Go to Original
By Frank Joyce
It has been apparent for some time that the 20th Century US social contract is defunct beyond repair. Now the economic system faces the prospect of collapse as well. Not surprisingly, these developments are related. They did not come about overnight.
Looking back, it's easy to see that the system which emerged from the post-Bolshevik revolution, mass industrial production era of the 1920's, 30's and 40's was beginning to unravel by the end of the 1970's.
Union membership provides a helpful lens through which to view the process.
During the 1960's union membership bounced up and down within a narrow range ending the decade slightly higher than it began. But starting in 1970, it began a steady decline. In 1970 union workers were 29.6 percent of the work force. At those numbers, unions were able to exert considerable leverage over the wages, benefits and working conditions of all workers. By 1980 union workers were down to 23.2 percent of the total workforce. By the year 2000, union members represented just 13.5 percent of all workers. Today it is about 12.1 percent.
Conventional wisdom holds that Ronald Reagan caused the decline of unions by busting the air traffic controllers union (PATCO) in 1981. Not so. What Reagan and his advisors understood was that union power was already on the wane. Did they know for certain that they could attack PATCO and get away with it? Probably. But even if they didn't, they deemed it a risk--a "probe," if you will--worth taking.
Either way, they did bust PATCO. Consequently, the message that unions could be beat came through for all to see. Employers got the point and stepped up their already fierce resistance at the bargaining table. And they devoted new and effective resources to defeating organizing efforts by their workers.
Workers also got it that unions were weakening. That too made organizing tougher. Corruption scandals and other difficulties added to problems of unions. As the power of unions declined, real wages for workers declined too. Most economists agree that measured in constant dollars, wages in the US have been effectively stagnant since about 1975.
Unions were indisputably an effective instrument for building a broad "middle" class. They did so by applying sufficient power to assure that workers shared in the value that they were helping to create. As industrialization brought enormous innovation and productivity, workers waged epic struggles that won them the wages to buy what they were making. Working conditions improved. Home ownership, car ownership and college for the children of workers became widespread. Pensions and employer paid health care became the norm.
But. But. But. For many reasons unions were less effective at sustaining the newly huge middle-class than they had been at creating it. (The how and the why of the inability of US unions to perceive, let alone counteract, the new forces coming into play in the 1970's is an interesting and important but different topic.)
Declining union membership and power is, however, only one variable in the equation that has brought us to the white hot economic and political meltdown now dominating our news and our lives. Another critical variable is this: as the wallets of workers held fewer and fewer union cards, credit cards were filling up those very same wallets. Workers were in effect trading union cards for MasterCard's.
In the process workers became the proverbial frogs in the pot on the stove. The temperature kept getting closer to the boiling point. But the water felt just fine. Because even though worker power was in decline, worker consumption was going up. Color TV's replaced black and white TV's, only to be replaced again by bigger screen TV's and now LCD's and Plasmas. Vehicles got bigger and better and working families had more of them. Shopping malls proliferated and shopping itself became the national religion. Cell phones, computers, video games, boats, iPods and snowmobiles--workers had stuff, lots and lots of stuff. The whole economy grew.
How could this happen in the face of stagnant real wages? Three reasons. Technological political and economic forces made global production both possible and necessary. That in turn made it possible to stabilize and in many cases lower costs and prices for goods and services.
The social upheaval of the 60's helped create conditions that brought women into the workforce in great numbers. The added income helped to offset the decline in wages for men.
Last and anything but least, credit, not wages, came to drive purchasing and consumption. For workers, debt came from all over: credit cards; longer and longer terms for auto loans; huge college loans; "creative" financing for mortgages. A whole kit and caboodle of financial entanglements enmeshed workers, students, just about everybody. The "middle" class became the debtor class.
Between 1970 and 2000, according to the Bureau of Economic Analysis of the Federal Reserve Bank, household debt relative to disposable personal income nearly doubled. In 2006, David A. Gaffen reported in the Wall Street Journal that "households'...debt-to-income ratio reached an all time high 131.1%." (Exploding public debt is an important component of this dynamic too. According to Federal Reserve Board data, between 1957 and 2007 the inflation adjusted total debt load per person in the US increased $145,432, equivalent to an increase of $581,728 per family of 4. That number, of course, does not include long-term costs of the war in Iraq or of ongoing taxpayer funded bailouts of financial companies.)
That debt is bondage is a profound moral truth. But it is an important shaper of political and economic consciousness as well. The more you are in debt, the less likely you are to rock the boat. Take on your employer? Go on strike? Risk your job by trying to start a union? What, and miss a credit card payment? Don't you get it? I'm maxed out. Risk getting my car getting reposed? You've got to be kidding.
Some of this attitude is quite conscious. Much of is more below the surface. Either way, this kind of debt profoundly changes many things including the relationship of the worker to the employer. It's one thing to "owe my soul to the company store." But this debt is different. This debt creates a mindset by which the paycheck and the employer who provides it come to be seen as a protector from the demands of the lender. It is the credit card company and the collection agency that become the greatest source of worry and harassment.
To be sure, there are those who have felt little or no grief at all. Others have overcome financial challenges and setbacks. There is no denying that for quite a long time, this system seemed to work just fine. In garden variety daily life terms, living standards were going up. Millions of working class families had fulfilling and decent lives. Many still do.
But this arrangement changes politics too. Economically satisfied workers can "afford" political engagement on social issues such as gun ownership or abortion if they choose to be involved at all. And if you have a growing 401 K--which you have been led to believe is far more secure than Social Security--why wouldn't you have a literally "conservative" political outlook? Why not align with the politics that come with living in a "gated" community to defend against the less well off hordes? From that outlook, it's easy to imagine immigrants and/or "angry" African Americans as being seen as a much bigger threat than financial shenanigans on Wall Street. Thus are born "Reagan Democrats."
Moreover, from church, media and political pulpit alike comes a very sophisticated propaganda drumbeat. Relentlessly it pumps out the message that is that if you are on debt overload, you and you alone made bad choices. You didn't manage your money well. You should be contrite, even ashamed. The last thing you should do is think you have anything in common with any one else--even if millions are in exactly the same situation. Even less should you consider that you are a victim of extremely cynical and deliberate manipulation.
Did not the Credit Card Masters of the Universe barefacedly testify before Congress that it was they who needed protection from irresponsible borrowers? And did not a substantial majority of the "people's" representatives from both political parties in Congress agree with them? (As the righteous Elizabeth Warren has pointed out, those very same credit card companies routinely troll bankruptcy fillings to get names of bankruptcy filers to whom they then send credit cards solicitations! See here for terrific information on debt dynamics from Elizabeth Warren and her band of researchers. The New York Times recently published an excellent article on this subject as well.)
But credit card solicitations are not the only toxic Kool-Aid that's been on offer. The same institutions told us too that 401-K's are safer and better than either social security or a union negotiated pension. Why? Because private investments and personal responsibility are good and government and collective action are bad, that's why.
It's all enough to make your head swim. Partly that's because through it all You're On Your Own (YOYO). Even now, workers have some degree of union protection--whether they belong to a union or not. Unions and the threat of unions retain a small degree of leverage over some employer behavior.
Debtors have nothing. No one even pretends to care about them except lenders who will offer more credit at terms worse than what you have now or "credit counselors" who will help you--oh, and incidentally help themselves and help the lenders who got you into trouble in the first place too.
The result is now before us. Absent any restraining force whatsoever, the financial masters of the universe went wild. They invented ways to make money out of whole cloth. They ENRONed the economy of the world.
Let's take a deep breath and go back to the beginning for a minute. The "cost" of forming or joining a union seems high. As a worker, you are told over and over again that you might lose your job because you'll get fired for being a union supporter or that your employer will close up shop altogether if it goes union. And enough employers do just that, so the threat is entirely credible.
And even if you get a union you'll pay dues. And you will hear again and again what a dumb thing that is. You will learn repeatedly about workers who go on strike only to settle for wages and benefits that are worse, not better. The media will tell you over and over about union companies that shrink or move all their work to Mexico or China or go out of business entirely.
At the same time workers get offers of "cheap" credit in the mail virtually every day. The choice seems clear. Union membership? Expensive. Risky. At least a little bit scary.
The credit that gets you your car(s), your plasma TV, your home and college tuition for your children? That seems "cheap." Isn't the word "free" the single most common word in credit solicitations?
Admittedly sometimes there can be a downside to all this credit. Well actually, more often than not the lenders, especially credit card companies do treat their customers like shit. They raise rates and add incomprehensible and ever more expensive fees. When you call them to argue or just get an explanation you enter voice mail hell. Or if you do reach someone they might respond by lowering your credit limit or adding yet another fee. Collection agencies can really make you life miserable.
And yes, politicians of both parties do keep changing the rules so that lenders can basically do whatever they want. Until just the last few weeks they were virtually all for "deregulation." (Suddenly they are all "born again" regulators. Hmmm.) Speak up as Dennis Kucinich, Danny Schecter and others have done and you will be marginalized as a kook, a whiner or an extremist.
And yes it can be annoying that the perpetrators of this economic bondage are living very large while you are struggling more and more every day.
But, hey, don't be ungrateful. You live in the "ownership society"!
Really? Do you own your stuff? Or is it in effect rented? Or is it maybe that the finance companies own you? And by the way, if they are so morally and otherwise superior, how are they doing at managing the system they created?
Sisters and brothers, the debt society truly is a house of cards. MasterCard's, VISA cards, Discover Cards, Debit cards. And it is built on sand at that. The whole damn thing rests on a foundation of credit default swaps and commercial paper and sub-prime mortgage bundles and hedges and leverage and god only knows what other hocus pocus.
But now. But now? Make no mistake about it--the financial equivalent of Hurricane Katrina is blowing that house down. Naturally, the very same people who built the house in the first place are trying to patch it up. Why wouldn't they? In the short term we should probably wish them the best. So far, however, the only solution they seem to have to the debt crisis is to create a more debt. A lot more debt.
Clearly, we need to start designing and building a new house altogether. In the 20th century, the Flint sit-down strike and the Montgomery Bus Boycott stand as icons of successful struggles by working men and women to win economic and social justice against daunting opposition. It's time to do it again.
Friday, October 24, 2008
More recriminations over US/NATO quagmire in Afghanistan
Go to Original
By James Cogan
An increasing number of politicians, diplomats, military commanders and media commentators are describing the US-led occupation of Afghanistan as a failure and warning that American and NATO forces face defeat at the hands of a strengthening resistance movement led by the Islamist Taliban movement.
The most prominent example in the past week has been a comment published in the British Independent on October 20 by David Davis, a Conservative Party parliamentarian. He has been promoted by various liberals and "lefts" in Britain as a defender of civil liberties, due to his opposition to aspects of the Labour government's anti-terrorism laws.
The column, based on Davis's observations during a recent fact-finding trip to Afghanistan, was an indictment of the occupation and the puppet government in Kabul.
Davis began: "It is time to face facts in Afghanistan: the situation is spiraling downwards, and if we do not change our approach, we face disaster. Violence is up in two-thirds of the country, narcotics are the main contributor to the economy, criminality is out of control and the government is weak, corrupt and incompetent. The international coalition is seen as a squabbling bunch of foreigners who have not delivered on their promises. Although the Taliban have nowhere near majority support, their standing is growing rapidly among some ordinary Afghans."
Davis noted that three quarters of the police "actively steal from the people". The Afghan government of President Hamid Karzai, he continued, "appears to have been run for the financial benefit of 20 families", who are "old-time warlords and faction leaders responsible for past atrocities" and "operate with impunity, even over acts of violence and attempted murder".
Corruption is so pervasive in the security forces, Davis wrote, that a farmer attempting to take produce from the British base at Lashkar Gah to the city of Kandahar has to pay bribes or "tolls" at as many as 12 police checkpoints. "The ordinary Afghan must feel caught between competing protection rackets in the police, the Taliban, the narco-bandits and the warlords... This is the regime we are defending and are perceived to be supporting."
Davis's solution, however, was no different than that being proposed by scores of pro-war commentators: more US and NATO troops, more Afghan government troops and more repression against the legitimate resistance among the Afghan people to foreign occupation.
The corrupt character of the US-backed Afghan state was reinforced by a feature on the Afghan police in this week's edition of Time magazine.
Time noted: "A long history of corruption has reduced the image of Afghanistan's police to little more than uniformed thieves." Individuals are said to have paid government officials bribes of up to $US200,000 to be appointed to major police commands, as they can generate fortunes from "tolls, pay-offs and unofficial taxes on merchants".
The corruption reaches the highest circles of the Karzai government. Captain David Panian, a US soldier assisting in the training of police recruits, told Time: "It's like a feudal system. The baron pays the count, the count pays the duke, the duke pays the king... In order to maintain your job you have to give X amount to the provincial guy, and he has got to give it to the regional guy and so on all the way to the top."
Police corruption, stand-over tactics and abuses make them a prime target for anti-occupation insurgents. According to Interior Ministry statistics cited by Time, 1,119 police officers out of a total force of about 70,000 were killed between March 2007 and March 2008. Since March, another 720 police have been killed.
The insurgency has reached its most intense phase since the initial invasion more than seven years ago. The Taliban and other guerilla groups are attacking US, NATO and Afghan government forces across a growing area of the country, including in the capital Kabul. The occupation, consisting of just 70,000 troops, simply does not have enough manpower to adequately control the country.
The European members of NATO are continuing to resist Washington's calls for them to increase the size of their contribution and to lift the caveats that limit where and how their troops can be used. The bulk of the large German, French, Italian, Spanish, Polish and Turkish contingents—more than 11,000 troops in total—cannot be deployed into the southern and eastern provinces where the Taliban insurgency is the strongest.
Italian Foreign Minister Franco Frattini ruled out sending any extra troops during a visit to Pakistan this week. The Italian contingent mainly operates in the western province of Herat. Dismissing US calls, Frattini stated: "I do not think sending more troops is the right solution today." The German parliament has approved the dispatch of 1,000 additional personnel—boosting German troop numbers in Afghanistan to 4,500—but their sphere of operation is limited to the northern provinces.
The stance of the European powers was openly condemned on Monday by the Supreme Allied Commander in Europe, US general John Craddock. Addressing a forum in London, Craddock pointed to the "70 caveats" restricting the use of European troops and declared: "We are demonstrating a political will that, in my judgment, is sometimes wavering. We in NATO have the ambition, we have the military capability, but the question is, do we have the will to address these challenges?"
Craddock described the US-NATO operations in Afghanistan as "disjointed in time and space". With no other NATO ally offering troops, the Netherlands withdrawing its contingent in mid-2010 and Canada withdrawing by the end of 2011, Craddock stated that Britain would need to send additional forces to boost its 8,300-strong contingent in the southern province of Helmand.
Additional American troops are scheduled to deploy from January. Particularly if Barack Obama wins the presidency, it is likely that at least four extra combat brigades will be sent to Afghanistan in the first half of 2009, boosting the US force in the country to over 60,000.
The endemic corruption of the Karzai regime, the broad and growing hostility of Afghans to foreign troops, the daily abuse of democratic rights, the dysfunctional economy and the lack of elementary social services all underscore the fact that the aim of US-led occupation was never to improve the lot of the Afghan people. Rather it was to establish a base of operations for Washington's broader ambitions in the resource-rich regions of Central Asia and the Middle East.
By James Cogan
An increasing number of politicians, diplomats, military commanders and media commentators are describing the US-led occupation of Afghanistan as a failure and warning that American and NATO forces face defeat at the hands of a strengthening resistance movement led by the Islamist Taliban movement.
The most prominent example in the past week has been a comment published in the British Independent on October 20 by David Davis, a Conservative Party parliamentarian. He has been promoted by various liberals and "lefts" in Britain as a defender of civil liberties, due to his opposition to aspects of the Labour government's anti-terrorism laws.
The column, based on Davis's observations during a recent fact-finding trip to Afghanistan, was an indictment of the occupation and the puppet government in Kabul.
Davis began: "It is time to face facts in Afghanistan: the situation is spiraling downwards, and if we do not change our approach, we face disaster. Violence is up in two-thirds of the country, narcotics are the main contributor to the economy, criminality is out of control and the government is weak, corrupt and incompetent. The international coalition is seen as a squabbling bunch of foreigners who have not delivered on their promises. Although the Taliban have nowhere near majority support, their standing is growing rapidly among some ordinary Afghans."
Davis noted that three quarters of the police "actively steal from the people". The Afghan government of President Hamid Karzai, he continued, "appears to have been run for the financial benefit of 20 families", who are "old-time warlords and faction leaders responsible for past atrocities" and "operate with impunity, even over acts of violence and attempted murder".
Corruption is so pervasive in the security forces, Davis wrote, that a farmer attempting to take produce from the British base at Lashkar Gah to the city of Kandahar has to pay bribes or "tolls" at as many as 12 police checkpoints. "The ordinary Afghan must feel caught between competing protection rackets in the police, the Taliban, the narco-bandits and the warlords... This is the regime we are defending and are perceived to be supporting."
Davis's solution, however, was no different than that being proposed by scores of pro-war commentators: more US and NATO troops, more Afghan government troops and more repression against the legitimate resistance among the Afghan people to foreign occupation.
The corrupt character of the US-backed Afghan state was reinforced by a feature on the Afghan police in this week's edition of Time magazine.
Time noted: "A long history of corruption has reduced the image of Afghanistan's police to little more than uniformed thieves." Individuals are said to have paid government officials bribes of up to $US200,000 to be appointed to major police commands, as they can generate fortunes from "tolls, pay-offs and unofficial taxes on merchants".
The corruption reaches the highest circles of the Karzai government. Captain David Panian, a US soldier assisting in the training of police recruits, told Time: "It's like a feudal system. The baron pays the count, the count pays the duke, the duke pays the king... In order to maintain your job you have to give X amount to the provincial guy, and he has got to give it to the regional guy and so on all the way to the top."
Police corruption, stand-over tactics and abuses make them a prime target for anti-occupation insurgents. According to Interior Ministry statistics cited by Time, 1,119 police officers out of a total force of about 70,000 were killed between March 2007 and March 2008. Since March, another 720 police have been killed.
The insurgency has reached its most intense phase since the initial invasion more than seven years ago. The Taliban and other guerilla groups are attacking US, NATO and Afghan government forces across a growing area of the country, including in the capital Kabul. The occupation, consisting of just 70,000 troops, simply does not have enough manpower to adequately control the country.
The European members of NATO are continuing to resist Washington's calls for them to increase the size of their contribution and to lift the caveats that limit where and how their troops can be used. The bulk of the large German, French, Italian, Spanish, Polish and Turkish contingents—more than 11,000 troops in total—cannot be deployed into the southern and eastern provinces where the Taliban insurgency is the strongest.
Italian Foreign Minister Franco Frattini ruled out sending any extra troops during a visit to Pakistan this week. The Italian contingent mainly operates in the western province of Herat. Dismissing US calls, Frattini stated: "I do not think sending more troops is the right solution today." The German parliament has approved the dispatch of 1,000 additional personnel—boosting German troop numbers in Afghanistan to 4,500—but their sphere of operation is limited to the northern provinces.
The stance of the European powers was openly condemned on Monday by the Supreme Allied Commander in Europe, US general John Craddock. Addressing a forum in London, Craddock pointed to the "70 caveats" restricting the use of European troops and declared: "We are demonstrating a political will that, in my judgment, is sometimes wavering. We in NATO have the ambition, we have the military capability, but the question is, do we have the will to address these challenges?"
Craddock described the US-NATO operations in Afghanistan as "disjointed in time and space". With no other NATO ally offering troops, the Netherlands withdrawing its contingent in mid-2010 and Canada withdrawing by the end of 2011, Craddock stated that Britain would need to send additional forces to boost its 8,300-strong contingent in the southern province of Helmand.
Additional American troops are scheduled to deploy from January. Particularly if Barack Obama wins the presidency, it is likely that at least four extra combat brigades will be sent to Afghanistan in the first half of 2009, boosting the US force in the country to over 60,000.
The endemic corruption of the Karzai regime, the broad and growing hostility of Afghans to foreign troops, the daily abuse of democratic rights, the dysfunctional economy and the lack of elementary social services all underscore the fact that the aim of US-led occupation was never to improve the lot of the Afghan people. Rather it was to establish a base of operations for Washington's broader ambitions in the resource-rich regions of Central Asia and the Middle East.
US layoffs mount, home foreclosures rise
Go to Original
By Patrick O’Connor
Indicators of a worsening social crisis in the US are mounting daily as the economic downturn takes an ever greater toll on jobs. Further layoffs were announced yesterday in the US and around the world. New data was also released showing escalating numbers of American families losing their homes through foreclosure, further driving down house prices.
A Reuters roundup of some of the US corporations which have made major layoff announcements in the last two days alone included:
• Chrysler, which announced an additional 1,825 layoffs on Thursday
• Goldman Sachs, which said it will cut 10 percent of its staff, or almost 3,300 jobs
• Pharmaceutical giant Merck, which announced it is shedding 12 percent of its workforce
• Biotechnology company Maxygen, which said it will cut nearly 30 percent of its workforce
• Money manager Janus Capital Group, which is sacking 9 percent of its workforce
• Xerox, which said yesterday it will cut 5 percent of its staff, or 3,000 positions
• Mining equipment maker Terex Corporation, which is laying off hundreds of its workers
• United Parcel Service, which announced plans to cut an unspecified number of jobs next year
• Fidelity National Financial Inc., which announced it will slash 1,000 jobs and cut pay by 10 percent
• Financial services conglomerate Popular Inc., which is cutting 600 jobs and closing more than a quarter of its branches in the US.
The US Labor Department reported that new applications for unemployment insurance increased by 15,000 to 478,000 in the week ending October 18, significantly more than was anticipated by economists. A year ago, new jobless claims stood at 333,000.
The Labor Department also found that inflation-adjusted wages for non-managerial workers declined by 1.9 percent in the twelve months up to September. This extraordinary figure indicates the extent to which the social position of the working class is being further undermined as the financial crisis and recession unfold.
The Washington Post yesterday reported that leading temp agencies are receiving far higher numbers of inquiries from job-seekers, including from people who are currently working but fear for their jobs. The article noted that many desperate workers "are also willing to make less money, even as the cost of living goes up." An example was call center jobs that paid $9 an hour last year but now pay $8.50.
Workers in the auto industry continue to bear much of the brunt of the growing assault on jobs and conditions. Chrysler announced 1,825 layoffs through the elimination of a shift at an assembly plant in Toledo, Ohio and said it would bring forward the closure date of a plant in Newark, Delaware that had been scheduled to close in December 2009.
Chrysler released figures yesterday revealing that it lost more than $1 billion in the first six months of 2008. Standard and Poor's has said that both Chrysler and GM may run out of cash in 2009 as auto sales fall to their lowest level since 1991.
Germany's Daimler AG, which has a 19.9 percent stake in Chrysler, said yesterday it was revising the book value of its stake to zero. This is down from $220 million three months ago and $1.2 billion at the end of 2007.
GM is in an equally severe crisis. A JPMorgan analyst told Reuters he expects the company to lose more than $12 billion next year. Like Chrysler, GM is slashing costs ahead of a potential merger between the two companies.
GM announced Wednesday it was considering selling AC Delco, its international parts subsidiary, a measure which will inevitably lead to further job losses. The company also said it will suspend many salaried employee benefits, including matching contributions for workers' 401(k) retirement plans.
Job losses continue to mount in the European auto industry. Sweden's Volvo AB said yesterday it would sack 850 more workers at its construction equipment unit. This follows an earlier announcement of 500 layoffs in the same unit, as well as 1,400 layoff notices issued to workers at truck factories in Sweden and Belgium.
Germany's Frankfurter Allgemeine Zeitung reported yesterday that Volkswagen plans to cut most or all of its 25,000 temporary staff. A Volkswagen spokesman denied the report, insisting that no decision had yet been reached.
Polish government advisors have estimated that one third of the 1.2 million Polish workers in Britain and Ireland, i.e., 400,000 people, will either return to Poland or move to another country to try to find work. According to a number of reports, the exodus has already begun, with thousands of Polish workers relocating, either in response to being laid off or to the British pound's poor exchange rate, which has sharply reduced the value of immigrant workers' wages sent back to their families.
Workers in countries throughout Europe are also being hit with rapidly declining house prices and increased foreclosures. But nowhere is the crisis more severe than in the US.
A survey released yesterday by listing service RealtyTrac found that foreclosure filings—that is, default notices, auction sale notices and bank repossessions—were reported on 765,000 properties in the three months ending in September, up 71 percent from the third quarter in 2007. Six states—Nevada, California, Florida, Ohio, Michigan, and Arizona—accounted for more than 60 percent of all foreclosure activity. Nevada recorded the highest foreclosure rate, with one out of every 82 housing properties issued a foreclosure filing.
The RealtyTrac report concluded that the third quarter figures probably underestimate the situation. Several states have passed new laws requiring lenders to issue extended notices before filing default notices. These laws artificially suppressed September's foreclosure figures by temporarily postponing the full impact. Rising unemployment will further accelerate the catastrophe.
The company said 81,300 homes had been foreclosed in September, and a total of 851,000 had been repossessed by lenders since August of 2007.
Rod Dubitsky, managing director for asset-backed securities at Credit Suisse, told BusinessWeek he expects that more than 5 million American families will lose their homes through the year 2012. He said 1.69 million families will lose their homes in 2008.
Falling property values have also hit homeowners. Over the last period, the family home was widely regarded as the primary asset to fund people's retirement, their children's college education, and even to cover unanticipated health expenses. But yesterday, the Federal Housing Finance Agency reported that house prices in August were 5.9 percent lower than they were a year earlier. The decline was the greatest recorded since 1991, when data was first collected.
By Patrick O’Connor
Indicators of a worsening social crisis in the US are mounting daily as the economic downturn takes an ever greater toll on jobs. Further layoffs were announced yesterday in the US and around the world. New data was also released showing escalating numbers of American families losing their homes through foreclosure, further driving down house prices.
A Reuters roundup of some of the US corporations which have made major layoff announcements in the last two days alone included:
• Chrysler, which announced an additional 1,825 layoffs on Thursday
• Goldman Sachs, which said it will cut 10 percent of its staff, or almost 3,300 jobs
• Pharmaceutical giant Merck, which announced it is shedding 12 percent of its workforce
• Biotechnology company Maxygen, which said it will cut nearly 30 percent of its workforce
• Money manager Janus Capital Group, which is sacking 9 percent of its workforce
• Xerox, which said yesterday it will cut 5 percent of its staff, or 3,000 positions
• Mining equipment maker Terex Corporation, which is laying off hundreds of its workers
• United Parcel Service, which announced plans to cut an unspecified number of jobs next year
• Fidelity National Financial Inc., which announced it will slash 1,000 jobs and cut pay by 10 percent
• Financial services conglomerate Popular Inc., which is cutting 600 jobs and closing more than a quarter of its branches in the US.
The US Labor Department reported that new applications for unemployment insurance increased by 15,000 to 478,000 in the week ending October 18, significantly more than was anticipated by economists. A year ago, new jobless claims stood at 333,000.
The Labor Department also found that inflation-adjusted wages for non-managerial workers declined by 1.9 percent in the twelve months up to September. This extraordinary figure indicates the extent to which the social position of the working class is being further undermined as the financial crisis and recession unfold.
The Washington Post yesterday reported that leading temp agencies are receiving far higher numbers of inquiries from job-seekers, including from people who are currently working but fear for their jobs. The article noted that many desperate workers "are also willing to make less money, even as the cost of living goes up." An example was call center jobs that paid $9 an hour last year but now pay $8.50.
Workers in the auto industry continue to bear much of the brunt of the growing assault on jobs and conditions. Chrysler announced 1,825 layoffs through the elimination of a shift at an assembly plant in Toledo, Ohio and said it would bring forward the closure date of a plant in Newark, Delaware that had been scheduled to close in December 2009.
Chrysler released figures yesterday revealing that it lost more than $1 billion in the first six months of 2008. Standard and Poor's has said that both Chrysler and GM may run out of cash in 2009 as auto sales fall to their lowest level since 1991.
Germany's Daimler AG, which has a 19.9 percent stake in Chrysler, said yesterday it was revising the book value of its stake to zero. This is down from $220 million three months ago and $1.2 billion at the end of 2007.
GM is in an equally severe crisis. A JPMorgan analyst told Reuters he expects the company to lose more than $12 billion next year. Like Chrysler, GM is slashing costs ahead of a potential merger between the two companies.
GM announced Wednesday it was considering selling AC Delco, its international parts subsidiary, a measure which will inevitably lead to further job losses. The company also said it will suspend many salaried employee benefits, including matching contributions for workers' 401(k) retirement plans.
Job losses continue to mount in the European auto industry. Sweden's Volvo AB said yesterday it would sack 850 more workers at its construction equipment unit. This follows an earlier announcement of 500 layoffs in the same unit, as well as 1,400 layoff notices issued to workers at truck factories in Sweden and Belgium.
Germany's Frankfurter Allgemeine Zeitung reported yesterday that Volkswagen plans to cut most or all of its 25,000 temporary staff. A Volkswagen spokesman denied the report, insisting that no decision had yet been reached.
Polish government advisors have estimated that one third of the 1.2 million Polish workers in Britain and Ireland, i.e., 400,000 people, will either return to Poland or move to another country to try to find work. According to a number of reports, the exodus has already begun, with thousands of Polish workers relocating, either in response to being laid off or to the British pound's poor exchange rate, which has sharply reduced the value of immigrant workers' wages sent back to their families.
Workers in countries throughout Europe are also being hit with rapidly declining house prices and increased foreclosures. But nowhere is the crisis more severe than in the US.
A survey released yesterday by listing service RealtyTrac found that foreclosure filings—that is, default notices, auction sale notices and bank repossessions—were reported on 765,000 properties in the three months ending in September, up 71 percent from the third quarter in 2007. Six states—Nevada, California, Florida, Ohio, Michigan, and Arizona—accounted for more than 60 percent of all foreclosure activity. Nevada recorded the highest foreclosure rate, with one out of every 82 housing properties issued a foreclosure filing.
The RealtyTrac report concluded that the third quarter figures probably underestimate the situation. Several states have passed new laws requiring lenders to issue extended notices before filing default notices. These laws artificially suppressed September's foreclosure figures by temporarily postponing the full impact. Rising unemployment will further accelerate the catastrophe.
The company said 81,300 homes had been foreclosed in September, and a total of 851,000 had been repossessed by lenders since August of 2007.
Rod Dubitsky, managing director for asset-backed securities at Credit Suisse, told BusinessWeek he expects that more than 5 million American families will lose their homes through the year 2012. He said 1.69 million families will lose their homes in 2008.
Falling property values have also hit homeowners. Over the last period, the family home was widely regarded as the primary asset to fund people's retirement, their children's college education, and even to cover unanticipated health expenses. But yesterday, the Federal Housing Finance Agency reported that house prices in August were 5.9 percent lower than they were a year earlier. The decline was the greatest recorded since 1991, when data was first collected.
The economic crisis and war
Go to Original
While the world's attention has been focused on the global economic crisis, the United States has continued to prosecute its neo-colonial war in Iraq and has expanded its military violence in Afghanistan and the adjoining border regions of Pakistan.
Early Thursday morning, a US drone fired four missiles into a religious school, or madrassa, in a tribal area of Pakistan's North Waziristan, killing 11 people, according to Agence France-Presse. It was the latest in a series of US strikes into Pakistan, including at least one commando raid by Special Forces ground troops, launched since the beginning of September. That the US has embarked on a deliberate policy of spreading its war of occupation in Afghanistan into Pakistan was underscored by last month's revelation that President Bush signed a secret order in July authorizing the use of American ground troops in Pakistan.
In Afghanistan itself, the US and its NATO allies have stepped up their attacks on military and civilian targets in an attempt to stem a widening war of resistance against foreign occupation. An overnight airstrike by US-led coalition forces in Khost Province in eastern Afghanistan killed nine Afghan soldiers, in an apparent "friendly fire" incident. The civilian toll from US air strikes has risen sharply in recent months, including an attack on an alleged Taliban compound last August that killed more than 90 civilians, a majority of them women and children.
Human Rights Watch reports that American and NATO air strikes have killed some 500 Afghan civilians over the past five years, very likely a serious underestimation of the actual toll. As the New York Times reported on Thursday, "The latest air strike came as fighting in Afghanistan reached its highest level since late 2001," i.e., in the first months of the US invasion.
The deteriorating US military and political situation in Afghanistan has become a focus of the presidential election, with Democratic front-runner Barack Obama taking the lead in pledging a major escalation of the US intervention. In a campaign speech in Virginia on Wednesday, Obama said he would order a surge of US troops, perhaps 15,000 or more, as soon as he gained the White House. "It's time to heed the call ... for more troops," he declared. "That's why I'd send at least two or three additional brigades to Afghanistan."
Obama has brushed off as a "rhetorical flourish" statements made at a Seattle fundraising event by his running mate, Senator Joseph Biden, that within six months of Obama's inauguration, the new president would respond to a major foreign policy crisis by taking "incredibly tough" and unpopular decisions. Biden cited five possible flashpoints—the Middle East, Afghanistan, Pakistan, North Korea and Russia.
That Biden's chilling remarks were no mere "rhetorical flourish" is substantiated by a lengthy article published in Thursday's New York Times by the newspaper's White House correspondent, David E. Sanger. Discussing the foreign policy positions advanced by Obama and his Republican opponent, Senator John McCain, Sanger points to key areas where Obama has articulated an even more aggressive posture than McCain.
On Iran, for example, the McCain campaign has suggested that it would be willing to accept a deal that allowed Iran to produce uranium on its territory, while the Obama campaign told the newspaper that an Obama White House "would not allow Iran to produce uranium on Iranian soil, the same hard-line view enunciated by the Bush administration."
Sanger notes that Obama has declared that "we will never take military options off the table" and that he would not give the United Nations "veto power" over a decision to hit Iranian nuclear facilities. Sanger goes on to say that US intelligence officials claim the "threshold" for a possible military strike—the point where Iran produces sufficient nuclear material to build a weapon—"may be crossed fairly early in the next presidential term."
Obama has also suggested that the US should impose a blockade on Iranian imports of gasoline and refined petroleum products. Noting that the Bush administration has stopped short of proposing such a move, he writes, "A blockade, however, could constitute an act of war..."
On Pakistan, Sanger writes, "it is Mr. Obama who has been far more willing than Mr. McCain to threaten sending in American troops."
Obama, no less than McCain, speaks as a representative of the American ruling class, which will determine the foreign and military policy of the United States in accordance with what it perceives to be its global economic and strategic interests.
The economic crisis, global in scope but centered in the decline of the world economic position of American imperialism, will inevitably drive that policy in an even more aggressive and belligerent direction, regardless of which capitalist party occupies the White House. The economic crisis injects into world affairs an ever-greater element of tension and conflict between rival imperialist and capitalist nations.
Even more so than in the previous decade, the United States will seek, under conditions of financial turmoil and economic slump, to offset its economic decline by military means. It is necessary to learn the lessons of history. The last great world economic crisis—the Depression of the 1930s—set off escalating military conflicts that culminated in the holocaust of World War II.
The 2008 elections, unfolding under conditions of deepening recession and escalating military violence, demonstrate the immense dangers posed by political illusions in Obama and the Democratic Party. Once again, the enormous anti-war sentiment of the American people has been preempted by being channeled behind the Democratic wing of American imperialism.
Should Obama win the election, as appears increasingly likely, the struggle against militarism and war will be waged against his administration.
While the world's attention has been focused on the global economic crisis, the United States has continued to prosecute its neo-colonial war in Iraq and has expanded its military violence in Afghanistan and the adjoining border regions of Pakistan.
Early Thursday morning, a US drone fired four missiles into a religious school, or madrassa, in a tribal area of Pakistan's North Waziristan, killing 11 people, according to Agence France-Presse. It was the latest in a series of US strikes into Pakistan, including at least one commando raid by Special Forces ground troops, launched since the beginning of September. That the US has embarked on a deliberate policy of spreading its war of occupation in Afghanistan into Pakistan was underscored by last month's revelation that President Bush signed a secret order in July authorizing the use of American ground troops in Pakistan.
In Afghanistan itself, the US and its NATO allies have stepped up their attacks on military and civilian targets in an attempt to stem a widening war of resistance against foreign occupation. An overnight airstrike by US-led coalition forces in Khost Province in eastern Afghanistan killed nine Afghan soldiers, in an apparent "friendly fire" incident. The civilian toll from US air strikes has risen sharply in recent months, including an attack on an alleged Taliban compound last August that killed more than 90 civilians, a majority of them women and children.
Human Rights Watch reports that American and NATO air strikes have killed some 500 Afghan civilians over the past five years, very likely a serious underestimation of the actual toll. As the New York Times reported on Thursday, "The latest air strike came as fighting in Afghanistan reached its highest level since late 2001," i.e., in the first months of the US invasion.
The deteriorating US military and political situation in Afghanistan has become a focus of the presidential election, with Democratic front-runner Barack Obama taking the lead in pledging a major escalation of the US intervention. In a campaign speech in Virginia on Wednesday, Obama said he would order a surge of US troops, perhaps 15,000 or more, as soon as he gained the White House. "It's time to heed the call ... for more troops," he declared. "That's why I'd send at least two or three additional brigades to Afghanistan."
Obama has brushed off as a "rhetorical flourish" statements made at a Seattle fundraising event by his running mate, Senator Joseph Biden, that within six months of Obama's inauguration, the new president would respond to a major foreign policy crisis by taking "incredibly tough" and unpopular decisions. Biden cited five possible flashpoints—the Middle East, Afghanistan, Pakistan, North Korea and Russia.
That Biden's chilling remarks were no mere "rhetorical flourish" is substantiated by a lengthy article published in Thursday's New York Times by the newspaper's White House correspondent, David E. Sanger. Discussing the foreign policy positions advanced by Obama and his Republican opponent, Senator John McCain, Sanger points to key areas where Obama has articulated an even more aggressive posture than McCain.
On Iran, for example, the McCain campaign has suggested that it would be willing to accept a deal that allowed Iran to produce uranium on its territory, while the Obama campaign told the newspaper that an Obama White House "would not allow Iran to produce uranium on Iranian soil, the same hard-line view enunciated by the Bush administration."
Sanger notes that Obama has declared that "we will never take military options off the table" and that he would not give the United Nations "veto power" over a decision to hit Iranian nuclear facilities. Sanger goes on to say that US intelligence officials claim the "threshold" for a possible military strike—the point where Iran produces sufficient nuclear material to build a weapon—"may be crossed fairly early in the next presidential term."
Obama has also suggested that the US should impose a blockade on Iranian imports of gasoline and refined petroleum products. Noting that the Bush administration has stopped short of proposing such a move, he writes, "A blockade, however, could constitute an act of war..."
On Pakistan, Sanger writes, "it is Mr. Obama who has been far more willing than Mr. McCain to threaten sending in American troops."
Obama, no less than McCain, speaks as a representative of the American ruling class, which will determine the foreign and military policy of the United States in accordance with what it perceives to be its global economic and strategic interests.
The economic crisis, global in scope but centered in the decline of the world economic position of American imperialism, will inevitably drive that policy in an even more aggressive and belligerent direction, regardless of which capitalist party occupies the White House. The economic crisis injects into world affairs an ever-greater element of tension and conflict between rival imperialist and capitalist nations.
Even more so than in the previous decade, the United States will seek, under conditions of financial turmoil and economic slump, to offset its economic decline by military means. It is necessary to learn the lessons of history. The last great world economic crisis—the Depression of the 1930s—set off escalating military conflicts that culminated in the holocaust of World War II.
The 2008 elections, unfolding under conditions of deepening recession and escalating military violence, demonstrate the immense dangers posed by political illusions in Obama and the Democratic Party. Once again, the enormous anti-war sentiment of the American people has been preempted by being channeled behind the Democratic wing of American imperialism.
Should Obama win the election, as appears increasingly likely, the struggle against militarism and war will be waged against his administration.
Subscribe to:
Posts (Atom)