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Where is the relief for workers?

Banks bailout billionaires, Wall Street investors

Published Aug 16, 2007 12:11 AM

On Aug. 9, Aug. 10 and then again on Aug. 13, the central banks of many of the world’s largest economies simultaneously came to the rescue of a handful of billionaire investment bankers and hedge fund tycoons who are enmeshed in the U.S. sub prime mortgage crisis. The United States Federal Reserve, the European Central Bank, and central banks in nearly a dozen Asian countries poured hundreds of billions of dollars into the financial system, in a concerted attempt to stem the tide of the growing global credit crisis.

The bailout plans came mostly in the form of massive central bank purchases of collateralized debt obligations, commonly referred to as CDOs. CDOs are securities backed by mortgages and other types of loans. In the last decade CDOs have been packaged and sold in bulk to investors, generating trillions of dollars in profits for investment banks and hedge fund tycoons across the globe.

CDOs were the primary investment tool used to underwrite the predatory sub prime mortgage loans in the U.S. that sparked the current meltdown. Investors and financial institutions in the U.S., Europe, and Asia hold these CDOs in large quantities.

Now that a large number of the mortgages and loans that these investments are tied to are in default, many of the CDOs are, in effect, worthless. The realization that these CDOs are worthless is the underlying reason for the wild swings in global stock markets over the past few weeks.

So to try and calm the market jitters, the central banks and finance ministers are essentially handing billions of dollars to the very same greedy banks and hedge funds that orchestrated the sub prime debacle. Meanwhile, the working class families, who are entering into foreclosure and bankruptcy at levels not seen since the Great Depression, have yet to receive a dime.

In the U.S, the Federal Reserve injected nearly $60 billion worth of bailout funds on Aug. 9 and 10 followed by at least an additional $2 billion on Aug. 13. In Europe, the European Central Bank injected some $200 billion on the 10th, followed by an additional $63.5 billion on the 13th. The central bank of Japan injected $8 billion into the money markets on Aug. 10, with the central banks of Indonesia, Malaysia, Taiwan, the Philippines and Australia all following suit.

The war at home and the war abroad

It is important to put these bailout numbers into perspective. The more than $62 billion that the U.S. Federal Reserve essentially handed to ultra-rich investors in just three days would have been enough to provide health care for all the country’s uninsured for more than a year.

Contrast this with the fact that the U.S. banks have yet to provide the necessary funds to rebuild New Orleans and the Gulf Coast to allow the survivors of Hurricanes Katrina and Rita to return home, two years after the storms, but was able to instantly hand billionaire investors over $62 billion in three days.

In a country where the infrastructure has fallen into such disrepair that bridges are collapsing in Minneapolis and steam pipes are exploding under the streets of NYC, the ultra rich are given billions for behaving anxiously in the markets.

And these bailouts, remarkable in their size and scope, are still only a fraction of what the U.S. is spending on war in Iraq and Afghanistan. A trillion dollars that could have been spent on healthcare, education and jobs has instead been funneled into the coffers of the military industrial complex, bringing misery and suffering to millions of people around the world.

In the book “Socialism, Utopian and Scientific,” Engels, referencing Marx’s theory of capital, wrote, “Accumulation of wealth at one pole, is, therefore, at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole.” This fact has never been more evident than today.

But the military misadventures in Iraq and Afghanistan, coupled with the growing economic crisis stemming from U.S. finance capital, have highlighted the extreme volatility and vulnerability of the imperialist world order. It is now clear that the U.S., which has brutally sought to extend its influence across the globe as the world’s dominant superpower, is now stumbling.

The wars in Iraq and Afghanistan have shown that the greatest military power on earth can be hobbled by determined local anti-imperialist resistance movements.

The growing economic crisis has shown that the U.S. is weakening as an economic power. And it has shown how the processes of “globalization” have increased the risk of contagious financial crises by interweaving systems of finance capital across borders and continents in unprecedented ways.

The world’s biggest capitalist markets and systems of finance capital are now interwoven to such an extent that the ability of U.S. homeowners to pay their mortgages now has a direct affect on the availability of all types of credit in Europe and Asia. This interconnection means a crisis in one imperialist country can quickly spread to other countries, weakening them all.

And both the war and the economic crisis have given more proof of why the elimination of capitalism and the installation of socialism—a system under which human needs like housing, health care and education would no longer be subject to the predatory profit-hungry instincts of the military industrial complex, investment banks, hedge funds and private equity corporations—are so vitally necessary for the emancipation of the working class and oppressed across the globe.

While socialism remains a long term but inevitable vision, there is a clear urgency now, however, for those activists already in motion, including workers of all nationalities, to unite to demand a national moratorium on foreclosures and debt payments.

These are just a few of many issues that will be raised at the Sept. 22-29 People’s Encampment and March on Washington initiated by the Troops Out Now Coalition.