indebted western consumers? Hardly. From emerging
country consumers? Unlikely. From fiscal expansion? Up to a point. But
this still looks too weak and too unbalanced,
with much coming from the U.S. China is helping, but the eurozone and
Japan seem paralyzed, while most emerging economies (are so troubled
that they) cannot now risk aggressive action."
"Last year marked the end of a hopeful era." More
likely it was early 2000. "Today, it is impossible to rule out a lost
decade for the world economy." Some economists are even gloomier given
the depth and breadth of world crisis, the dearth of credible policies
to combat it, and ones being implemented
doing more harm than good.
Martin Weiss on the "Truth and Consequences (of)
Stimulus"
Financial expert and investor safety advocate
Martin Weiss believes that post-2007 policies "have failed." Over $9
trillion and counting "were designed to stimulate the economy, avoid a
housing bust, restore public confidence, contain
the credit crunch, reduce the danger of a global debt collapse, and
shore up sinking banks."
So far, "every single (measure) is an outright,
unambiguous, proven failure." Here's the score:
- the economy wasn't stimulated; it's been
plunging -- by an annualized Q 4 3.8% rate and projected to deepen to
5.2% in Q 1, according to a Philadelphia Fed survey of economists;
- housing valuations have fallen for 28 straight
months and continue to plunge with recent declines the "worst on
record;"
- the University of Michigan's Consumer Sentiment
Index is its lowest in 28 years;
- the credit crunch persists; "we've seen the
biggest contraction in credit availability in recorded history -- new
home mortgages shrinking at an annual rate of $327.5 billion,
commercial mortgages (dropping) $56.7 billion, (and) commercial paper
plunging $291 billion;"
- a potential global debt collapse is more
possible than ever:
(1) America's 25 largest banks increased their
holdings of "the single most dangerous form of derivatives -- credit
default swaps (CDSs);"
(2) on average, America's five largest banks
increased their CDS exposure from 264% at yearend 2007 to 317% nine
months later; and
(3) "similar risks are rising dramatically in
Western Europe, Japan and emerging market economies."
As a result, "a global debt collapse is even more
likely today than (before Washington) began its massive interventions."
Instead of shoring up the nation's banks, they've gotten worse because
offenders get bailout rewards, and they're counterproductive and don't
help.
Bottom line: "As the housing bust progressed and
the foreclosure epidemic spread," bank asset valuations plunged
further. Their losses "multiplied," and their balance sheets "have sunk
into an even deeper hole." They're insolvent and operating only with
federal bailout help.
Many economists agree, with a February 12 New
York Times article calling them "dead men walking." Yet new
policy failures follow old ones. Trillions are being ill used as a
result. The Japanese spent $6.3 trillion and failed to fix their
economy. Matching them would take over $29 trillion,
given the U.S. economy's size, with much the same result in the end
plus a debt burden that will crush us.
Further, today's crisis is global, and America's
problems far exceed Japan's in the 1990s. They're getting worse, not
better "with deeper deflation, bigger debt collapses, and far larger
financial losses." Japan is a creditor nation with 1980s and early
1990s personal savings at around 14% -- at the time,
the highest of any major industrial nation in the world.
In contrast, America is the world largest debtor
with personal savings at minus 0.5% until it rose to 2.9% just
recently. Japan pursued bad policy and failed. Its economy today is in
shambles. America's is on the same path. Throwing good money after bad
with failed policies, not sound ones, assures painful
fallout coming, higher costs in the long run, an economy heading for
ruin, and dragging most others down with it.
False Signal from the Baltic Dry Index (BDI)
Issued daily by London's Baltic Exchange, it
provides "an assessment of the price of moving the major raw materials
by sea. Taking in 26 shipping routes measured on a timecharter and
voyage basis, the index covers Handymax (terminology for bulk
carriers), Panamax (maximum ship size for the Panama Canal), and
Capesize (ships using the Cape of Good Hope or Cape Horn) dry bulk
carriers carrying a range of commodities including coal, iron or and
grain."
In December, the BDI hit a low of about 660 off
its 11,000 May 2008 high. On February 10, it reported a rise to about
1800 and a glimmer of hope for the global economy. Not for long.
On February 17, Lloyd's List, "The Leading
Maritime & Transport News Portal," headlined: "Asian box ports
see alarming drop in throughput," and are bracing for a grim 2009 after
"alarming drops in (January) volumes." Here's the tally:
- Singapore: "the world's largest container port"
down 19% from a year ago reflecting sharp drops in Asian -- Europe
trade; Indonesia is also down as most of its cargo is transhipped
through Singapore;
- Hong Kong: down 23% with reports calling
February "challenging;"
- Port Klang, Malaysia: down 16% with 2009
estimates of 10% down and the likelihood those numbers will be revised
higher;
- China overall dropped 17.5%; in ports besides
Hong Kong: down 15% and down 10% from December alone; Shenzhen dropped
18%; Xiamen down 10%; Ningbo down 9%;
- one of Southeast Asia's largest exporters, Mari
Pangestu, forecasts a 2009 decline of 20%;
- on February 2, the Wall Street Journal
reported that South Korea's January exports fell 32.8% from a year ago,
far higher than expected;
- earlier, reports from Japan were that December
exports plunged by a record 35% from the previous year.
Analysts expressed shock over these and other
regional results with IMA Asia's Richard Martin saying: "It's a bit
like watching a train wreck in slow motion. North Asia is suffering the
biggest collapse in demand since World War II." Westpac's Richard
Franulovich called it "on a par with the collapse
in the U.S. during the 1930s Depression." Bank of Japan chief economist
Kazuo Momma said his economy faced an "unimaginable" contraction with
huge output drops and large numbers of layoffs. Deutsche Bank's Tokyo
branch was even blunter in predicting a "severe depression" at least
through late 2010, and
it's evident in the numbers.
The world's largest automaker, Toyota, saw January
sales fall 30% and predicts its first ever loss in its 70 year history.
The 10 largest electronics firms collectively expect to lose $20
billion, and the Reuters Tankan corporate sentiment survey hit its
lowest ever reading of -74.
India is also bleak with the ENS Economic Bureau
reporting (February 4) that January exports fell 20%, sparking fears of
further declines. According to commerce secretary GK Pillai, the "sharp
drop came as a surprise and was not expected."
In America, December exports fell 6% while imports
dropped 5.5% as recession deepens globally and economists see steeper
declines ahead.
Great Depression II?
So it seems because of what Martin Weiss calls
"The Great Credit Crunch and Real Estate Crash of 2009." Its fallout
hits everywhere and in some places disastrously. On The Global Research
News Hour (February 16) and in his latest Global Research.ca February
18 article,
F. William Engdahl headlined an example:
"Next Wave of Banking Crisis to come from Eastern
Europe (with) an entirely new wave of losses in coming months not yet
calculated in any government bank rescue aid to date." They're from
"massive" 2002-2007 Western European risky bank loans to Eastern
European countries, now in big trouble
"with unpayable loan debts."
"The dimension (of the problem) pales anything yet
realized. It will force a radical new look (at nationalizing troubled
banks) in coming weeks." According to Engdahl's "well-informed City of
London sources, (these concerns) will define the next wave of the
global financial crisis (with impact) more
devastating than the U.S. sub-prime securitization collapse which
triggered the entire crisis of confidence."
The risk amounts are "staggering" for banks in
Italy, Austria, Switzerland, Sweden, Greece," and likely Germany. Other
troubled countries include Ireland, Spain and Portugal as pain heads
everywhere across the continent and beyond. "Perhaps most alarming is
that the EU institutions don't have any
framework for dealing with this. The day they decide not to save (one
country, it will) trigger....a massive crisis with contagion spreading
into the EU."
According to UK-based Market Oracle editor Nadeem
Walayat, add Britain to the troubled country list from his article
headlined: "UK Recession Watch -- Britain's Great Depression?" In a
lengthy analysis, he cites why:
- Q 4 GDP contracting 1.5% (or an annualized 6%
loss) compared to 2009 forecasts of 2%;
- like America, enough "money (being printed to)
bankrupt" the country;
- today's deflation will be tomorrow's inflation,
and it's likely to be severe;
- sterling falling over 30% in six months to a
23-year low against the dollar;
- it still failed to boost manufacturing as the
global slump hits everywhere;
- a growing conviction that Britain is contracting
fastest since the 1930s;
- slumping oil prices exacerbated trouble as UK
North Sea foreign exchange earnings have plunged;
- British banks are in crisis with Northern Rock
nationalized last February and Royal Bank of Scotland (RBS)) and Lloyds
Banking Group PLC last October classified "public-sector entities,"
meaning their liabilities are included in public finances;
- last September's "shot-gun wedding between HBOS
and Lloyds TSB....is increasingly blowing up in Lloyds face;"
- as in America, nationalizations loom as the only
viable solution;
- on February 22, after Walayat's article, the
UK's Sunday Times reported that RBS will be
"split into a 'good bank' and 'bad bank' in a dramatic restructuring in
which assets worth several hundred billion pounds will be put up for
sale." RBS will also "place at least 200 billion pounds of
toxic assets into the government's asset-protection scheme, a
controversial insurance scheme designed to protect banks against
further losses." RBS' losses and job cuts were reported earlier. The
"bad bank" idea is similar to the insurance plan for Citigroup and Bank of
America, although both banks so far remain whole.
- further UK evidence shows in sharply rising
unemployment, slumping retail sales and housing, commercial real estate
in trouble, and so is the entire financial sector in a crisis-ridden
country like most others.
It's why economist Michael Hudson calls the
"financial 'wealth creation' game....over....The economy has hit a debt
wall and is falling into Negative Equity....A quarter to a third of
U.S. real estate (is) in Negative Equity." It will stay there "for as
far as the eye can see until there is a debt write-down....debt
deflation threatens to keep the economy in depression until a radical
shift in policy occurs -- a shift to save the 'real' economy, not just
the financial sector and the wealthiest 10% of American families."
Obama's "recovery" plan is ruinous by adding mountains of new debt and
ignoring "the need for a write-down."
World markets may agree as a February 20 Wall
Street Journal online headlines: "Wave of Selling Spans
Globe....prolonging a market swoon that has dragged major averages down
to levels not seen in years."
Bellwether General Electric is around 85% off its
valuation high and year to date down around 43% in less than two
months. At the same time, gold touched $1000 an ounce before pulling
back intra-day. Spot gold reached $1030.80 last March with analysts
predicting much higher prices going forward
given strong physical demand and investors seeking the traditional safe
haven in troubled times.
It's why financial expert and consumer advocate
Catherine Austin Fitts recommends:
- "Vote with your feet;"
- take your money out of "big money-center,
tapeworm banks and financial institutions and put it in local credit
unions, thrift institutions, savings banks and state chartered banks;"
- control your own retirement savings in troubled
times, and above all:
- "Bail out of Wall Street" and "nationalize" the
Fed. In other words, drop the fiction that it's a government agency.
Expose its status as a private for-profit cartel, abolish it, and obey
the Constitution's Article I, Section 8 that
gives Congress alone the right to coin (create) money and regulate
its value.
A Final Comment
Today's crisis should bury the myth about
"free-market" fundamentalism as the best of all possible worlds.
History proves otherwise by clearly showing that it fails the many to
advantage the few because it's arranged that way:
- nearly everywhere earlier and now.
In 19th century America:
- through indigenous slaughter, slavery, financial
panics, child labor, sexism, racism, and worker exploitation;
In 20th century America:
- much the same in most respects;
- the 1930s depression;
- repeated recessions, inflation, deflation,
instability, unemployment, under-employment, and the erosion of job
security, high wages, good benefits, and reliable pensions;
- wealth and want extremes;
- a plutocracy masquerading as democracy;
according to Gore Vidal, most people never question "the inequality of
a system (under which they) drudge along, pay heavy taxes (and) get
nothing (back) in return;"
- government of, by, and for the privileged;
- elections reduced to theater in a de facto
one-party state;
- a corporate state placing profits over people;
- essential needs left unmet; and
- imperialism, militarism, foreign wars, homeland
repression, government and business corruption, a broken media, a
prison-industrial gulag, wage slavery, social decay, growing poverty,
inequality, injustice, and racism under a system where the business of
America is business; where never have so
many lost out to the few; where capital is empowered to get more of it;
where it's sucked from the public to the privileged; and where
government is indifferent to human needs, rights and civil liberties.
Enough is enough. Bury the monster, its crimes,
its inhumanity. End its poison and bandit ideology for egalitarian
freedom and equal justice. Marshal collective defiance for real change.
It's high time we got some.
Read The
Marxist-Leninist
Daily
Website: www.cpcml.ca
Email: editor@cpcml.ca
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