The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Editorial:
GE, Corporate Fraud, and the Impending Economic Crisis

Aug 19, 2019

GE, a major company that makes everything from jet engines and power plants to high tech machinery and industrial equipment, complete with its own bank, could be on the verge of collapse under a mountain of bad debt. This is the conclusion of a 177-page report released by Harry Markopolos, a corporate whistle blower.

The report shows how GE management hid massive losses by taking on enormous debts, while draining tens of billions of dollars every year in order to further enrich its top shareholders and executives. According to Markopolos, GE is a much bigger fraud than Enron, a very large company whose collapse two decades ago was a part of a much bigger crisis.

Markopolos admitted that he is working with a group of speculators who are placing big bets against GE. The worse GE does, the more money Markopolos and his allies stand to make. But both the U.S. Justice Department and the Securities and Exchange Commission (SEC) announced several months ago that they have been investigating GE for fraud, among other crimes.

If GE were an isolated case it wouldn’t be a huge problem. But companies throughout the economy have been taking on record amounts of debt in order to increase their payouts to the biggest stockholders and executives. So, any small fall in business, any small downturn in the economy could threaten a complete collapse of not just GE, but of much bigger companies.

None of these big companies operate in a vacuum. They are all connected to each other, to the whole financial system and the rest of the economy. Look at what happened during the last big financial crisis 10 years ago. The collapse of two bellwether banks, Lehman Brothers and Bear Stearns, almost took down the entire economy.

A new day of reckoning could be fast approaching. Business is already beginning to contract in important parts of the economy, including in housing, manufacturing production and corporate investment. The ever more wild swings in the capitalists’ own speculative markets, such as in stocks and bonds, are all harbingers of a new panic, a new crisis. And since debt levels today are much higher than they were 10 years ago, a new crisis threatens to be much worse, much more destructive.

Over the last 10 years, the drive to increase their profits has led the capitalist class to continually attack the working class. Non-stop corporate cost cutting means no job is safe. New work is farmed out to low wage contractors, or else it is kept in-house for temps. Generations of workers have not experienced a regular, full-time job. And certainly no new jobs come with the same wages and benefits that better off parts of the workforce used to take for granted, like regular pensions and health care coverage. Low wages and a precarious existence have become the norm for increasing layers of the working class.

In other words, to assure their profits, companies go after the workforce with a vengeance. When the next crisis hits, it will be worse. The capitalists already prepare to compound this disaster by using demagogues to fan the flames of racism, prejudice and xenophobia, trying to foment a war to divide the workers.

We have no choice but to organize and fight back. We have no choice but to break down all the barriers which the capitalists use to divide, divert and weaken the working class.

But we cannot stop there. We will have to recognize what history has put in front of us: capitalism is an old, worn-out system that survives by feeding on the rest of society, cannibalizing everything that was built up and achieved.

The working class has every interest to take the power away from the capitalists. And we have the power to do it. We produce everything and make society run. We are in the perfect position to make it run not only for us, but for all of humanity.