imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Calendar Publish RSS
latest news
best of news




A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List


IMC Network:

Original Cities africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech

Surviving Cities africa: canada: quebec east asia: japan europe: athens barcelona belgium bristol brussels cyprus germany grenoble ireland istanbul lille linksunten nantes netherlands norway portugal united kingdom latin america: argentina cmi brasil rosario oceania: aotearoa united states: austin big muddy binghamton boston chicago columbus la michigan nyc portland rochester saint louis san diego san francisco bay area santa cruz, ca tennessee urbana-champaign worcester west asia: palestine process: fbi/legal updates process & imc docs projects: radio satellite tv
printable version - js reader version - view hidden posts - tags and related articles

The panic of 2008

by Lee Sustar Monday, Oct. 13, 2008 at 6:24 AM

Lee Sustar explains that the mayhem in the markets this week is symptomatic of a deeper crisis--and the leaders of the most powerful governments aren't sure what to do.

October 11, 2008

IT WAS the worst week ever for Wall Street and the world financial system--a global stock market meltdown that wiped out more than trillion of wealth and had even cautious media commentators musing about the failure of capitalism and the possibility of another Great Depression.

Even Congress' passage of the 0 billion bailout to the banks, sold as a surefire solution to the crisis, was spectacularly unsuccessful in restoring market confidence. Nor could the coordinated efforts by central banks in the industrialized nations to lower interest rates and make hundreds of billions of dollars available in new loans budge the frozen credit markets--lending between banks and to businesses remained at a standstill.

For working people, the threat lies not only in the wipeout of retirement funds, now that traditional pensions have been replaced by 401(k) plans and other programs tied to the stock market.

The worse nightmare is what happens if the banks continue to clamp down on lending, even to other banks, because of the entirely justified fear that the next borrower could go bankrupt. If loans to businesses remain on ice, then there may not be money to pay suppliers, or meet next week's payroll--and the crisis will take a further lurch downward with mass layoffs and closures.

- - - - - - - - - - - - - - - -

BY THE week's end, the assumptions of free-market, neoliberal ideology--the foundation of U.S. politics for last three decades--had been totally discredited.

Gone were the clichés about how "the free market knows best," and that "government regulation stifles capitalist dynamism and growth." Instead, the same people who whined a month ago about the nationalization of mortgage giants Fannie Mae and Freddie Mac and insurance company AIG as creeping "socialism" now advocate the most sweeping government intervention in the economy since the Great Depression--and fast.

"The government needs to inject capital directly into banks," wrote Wall Street Journal columnist David Reilly. "The government also needs to force banks to recognize losses they have so far ignored, require banks to provide fuller disclosure of holdings, push banks to lend to one another again, euthanize weaker banks while helping strong banks get stronger, guarantee deposits and backstop a portion of bank credit.

"Above all, the government needs to tell banks that they have to take part in a systemic solution. The time for negotiation by banks is over."

Take a moment to consider that statement: A top writer for Corporate America's leading newspaper is calling for the federal government to seize control of the banking industry, expose the worthless assets on its books, insure all bank deposits in any amount, order lending between the banks to take place, and force unwilling executives to accept mergers--and even liquidation.

Put simply, the Wall Street Journal is calling for the nationalization of the banking system. A few weeks ago, you wouldn't have seen this proposal outside the pages of and others on the left.

Now, though, nationalization is the latest strategy of the increasingly desperate ruling class of the advanced industrial countries in the Group of Seven (G7).

Last week, British Prime Minister Gordon Brown announced that his government would buy stocks in the six leading British banks to prevent a total collapse in London, the world financial capital.

The U.S. initially rejected Brown's strategy, sticking with the so-called Troubled Assets Relief Program (TARP), the 0 billion cash-for-trash program approved by Congress and signed into law by George Bush little more than a week ago. Under the TARP plan, the Treasury Department will buy up the banks' bad debts and failed investments that can't be sold at any price.

But as Wall Street staggered through a weeklong decline in the stock market--the Dow Jones Industrial Average ended the week 39.4 percent lower than its record high a year ago--Treasury Secretary Henry Paulson changed his tune.

Paulson announced that Treasury would also use the bailout money to buy stocks in banks directly. Paulson, a former Wall Street CEO, concluded that direct investments is the only way to inject capital into banks fast enough to revive lending and boost stock prices.

This and other forms of government intervention in the economy will be the topic of an urgent meeting by G7 finance ministers on October 11-12 at the annual meeting of the International Monetary Fund and the World Bank. If Paulson and his counterparts can't come up with a plan for even more far-reaching government intervention--such as a virtual guarantee of all deposits and transactions by the most powerful states in the world--then the panic will only get worse.

European stocks ended the week down 22 percent, their worst ever. Nearly every major stock exchange in the world was battered, and stock markets in Indonesia and Russia are closed indefinitely.

But it's the U.S. that is dragging the rest of the world down. "The U.S. and advanced economies' financial system is now headed towards a near-term systemic financial meltdown," wrote New York University economist Nouriel Roubini.

Unless credit markets revive, what was already shaping up to be a bad world recession could become far worse, Roubini argued. "At this point, severe damage is done, and one cannot rule out a systemic collapse and a global depression. It will take a significant change in leadership of economic policy and very radical, coordinated policy actions among all advanced and emerging market economies to avoid this economic and financial disaster."

The problem is that while the U.S. is the only government capable of spearheading this effort, there's no capable leadership. It's the Bush administration's erratic and inept policies that threaten to turn an acute financial crisis into an unthinkable catastrophe.

- - - - - - - - - - - - - - - -

TO THE Neanderthals of the Republican right, even ineffective government intervention is "socialism." But nothing could be further than the truth. This is financial state capitalism, carried out by the same people who used pro-market ideology to justify a three-decade-long transfer of wealth from workers to a tiny minority of the superrich.

In the 1980s and 1990s, Republicans and Democrats collaborated to deregulate the banking system and business generally, arguing that this would stimulate capitalist growth and benefit everyone. Now that their own interests are on the line, though, they're running to the state for protection.

However, their aim remains the same: the maximization of profits. If it's necessary for widespread government intervention in the economy to enable capitalists to keep on exploiting workers, the capitalists are all for it. Whether banks are run privately or by government bureaucrats, they're essentially parasitic institutions in relation to the productive, "real" economy.

A genuinely socialist solution to the crisis would be fundamentally different. The banks' functions of allocating investment and credit could be carried out democratically under workers' control, with the aim of meeting human needs. By contrast, in 2007, bonus pay at the then-top five Wall Street investment banks totaled billion--nearly the amount the federal government spent on the State Children's Health Insurance Program in its first 10 years.

These obscene Wall Street bonuses, we were told, were justifiable in view of the success of the U.S. economy. Now we know differently.

The Wall Street fat cats are only the most visible members of a capitalist class that has thrived on the backs of working people. The wealthiest 1 percent nearly doubled its share of annual national earnings, from 7.3 percent in 1979 to 13.6 percent in 2006, and the richest 0.1 percent increased its annual earnings by a staggering 324 percent from 1979 to 2006, to more than .2 million. Meanwhile, 26.4 percent of U.S. workers receive poverty wages, and since 2001, workers' productivity grew by 11 percent, while real wage gains (after inflation) were zero.

As a result, U.S. society is about as unequal today as it was in the 1920s, on the eve of the Great Depression.

Now, as the prospect of another severe economic crisis looms, big capital finds itself discredited and forced to lean on Democratic politicians like Barack Obama to rebuild their credibility of the system. Some concessions may be tolerated--limits on CEO pay at companies where the government owns shares, for example. But as in the 1930s--the era of sit-down strikes and a rebirth of unionism--it will take organization and struggle to really shift the balance of forces in workers' favor.

But much has already changed. U.S. politics will never be the same. There is a political opening--indeed, a great urgency--to discuss and plan how working people can respond to this crisis. In that debate, it is important to put forward a vision of a different kind of world, free from the inequality, chaos and crisis of capitalism--a genuine socialist alternative.


Report this post as:

Local News


lausd whistle blower A10 11:58PM

Website Upgrade A10 3:02AM

Help KCET and UCLA identify 60s-70s Chicano images A04 1:02PM

UCLA Luskin: Casting Youth Justice in a Different Light A02 11:58AM

Change Links April 2018 A01 11:27AM

Nuclear Shutdown News March 2018 M31 6:57PM

Join The Protest Rally in Glendale on April 10, 2018! M29 7:00PM

Join The Protest Rally in Glendale on April 10, 2018! M29 6:38PM

Spring 2018 National Immigrant Solidarity Network News Alert! M19 2:02PM

Anti-Eviction Mapping Project Shows Shocking Eviction Trends in L.A. M16 5:40PM

Steve Mnuchin video at UCLA released M15 12:34AM

Actress and Philanthropist Tanna Frederick Hosts Project Save Our Surf Beach Clean Ups M06 12:10PM

After Being Told He's 'Full of Sh*t' at School Event, Mnuchin Demands UCLA Suppress Video M02 11:44AM

Resolution of the Rent Strike in Boyle Heights M01 6:28PM

What Big Brother Knows About You and What You Can Do About It M01 3:30PM

Step Up As LAPD Chief Charlie Beck Steps Down F14 2:44PM

Our House Grief Support Center Hosts 9th Annual Run For Hope, April 29 F13 12:51PM

Don’t let this LA County Probation Department overhaul proposal sit on the shelf F13 11:04AM

Echo Park Residents Sue LA Over Controversial Development F12 8:51AM

Former Signal Hill police officer pleads guilty in road-rage incident in Irvine F09 10:25PM

Calif. Police Accused of 'Collusion' With Neo-Nazis After Release of Court Documents F09 7:14PM

Center for the Study of Political Graphics exhibit on Police Abuse posters F07 9:50AM

City Agrees to Settle Lawsuit Claiming Pasadena Police Officer Had His Sister Falsely Arre F04 3:17PM

Professor's Study Highlights Health Risks of Urban Oil Drilling F04 12:42PM

Claims paid involving Pasadena Police Department 2014 to present F04 10:52AM

Pasadenans - get your license plate reader records from police F03 11:11PM

LA Times Homicide Report F03 1:57PM

More Local News...

Other/Breaking News

The Shortwave Report 04/27/18 Listen Globally! A26 4:03PM

Federal Bank Examiner FDIC recalls year long 1999 robbery in 2017 A26 3:24PM

Doxa du lobby A25 2:03AM

Tech workers organize A24 6:24PM

Architect Stephen Francis Jones A24 3:01PM

UN Forum Wrestles with Economic Policies 10 Years After Financial Crisis Islands Call for A24 12:34PM

Xyloglossie attitudinale A23 8:07AM

What does the Quran Say About Islamic Dress?? A21 4:15PM

Biodiversité ou la nature privatisée A20 11:22AM

The Market is a Universal Totalitarian Religion A20 7:14AM

Book Available about Hispanics and US Civil War by National Park Service A19 5:52PM

The Shortwave Report 04/20/18 Listen Globally! A19 4:01PM

The Republican 'Prolife' Party Is the Party of War, Execution, and Bear Cub Murder A19 11:48AM

Neurogenèse involutive A18 9:21AM

Paraphysique de la dictature étatique A16 10:13AM

Book Review: "The New Bonapartists" A16 3:45AM

The West Must Take the First Steps to Russia A14 12:25PM

Théorie générale de la révolution ou hommage à feu Mikhaïl Bakounine A14 3:30AM

The Shortwave Report 04/13/18 Listen Globally! A12 3:50PM

“Lost in a Dream” Singing Competition Winner to Be Chosen on April 15 for ,000 Prize! A12 3:48PM

The World Dependent on Central Banks A12 4:43AM

Ohio Governor Race: Dennis Kucinich & Richard Cordray Run Against Mike DeWine A11 9:40PM

March 2018 Honduras Coup Again Update A10 10:52PM

Apologie du zadisme insurrectionnel A10 3:33PM

ICE contract with license plate reader company A10 1:14PM

Palimpseste sisyphéen A09 11:23PM

Black Portraiture(S) IV: The Color of Silence...Cuba No...Cambridge Yes A09 5:32AM

Prohibiting Micro-Second Betting on the Exchanges A09 4:18AM

More Breaking News...
© 2000-2018 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy