Fightback measures are called for
Published Feb 1, 2009 9:26 PM
By the time the stock market closed on Jan. 26, 11 large U.S. corporations had
announced a total of 60,000 new layoffs in just that one day.
Caterpillar, the largest manufacturer of construction and mining equipment in
the world, announced 20,000 layoffs, or 18 percent of its global work
Home Depot, the largest home equipment dealer in the U.S., announced 7,000
layoffs and the closing of 34 of its high-end EXPO Design Centers.
Sprint Nextel will lay off 8,000, or 13 percent of its workforce.
The giant drug company Pfizer is projecting 8,300 layoffs after its $68-billion
purchase of another huge pharmaceutical, Wyeth.
Toward the end of the day Texas Instruments announced another 3,400 layoffs, 12
percent of its workforce, and there was a belated announcement that IBM had
sent out pink slips to another 2,800 workers.
Caterpillar, which had sales of $12.92 billion last quarter and is a bellwether
for the economy because of its global reach and its crucial role in
construction worldwide, predicted that 2009 would be its worst year since the
end of World War II.
Altogether, large U.S. companies publicly announced more than 170,000 layoffs
(see accompanying chart) in the first four weeks of this year, but hundreds of
thousands more are expected to be added when the government releases its
monthly statistics early in February.
As workers lose their incomes, the defaulting on mortgage payments, credit
cards, auto loans and student loans keeps rising. As the defaults rise, the bad
debts on the books of the banks go up. The deepening crisis of the workers
aggravates the financial crisis of the bankers.
Gov’t rushes to save banks
The capitalist government in Washington has not been trying to solve the
banks’ problem of insolvency by rushing to the aid of the millions of
workers who are defaulting on their debts and losing their homes and jobs.
Instead, it has put limited aid to the workers on the slow track while it
rushes to find ways to bolster the banks.
Citigroup and Bank of America had merely to apply to the government, filling
out a perfunctory request form, and they immediately received $45 billion each
in installments, with guarantees of $300 billion and $100 billion,
respectively, to cover bad debts. Other banks have received similar handouts,
adding up to hundreds of billions of dollars in direct infusions of capital and
in bad debt guarantees.
As fast as the Obama administration draws up plans for its stimulus package,
the deterioration of the economic situation outpaces these modest plans to deal
So far $700 billion has been officially appropriated for the financial crisis.
But, according to an article in the Washington Post of Jan. 24, “with the
economy deteriorating rapidly, financial companies are incurring trillions of
dollars in losses on failing mortgage loans and other assets, forcing the
federal government to consider substantially expanding its response to the
crisis. ... Leading economists and lawmakers calculate that hundreds of
billions more could be required.” There is talk of raising the official
bank bailout fund to $1 trillion—in cash.
As for the foreclosure crisis, the administration has officially pledged $50
billion to help homeowners avoid foreclosures. But Goldman Sachs estimates
there is more than $1 trillion outstanding in bad mortgage debt. At a private
luncheon on Jan. 22, economists were talking about needing $250 billion for the
foreclosure rescue program.
“Foreclosures have skyrocketed,” according to the Post, “with
an estimated 8 million families expected to lose their homes over the next four
Losing 500,000 jobs per month
Mark Sandy of Moody’s Economy.com told the Post: “Conditions are
eroding far more rapidly than anyone anticipated. ... The job market is now
consistently losing 500,000-plus jobs per month, something you couldn’t
have envisioned eight to 12 weeks ago. Losses in the banking system over the
last week or two have been much larger than people had been expecting.
We’re coming to the realization that these things are self-reinforcing
and the problems aren’t developing in a linear way. They’re getting
worse very rapidly.”
The bourgeois “experts” cannot fathom their own system. They are
utterly taken aback when capitalism behaves the way it has been behaving since
the first real global collapse in 1825.
The capitalist system goes through a cycle of expansion that leads to a glut of
goods, stocks, land deals and so on that always ends up in a crash. As each
capitalist or capitalist grouping fights for market share of commodities,
gambles on speculative gains in the stock market, the bond market, the real
estate market, etc., things always end up in a catastrophe, which the bosses
then push off onto the workers.
As capitalism has decayed under imperialism, has become more financial, more
parasitic, more speculative, the tendency increases for the crashes to be more
Only the tunnel vision of capitalists driven by profit lust could keep them and
their experts from seeing the inevitable end of this anarchic system of
production and finance:
• No capitalist knows if the commodities produced can be sold.
• No one knows if the stock they buy will go up or down.
• No one knows when the upward cycle of speculative buying and
selling of land or houses will reverse itself and come crashing down with a
Furthermore, it was clear to all who wished to see that selling junk mortgage
bonds around the world to institutions, municipalities and states alike, while
calling them AAA, highest-rated, could only result eventually in a global
The financiers who stand at the pinnacle of capitalist society, the bankers who
control the financial resources of society and therefore dictate the fate of
hundreds of millions of workers all around the world, have used those resources
in a mad race after profits—by any speculative, fraudulent means
necessary. And they have brought the system to ruin.
Now the capitalist government must step in with trillions taken from the
workers and the middle class and bail out the banks, because that is the only
way they can conceive of under present circumstances to bail out the capitalist
Government intervention shows above all, however, that bankers are completely
unnecessary to the functioning of society. Their only role is to get rich by
financing exploitation and debt.
What capitalist ‘nationalization’ means
Right now “nationalization” of the banks is being discussed. It is
a measure of the feeling of powerlessness to control their own capitalist
system that economists, politicians and advisers are even contemplating the
very thought of nationalization of the banks. In the days before this crisis,
no one in the establishment would have dared to introduce this idea, even into
the most private conversation. The word “nationalization” was not
in the vocabulary of U.S. bourgeois society.
But this crisis has forced sections of the ruling class to think the
Nationalization under the capitalist class, that is, the takeover and running
of a bank or an industrial corporation or an industry, has historically been
used for the purposes of rescuing the capitalist bank or enterprise from
complete ruin. The goal has been to take it over temporarily, put the
enterprise back on its feet until it becomes profitable again, and then sell it
back to the bosses.
In other words, it has been used to strengthen the system of exploitation when
some aspect of the system has become weakened.
The nationalization of the major enterprises of British industry after World
War II is a classic example. It was carried out by successive Labor governments
with understandable popular support from the workers and was presented as a
socialist measure. But it left the capitalist ruling class intact. Once the
economy had completely recovered, Prime Minister Margaret Thatcher began to
give back to private capitalists what was profitable.
Time for a people’s fightback
In the meantime, workers are losing their homes and livelihoods. They are being
battered from pillar to post on a daily basis by the inhuman wave of layoffs
and foreclosures. The capitalist government in Washington and the financial
authorities at the Treasury Department and the Federal Reserve Board have
already given the banks over a trillion dollars and are now rushing to give
them more on an emergency basis.
What is the real emergency, which needs immediate attention? It is that tens of
millions of workers and their families are rapidly being driven to the wall by
the economic crisis. Social tensions are increasing. Racist killings and
beatings are increasing, especially by the police. Arrests of the poor are
rising as more workers are driven to commit crimes of survival. The
scapegoating of immigrant workers is growing under the impact of the
The workers and the oppressed are not just losing paper wealth. They do not
have millions of dollars stashed away in personal wealth to be tapped for a
rainy day. They are losing the means to sustain living.
The only way out of this crisis for the working class is to organize a massive
A movement is taking shape to launch peoples’ assemblies and
community-labor alliances whose aim is to broaden the struggle by uniting the
various movements into a common front.
This is an essential first step for the workers and oppressed to put their
needs on the agenda, ahead of the Wall Street billionaires.
Articles copyright 1995-2012 Workers World.
Verbatim copying and distribution of this entire article is permitted in any medium without royalty provided this notice is preserved.
Workers World, 55 W. 17 St., NY, NY 10011
Email: [email protected]
Subscribe [email protected]
Support independent news DONATE