Handout to the rich ignites people’s anger
Fight for a workers’ program to save jobs, homes!
By
Fred Goldstein
Published Oct 1, 2008 4:50 PM
Sept. 30—The political and financial establishment of U.S. capitalism has
been stunned by the failure of its initial attempt to get Congress to pass a
$700-billion handout to the banks.
Against a background of bank failures in the U.S. and Europe and appeals from
the White House and the Treasury secretary, the House of Representatives on
Sept. 29 defeated the bailout bill, 228 to 205. Following the vote, all three
U.S. stock markets had historic drops, global stock markets initially plunged,
and credit markets tightened up as fear struck Wall Street.
The vote was a defeat for a triple alliance: the bankers, represented by
Secretary of the Treasury Henry Paulson and Federal Reserve Chair Ben Bernanke;
the Bush administration; and the Democratic Party leadership. They all had
labored mightily to sell the bailout.
It is highly likely that another round of political pressure from above will
lead to the banks getting their way in the long run. Already the new line
coming from the corporate media is to threaten workers that there will be no
paychecks unless some version of the bill is passed. But with e-mails and phone
calls to politicians running against the bill by 100 and 200 to 1 before the
vote, the political pressure from below has for the moment overcome Paulson,
Bernanke and company.
Capitalism’s faithful parties gripped by fear
The growing economic crisis produced a political crisis in the two faithful
parties of capitalism. On the one hand, the Democratic Party leadership was
unable to force some 40 percent of its members to sign on to this gigantic
giveaway to billionaires this time around, especially in the face of mounting
foreclosures and layoffs. It was particularly noticeable that a majority of the
Congressional Black Caucus and Congressional Hispanic Caucus refused to sign
on.
On the other hand, the Republican right wing tried to pose as advocates for the
people, spouting hypocritical demagogy against “big government” and
greedy bankers. But in actuality, their proposals were to further deregulate
the banking industry to allow hedge fund gamblers and private equity
billionaires to enter the bailout racket.
Of course, the right-wing opposition to “big government” does not
extend to the growth of the Pentagon and its trillion-dollar war in Iraq, the
growth of the repressive apparatus of Homeland Security to persecute immigrants
and undocumented workers, the growth of the FBI, the CIA and so on. These
ideologues are only against government intervention that might put restraints
on the unbridled profit-seeking activity of big business.
It is hard to tell whether these right-wingers voted “no” out of
concerns of ideology or pragmatic protection of their seats in the House or
both. Whatever their motives, their political rhetoric against “big
government,” which used to be applauded on Wall Street, has suddenly been
made obsolete by the present crisis.
The once high-and-mighty tycoons of Wall Street used to get their assistance
quietly, behind the scenes, from the Federal Reserve. In the present crisis
they suddenly find themselves in desperate need of openly and directly getting
their hands on the entire U.S. Treasury. The bankers behind the present crisis
now need to rid themselves of trillions of dollars in toxic debts that they
acquired by swindling the workers and then swindling the rest of the world into
buying these bad mortgages. The “no big government” right-wingers,
once praised by Wall Street, are completely out of sync with the needs of their
masters in the present crisis.
Whatever the ultimate fate of the bailout bill, two important things stand out.
First, the working class, the oppressed, everyone who is suffering foreclosure,
job layoffs, lack of health care and other hardships, must formulate their own
program of demands to solve their problems. And second, the people must wage an
independent struggle to fight for these demands.
What the bailout bill says
One look at the wording of the bailout bill tells why. The Democratic Party
leadership tried to wrap the bill in appealing language about aid to
homeowners, accountability, oversight, etc. But this is mainly deception to
provide a political cover to shield the politicians in the event of an outright
rebellion.
In the matter of stopping foreclosures, the bill calls on the secretary of the
Treasury “to encourage the servicers of the underlying mortgages ... to
take advantage” of various programs to “minimize
foreclosures.” In other words, foreclosure protection is completely
voluntary and depends entirely on the will of the mortgage holder.
As for the authority of Paulson to run the show, the bill states that
“The Secretary is authorized to ... purchase, and to make and fund
commitments to purchase, troubled assets from any financial institution, on
such terms and conditions as are deemed necessary by the Secretary, and in
accordance with ... the policies and procedures developed and published by the
Secretary.”
Paulson was the former CEO at Goldman Sachs investment bank. He is the point
man for the biggest bankers. This bill would give him the sole authority to
deal not only with mortgage debt, but also with “any other financial
instrument that the Secretary, after consultation with the Chairman of the
Board of Governors of the Federal Reserve System, determines the purchase of
which is necessary to promote financial market stability.” In other
words, Paulson can buy worthless credit card debt, student loan debt, auto loan
debt, or any other type of debt from any financial institution that he
pleases.
But the Treasury will be under no obligation whatsoever to give debt assistance
to anyone but the banks.
As for oversight, not one elected official would be involved. The oversight
board would consist of the chair of the Board of Governors; Paulson himself as
secretary of the Treasury; the director of the Federal Home Finance Agency,
created last July by Paulson; the chair of the Securities and Exchange
Commission; and the secretary of Housing and Urban Development.
This is equivalent to asking the robbers to guard the vault.
The important point about this is that the Democratic Party leadership was
touting this as the new, improved version of the bailout bill. But homeowners,
indebted workers, students overburdened by loans, families laboring under debt
incurred because of illness, job loss, or any of a hundred reasons for workers
to go into debt under low-wage capitalism, wind up with nothing.
The bill was originally three pages long and gave total authority to Paulson.
After days of negotiation it grew to 100 pages long and still gave authority to
Paulson and his oversight committee of powerful financial officials.
Workers need their own demands
Thus it is vital for the workers to have a clear and unambiguous program of
demands that meet their own needs and put the burden on the bankers and the
rich to pay. There is a growing movement across the country to demand a
moratorium on home foreclosures and evictions. Foreclosures are at present
paramount. However, even with 10,000 people a day facing the loss of their
homes, the crisis of the people goes much wider.
As the unemployment rate rises, it is urgent to demand a freeze on all
workplace closings and job layoffs and an extension of unemployment benefits.
There must be a freeze on utility cutoffs and a rollback in gas, food and
utility prices. Workers’ pensions and savings must be protected. Working
and poor people need a general cancellation of their debts and an end to
repossessions and wage garnisheeing.
As the crisis of the states and cities grows, there must be a moratorium to
stop cuts in the budgets of social programs. Affordable, quality health care,
housing and education should be a right.
It is the workers and oppressed, the youth and the elderly who need the
trillion dollars that the government wants to hand over to the bankers. The
Federal Deposit Insurance Corp., which is supposed to insure individual
deposits up to $100,000, just took on $40 billion in debt from Wachovia Bank.
This $40 billion was the price the government paid to have Citigroup take over
Wachovia and keep it from falling into bankruptcy.
That $40 billion, plus a good part of the $700 billion that the government
wants to dole out to the banks, could be used to help homeowners facing
foreclosure.
From a strictly capitalist point of view, aid to homeowners would transform bad
debts into debts that are payable. It would actually ease the financial crisis
of the system. Furthermore, by keeping people in their homes, it would keep
their homes off the market and ease the glut of unsold properties.
But the bankers would rather get handouts from the government and proceed with
foreclosures. They don’t want to set a precedent of granting relief to
homeowners, because that could lead to an avalanche of popular demands for all
kinds of relief.
It is futile to rely upon the capitalist government or the big business parties
to voluntarily give assistance to the multinational working class on a scale
that would make a genuine difference in the lives of the millions suffering
foreclosures, layoffs and other hardships. The only way that real, profound
change takes place is as a result of struggle.
No bailout is going to stop the crisis of overproduction that is overtaking
capitalism today. It underlies the financial panic that is roiling not only the
U.S. but Europe, Asia and the rest of the world. What Paulson and Bernanke have
in mind is to slow down and manage the crisis. They want to avoid a sudden
collapse, a social shock that would not only cause a sharp drop in the profits
of the corporations and banks but could set off an upsurge of the mass
struggle. The goal of Washington and Wall Street is to engineer a so-called
“soft landing.”
But whether the economic crisis develops gradually or suddenly accelerates, the
ruling class will try to shift all the suffering onto the workers. The greater
the crisis of the ruling class and the rich, the more they will try to push it
onto the people. The series of government bailouts is a prime example.
They began with $29 billion for JPMorgan Chase to acquire the bankrupt Bear
Stearns investment bank.
Then came $200 billion more for the Freddie Mac and Fannie Mae mortgage
banks.
Then came $85 billion for AIG, the insurance giant.
With the crisis spreading, the bosses now want a giveaway of $700 billion to
all the banks. And that may not be enough.
They admit to at least $4 trillion in bad mortgage debts—and
there’s probably more, because the bankers hide everything from each
other and from the government. With each escalation of their crisis, they pile
more debt upon the working class and the middle class.
Bailout of capitalism
In truth, the bailout of the banks is really a bailout of capitalism. The banks
are the heart and soul of capitalism. They have engaged in an orgy of
speculation for a decade. They inflated values in the stock market and flooded
the world markets with worthless mortgage-backed securities. They created a
mountain of fictitious capital that far outstripped the underlying real value,
all of which must be created by workers working. Now that false value is
beginning to collapse.
This is not capitalism “gone wrong.”
It is the fullest expression of what capitalism really is. Panics and crashes
have happened throughout the history of capitalism, but now, in the age of
globalization and high technology, they have reached new heights.
This system is based on profit. Profit is the be-all and end-all of capitalism.
The engine of the entire system is production for profit. Getting the most
profits is the aim of every capitalist, from the sweatshop owner to the largest
transnational corporation.
Speculation and gambling for instant profits grows naturally out of the system.
It is not an aberration or an abnormality.
The bankers who swindled the workers with subprime, deceptive, lying mortgages
and then sold these mortgages off to other capitalists, gaining fees and high
profits along the way, were doing what the ruling class does all the time, at
every opportunity.
The starting point of capitalist exploitation and profit is money. Without
money, no capitalist can hire workers or buy raw materials or inventory to set
the process of exploitation and profit making into motion.
The bankers are in control of all the money in society. They sit on the boards
of the corporations. They advise them and finance their loans. They sell
corporate stocks and bonds on the market. The owners of productive capital and
the parasitic financiers are completely intertwined with one another.
Human need is not part of their calculation. The fact that people need housing,
food, jobs, education and health care means nothing to them if they cannot
profit from it.
The bankers who are throwing people out of their homes are interlinked with the
corporations that are laying workers off. They are tied to the utilities that
are shutting people’s heat off in the winter, to the supermarket chains
and agribusiness corporations that are raising food prices, and to the oil
companies behind the invasion of Iraq and the high cost of gasoline.
Behind the problem of bankers’ bailouts, foreclosures and layoffs is the
capitalist profit system itself.
Articles copyright 1995-2012 Workers World.
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