Oct 28, 2019
GM workers ratified their new contract, with 43% of the workers voting “no.” The no-vote meant a willingness to remain out on strike, even after six weeks on picket lines on strike pay of less than 300 dollars per week. The high no-vote is a reflection of the GM workers’ determination to fight.
The no-vote was especially strong among workers from the four GM plants that are definitively closed by this contract. As well, workers at GMCH and parts depots who earn a lower wage with fewer benefits than the workers in manufacturing plants voted “no.” But they were not the only ones saying “no,” even after six weeks on strike.
This strike was marked by a high level of consciousness on the part of high seniority workers to support lower tier workers and temporary workers and to demand equality for them. This was expressed openly on picket lines—that what happened to others could easily happen to all: plant closures, lowered wages, cuts in benefits, all of it.
As for the 57% of GM workers who voted to accept this last offer, no doubt most understood that they had not gotten everything they deserve and need. But after six weeks on strike, they decided they had taken this fight as far as they could take it.
So what were the outcomes of the strike?
Permanent workers won increased income from bonuses and raises. The bosses appear to have backed off on proposals to transfer health care costs to individual workers, although it is not clear that they could have obtained this in any event.
The issue of the unfairness of lower paid tiers and temporaries was not settled. Even the promise to bring all second tier permanent workers up to top rate is delayed until literally the last weeks of the four year agreement. And there is no agreement to eliminate the tiers for future hires.
This is not a surprise. Tiering was put in place decades ago, and has been getting worse ever since. Was it going to disappear after one strike, one fight? No.
It is a system imposed by all the bosses across the board in one form or another to lower wages and cut benefits. It will take a wider fight of the working class to roll it back.
But the fact that GM workers finally took a stand against it—fought some of it back—is perhaps the most substantial gain of this strike. While the contract is not all that workers wanted and deserved, it is certainly not what the company wanted, either.
No doubt there will be a steady stream of propaganda in the months to come aimed at convincing workers to blame the union for what they didn’t get. The purpose of this propaganda will be obvious: to break the workers’ solidarity and to undermine the union.
But GM workers have nothing to regret. They did something that hasn’t been done in decades. Their strike broke through the demoralization that has infected the working class, the feeling that nothing can be done.
The fight of GM workers opened a door for all workers.
The high level of support both on and off of picket lines shows that workers in other workplaces felt that the fight was their fight as well. Their support opened the way for solidarity between larger sections of the working class.
Workers at one company, by themselves, cannot solve the problems of jobs, tiered wages, etc. But workers at one company can start the fight.
And GM workers did that. They have every reason to be proud. They stuck together during the long six weeks of this strike, and gained experience that will allow them to better fight for their rights into the future.
Oct 28, 2019
Officials of Baltimore City, the Stronach Group (owners of both Pimlico and Laurel Race Tracks in Maryland), and Anne Arundel and Baltimore counties recently announced a tentative 375 million dollar deal to re-develop Pimlico Race Course in Baltimore and renovate Laurel Race Course near Washington, D.C.
This deal would be very profitable for the Stronach Group. But who are they proposing will pay for this deal? Maryland’s taxpayers and school children.
Financing for the deal would require help from the state. The state would issue bonds. And the money to pay off the bonds would come in part by taking even more money from state gambling casino revenues—money that is supposed to be going to public schools.
What can we say about this? Here we go again?
Oct 28, 2019
The city of Baltimore is supposed to be spending about two billion dollars on its aging water mains that break daily throughout the city and county. And out of that two billion the city promised to spend, one tenth of one percent was supposed to help city or county residents who experienced back-ups of water and sewage.
So far, the city fund has paid to clean up only 10 homes—although dozens of people report back-ups after big rain storms. A private company offered warranties to home owners on such items as water and sewage back-up, and they also established money to pay poorer residents. But hardly any of that money was spent.
Both the company and the city did the same thing—made it hard for residents to apply, made ridiculous deadlines, said they would pay if it was heavy rain but not if it was clogged. Any and every excuse to avoid paying when people actually experience water and sewage back-ups.
As if it was the fault of residents and not the fault of decades of neglect by city and county officials!
Oct 28, 2019
Last month Caltech, a major research university on the West Coast, received the biggest donation in its history. Billionaires Stewart and Lydia Resnick pledged Caltech a gift of 750 million dollars—which is also the second largest gift ever to a university in the U.S.
Coming on the heels of worldwide protests at world governments’ inaction in the face of climate change, the Resnicks said they wanted to help climate research and the effort for “environmental sustainability” with this donation.
How do they have the money to donate? Well, the Resnicks would certainly not have amassed an estimated 9 billion dollars if they hadn’t focused on profitmaking at the expense of everything else, including the environment.
Look at the Resnicks’ main line of business, for example. Their Wonderful Company is the world’s largest almond and pistachio grower. And almonds and pistachios need more water than almost every other plant—a permanent, uninterrupted supply of large amounts of water—to the detriment of other agricultural areas and fisheries, as environmentalists have long decried.
So how does all that water come to the Resnick’s more than 65,000 acres of almond and pistachio orchards? A big part of it comes from the Kern Water Bank, a system of aqueducts, pumping stations and power plants, which distributes water from rivers in Northern California to other parts of the state. Built through state bonds and originally called the State Water Project, the system was turned over in 1995 to Kern County water authorities, who, in turn, quickly handed it over to a consortium of companies, including Westside Mutual Water Co., owned by ... [you guessed it] the Resnicks!
Is it a coincidence that some of the Resnicks’ big donations have gone to the Democratic Party, which has run California for a long, long time?
No, don’t look to the Resnicks or any other billionaires to help solve the climate crisis. They make their huge fortunes by being some of the biggest contributors to climate change and other environmental problems.
Oct 28, 2019
Dan Gilbert is someone who has spent the last 10 years buying up buildings and property in downtown Detroit, nearly 100 properties, often with the help of generous tax breaks from the City of Detroit, Wayne County and the State of Michigan. So many you can hardly keep count.
But why stop there? Surely there are more opportunities for this billionaire to amass yet more prime property to expand his empire. And it has come in the form of “opportunity zones” created by Trump’s 2017 tax code overhaul. The stated idea was to grant lucrative tax breaks to encourage new investments and development in poor areas around the country.
These certain tracts are supposed to be eligible for the opportunity-zone status based on poverty and income levels.
But lo and behold, 3 swaths of downtown Detroit were selected as opportunity zones under this tax law—areas of downtown that are considered islands of wealth in the city, including Gilbert-owned office space, with such “poor tenants” as Microsoft, J.P. Morgan Chase, Gilbert’s own Quicken Loans, and a luxury hotel!
Does it help to be a billionaire already? Sure! Does it help to be a Trump campaign financial supporter—couldn’t hurt. Does it help that your firm can pay lobbyists to convince the very government department making determinations to revise its list to include Gilbert’s holdings? Maybe not just a coincidence.
Oct 28, 2019
A new analysis by the Detroit News found that 147 properties in the city of Detroit owned by Olympia Development, the company tied to the family of the late billionaire Mike Ilitch, continue to stand empty. The properties include 70 within the area known as District Detroit, which surrounds the recently built Little Caesars Arena.
The Ilitch family are the owners of Little Caesars pizza, the Detroit Red Wings, and the Detroit Tigers. They received over 400 million dollars from the City of Detroit and State of Michigan for the construction of Little Caesars Arena (LCA), where the Red Wings play, near downtown Detroit. In requesting money for the project, the Ilitches made grand promises of transforming the area into a “walking neighborhood” complete with hundreds of new residences, restaurants and small shops to benefit city residents. They promised the area would be transformed by 2017.
The Ilitches and Olympia Development got their arena built. They pay no property tax on the LCA. They also got the rights to all revenue from the arena, including parking, food and beverage sales, souvenirs, TV and radio broadcasting contracts, fees for luxury suites, and naming rights.
Over the years, with help from local governments, the Ilitches succeeded in gobbling up the land in and around District Detroit and pushing out people who lived in the area, many of them poor and black.
The Ilitches now give all kinds of excuses for why the transformation has not been completed, but they made no mention of any potential obstacles when they sold the public on their need for money for the project.
The more time goes by, the more apparent it becomes to city residents that the promised “development” had nothing to do with them—except for paying the bill.
Oct 28, 2019
William Taylor, U.S. Ambassador to Ukraine, testified in the impeachment inquiry against Trump. Taylor’s testimony was potentially extremely damaging to Trump, and it is being treated as the smoking gun that ensures impeachment is nearly inevitable.
Much of the news media made Taylor appear to be a knight in shining armor, which is not particularly hard when he is stood up next to Trump. So who exactly is William Taylor?
Taylor has worked for over 50 years as a member of the U.S. state apparatus. He has held various high-level government positions under seven presidents, beginning with Reagan.
He worked for the Department of Energy, on the staff of Senator Bill Bradley, as a deputy advisor to the ambassador to NATO, as an ambassador coordinating assistance to Eastern Europe and the former Soviet Union, and later coordinating assistance to Afghanistan.
He has served twice as ambassador to Ukraine and coordinated U.S. policy in Egypt, Tunisia, Libya and Syria following the Arab Spring uprisings, carrying out imperialist foreign policy against the population of the world for decades.
Trump thought because he was elected, he had the right to run the U.S. state apparatus as he pleased. Taylor’s testimony and the media fanfare over it demonstrate that Trump, in trying to decide policies like military aid to Ukraine and the presence of U.S. troops in Syria, succeeded in turning against him a whole layer of the U.S. state apparatus: people like Taylor and others who have come forward to testify against him in the impeachment inquiry, and those who have yet to come forward. Taylor represents tens of thousands of others like him, and they are the people who really run the state apparatus—not a single politician like Trump, or any of the elected representatives.
Oct 28, 2019
The following article is translated from Lutte Ouvrière, the newspaper of the revolutionary workers group active in France.
When, for the second time this year, Chilean President Piñera announced an increase in the price of Metro tickets from 800 to 830 pesos, students in the high schools and universities in Santiago, the capital, mobilized. On October 7, they invaded the train stations, jumping the turnstiles and blocking the trains.
Now, in this overcrowded capital, the Metro is used by three million people every day. The cost of transportation can represent 20% of the wages of a worker and almost 40% of the pension of many retirees. For this reason, the mobilization of the youth touched a popular current of anger.
When the government sent the police into the train stations against the students, the anger exploded. On October 18, about 40 stations were burned, which caused the closing of the entire system and general chaos in the capital. The same evening, President Piñera declared a state of emergency, applying a law that dates from the military dictatorship of Pinochet (1973–1990). General Javier Iturriaga del Campo deployed six thousand soldiers in the capital.
Piñera thought that the damage to the transit system would turn public opinion, and that sending in the army would demobilize the demonstrators. He got the opposite result. Soldiers in the streets recalled the nightmare of the dictatorship. Thousands of people descended on the streets of Santiago, banging on pots and pans, with cries of “Military, Get Out!”
Demonstrators brandished photos of people “disappeared” during the dictatorship and saluted the courage of the youth who had helped to erase their own fears.
The confrontations multiplied. Other train stations were burnt, buses were lit on fire, and private companies were invaded, like the building of the electric company Enel and a branch of the Bank of Chile. Supermarkets were looted, notably those owned by Walmart.
The fight spread to areas outside the capital, then to the whole country.
On Saturday, October 19, Piñera, forced to retreat, announced he was canceling the increase in fares.
At the same time, General Iturriaga announced a curfew of 10 PM.
But at this new provocation, demonstrators went back into the streets: in Santiago, in Valparaiso, in Concepción, in Antofagasta, and in many other towns, where more public buildings were set on fire.
On October 20, Piñera declared on TV: “We are at war, against a powerful, implacable enemy who doesn’t respect anyone.” Seven demonstrators were dead and 1,500 had been arrested, but for the president, the demonstrators were the “real criminals.”
On October 21, the Student Confederation, the mineworkers union at La Escondida, the biggest mine in the country, and the dockworkers union in Valparaiso called for a general strike. The Central Union of Workers and other union federations joined in. While they had been quiet up to that point, they denounced the state of emergency and called for a strike on October 23.
Just a few weeks ago, President Piñera bragged that Chile was an oasis in the midst of the boiling situation in the rest of Latin America.
His intransigence caused an explosion around every issue that angered people. One leaflet, said: “This is not just about the Metro, but the dignity of all of society.” The leaflet denounced the many problems in this very unequal Chile: “healthcare, education, housing, the price of electricity and gas, the high salaries of parliamentary representatives, the diversion of money to the military, and the impunity of the bosses.”
The general privatization of the economy, which started under Pinochet, has grown to include the health, education, and retirement systems. The consequences have been borne by the population: going to college now results in decades of debt for most students, pensions pay at a poverty level, and a minimum wage so low that a member of Parliament makes 32 times as much. All this helped produce the explosion.
Oct 28, 2019
The following article is translated from Lutte Ouvrière, the newspaper of the revolutionary workers group active in France.
On Thursday, October 17, demonstrations broke out in Lebanon once again, this time after the government announced a new tax on calls made using an internet app, WhatsApp. This tax has already been repealed under the pressure of the population, but the demonstrations and protests continue across the country.
The demonstrators demand the removal of all the country’s political leaders. They express their anger against the frequent shutoffs of water and electricity, the growing unemployment, and the inflation which presses more and more heavily on working people. Some must worry whether they can eat.
The current government was formed at the beginning of the year after long negotiations between Saad Hariri, ally of the U.S. and Saudi Arabia, and Hezbollah, an Islamic party allied with Iran. The new government took austerity steps to force the population to pay for an enormous national debt, 86 billion dollars—that is, more than all the goods and services produced in Lebanon for a year.
Last year France’s government gave Lebanon an 11-billion-dollar loan, on condition that the country impose austerity against the population.
It is notable that protestors expressed anger against representatives of all their own religious sects, whom they accused of pillaging the country. They chanted, “All of them, We Say All of Them.” Some politicians who showed up at protesters’ meetings were expelled, but then they showed their true faces: these expelled politicians ordered their thugs to shoot at demonstrators.
In the face of the growing demonstrations, Prime Minister Saad Hariri last week announced an end to all new taxes directed against the population in the 2020 budget. The head of Hezbollah supported this move, expressing his fear of “the danger of a popular explosion.” But these measures have not calmed the anger of the demonstrators. Their mobilization has for the moment united the country’s bitter religious divisions, because all are determined to make the government fall.
The Lebanese political system organizes the division of power among the clans that run the different religious communities and accumulate fortunes at the expense of the population. By identifying the cause of their problems as the religion-based political system, the demonstrators accuse the ruling class that enriches itself at their expense.
Oct 28, 2019
On October 14 in Culiacan, forces from the Mexican police and army arrested Ovidio Guzman, heir apparent to the Sinaloa cartel and son of Joaquin Guzman Loera, “El Chapo.” Immediately, dozens of gunmen appeared, surrounding the police and army. They had heavy weapons, including machine guns and anti-tank missiles. In the ensuing gun battle, at least 13 people were killed, and the army and police were forced to release Guzman.
In the last three weeks, dozens of other Mexican police and troops have been killed in battles with the cartels in the Mexican states of Michoacan and Guerrero in addition to Sinaloa, not to mention all of the ordinary people caught up in the accelerating violence across the country.
Opposition politicians blame the current Mexican president, Andres Manuel Lopez Obrador, for not going after the cartels aggressively enough. But when President Calderon tried to carry out a more aggressive policy in 2012, declaring war on the cartels and sending in the Mexican army, the result was a bloodbath that lasted for years.
These cartels are deeply rooted in Mexican society. They command the allegiance of thousands of people. They go much deeper than the policies of any Mexican president.
While the government might sometimes arrest one or another cartel leader, in fact, the cartels are linked to all levels of the Mexican state. In addition to corruption, they offer their services to politicians—for instance, when cartels murdered 43 student protestors in the state of Guerrero in 2014, it turned out they were asked to do so by the local mayor, who got the federal police to arrest the students and then hand them over to the gang for execution. One of the most brutal cartels even came out of the Mexican military.
They are also linked to the U.S. government, which has used them to fund covert operations against social movements throughout Latin America.
More deeply, they are a product of the U.S. and its economic domination of Mexico. The cartels get their money by selling their drugs to the U.S. drug market. They buy their weapons from U.S. gun makers. They launder their money through the international financial system, which is centered in the U.S.
At base, the problem is the lack of jobs and opportunity in Mexico—also a result of U.S. domination of the country. This makes it very easy for the cartels to find recruits, who have no other future. Instead of getting an education in a useful skill, the cartel “educates” its members in brutality, and gives them a way to make money.
Mexico today is approaching the highest yearly number of murders in its history. While gunmen for the cartels may be pulling the triggers, U.S. imperialism is responsible for these murders.
Oct 28, 2019
After Trump green-lighted the Turkish invasion of northern Syria in the second week of October, he was attacked by both Democrats and Republicans for abandoning the Kurdish militia that had been the most loyal U.S. ally in the Syrian civil war. Trump defended himself in his usual crass way. After the Turkish army had taken the territory it wanted, the Turkish government agreed to a cease-fire, and Trump tried to portray himself as an anti-war president, claiming he had in fact “saved a lot of lives.”
Trump then spewed the usual dishonest victim-blaming. “Turkey, Syria, and all forms of the Kurds have been fighting for centuries ... Let someone else fight over this long-bloodstained sand ... How many Americans must die in the Middle East in the midst of these ancient sectarian and tribal conflicts?”
In reality, the U.S., Britain, and France created this situation in the first place. They carved up the region out of the Ottoman Empire at the end of World War I into “protectorates” of the various powers. After World War II, they rearranged the map to ensure their domination could continue when these countries became independent. Since then, the U.S. has stoked the flames of ethnic and sectarian rivalries whenever that benefitted its interests.
When the Arab Spring hit Syria in 2011, the U.S. hoped to take advantage of it to ditch Assad, the head of the Syrian state, in favor of someone more amenable to U.S. interests. U.S. policies helped turn a movement that began with economic and democratic demands into an ethnic and religious civil war. Saudi Arabia, Turkey, Qatar, Egypt, and Iran all got involved, and each was at different moments encouraged or held back by the U.S. They turned Syria into a battleground between competing militias. When ISIS emerged in Syria, as a direct consequence of the U.S. war in Iraq, the U.S. switched policies again, accommodating itself to the continuation of the Assad regime and pushing Kurdish militias to retake the ISIS territory, village by village, offering them support. But now that they have done the dirty work for the U.S., they are disposable.
While Trump said that “we’re getting our troops out” of Syria, in fact, Trump’s moves don’t even reduce the U.S. presence in the country. Soon after Trump declared victory with the cease-fire, his defense secretary announced that the U.S. was sending an armored force to eastern Syria to secure the country’s oil fields. Trump admitted as much himself, tweeting, “When these pundit fools ... ask what we are getting out of the deal, I simply say, THE OIL....”
This crude admission offends other politicians only because it lays bare their underlying motivations. Democrats and Republicans alike are worried that Trump’s bluntness might make it more difficult for the U.S. to find willing partners in the future. But in fact, Trump just more openly expresses the perspective of U.S. imperialism that all of these politicians defend.
Oct 28, 2019
The following article is the editorial from The SPARK’s workplace newsletters, for the week of Oct. 21, 2019.
The proposed GM contract does not contain everything GM workers deserve. The current in-progression (two-tier) workers don’t catch up fast enough, and new workers will face the same 8-year progression. Not enough temps will become permanent. And new temps will come into the plants. The “furloughed” plants—Lordstown, Baltimore Transmission and Warren Transmission—are closing for good, and so is CCA Fontana. No one really knows how many jobs will exist at Detroit/Hamtramck.
But there is something else to say. Something important. Gains were made, and whatever they are, whatever money is in the contract is there because GM workers were determined to make a fight—and did fight.
They must be the ones to decide if it’s enough. They are the only ones who can know right now what they think is possible.
The situation they face, the situation we all face is not easy. The problems go far beyond one company and one industry, and they won’t be solved one company at a time.
In this decades-long economic crisis, every company tries to squeeze more work out of fewer workers in order to cut jobs. Every city, county and state government and every school system does the same. Every employer looks for tricks to drive down wages.
Companies one after the other close plants, close offices and warehouses. They pick up production and move it elsewhere, sometimes to another country, more often to another part of this country. Companies farm out work to “sub-contractors”—who pay lower wages.
Companies go bankrupt, close down, reopen under another name, merge with each other—and always see how many jobs they can get rid of and how much they can lower wages.
These problems won’t be overcome if we go on fighting one plant at a time, one company at a time, or even one industry at a time. The problems run across the whole economy. The answers to those problems will be found when workers across the whole economy begin to bring their fights together.
Does that mean the strike of GM workers was useless? NOT AT ALL.
First of all, their strike began to show the power that workers can have, simply because they do the work that is needed to make the economy, the whole society run. By the second week of the strike, the business press was filled with stories about how the strike was affecting the economy. If workers at just one company can do that, how much more power many of us together will have!
Other workers came out and stood on the picket lines with GM workers—Ford workers, FCA workers, parts plant workers, hospital workers, truckers, nurses, public sector workers, retirees, even students. Drivers refused to cross picket lines. Other workers brought carloads of canned goods, and gift cards and money to GM locals to sustain the strikers.
All of that was important. Solidarity is not just the name of an online magazine. It’s something that has been needed by the whole labor movement for a long time—the acknowledgment that when one of us is attacked, we are all under attack; the recognition that when one of us fights, it’s everyone’s fight.
What GM strikers did opens the door for other workers who are fed up with accepting a situation that is intolerable.
That’s what pulled other workers out to GM lines. That’s what can be the impetus for other workers to start their own fight.
For too long, too many of us have gone along with this nonsense that there is nothing you can do. That no one else wants to fight.
Well, there IS something that can be done. And GM workers did it. They decided themselves to fight. They started the ball rolling. Now the question is, what will other workers do? And what will the GM workers themselves decide? We certainly haven’t heard the last from them!
Oct 28, 2019
As of this writing, 32,000 Chicago teachers and school support staff have been on strike for more than a week. Their union is asking for improved school workers’ pay and healthcare, for smaller class sizes, preparation time for elementary school teachers, for staffing every school with a nurse and a librarian, and for hiring more counselors, case managers, and workers to help homeless students. They are also calling for an end to budgeting and school rating systems that have helped to starve and close neighborhood schools in poor areas.
Mayor Lightfoot campaigned promising additional nurses and librarians, among other things the teachers are demanding. But now she says there isn’t enough money. The two main Chicago newspapers agree with her, and have run article after article throwing whatever dirt they can at the strikers, hoping some of it will stick. But despite their propaganda that the strike is hurting students, it should be obvious after all these years of attacks on the schools that whatever improves the conditions for teachers is also an improvement for students.
Some of the Democratic candidates, including Joe Biden, Bernie Sanders and Elizabeth Warren, have come to picket lines or rallies, or at least voiced support for the strike—even though the mayor fighting the teachers is in the same Democratic Party. Strikers are happy for a show of support. But whatever they get will depend on their strike, not on these politicians.
Teachers and support staff have been enthusiastic on the picket lines. Some students and parents have joined them. Bus drivers have been giving teachers free rides to their daily rallies.
It is outrageous that teachers should have to fight for these demands. Even to begin to get them, they’re going to have to show this mayor that she will not be able to carry on business as usual in this city until she answers the demands of the teachers, which are at the same time demands for the students.
But as every teacher knows, even if they got every single one of their demands, it wouldn’t solve the problems they confront in the classrooms every day—because those are problems on a bigger scale. Issues teachers talk about all the time, like homeless students, students with health and mental health problems, crime, the lack of a future for their students—those are problems of the society. And those will only be solved by a fight over which direction society goes, a fight to turn it into a society that puts the needs of every human being as its primary goal, not profit.
Oct 28, 2019
In September, California politicians approved a bill, a so-called statewide rent cap promoted as “the strongest rent control package in America.” This act is supposed to prohibit an owner of residential property from increasing the rent more than 5%, plus the percentage change in the cost of living, per year.
But, currently, the rents are already very high. The average two-bedroom apartment rents for around $2,500 in California, according to Zillow. Some 9.5 million renters, more than half of California’s tenant population, are burdened by these very high rents, spending at least 30% of their income on housing costs, according to UC Berkeley. This bill does nothing to decrease these already skyrocketing rents.
Considering that the inflation rate is above 2–3% in California, this bill allows the real estate owners to increase the rents by more than 7% per year. This allowed increase is well above what the working class can afford: who gets a wage increase more than 3%?
Also, this rent cap is only applicable to the rental properties older than 15 years. So, owners of the new buildings can increase their rents with any price that strikes their mind at the moment, preventing the working class from moving into the new rental properties at all.
All in all, this bill is just another deceitful scheme, another malignant joke, brought to the working class by the politicians. Our rents are already damn high. If we don’t get organized and resist against these skyrocketing rents, the owners will increase these rents even higher.
Oct 28, 2019
On September 16, there was a crisis in the U.S. market in which companies and banks make very short-term loans to each other. That financial market, called the Repo Market, seized up and interest rates spiked, as companies and banks stopped making loans to each other. If this crisis had continued, several banks and big companies might have had to file for bankruptcy because they could not have met their obligations.
But the U.S. Federal Reserve stepped in and made loans when private companies and banks didn’t. The U.S. Federal Reserve has been lending about 50 billion dollars in very short-term loans to big companies and banks ever since.
The market for very short-term loans is enormous, worth over a trillion dollars every day in this country. Many important banks, financial companies, and big corporations heavily depend on this market to finance their ongoing operations.
This was the first time that the Federal Reserve carried out this kind of intervention in the market for short-term loans since the financial crisis of 2008. At that time, banks and big companies stopped lending to each other because they were afraid that they wouldn’t get their money back. They only started lending to each other again after the Federal Reserve and the U.S. Treasury stepped in with trillions of dollars of guarantees.
This time around, the Federal Reserve interventions ended the financial panic. But for how long? Big corporations have taken on a record amount of debt since the last financial crisis. They have done this in order to increase payouts to their biggest stockholders in the capitalist class, as well as to buy and sell each other and increase their speculative bets in financial markets.
In the long term, as these companies continue to stuff themselves to the gills with more debt and speculate ever more, it could very well detonate a new crisis anyway.
This shows just how barbaric capitalist society really is. The working class creates so much wealth that we could satisfy the needs of everyone on the planet. But because the economy is controlled by a tiny minority of capitalists for their own enrichment, that wealth is used to speculate and gamble with, leading to ever-worse crises that the working masses pay for in every way.
Oct 28, 2019
Translated from Lutte Ouvrière (Workers’ Struggle), the newspaper of the revolutionary workers’ group active in France.
The International Monetary Fund (IMF) published a report in mid-October warning about high levels of corporate debt in many countries. The IMF says this debt is a ticking time bomb on the scene of the approaching global economic recession.
By early this year, the total debt of companies excluding banks had risen by a fifth from two decades ago. The amount of debt is as huge now as nine-tenths of the global economy. The report lays out a worst-case scenario of recession in which 40% of all debt in the eight richest countries could be in default. That is more than in the last financial crisis. To be blunt: any predictable disruption of the global economy would lead to one bankruptcy after another.
The IMF’s figures for ratios of total business debt to a country’s economy range from 150% in China, and nearly that in France, to 75% in the USA. But adding government and household debt gives the picture of a volcano about to explode.
Since the 2008 financial crisis, companies have been taking advantage of the loans given nearly for free by governments and central banks. Even companies loaded with cash borrow. For example, Apple has 200 billion dollars in cash, but it borrowed seven billion dollars in September. Around the same time, Coca Cola and Disney borrowed 74 billion dollars. These companies borrow to buy back their own stock and give big dividends to shareholders, or to take over other companies. What they do not do is borrow to invest in production at any more than tiny levels.
Economists cynically coined the term “zombie companies” for small and medium-sized businesses with high debt. They can only survive if interest rates stay low. But as in horror movies, the axe is sure to chop. The only question is when and where. Capitalism today is like a house of cards.
The IMF and business journalists are perfectly capable of diagnosing the problem and sounding the alarm. But they are incapable of finding a remedy. That can only come from social revolution.
Oct 28, 2019
Delmer Joel Ramirez Palma was seriously injured when the Hard Rock Hotel under construction in New Orleans pancaked upon itself. Three workers were killed in the collapse and at least seventeen others were injured.
Six of the injured, including Palma, filed suit against the developers, architects, engineers and others they say are liable for the disaster.
Immigration and Customs Enforcement agents picked up and detained Palma, an undocumented Honduran worker, just a few days after the lawsuit was filed. They are planning to deport him.
ICE publicly claims it is not going after just any undocumented immigrants, only those guilty of a crime. The excuse they’re using for detaining Palma? He once was arrested—for fishing illegally!
This is a man who was working and was seriously injured. He is lucky to be alive. An Internet video purports to show a concrete floor barely held up by temporary supports just before the collapse, yet those in charge failed to warn workers at the site.
Who with any sense of morality whatsoever could defend Palma’s deportation under the pretext that he once fished illegally? His true crime, in the eyes of ICE and the profiteers behind them, is that he dared to demand compensation for their criminal negligence.