the Voice of
The Communist League of Revolutionary Workers–Internationalist
“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx
the Voice of
The Communist League of Revolutionary Workers–Internationalist
“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx
May 4, 2009
For months, the biggest guns in the country–Presidents Bush and Obama–threatened auto workers that their companies would be pushed into bankruptcy if the workers didn’t agree to gut their own wages and benefits, and especially to stab their elders, the retirees, in the back.
Finally, April 28, Chrysler workers surrendered. April 29, the Obama administration forced Chrysler into bankruptcy anyway, spouting platitudes about “hope for the future.”
The whole tangled ball of yarn began to unravel. Only two hours after declaring bankruptcy, Chrysler announced it was closing all its plants so it could carry out the bankruptcy more “efficiently”–perhaps it would take 30 days, perhaps 60 days. Bankruptcy lawyers quietly laughed.
An hour later came more blows to production and jobs. Chrysler announced that eight of its plants would not be in the “new Chrysler.” 6500 more workers would lose their jobs.
Even before Chrysler closed its plants, some of them had to stop production–suppliers, worried about getting paid, stopped supplying them. Other suppliers began to shut down. For many, it was the final chapter. They don’t have the funding to last 60 days.
GM had already announced that it was about to close 13 assembly plants for nine weeks or more. Obviously that can only mean it’s closing its parts plants also.
More suppliers shut down. American Axle, which provides axles to both GM and Chrysler, “furloughed” its work force.
Auto shuts down, and then what? What happens to steel–or to rubber, plastics, copper, other metals, electronics, wood products, textiles....
When factories shut down, stores and restaurants, already running on fumes, have no customers. Even hospitals close.
Why? Why would this government–which has already spent or committed 12.2 trillion dollars to the financial system–force the auto companies into bankruptcy over a measly few billion dollars and risk unleashing a worse depression?
Unbelievable as it may seem, you better believe it. The Obama administration forced the bankruptcy to enable Chrysler, and after it GM, to get rid of what the companies call, “dead wood”–and behind them every other company.
First of all, Chrysler and GM want to dump their obligations to their retirees, all those workers whose labor ground out hundreds of billions of dollars the auto companies turned in profits.
They want to forget about paying all those taxes they owe to cities and states and school districts. Forget about their obligation to clean up environmental hazards or compensate for asbestos damage, forget about suits filed by women or minorities whose civil rights have been violated, forget about suits filed by workers who have been injured.
They want to get rid of half their dealerships–and Obama’s Auto Task Force obligingly demanded it! When thousands of dealers shut, many tens of thousand of workers lose their jobs. Cities and towns lose a big part of their tax base.
As for all those bonds–yes, the auto companies want to dump them. And the U.S. Treasury has already enabled them to do it–by bailing out the big banks that held most of the bonds. As for the rest of the bondholders–the little people and the pension funds–tough luck!
But above all, this “new Chrysler” and this “new GM,” through sheer brutality, in the midst of a depression, are trying to force workers to live at a standard of living and to work under conditions their grandparents would not have accepted.
It’s a social catastrophe. But it will make Chrysler and GM more “efficient,” more “competitive”–and more profitable for the big stockholders.
If they get away with it, every other company in the country will try to follow. When auto goes from $29 an hour to $14, those making $14 will be lucky to get minimum wage.
But Chrysler has shown us all where the corporations intend to take the whole working class. And not a one of us has any reason to follow.
On April 29, Chrysler workers signed a contract at the point of a gun, their “yes” extorted from them. But it’s only a piece of paper. It can be torn up just as easily as the companies tore up every contract they ever signed, every promise they ever made.
Tear up these contracts–yes, workers should–and tear up this system that puts profit before the needs of the human beings who create all the products and services that society needs.
May 4, 2009
Swine flu is making some people very sick, even killing some of those who get it.
But, there are some other people who are making a killing on Swine flu. Pharmaceutical companies have profited from the news that swine flu is spreading. Several of these companies have seen their stock prices rise as a result.
Roche, maker of Tamiflu, saw its shares rise 3.5% in one day, while British pharmaceutical company GlaxoSmithKline, maker of Relenza, saw their shares go up 6%!
Worldwide, Roche saw sales in excess of 347 million dollars for the first quarter of 2009. The company said that 264 million dollars was on sales for stockpiling Tamiflu while the other 84 million dollars was for general seasonal use.
These corporate pigs are getting rich off the misery of swine flu victims.
May 4, 2009
President Obama responded to the swine flu problem saying, “If you are sick, stay home.”
What a stupid remark! Who wants to go to work when they have a fever and feel like hell? No one, Mr. President! We go to work when we are sick because we don’t want to lose our jobs! Especially now. During a recession.
More than 59 million people have no paid sick time at all. More than 75% of women, low-wage workers have no paid sick days. And who takes care of sick children?
If President Obama wants us to stay home, fine. Let him write the notes to all the bosses! Not to mention, pay our sick days!
May 4, 2009
Four journalists from the Baltimore Sun newspaper were told they had been laid off in the middle of covering a baseball game! They got the phone call in the press box during the 5th inning.
Want to know what happened during the rest of game? Want to know who won? Read the Baltimore Sun newsp . . . .
May 4, 2009
A new nation-wide study shows an enormous gap in graduation rates between city schools and suburban schools. The average difference found in the study was around 20%, which is already huge. But in some systems the gap was double.
In Cleveland and Baltimore, for example, only 40% of students entering high school graduate, compared with 80% in those cities’ suburbs.
For decades, children in the more prosperous suburban areas of the U.S. have had a better education than those in big city school systems or in rural areas.
This is not an accident. Funding in the schools is organized in such a way that the suburban systems almost always have more money than the central cities–and also more money than rural schools.
What does more money mean? It means class sizes can be smaller, schools can have more books and equipment. It means schools can pay higher wages and more benefits to more qualified teachers. So it is not surprising that more of these students graduate.
The No Child Left Behind program does not remove all these disadvantages from education because it doesn’t give additional funding to the schools that need it most. In fact, the program is doing quite the opposite. It takes away federal funding from these schools.
Children in wealthier areas get more education, while the children of workers and poor get less–this, according to the wealthy who benefit, is “democracy in action.”
May 4, 2009
California politicians–the Republican governor and Democratic legislators–have scheduled a special election for May 19 to vote on several propositions that are nothing less than an enormous attack on the population.
Proposition 1A cuts funding from education, health care and other public programs below the already low constitutionally mandated limits. At the same time, it extends recent increases in the sales tax, income tax and car registration fees. Proposition 1C completely privatizes future profits from the state lottery using one gimmick or another. Propositions 1D and 1E overturn previously approved ballot measures to fund early childhood development and mental health care programs.
Of course, the politicians’ usual claims that they have no other way to balance the budget are complete, bold-faced lies. The proof is that in the last budget passed in September, the politicians voted to open up enormous tax loopholes to big business that tax experts say will be worth close to three billion dollars per year–potentially saving big companies 25% to 30% of all their corporate taxes! The politicians are literally taking whatever they can from the working population in order to hand it over to the wealthy few.
Early polls showed that these four propositions were unpopular with voters–which is a good thing. But working people must do more than vote to oppose these attacks. We can be sure that if these propositions are defeated at the ballot box, the bosses’ politicians will look for another way to do the same thing.
May 4, 2009
Only days after U.S. officials announced that a potentially dangerous strain of the flu was infecting people in this country, hospitals all over the country were overwhelmed by people seeking diagnosis and treatment. In Galveston, Texas, for example, the local hospital almost immediately ran out of flu testing kits. At Loma Linda University Medical Center outside Los Angeles, emergency room workers had to set up a tent in the parking lot to handle the new patients. In Chicago, ER visits at the city’s biggest children’s hospital doubled, forcing administrators to open new space to accommodate the growing crowds of children and their parents.
Some high-priced hospital administrators even had the nerve to complain that many of the people seeking treatment didn’t have the flu. “It’s a major drain on resources,” one hospital vice president told the New York Times.
This evades the basic problem: if there were a bad swine flu epidemic, these hospitals couldn’t have handled it. Hospitals have been downsizing relentlessly in their drive to maximize profits and so-called surpluses. They cut the number of emergency departments and hospital beds by nearly 10% between 1996 and 2006, even as demand for emergency services skyrocketed, with even worse cuts since the economic crisis hit. Emergency rooms regularly turn away patients on so-called “normal” weekends. So imagine what would happen during a potentially deadly flu epidemic.
Hospitals have also not invested in the necessary equipment and staff to deal with a flu epidemic. For example, they did not stockpile enough extra ventilators, for those with lungs that fill up with fluids, since each ventilator costs $30,000. Nor do hospitals have the extra trained staff to care for the patients and monitor them.
Neither have hospitals built units with special ventilation systems to prevent germs from circulating to the rest of the hospital. This means that hospitals will spread the disease–especially endangering the staff.
The first line of defense against a flu epidemic is a public health system able to manage the testing and treatment of infected residents and mount vigorous public education campaigns. But corporations have opposed most public health services, seeing them as competition that cuts into their profits. Thus, public health systems hardly exist in big parts of the country. And those that do have had their funding cut repeatedly, along with the rest of state and local public services.
The economic crisis has made things worse. In 2008, local health budgets were slashed by 300 million dollars, and 7,000 health care workers were laid off. “The entire system is lining up to decrease resources at the time we need them most,” said Dr. Paul E. Jarris, executive director of the Association of State and Territorial Health Officials.
To reassure the public, the Obama administration advertised that it had stockpiled millions of doses of anti-viral drugs, like Tamiflu, to treat people who come down with the flu. The problem is that in order for these drugs to be effective, they have to be administered in the early stages of the disease. But with more than 50 million people in this country without any medical coverage, and tens of millions more with inadequate coverage, they most likely won’t go to the doctor until it is too late.
Neither does the U.S. have an adequate system to produce vaccines to prevent people from getting the flu. The pharmaceutical industry has not invested in new technologies that use faster, more reliable methods of producing vaccines. Instead, they still produce vaccines from hens’ eggs, a technology that goes back more than half a century. At the earliest, a new vaccine for the swine flu could not begin to reach the public for another six months–that is, way too late for a lot of people if the disease becomes serious.
Currently officials claim that the strain of swine flu does not pose as big a medical risk as first feared. But even if that is true, on average 36,000 people die in the U.S. from the flu every year. So even a small uptick in flu deaths could very well mean tens of thousands more people will die–simply because in every way, medical care for profit gets in the way of what medical science could really do.
May 4, 2009
Speaking in support of the Chrysler bankruptcy, which was used to batter down workers wages, Barack Obama spoke glowingly of the “responsible” creditors who “agreed to reduce their debt to less than one-third of its face value to help free Chrysler from its crushing obligations.”
Who are Chrysler’s biggest creditors who own 70% of Chrysler’s debt? They are Morgan Chase, Morgan Stanley, Citibank and Goldman Sachs.
They claim to be losing 4.5 billion dollars. But these four banks got over 105 billion dollars in government bailout money. And that’s not all, they also just happen to be among the biggest recipients of money from the government’s bailout of AIG, which wrote insurance polices to cover the losses of–SPECULATORS! In all, the four investment companies received 16.8 billion dollars from AIG.
Obama can say what he wants. Money speaks louder than words–especially if it is 121.8 billion dollars!
May 4, 2009
Officially, this new agreement with Chrysler expires in September of 2011.
But unless the union leadership gives the company what it wants in the 2011 “negotiations,” all wages and benefits will be settled by binding arbitration. No matter what changes are made, the workers will not have a vote, and legally they will not have the right to strike.
And note this: The arbitrator has to make wages and benefits conform to wages and benefits paid by other auto companies–and specifically those paid by the transplants.
In other words, the arbitrator can cut them!
And now that Chrysler and Ford have brought their wages down to the transplant level, we can be sure the transplants will cut their wages further still.
The cuts won’t end until the workers refuse to accept this race to the bottom.
May 4, 2009
In the 2007 UAW contracts, Chrysler, Ford and GM refused the promises they had made during 57 years to pay for retiree health care and instead set up VEBAs to be run by the union. Chrysler agreed to add 10.3 billion dollars to the existing VEBA, which had 3.75 billion–coming to a total of 14.1 billion dollars to be turned over to the new VEBA. And even that was estimated to be less than half the money the VEBA needed to guarantee future retiree health care.
Now Chrysler is dumping retiree health care onto the VEBA this coming January–instead of starting in 2012. And it is providing only 1.5 billion dollars immediately, perhaps less–with promises to pay another four billion, if you believe that, and a bunch of completely worthless Chrysler stock, which has no way to be valued, since it’s never been sold anywhere.
In other words, they have ripped the VEBA to shreds. And that guarantees that retirees will have to pay much more and their benefits will be cut.
The cuts and increases have already begun.
• On July 1 this year, Chrysler retirees will lose both dental and vision coverage.
• Prescription co-pays will be doubled or even tripled.
• Retirees and surviving spouses with pensions and Social Security totaling less than $8,000 per year will now have to pay monthly premiums.
• Retirees who could afford only Catastrophic Coverage now have to join the regular plan and pay monthly premiums, as well as co-pays and deductibles.
• Retirees will have to pay $100 for Emergency Room visits.
• Pensions will be reduced by $76.20 per month for Medicare-eligible retirees (age 65 and over).
• Starting January 1, 2010, the VEBA Committee can eliminate or reduce all other benefits and increase all other payments for retirees.
It comes as no surprise that big companies are ready to throw you away as soon as they use up your labor.
But what can be said about a union leadership that would have us honor our elders by dumping them?
May 4, 2009
The contract concessions at Chrysler are a devastating attack on the workers’ lives and standard-of-living and include almost every aspect of wages, benefits, work rules and working conditions.
• Wages are frozen and the yearly bonuses, which were supposed to replace wage increases, are now eliminated.
• Christmas bonuses eliminated.
• One paid holiday every year is eliminated.
All this amounts to a loss of nearly $11,000 a year.
• Plus cost-of-living raises are eliminated.
• Overtime pay is reduced. Overtime will be paid only after 40 hours, regardless of how many hours are worked on any particular day.
• Two-tier new hires, who are brought in at about half the wage and benefits of current workers, will get no raises.
• All new hires will be at 2-tier wages. Previously, Chrysler was limited on how many people it could hire at the lower wage.
• Chrysler can use many more part-time workers and vacation replacement workers to work at regular positions throughout the year at low wages.
• The Jobs Bank is eliminated. Everyone who is laid off collects only SUB pay, which is much less, and they can soon lose their health care coverage.
• SUB pay will be reduced and then eliminated after a certain number of weeks on layoff.
• Laid off workers can be forced to move anywhere else in the country or lose their seniority and recall rights.
• Educational assistance is eliminated.
• Break time will be reduced from 46 minutes per day to 40 minutes per day for workers on the assembly line and to 24 minutes per day for jobs not directly on the assembly line.
• All clean-up or environmental relief time for workers is eliminated.
• Workers will be forced to use two weeks of their vacation time whenever the company chooses.
• The company can impose alternative work schedules, such as 12-hour days, whenever it wants.
• A new attendance policy means that workers will be fired after seven absences or lates in more than two years, even if you are sick or have a family emergency.
• Salaried workers can be put on some work that has previously been hourly work.
• Skilled trades classifications will be reduced, combined and eliminated.
All of these current concessions come on top of the concessions in the 2007 contract. Together, they take back many of the gains that auto workers fought for, struck for, sacrificed for and even died for during the 1930s, 40s, 50s, 60s, and 70s.
May 4, 2009
The top UAW leadership agreed to the contract with Chrysler, which demanded severe concessions from the Chrysler workers. Then they agreed to give up the union’s right to strike for six-and-a-half years, giving an arbitrator the right to further push down wages and benefits.
But they did more than just agree. They scammed the workers to help impose these bitter concessions.
The top UAW leadership rarely spoke up to challenge the lies and attacks on auto workers by the media or the Bush administration during Congressional hearings. Nor did UAW leaders protest when Obama, who won the election with the support of the UAW, demanded further concessions from auto workers.
The UAW leadership did, however, pressure workers and local union leaders to accept these concessions. And they went along with the maneuvers engineered by Obama’s task force to scare the workers into surrender.
The basic terms of this contract were settled on February 17, when the UAW reached agreements with Ford, GM and Chrysler. The additional issues with Chrysler, including more takeaways from retiree health care, were settled on April 10, after Obama demanded them. Then everyone sat back while the news media ran scare stories about bankruptcy. Finally, the task force added the final blow on April 27–the requirement for binding arbitration.
The leadership immediately announced they had a settlement. With the government deadline looming, they rushed the vote through in two more days, pretending that if workers didn’t ratify, Chrysler would go bankrupt. Workers ratified it on April 29.
THE VERY NEXT DAY, Chrysler declared bankruptcy anyway. The day after that, Chrysler lawyers were in court with the bankruptcy papers already prepared. It was a set-up, prepared many months before. And not one member of the union bargaining committee leaked a word of this scam to rank and file workers. Not a single one exposed this craven surrender!
For many years, top UAW leaders argued that if workers gave up and sacrificed to help “their companies,” they would come out ahead in the long run. Well the long run is here and now. Those earlier workers who fought and sacrificed to improve everyone’s standard of living must be turning over in their graves. Concessions have decimated the workers’ standard of living they fought for.
The reaction of some workers to the Chrysler contract was that the binding arbitration will bust the union. Well, this leadership, President Ron Gettelfinger, Vice President General Holifield, the Chrysler Bargaining Council, they have busted this union.
But a real union can be brought to life. A real union can be built by workers who understand that working people can defend themselves by fighting, by workers who put themselves forward to organize that fight, just the way the union was built before.
May 4, 2009
If there is a single thing that shows what the new Chrysler contract is about, it is a clause hidden in the midst of the VEBA agreement, explaining how the funding is handled.
If–by some miracle–the stock Chrysler put in the VEBA sells for more than the 4.25 billion dollars that Chrysler promised, the VEBA has to turn the entire “profit” over to the U.S. Treasury–to help pay back the loan Chrysler got from the U.S. government.
But if the stock sells for less than 4.25 billion dollars, it’s the VEBA that takes the loss.
There it is in black and white: the Chrysler workers and retirees are bailing out the company ... and the U.S. Treasury.
May 4, 2009
Continental Tire Company announced that it intends to close its factory north of Paris in 2010.
As a consequence of a demonstration at a government office in the town of Compiegne on April 21, seven workers received a legal summons by the judicial police on April 27th. On that day, 500 Continental workers had invaded the government offices to express their anger. The French Prime Minister and the Minister of the Interior called for arrests. The media echoed the government in speaking about “vandalism” when some windows were broken and some computers were overturned. But that same media fails to speak of the “violence” when the bosses throw thousands of workers into the street!
When the judicial proceedings were announced against these seven workers, workers decided to go immediately to the police station in the town of Creil. There 600 workers rallied, joined by the city’s mayor and elected officials. The delegation, which was immediately received by the heads of the departmental police and judicial inquiry, demanded that the prosecution of the seven workers be dropped. That evening the prosecution gave in to this demand. This rapid mobilization of 600 protestors was a demonstration of force.
Since March 11, the day when the head of Continental announced the factory closing at Clairoix, 1,120 workers there have been fighting to get guarantees for their future. Their demands have been for the payment of wages until 2012; special provisions for those over age 50; and a $260,000 lump sum for each worker.
For weeks, workers demanded that company and government officials meet with them. It took until the evening of April 21, just after the Continental workers’ explosion of anger, for government officials to call a meeting for April 29.
For the company’s part, the head of the Clairoix factory decided to send the workers home on April 21, using the pretext of the absence of security due to broken windows at the guard shacks. Normally, management knew that by locking workers out it had to pay the workers 100%. But it tried to spend nothing since the company bragged, in writing, that it had an agreement with the government that the wages of the 1,120 locked-out workers would be paid out of the unemployment fund. This would save Continental at least 6.5 million dollars!
And the State had just said a short time before that it wouldn’t spend a penny for Continental!
In any case, three days after 1,000 Continental workers left for Hanover, Germany to demonstrate with the Continental workers there, there were again 600 workers at Creil. These workers prepared to demonstrate again under the windows of the Minister at Bercy on April 29.
Everyone understands that the only language the State and the bosses know is that of the relationship of forces.
May 4, 2009
On Thursday, April 23, more than a thousand workers from the Continental tire factory in Clairoix, France, marched in Hanover, Germany where the stockholders of this multinational company were holding their annual meeting. They were joined by their co-workers from the factory in Sarreguemines and those from other Continental factories in Germany, including those from the Stocken facility who are also being threatened with layoffs. It has been a long time since such a demonstration has been organized.
A special train carrying the Continental workers from France departed the night before from the town of Compiegne. When they arrived the next day, the train station in Hanover was packed. There were thousands of German demonstrators: hands were shook, embraces were had, and slogans appeared in the two languages, “Tous ensemble” in French and “Alle zusammen” in German–meaning in English, “All together”. Everyone felt the fraternal atmosphere.
A dynamic demonstration took place in front of the Palais des Congres (the convention center) where the stockholders were meeting, the little ones as well as some of the biggest shareholders, such as the majority holder named Schaeffler. During the meeting, the German workers enthusiastically welcomed the speech given by the spokesperson of the French workers of Clairoix who denounced the “parasites,” the “looting stockholders” with an unusual tone that was very combative–as was noted by a representative of the German union IG BCE. The speech ended with “Long live the struggle of the Continental workers! Long live the international solidarity of the workers!” It had a real meaning for the thousands who were gathered there.
This day should give a boost to the morale and the strength to continue the fight in Germany as well as in France.
May 4, 2009
The end of April marked seven weeks that Caterpillar workers at two plants in Grenoble, France have been carrying out a fight against the giant U.S. company. Seven weeks ago, the company announced that 733 workers were to be laid off. It’s part of the company’s drive to eliminate 22,000 workers worldwide. This company had 3.5 billion dollars in profits last year, and it has greatly increased its dividends to stockholders quarter after quarter.
Caterpillar workers have carried out a number of different actions over the last two months. On March 17, they blocked the road to the Grenoble plant. The next day, 500 workers rallied in front of the factory. Some got inside, where guards had dogs and shot at the strikers with water and tear gas. Workers occupied the offices all night. Two days later, Caterpillar strikers made up one of the biggest and most combative contingents during the day of strikes and action in Grenoble that were part of a national protest.
At a meeting of March 18, the workers demanded that each laid off worker be paid $39,000 plus three months of pay for each year of service. They also refused any concessions for those who remained in the plants.
On March 27, there was a demonstration outside management’s offices and a hundred strikers took over the office of the metro area government. Beginning March 30, there was a strike at both plants and on March 31, workers blocked the plant manager and three of his assistants in his office overnight. On April 8, 200 workers went to Home Box, another Caterpillar plant, to talk to workers there. The workers also visited a contractor for Caterpillar, CMI/CGMI, which laid off 41 workers. The same day the workers again blocked management in their office until 7 P.M. and extracted another two million dollars for the severance package and reduced the number of layoffs from 733 to 600. When management left by car, workers threw eggs at them.
On April 14, a meeting called by the unions to calm things down instead had a combative tone. It was attended by 700 workers and spilled out into a demonstration. The next day, workers occupied one of the two Grenoble factories, escorted the managers out, took over the cafeteria and moved bulldozers outside the entrance.
On April 19, the company and the unions signed an agreement for 600 layoffs and brought the total severance pay from 63 to 65 million dollars. This agreement demanded that the workers must vote in a secret ballot, i.e., hidden from each other. Instead, a mass meeting, where each worker could hear the reactions of the others and discuss it openly, rejected the agreement. The company continued to demand a secret vote, which has been resisted. Then on April 27, most of the morning shift went out on strike again.
After seven weeks of rolling strikes, occupations, demonstrations and a movement, the workers have been able to block the company up to now. They have renewed their strike, extended it and reached out to other workers. The latest development was that workers mobilized in front of a court where Caterpillar tried to get its layoff plans imposed, but the court, feeling the pressure of the workers, put off a settlement.
The Caterpillar workers are continuing their struggle.
May 4, 2009
American Axle announced it is closing its largest plant in Detroit, Michigan and cutting more than 500 jobs permanently.
In 2001, the State of Michigan and the City of Detroit gave American Axle 18.5 million dollars in tax breaks. Of course, the politicians claimed this would save jobs!
In 2004, workers at American Axle gave up big concessions followed by more concessions in 2006 and 2008. This too, was supposed to save jobs–so the union leadership claimed.
Now they have closed American Axle. They told 500 workers, “Too bad, you don’t have a job!”
The politicians and the union leadership have been claiming forever that tax breaks and concessions save jobs. When? Never! They lie!
May 4, 2009
For the first quarter of 2009, the biggest banks showed substantial profits. Citigroup announced it had made 1.6 billion dollars in profits for the beginning of 2009, Wells Fargo had 3 billion dollars, Goldman Sachs, 1.8 billion dollars and JP Morgan Chase, 2.1 billion dollars.
Of course! These banks have benefitted from the handouts started by Bush and continued by Obama–trillions of dollars of tax money to save the financial system from its disastrous speculation. Citigroup, for example, received no less than 45 billion dollars in loans and benefitted from 300 billion dollars in government loan guarantees. Trillions of dollars have been given to the financial sector as a whole.
All this money, which was supposed to enable the banks to lend money to businesses and consumers and thus help the economy to turn around, only served to fill in some of the holes in the banks’ balance sheets. Instead of lending out more money, which was the official reason for the loans, the banks lent less and less. A study by the Wall Street Journal based on Treasury Department figures showed a substantial reduction in loans made by the main banks receiving bailout money. From October 2008, right before receiving the bailouts, to February, the last month for which there is data, loans and refinancing of previous loans made by these banks were 23% lower than before the bailouts.
The banks are lending little, but are making a big profit on what they do lend. They borrow money practically for free from the Federal Reserve, with an interest rate near zero. Then they lend it out to corporations at a minimum of 4% or 5%, and through credit cards to consumers at extortion rates nearly as high as 29.5%.
Obama, like Bush before him, didn’t require any concrete action from the banks for getting this money. On the contrary, Obama drew up a new plan to lend 900 billion dollars to the financiers, which will be extremely profitable for them.
Public money will be used to buy up their toxic assets. The banks themselves will say what their toxic assets are worth, when in fact they’re worthless. Financiers, hedge funds and other speculators will have to put up only 8% and will borrow the remaining 92% from the government as a guaranteed loan. If the operation pays off, the profits will be shared 50-50 between the government and its private partners.
But if it’s a failure, the government will assume 100% of the loss. All this is to lift the balance sheets of the banks that maybe will find buyers for their worthless assets.
So, the banks no longer have to consider these assets as losses. And so, this bookkeeping sleight-of-hand accounted for much of their recently declared profits.
But while public money floods in to save the banks, while everything is done to puff up their accounts, bank employees are the main victims. In one year, 262,000 employees lost their jobs in the financial sector, without the government caring the least to save them!
May 4, 2009
The armed opposition in Pakistan is growing. It has spread out from the Northwest Frontier Province, the tribal areas bordering Afghanistan, through the Swat Valley, to the province of Buner, just 60 miles away from the capital of Islamabad.
At the same time, battles continue to blaze in Karachi, a city of 14 million people on the southwest coast of the country, and its economic center. Bombing attacks have even hit the capital of Islamabad.
It’s no accident that Pakistan is blowing up now. Pakistan has long had huge income disparities and grinding poverty, especially in the countryside, where backward feudal structures have continued to rule. Since the beginning of 2008, as the global economic crisis has deepened, the conditions in Pakistan have only gotten worse. Inflation is at 20%, affecting especially the prices of food and fuel. Unemployment is skyrocketing in the cities. The rural areas are being even more cut off economically from the rest of the country and the world.
This poverty and desperation have fueled a growing opposition in both the cities and the countryside–which sometimes has taken the form of riots, sometimes of armed groupings that attack government outposts.
The governments of Pakistan and the U.S. call this the “Pakistani Taliban.” It’s a fiction, since what exists is not a single, unified insurgency but a varied set of forces in various areas of the countries. These range from out-and-out insurgencies in areas like the tribal areas that the central government has never really controlled, to bombings and armed attacks in cities like Karachi and Islamabad. The central government has all but ceded control to insurgents in areas like the Swat Valley, where they’ve declared a truce “allowing” those insurgents to establish Sharia law.
Into this situation, the U.S., already unable to control an insurgency in Afghanistan, has increased its attacks into the border areas of neighboring Pakistan.
These U.S. attacks started as rocket attacks from unmanned drones, and have expanded into armed Special Forces incursions and stepped-up CIA activity over the Afghani border into the tribal region of Pakistan, killing civilians indiscriminately. The U.S. has also pushed the Pakistani government to send its army into these areas to do the same.
Most recently, in the Buner town of Pulo Dand, the Pakistani military claimed to have killed 50 members of what they called the Taliban. But residents of the town said that the military had simply fired indiscriminately into houses. In one house, two children died, one man was nearly killed, and a woman lost both her legs. Three men drove toward the army to get them to stop; they were all killed by rockets fired from helicopters.
Is it any wonder the anger and the insurgency grow–toward the Pakistani government and the U.S. military? Is it any wonder the government is more and more discredited and stands on more and more shaky ground?
Indiscriminate killing and growing anger are all part of the package when the U.S. tries to impose its will on other regions of the globe. It happened in Iraq, and in Afghanistan–and now in Pakistan.