Posts Tagged ‘Wall Street’

Tony Benn: What went wrong in the capitalist casino?

October 18, 2008

By Tony Benn | rinf.com, Oct 17, 2008

These words are from the 1945 Labour manifesto Let Us Face The Future which brilliantly identified the very same crisis which is now described as a “credit crunch” as if it were a mere hiccup in an otherwise wonderful neo-liberal globalised world which could be corrected with a vast subsidy from the taxpayers to put the Wall Street casino and its partners worldwide back into profit. It reminded me of the fact that when slavery was abolished it was the slave owners, and not the slaves, who received compensation from the government of the day.

Perhaps more important – and never mentioned in the media – is that all the news we get every day and every hour is all about the bankers while presidents, prime ministers and other elected leaders of the world have been reduced to the role of mere commentators who are expected to supply taxpayers’ money whenever it is needed to bail out the wealthy.

Indeed, what we are watching is nothing less than the steady transfer of real political power from the polling station to the market and from the ballot to the wallet – reversing the democratic gains we have made over the last century when we were able, increasingly, to use our votes to shape our economic future.

Our 1945 manifesto made that clear in the very next passage following the quote above. This is what it said: “The nation wants food, work and homes. It wants more than that. It wants good food in plenty, useful work for all and comfortable labour-saving homes that take full advantage of the resources of modern science and productive industry.”

That was the policy that swept Labour MPs into power in 1945 and gave this country the National Health Service, the welfare state and a massive house building programme, made possible by elected local authorities who had the resources made available to them by the Treasury.

Now, 63 years later, we are back facing a similar situation and we need to understand why it has happened if we are to see our way forward.

We have been told every day by the media that we should put our faith in the market and that elected governments are the problem and not the answer and, for that reason, should not interfere.

These ideas began to emerge in the political mainstream when Margaret Thatcher came to power and in 1994 “new” Labour adopted them as the basis of its own approach which explains why she once described “new” Labour as her “greatest achievement”.

Trade union rights are now more restricted than they were in 1906, wages have been held down and people have been advised to borrow and spend as an alternative – which explains why the stock market has fallen and locked more and more people into debt, which is a subtle form of slavery itself.

This is why so many people are frightened and frightened people can sometimes be persuaded to seek an answer by identifying an enemy who can be made a scapegoat for failure – as Hitler did when he blamed the Jews, the Communists and the trade unions for the mass unemployment in Germany and set up a fascist dictatorship which led to the Holocaust and war.

Hitler dealt with the unemployed by giving them jobs in the arms factories and the armed forces which led to the Second World War and the massive human cost it caused.

Whatever the left does it must never respond by splintering into a mass of tiny ideological sects forever fighting each other – for that way leads to failure, frustration and defeat.

This is the time for co-operation across the left to tackle the problems that face us on a non-sectarian basis as we have seen in the Stop the War Coalition, the campaigns for trade union rights, civil liberties, pensions, nuclear disarmament, council house building and a fair tax system – all of which require full trade union backing if they are to succeed.

If the economic situation gets worse, as it very well may, we have also to be on the look out for the “coalition” solution which could well be presented to us as the only way that these problems can be tackled, an argument that is being put forward now in America when George Bush, John McCain and Barack Obama rallied round to back the $700 billion bail-out that Wall Street demanded.

That same argument was used by Ramsay MacDonald in 1931 when he formed a National Government which nearly destroyed the Labour Party in the general election when only 51 Labour MPs survived and, without the courage of Ernie Bevin and the TUC, it might never have recovered, as it did in 1945.

I hope that the re-appointment of Peter Mandelson to the Cabinet in the latest reshuffle does not lead to that idea being re-floated as the best way to see us through the crisis for that could be the end of democracy – allowing the European Commission to prevent the re-emergence of public ownership and control of the banks which many will now see as the best way forward.

For the first time in my life, the public are to the left of a Labour government and common sense points us in a direction quite different from the one we have been following since 1979 when Thatcher set out to destroy the trade unions, cripple local authorities and privatise our public assets which we need now more than ever.

In 1945, the nation realised that the problems of peace required the same intensity of commitment as the problems of war.

And with the disastrous experience of Iraq and Afghanistan that argument, too, is beginning to register again and people are asking why we waste so much money on those illegal, brutal and unwinnable wars and on new nuclear weapons when people are losing their jobs and facing repossession of their homes.

The case for peace and socialism is intensely practical and, put like that, will command wide public and electoral support as it did then, in 1945, and could again do now.

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Behind the Panic: Financial Warfare and the Future of Global Bank Power

October 15, 2008

By F. William Engdahl | AxisofLogic, Oct 10, 2008, 11:28

What’s clear from the behavior of European financial markets over the past two weeks is that the dramatic stories of financial meltdown and panic are deliberately being used by certain influential factions in and outside the EU to shape the future face of global banking in the wake of the US sub-prime and Asset-Backed Security (ABS) debacle. The most interesting development in recent days has been the unified and strong position of the German Chancellor, Finance Minister, Bundesbank and coalition Government, all opposing an American-style EU Superfund bank bailout. Meanwhile Treasury Secretary Henry Paulson pursues his Crony Capitalism to the detriment of the nation and benefit of his cronies in the financial world. It’s an explosive cocktail that need not have been.

“There is serious ground to believe that [Henry Paulson] is actually moving according to a well-thought-out long-term strategy.”

Stock market falls of 7 to 10% a day make for dramatic news headlines and serve to foster a broad sense of unease bordering on panic among ordinary citizens. The events of the last two weeks among EU banks since the dramatic state rescues of Hypo Real Estate, Dexia and Fortis banks, and the announcement by UK Chancellor of the Exchequer, Alistair Darling of a radical shift in policy in dealing with troubled UK banks, have begun to reveal the outline of a distinctly different European response to what in effect is a crisis ‘Made in USA.’

There is serious ground to believe that US Goldman Sachs ex CEO Henry Paulson, as Treasury Secretary, is not stupid. There is also serious ground to believe that he is actually moving according to a well-thought-out long-term strategy. Events as they are now unfolding in the EU tend to confirm that. As one senior European banker put it to me in private discussion, ‘There is an all-out war going on between the United States and the EU to define the future face of European banking.’

In this banker’s view, the ongoing attempt of Italian Prime Minister Silvio Berlusconi and France’s Nicholas Sarkosy to get an EU common ‘fund’, with perhaps upwards of $300 billion to rescue troubled banks, would de facto play directly into Paulson and the US establishment’s long-term strategy, by in effect weakening the banks and repaying US-originated Asset Backed Securities held by EU banks.

Using panic to centralize power

As I document in my forthcoming book, Power of Money: The Rise and Decline of the American Century, in every major US financial panic since at least the Panic of 1835, the titans of Wall Street—most especially until 1929, the House of JP Morgan—have deliberately triggered bank panics behind the scenes in order to consolidate their grip on US banking. The private banks used the panics to control Washington policy including the exact definition of the private ownership of the new Federal Reserve in 1913, and to consolidate their control over industry such as US Steel, Caterpillar, Westinghouse and the like. They are, in short, old hands at such financial warfare to increase their power.

Now they must do something similar on a global scale to be able to continue to dominate global finance, the heart of the power of the American Century.

That process of using panics to centralize their private power created an extremely powerful, concentration of financial and economic power in a few private hands, the same hands which created the influential US foreign policy think-tank, the New York Council on Foreign Relations in 1919 to guide the ascent of the American Century, as Time founder Henry Luce called it in a pivotal 1941 essay.

It’s becoming increasingly obvious that people like Henry Paulson, who by the way was one of the most aggressive practitioners of the ABS revolution on Wall Street before becoming Treasury Secretary, are operating on motives beyond their over-proportional sense of greed. Paulson’s own background is interesting in that context. Back in the early 1970’s Paulson started his career working for a rather notorious man named John Erlichman, Nixon’s ruthless adviser who created the Plumbers’ Unit during the Watergate era to silence opponents of the President, and was left by Nixon to ‘twist in the wind’ for it in prison.

Paulson seems to have learned from his White House mentor. As co-chairman of Goldman Sachs according to a New York Times account, in 1998 he forced out his co-chairman, Jon Corzine ‘in what amounted to a coup’ according to the Times.

Continued . . .

Faith. Belief. Trust. This economic orthodoxy was built on superstition

October 8, 2008

There is no alternative, went the mantra. Now this corrupt mythology lies in tatters, the crisis of conviction is profound


Over morning newspapers with the Today programme in my ear, I eye my garden nervously. If I ripped up the roses and the lavender, how many rows of potatoes could I fit in? Enough to feed a family? Is this madness or not? And why is it that I no longer trust the economists and policymakers to give me a straight answer to that question?

There is a strange air of suspense. Everyone agrees that things could get grim, but what does that mean? Grim, as in a bit of nasty unemployment, or grim, as in total economic breakdown with queues for soup kitchens and millions living off their allotments? If the latter sounds fanciful, there are countries like Argentina and Russia who can tell you from bitter recent experience what happens when economies collapse.

Gordon Brown, fearful of “self-fulfilling prophecies”, instead offers a tinny upbeat message. Everyone knows now that it is all about confidence: will savers panic and move their money to Ireland, crippling British banks? The circumspection of the wise men becomes sinister. On the Today programme, John Humphrys pressed Richard Lambert, director general of the CBI, for his forecast. Lambert hesitated, replying with, “my hope is …”. “No, no,” interrupted Humphrys, “what is your forecast?” There was another hesitation before Lambert nervously “forecast” a grim 18 months before life resumed as normal. It sounded like a hope. No one has any idea what is going to happen.

No sooner do economists or government ministers make a pronouncement using words such as “impossibility”, “unlikely” or “never”, than they are having to eat them. If these are uncharted waters then perhaps we are at the moment when the tsunami is visible on the horizon, and the tide has suddenly retreated, and fish are stranded, gasping for oxygen all over the beach.

But don’t get too bogged down in seed catalogues (and forget trying to get your head around collateralised debt obligations – even the Financial Times’s banking correspondents admit it is “fiendishly complicated”), the average citizen has a far more important plot to unravel: how did we get in this mess, and how do we make sure it doesn’t happen again?

Answering these two questions does not require a crash course in City finance and economics, because this crisis is as much about politics and ideology as anything. If you’re pressed for time, the reading list can be very short. Key is Karl Polanyi’s The Great Transformation, published in 1944, an economic history which sets out to explain 1929, the Great Depression and the rise of fascism. Polanyi’s book came out the same year as another influential Austrian economist, Friedrich Hayek, brought out the central text of neoliberalism, The Road to Serfdom.

Hayek became the founding father of a model of economic management which has brought us to the current crisis; Polanyi, with extraordinary prescience, warned that the crisis would come; he rejected the idea that the market is a “self-regulating” mechanism which can correct itself. There is no “invisible hand” such as the neoliberals maintain, so there is nothing inevitable or “natural” about the way markets work: they are always shaped by political decisions.

At the time Polanyi was writing, there were many who agreed with him that free-market capitalism was chronically and destructively unstable, with terrible political consequences. But in the 70s and 80s, Hayek’s neoliberalism began to take hold on the US ruling elite, Margaret Thatcher was recruited – and in due course Tony Blair and Gordon Brown. “Roll back the state, leave the economy to run itself” has held sway ever since. As Ann Pettifor points out on her website, debtonation.org, Alan Greenspan wrote enthusiastically in August that “the past decade has seen mounting global forces (the international version of Adam Smith’s invisible hand) quietly displacing government control of economic affairs”. He blithely continued that the greatest danger facing the economy was that “some governments, bedevilled by emerging inflationary forces, will endeavour to reassert their grip on economic affairs”. Last week, Greenspan did a gigantic volte-face as he pleaded for government to do just that – reassert its grip in the form of the bail-out.

We are now learning what countries across the developing world have experienced over three decades: unstable and inequitable neoliberal economics leads to unacceptable levels of social disruption and hardship that can only be contained by brutal repression. Add that to the two other central charges against deregulated capitalism: first, it may create wealth but it does not distribute it effectively; and second, that it takes no account of what it cannot commodify – neither the social relationships of family and community nor the environment, which are vital to human wellbeing, and indeed to the functioning of the market itself. Ultimately, neoliberal capitalism is self-destructive.

We are now witnessing the collapse of this absurd economic orthodoxy that has dominated politics for nearly 30 years. Its triumphalist arrogance, its insistence on orthodoxy, has been comparable to Soviet communism in its scale. For two decades, we’ve been told “Tina” – “There is no alternative”.

Economists talk of trust, belief, faith; we now understand that all along neoliberal capitalism was a form of mythology. That’s why the triumphalism was necessary – you could not afford to have anyone challenge the system or we might all realise we were gawping at the emperor’s nakedness. Rowan Williams was right to quote Marx, that “unbridled capitalism becomes a kind of mythology, ascribing reality, power and agency to things that have no life in themselves”. Richard Dawkins should be critiquing this superstitious belief system.

Fortunately Thomas Frank did so in his brilliant book, One Market Under God (2001). This is the second book on the reading list, because it explains how neoliberalism entrenched its triumphalism into the political system of the US; how it marginalised and delegitimised all challenge and established hegemony in the so-called free world.

Now, as it all totters, we can take stock. We can ask how and why the critique – of which Frank was a part and Polanyi the bible – which was emerging in the late 90s was crippled. The anti-globalisation movement argued that neoliberal capitalism was unjust, unstable and destructive to human and environmental wellbeing. Sounds sensible now, but at the time it mysteriously got smeared by association with anarchists with a penchant for smashing Starbucks’ windows. The broad network of social grassroots movements – US unions, Mexican peasants, Indian farmers – were misnamed, misunderstood, ridiculed and ignored. There is no alternative, the politicians intoned mantra-like.

Then 9/11 and for the next seven years a sideshow was offered as a distraction with caricature villains and thriller drama. While eyes were on the absurd charade of the “threat of Islamist terrorism to western civilisation”, the real doomsday scenario that poses a far greater threat to western civilisation (whatever that is) was gathering pace right next to Ground Zero, in Wall Street.

As in all mythologies, the only option, according to Timothy Garton Ash (not noted for his religious faith) on these pages recently, is to pray. What makes me frightened is that this is a corrupt mythology which, like that of the Aztecs, may require a lot of human sacrifice.

m.bunting@guardian.co.uk

Bailout Vote Underscores US Leadership Crisis

October 1, 2008

by: Steven Thomma, McClatchy Newspapers

photo
The bailout deadlock demonstrates that no definitive leadership exists in Washington – least of all in the White House. (Photo: Ezra Shaw / Getty Images AsiaPac)

Columbus, Ohio – The failure of a proposed Wall Street bailout Monday underscored that America is suffering not just from a financial crisis, but also from a crisis of political leadership.

“This has been a bad day for Washington and a bad day for American politics,” said Harold Ford, a former Democratic congressman from Tennessee. “What happened today was an embarrassment for the country.”

None of the country’s political leaders, Republican or Democrat, has proved able to navigate the treacherous politics of the moment and secure an agreement to bail out the country’s financial system and restore confidence in the marketplace.

President Bush is a largely discredited lame duck. He’s not trusted by his own party and was unable to bend the Congress to his will even as he warned of a catastrophe if lawmakers rebelled.

Democratic presidential nominee Barack Obama and his party’s congressional leaders control the Congress and agreed with Bush’s urgency, but they couldn’t deliver a majority, either.

Still, they came closer than did Republican John McCain and his party’s leaders in the House of Representatives, who delivered only 30 percent of the GOP votes for the compromise, while Democrats delivered some 60 percent of their members.

Leaders of both parties vowed to seek bipartisan cooperation toward drafting a compromise that could pass, but with their own elections five weeks away, they couldn’t stop themselves from partisan attacks, which make the goal of bipartisan agreement even more difficult to reach.

Nowhere is the crisis more evident than it is in the White House.

Bush limps toward the end of his second term with among the lowest job-approval ratings in history – a recent Gallup poll found just 27 percent approving and 69 percent disapproving.

Worse, he’s lost credibility in Congress, notably for leading the country into war in Iraq on false claims that Iraq had ties to al Qaida and weapons of mass destruction. When he dispatched Vice President Dick Cheney to lobby House Republicans to support the Wall Street bailout, the closed-door session grew heated, and some members reportedly reminded Cheney that they’d trusted him on Iraq.

Bush also is paying a price for years of strong-arming Congress, particularly when he counted on then-House Majority Leader Tom DeLay, R-Texas, to “hammer” proposals such as a costly expansion of Medicare past skeptical conservatives.

“There’s no question the rank-and-file are carrying some grudges from the past,” said Dan Schnur, the director of the Unruh Institute of Politics at the University of Southern California.

Democrats, who won control of both the House and Senate in 2006, also couldn’t deliver. Congress’s approval rating is even lower than Bush’s, at around 18 percent.

When Obama, the party’s new leader, learned of the plan’s rejection, he spoke about Washington almost as if he weren’t a member of Congress.

“Democrats and Republicans in Washington have a responsibility to make sure that an emergency rescue package is put forward that can at least stop the immediate problems we have so we can begin to plan for the future,” he said.

He didn’t say how he might lead or what role he’d play. “Step up to the plate,” he told Congress. “Get it done.”

His party’s leaders in Congress also threw up their hands, as House Speaker Rep. Nancy Pelosi, D-Calif., and others bragged that they’d delivered a majority of the Democratic votes, even though that wasn’t enough.

“The Democratic side more than lived up to its side of the bargain,” Pelosi said, lauding fellow Democratic leaders for “getting 60 percent of the House Democrats to support a bill which isn’t our bill.”

Republican leaders in Congress were powerless as well to deliver the votes they’d promised, saying that they lost about 12 committed votes when some of their members got mad at Pelosi.

“We could have gotten there today had it not been for this partisan speech that the speaker gave on the floor of the House,” said House Republican Leader Rep. John Boehner, R-Ohio.

McCain appeared as impotent as everyone else. He’d suspended his campaign briefly last week to rally support for the plan, and spent part of Saturday lobbying House Republicans by phone, but he couldn’t deliver, either.

Why not a bailout for the rest of us?

October 1, 2008

What’s really required in this crisis is an entirely different kind of government intervention in the economy.

Quickly organized protests around the U.S. drew opponents of the bailout for Wall Street (Joe Newman)Quickly organized protests around the U.S. drew opponents of the bailout for Wall Street (Joe Newman)

AS THE smoke cleared after Monday’s stunning House of Representatives vote against a $700 billion financial bailout for Wall Street, the politicians immediately got down to the business of blaming each other–and scheming about the next attempt to push through this rescue of the super-rich.

But for working people trying to figure out what the hell has happened to the U.S. financial system–and why the leaders of the U.S. government, apparently regardless of political party, are prepared to spend more than $2,000 for every man, woman and child in this country to save Wall Street–the reaction was different.

For one thing, there was sweet satisfaction to be taken in the fact that the bankers and stockbrokers didn’t get their way for once–especially since they’re out to steal $700 billion in taxpayers’ money to cover their bad investments, under a program devised by former Wall Street CEO and now Treasury Secretary Henry Paulson.

With the business world ratcheting up political pressure and Paulson predicting certain doom if no action was taken, the Bush administration and the leadership of both parties in both the House and Senate were all sure that the bailout bill would go through. Yet the legislation was derailed because members of Congress are feeling the heat from a growing popular outrage over the staggering scale of a giveaway to the very same people who led the economy to the edge of the abyss.

It was an all-too-rare turn of events for the U.S. political system–the opinions of ordinary Americans actually mattered in what happened.

At the same time, though, there’s a sense of foreboding. If the government can’t agree on a bailout, will Wall Street really crash and burn–and cause an economic catastrophe on Main Street, too?

After all, that’s the claim of “King Henry” Paulson and his nominal boss, George W. Bush. They’re basically extortionists, insisting that if Congress doesn’t agree to a king’s ransom for the banks, the economy gets it–in the form of a worldwide financial meltdown that would wipe out workers’ savings and eliminate millions of jobs overnight.

The stock market plunge that followed the House vote Monday will have reinforced such fears. Few workers have the resources to play the stock market, of course, but their lives are affected by its ups and downs, especially the downs–for example, the loss of retirement savings in 401(k) accounts that many workers rely on, now that defined benefit pension plans are going the way of the dinosaur.

So is it true? Are we all–the multi-millionaire bankers on Wall Street and the tens of millions of workers on every other street–in the same boat after all? Do we really need the Paulson bailout to avert a second Great Depression?

The answer is no.

The argument that a bailout of the banks is good of all us is an ideological smokescreen, to cover the specifics of the Paulson proposal, as sanctioned by the Democrats–which benefits the rich and powerful, at the expense of the rest of us.

There are plenty of ways that government intervention could alleviate the financial crisis and provide urgently needed relief to working people. But that would involve programs, policies and priorities that the bankers despise–and that political leaders in Washington want nothing to do with.

Paulson is right to say that Wall Street is facing its most severe crisis since the Great Depression–a catastrophe entirely of its own making–and that the U.S. government has to respond. But the form that response takes–a huge handout for the super-rich or a progressive plan to rein in the banks and help ordinary people–depends on whether workers organize to make their voices heard and felt in Washington.

Continued . . .

Michael Moore: The Rich Are Staging a Coup This Morning

September 30, 2008

by Michael Moore

Friends,

Let me cut to the chase. The biggest robbery in the history of this country is taking place as you read this. Though no guns are being used, 300 million hostages are being taken. Make no mistake about it: After stealing a half trillion dollars to line the pockets of their war-profiteering backers for the past five years, after lining the pockets of their fellow oilmen to the tune of over a hundred billion dollars in just the last two years, Bush and his cronies — who must soon vacate the White House — are looting the U.S. Treasury of every dollar they can grab. They are swiping as much of the silverware as they can on their way out the door.

No matter what they say, no matter how many scare words they use, they are up to their old tricks of creating fear and confusion in order to make and keep themselves and the upper one percent filthy rich. Just read the first four paragraphs of the lead story in last Monday’s New York Times and you can see what the real deal is:

“Even as policy makers worked on details of a $700 billion bailout of the financial industry, Wall Street began looking for ways to profit from it.”Financial firms were lobbying to have all manner of troubled investments covered, not just those related to mortgages.

“At the same time, investment firms were jockeying to oversee all the assets that Treasury plans to take off the books of financial institutions, a role that could earn them hundreds of millions of dollars a year in fees.

“Nobody wants to be left out of Treasury’s proposal to buy up bad assets of financial institutions.”

Unbelievable. Wall Street and its backers created this mess and now they are going to clean up like bandits. Even Rudy Giuliani is lobbying for his firm to be hired (and paid) to “consult” in the bailout.

The problem is, nobody truly knows what this “collapse” is all about. Even Treasury Secretary Paulson admitted he doesn’t know the exact amount that is needed (he just picked the $700 billion number out of his head!). The head of the congressional budget office said he can’t figure it out nor can he explain it to anyone.

And yet, they are screeching about how the end is near! Panic! Recession! The Great Depression! Y2K! Bird flu! Killer bees! We must pass the bailout bill today!! The sky is falling! The sky is falling!

Falling for whom? NOTHING in this “bailout” package will lower the price of the gas you have to put in your car to get to work. NOTHING in this bill will protect you from losing your home. NOTHING in this bill will give you health insurance.

Health insurance? Mike, why are you bringing this up? What’s this got to do with the Wall Street collapse?

It has everything to do with it. This so-called “collapse” was triggered by the massive defaulting and foreclosures going on with people’s home mortgages. Do you know why so many Americans are losing their homes? To hear the Republicans describe it, it’s because too many working class idiots were given mortgages that they really couldn’t afford. Here’s the truth: The number one cause of people declaring bankruptcy is because of medical bills. Let me state this simply: If we had had universal health coverage, this mortgage “crisis” may never have happened.

This bailout’s mission is to protect the obscene amount of wealth that has been accumulated in the last eight years. It’s to protect the top shareholders who own and control corporate America. It’s to make sure their yachts and mansions and “way of life” go uninterrupted while the rest of America suffers and struggles to pay the bills. Let the rich suffer for once. Let them pay for the bailout. We are spending 400 million dollars a day on the war in Iraq. Let them end the war immediately and save us all another half-trillion dollars!

I have to stop writing this and you have to stop reading it. They are staging a financial coup this morning in our country. They are hoping Congress will act fast before they stop to think, before we have a chance to stop them ourselves. So stop reading this and do something — NOW! Here’s what you can do immediately:

1. Call or e-mail Senator Obama. Tell him he does not need to be sitting there trying to help prop up Bush and Cheney and the mess they’ve made. Tell him we know he has the smarts to slow this thing down and figure out what’s the best route to take. Tell him the rich have to pay for whatever help is offered. Use the leverage we have now to insist on a moratorium on home foreclosures, to insist on a move to universal health coverage, and tell him that we the people need to be in charge of the economic decisions that affect our lives, not the barons of Wall Street.

2. Take to the streets. Participate in one of the hundreds of quickly-called demonstrations that are taking place all over the country (especially those near Wall Street and DC).

3. Call your Representative in Congress and your Senators. (click here to find their phone numbers). Tell them what you told Senator Obama.

When you screw up in life, there is hell to pay. Each and every one of you reading this knows that basic lesson and has paid the consequences of your actions at some point. In this great democracy, we cannot let there be one set of rules for the vast majority of hard-working citizens, and another set of rules for the elite, who, when they screw up, are handed one more gift on a silver platter. No more! Not again!

Yours,
Michael Moore
MMFlint@aol.com
MichaelMoore.com

P.S. Having read further the details of this bailout bill, you need to know you are being lied to. They talk about how they will prevent golden parachutes. It says NOTHING about what these executives and fat cats will make in SALARY. According to Rep. Brad Sherman of California, these top managers will continue to receive million-dollar-a-month paychecks under this new bill. There is no direct ownership given to the American people for the money being handed over. Foreign banks and investors will be allowed to receive billion-dollar handouts. A large chunk of this $700 billion is going to be given directly to Chinese and Middle Eastern banks. There is NO guarantee of ever seeing that money again.

P.P.S. From talking to people I know in DC, they say the reason so many Dems are behind this is because Wall Street this weekend put a gun to their heads and said either turn over the $700 billion or the first thing we’ll start blowing up are the pension funds and 401(k)s of your middle class constituents. The Dems are scared they may make good on their threat. But this is not the time to back down or act like the typical Democrat we have witnessed for the last eight years. The Dems handed a stolen election over to Bush. The Dems gave Bush the votes he needed to invade a sovereign country. Once they took over Congress in 2007, they refused to pull the plug on the war. And now they have been cowered into being accomplices in the crime of the century. You have to call them now and say “NO!” If we let them do this, just imagine how hard it will be to get anything good done when President Obama is in the White House. THESE DEMOCRATS ARE ONLY AS STRONG AS THE BACKBONE WE GIVE THEM. CALL CONGRESS NOW.

Financial Meltdown: The Financial Edifice of U.S. Imperialism is

September 26, 2008

Raymond Lotta, Global Research, September 24, 2008

The events of the last ten days on Wall Street represent a new and more destabilizing phase of the turmoil gripping financial institutions and markets in the U.S. A financial crisis has been unfolding for more than a year. It is now the most serious financial crisis of U.S. capitalism since the Great Depression of the 1930s. And it is by no means contained or under control.

The financial edifice of U.S. imperialism is in danger of crumbling. And the U.S. ruling class is cobbling together desperate measures to prevent wholesale collapse.

This analysis examines the recent eruptions on Wall Street of mid- and late September and the deeper structural causes of the crisis.

I. Wall Street Panics, the Guardians of U.S. Capitalism Scramble

A). A Week of Deepening Financial Crisis

Two of the last two independent investment banks on Wall Street ceased to exist in mid-September. In a matter of hours, Lehman Brothers went bankrupt on September 15, while Merrill Lynch was forced into liquidation and then absorbed by Bank of America. This follows the government-promoted buyout in April of Bear Stearns, another giant investment banking firm that was on the ropes, by JPMorgan Chase.

It was only several weeks earlier that the U.S. government had taken over the two major and failing mortgage-finance giants–Fannie Mae and Freddie Mac. At the time, this takeover was presented as providing an effective firewall against future financial eruptions. But it proved to be no more than the patching up of a pothole during an earthquake. This past week the government had to take over the American International Group (AIG), the giant insurance-financial firm.

AIG had over a trillion dollars in assets. It had earned enormous profits from insuring mortgage-backed investments circulating in the financial system that were held by other banks. But this has turned into a disaster. Here is some of what happened:

Through deceit and aggressive marketing, banks pushed mortgages on people. The Federal Reserve Bank had pumped low-cost funds into the banking system to prop up mortgage loans. These loans were then combined into larger groups of loans by investment banks (like Lehman Brothers) and turned into financial products that were sold on financial markets. All kinds of lending took place with these original loans as collateral. But when housing prices fell, and mortgages could not be paid, much of this collateral became worthless.

AIG was insuring much of this lending against the risk of loss. But as the losses mounted astronomically, AIG could neither cover the costs of backing this debt nor borrow funds on the financial markets to keep itself afloat.

The financial markets had basically lost confidence, and AIG’s assets tumbled in value. AIG was in danger of collapse. But if AIG went under, the probability was great that it would have taken down other financial institutions with it. This forced the government’s hand.

Normally, so-called bad debt is marketed at distress prices. During the financial storm of mid-September, not only were there no takers for debt but it also proved impossible for the financial markets to establish any kind of value on this debt.

As the pace of the financial crisis grew more frenetic during the week of September 15, the U.S. ruling class was faced with a two-fold danger: additional and cascading losses and bankruptcies in the financial sector; and the possible choking up of lending channels, which could send the economy as a whole into a rapid downward spiral.

On September 19th, the U.S. government announced what will likely turn out to be the largest bail-out operation in U.S. history. Its initial cost is $700 billion, and this is on top of the $200 billion earmarked to shore up Freddie Mac and Fannie Mae and the $85 billion to bail out AIG.

B). International Dimensions

This is a rolling financial and credit crisis. It is amplifying internationally with bursts of instability. In the midst of last week’s U.S. market gyrations, the Russian stock market sank and shut down for two days. In other parts of the world, concern spread about whether dollar-based loans in global markets would continue on the scale necessary to sustain daily business operations. In response, the central banks of Germany, Japan, England, Canada, and Switzerland pumped some $185 billion into the financial markets.

And investor worry is mounting in East Asia. China, Japan, and South Korea, for instance, count on the U.S. as a major export market.

One of the most significant features of world growth and expansion over the past decade has been the deepening integration of the world capitalist economy. This is happening both on the level of production and trade—like the parts that go into an automobile being manufacturing in different factories around the world. And it is happening at the level of finance—where banks are more globally and tightly interlinked with one another through chains of borrowing and lending and even, as in the case of AIG, insuring the risks of borrowing and lending.

The rescue operation announced by the U.S. government was motivated, on the one hand, by the need to stanch the bleeding of the U.S. financial system; and, on the other, by the need to restore international confidence in the U.S. economy.


Raymond Lotta is a frequent contributor to Global Research.
Global Research Articles by Raymond Lotta


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