Oct 20, 2008
The U.S. government has been carrying out an enormous operation to bail out the financial system, centered in Wall Street.
Last March the Federal Reserve provided 29 billion dollars so Bear Stearns, one of the big investment banks that was failing, could be bought out.
In September the bail-out speeded up. 200 billion dollars went to prop up Fannie Mae and Freddie Mac, the mortgage companies. 85 billion dollars and another 38 billion dollars went to AIG, the big insurance company. 700 billion dollars is going to bail out nearly anyone who asks – that is, anyone except the population.
Yet the government’s enormous bailout hasn’t cured the crisis. The credit markets remain frozen. Financial companies continue to go broke. The crisis has gotten worse.
This crisis has been building for the last 30 years. For decades, capitalism rapidly increased its profits by severely lowering the purchasing power of the whole working class – cutting the number of jobs, pushing through a vicious speed-up, cutting wages directly and through all sorts of two-tier and three-tier schemes, turning to part-time workers, temporary workers. It was a real war carried out by the wealthy class against all those who work for their living.
Ordinary people tried to keep their heads above water – by working more hours and more jobs. They also began to rely on the greater amounts of credit that capitalism began to push. Sub-prime mortgages are only the most well-known example of all the means by which the financial system wrung more money out of the population, misleading people into loans that were sure to explode on them.
For most of the last 15 years, capitalist profits skyrocketed. But they didn’t reinvest most of these profits in production of consumer goods, because ordinary people were tapped out and the market was stagnating.
Instead, the capitalist class placed an ever larger mass of profits into financial speculation which created bigger and bigger financial bubbles.
Inevitably, their speculation led to a collapse of their whole financial system.
So here we are today, in the midst of a financial crisis worse than anything since the 1930s. The expansion of this crisis – for surely it is expanding – will lead to a worsening war carried out by the capitalists against the working class, resulting in still more layoffs, still lower wages, still more poverty and homelessness.
The government bail-out of the financial system will not stop that. It only will aid the biggest companies to carry it out. And the government, no matter which party controls it, will come back to demand that we pay for the bail-outs.
We have already paid for the capitalists’ speculation – in the loss of jobs, the lowering of wages, the reduction of benefits, the worsening of public services, social programs and education.
The only question for the working class today is how to defend ourselves – and damn the capitalist class and all their Wall Street bankers who have brought this crisis down on our heads.