sexta-feira, 5 de junho de 2009

What is socialism?

ISR Issue 65, May–June 2009

What is socialism?


IN A matter of months, the global financial crisis has dramatically reshaped the economic and political landscape around the world. The high priests of global capitalism have scrapped decades of neoliberal orthodoxy, replacing their denunciations of government spending as harmful interference in the free market with calls for trillions in bailout bills and stimulus packages. “The goal is to get the engine of capitalism going as productively as possible,” Nancy Koehn, a historian at the Harvard Business School, told the New York Times. “Ideology is a luxury good in times of crisis.”

After decades of promoting the gospel of free markets globally and deregulation at home, the push for deregulation has been replaced—for all but the most ideologically blinkered—by the gospel of state intervention. In mid-February, former Federal Reserve chairman Alan Greenspan, a zealot of free markets, deregulation, and privatization over the past four decades, acknowledged that a nationalization of at least part of the banking sector might be necessary to address the insolvency of major American banks.2 This followed Greenspan’s admission in October that the crisis, in particular the catastrophic errors in judgment by U.S. banks that precipitated the crisis, revealed a “mistake” in free-market economic models. “[There is] a flaw in the model that I perceived is the critical functioning structure that defines how the world works,” said Greenspan.3 The massive injections of capital into the banking system as well as proposals for hundreds of billions of dollars in economic stimulus spending have returned Keynesianism to a place of prestige in the debate about how to manage capitalism.

To illustrate the extent of the political transformation, it’s worth recalling that the response of many Republicans to the Bush administration’s rescue plan was to proclaim the imminent demise of American capitalism. “This massive bail-out is not the solution, it is financial socialism, it is un-American,” said Sen. Jim Bunning (R-KY) of the initial $700 billion plan to reassure holders of mortgage-backed debt and to get the credit markets working again. On another occasion, Bunning denounced then-Treasury Secretary Henry Paulson for acting like China’s finance minister. “No company fails in communist China, because they’re all partly owned by the government,” he said. “I sincerely believe that Henry Paulson and Ben Bernanke should resign. They have taken the free market out of the free market.”4

Perhaps even more compelling is the overnight conversion of Representative Thaddeus McCotter (R-MI) from free-marketeer to bailout booster. On September 29, McCotter compared the $700 billion bailout to the “horrors” of the Russian Revolution. “During the 1917 Bolshevik revolution, the slogan was ‘Peace, land, and bread,’” said McCotter. “Today you are being asked to choose between bread and freedom. I suggest that the people on Main Street have said they prefer their freedom, and I am with them.”5 But just a few weeks later on November 20, McCotter, whose district borders Detroit, showed up at a Capitol Hill hearing with auto executives to speak in favor of the bailout for Detroit’s Big Three auto manufacturers.6 It looks as if McCotter decided he’d prefer bread to freedom after all.

Full article here

quinta-feira, 4 de junho de 2009

Is Halliburton Forgiven and Forgotten?

Is Halliburton Forgiven and Forgotten? Or How to Stay Out of Sight While Profiting From the War in Iraq

by Pratap Chatterjee,
June 3rd, 2009

Originally published on May 31, 2009 at Read the full TomGram.

The Houstonian Hotel is an elegant, secluded resort set on an 18-acre wooded oasis in the heart of downtown Houston. Two weeks ago, David Lesar, CEO of the once notorious energy services corporation Halliburton, spoke to some 100 shareholders and members of senior management gathered there at the company's annual meeting. All was remarkably staid as they celebrated Halliburton's $4 billion in operating profits in 2008, a striking 22% return at a time when many companies are announcing record losses. Analysts remain bullish on Halliburton's stock, reflecting a more general view that any company in the oil business is likely to have a profitable future in store.

There were no protesters outside the meeting this year, nor the kind of national media stakeouts commonplace when Lesar addressed the same crew at the posh Four Seasons Hotel in downtown Houston in May 2004. Then, dozens of mounted police faced off against 300 protestors in the streets outside, while a San Francisco group that dubbed itself the Ronald Reagan Home for the Criminally Insane fielded activists in Bush and Cheney masks, offering fake $100 bills to passers-by in a mock protest against war profiteering. And don't forget the 25-foot inflatable pig there to mock shareholders. Local TV crews swarmed, a national crew from NBC flew in from New York, and reporters from the Financial Times and the Wall Street Journal eagerly scribbled notes.

Now the 25-foot pigs are gone and all is quiet on the western front. How did Halliburton, once branded the ugly stepchild of Dick Cheney -- the company's former CEO -- and a poster child of war profiteering, receive such absolution from anti-war activists and the media? Of course, the defeat of the Republicans in the 2008 U.S. election, the departure of the Bush administration, and a general apathy towards the ongoing, but lower-level war in Iraq are part of the answer. But don't ignore a potentially brilliant financial sleight of hand by Halliburton either. That move played a crucial role in the cleansing of the company.

Full article here

quarta-feira, 3 de junho de 2009

International Press Service

Globalisation and the South

Globalisation is undoubtedly one the hottest issues in the contemporary political and economic debate. But, what is globalisation? Is it good, or bad? Pundits say that globalisation is inevitable, and that being "against" globalisation is like being against the force of gravity. Is it really?

In an essay written for a joint FES–IPS publication, a prominent contemporary thinker, John Ralston Saul, had some really interesting words about the globalisation hype:

    "History is pretty clear. There are no philosophical or political inevitabilities. And as the theories of human evolution go, economics is a fairly minor field of speculation. As for globalization, it is perhaps the first broad economic theory to insist that civilization can only function through the prism of economics. [...]

    There lays our greatest difficulty in understanding the state of globalization. It is an approach to human relationships which is so utilitarian that it blocks us from the global reality of others. Here is a world theory which, curiously enough, encourages remarkably narrow fields of connection between humans. [...]

    I am not suggesting that nothing positive has come out of globalization. I am merely pointing out that a system declared to be inevitable and global is neither. And this is not a good sign, but nor is it a bad sign. It is certainly a sign of a troubled period with an uncertain outcome. [...] Globalization’s failure is that it no longer holds the promise of eventual success for those who feel they suffer from it (emphasis added) [...]." – John Ralston Saul, "Globalization really?", in Globalization Insights, a joint FES–IPS publication, Berlin, May 2005.

Globalization seems to offer humanity both threats and opportunities. Mainstream media has focused mainly on the opportunities, downplaying the threats. While opportunities ought to be recognised and exploited, threats must receive our full attention as well, since those marginalised by globalisation are often the least equipped to make their voices heard.

With roughly 70% of its journalists reporting directly from the countries of the South , IPS has been in a unique position to analyse the impact of globalisation from Southern points of view. Exclusion and exploitation are a big part of the story, but South–South cooperation is an opportunity we are covering too.

IPS editorial policy makes specific reference to ensuring that events and processes are globally contextualised to reach those marginalised by globalisation. A thematic news site Global Chaos / Global Order: Perspectives on an Inter–connected World pulls together the main stories on globalisation, and is complemented by our thematic sites about specific aspects like Economy, Finance and Trade and Migration.

In Africa, a continent often portrayed only as a helpless victim of the process of globalisation, IPS has sought to offer in–depth new perspectives through the Africa – A Globalising Continent thematic site. A three–year project focused on trade relations between Africa and Europe is another way in which the region has contributed to creating awareness about the benefits and risks of opening up the continent to more international trade.

Developing nations are among the fastest–growing, most dynamic economies in the world, with giants China and India leading the way. Growing South–South co–operation is changing the political, economic and diplomatic geography of the planet, and IPS news is tracking the phenomenon. The 2006 IPS Support Group in Rio focused on exactly this issue, and particularly on the IBSA alliance –– India, Brazil and South Africa – of the three biggest democracies of the South.

Brazil, India and South Africa are the first Southern Governments to attend the IPS Core Group meetings . IPS has been instrumental in positioning the issue of communication as a central dimension of the IBSA alliance.

IPS has longstanding relationships with the G77 (that has historically represented the Southern bloc of countries at the United Nations) and the Special Unit for South–South Cooperation of UNDP and has offered communication perspectives to many innovative cooperation efforts.

In 2008 IPS launched the South-South Executive Brief, the newest in the IPS TerraViva family of publications. A monthly print and PDF publication from the UN Bureau in New York, the South-South Executive Brief features news stories, analyses and high-level interviews focusing on increasing bilateral, trilateral, regional and inter-regional relations among developing countries. The newsletter circulates at the highest levels of the UN and among missions and ministries.

terça-feira, 2 de junho de 2009

An auto giant falls and workers pay the price

Despite complaints of right-wing blowhards about the bankruptcy and government takeover of auto giant GM, it's autoworkers, their families and communities who are getting screwed.

GM corporate headquarters in Detroit

THE BANKRUPTCY and government takeover of General Motors marks the end of an era in which U.S. capitalism could claim to offer an "American dream" of rising standards of living for working people--and highlights a grim future for workers under American capitalism.

GM was once the quintessential industrial powerhouse, synonymous with the dominance of U.S. capitalism worldwide. Now GM is a symbol of the decline of U.S. capitalism.

From AIG to GM, American capitalists' short-term obsession with profits and their religious faith in the free market contributed mightily to an epic collapse. Even before the auto industry's crash, the current recession had already shattered the lives of millions of working people in the U.S.

For the last 30 years, workers have been forced to compensate for stagnant or falling wages with ever-increasing amounts of debt. The financial meltdown and the housing bust put an end to that, wiping out tens of billions of dollars in household wealth. Now comes rising unemployment, reductions in wages and benefits, and deep cuts in public spending on education and health care. The bankruptcy of GM--and Chrysler before it--will only accelerate those trends.

But none of that bothers right-wingers in Congress or conservative commentators. To them, the deal that gives the federal government 60 percent control over GM is further evidence of President Barack Obama's "socialism."

"What we've's the road toward socialism, government intervention in the market in a big way," said Sen. Richard Shelby (R-Ala.). "I'm sure they haven't cut enough, and there aren't enough concessions there." Shelby, of course, was all for handing out government money when the state of Alabama gave $530 million in tax breaks to BMW, Honda and Toyota to get those automakers to build factories in his state--all nonunion, of course.

The Wall Street Journal editorial page sounded a similar theme. "The new agreement simplifies some work rules and job descriptions but makes no reductions in hourly pay, pensions or health care for active workers," the Journal complained. It was forgetting that the United Auto Workers (UAW) agreed to forgive a $20 billion debt that GM owes the union for a retiree health care fund. Instead, the UAW health care trust fund will get 17.5 percent of company stock--which is highly unlikely to ever be worth enough to pay for retirees' health care.

At Chrysler, the UAW health care trust fund will get 55 percent of company stock under the takeover by Fiat--but that's even more likely to force cuts in retiree health care. And at both Chrysler and GM, the UAW gave up the right to strike until 2015--and contract negations will apparently be replaced by arbitration.

So despite the complaints of right-wing blowhards, it's autoworkers, their families and communities who are getting screwed. With 14 GM plants set to close, the company's UAW workforce will be downsized from 64,000 today to just 40,000--compared to 450,000 in the late 1970s.

And as better-paid autoworkers retire, most will be replaced with new hires earning just about half the current top wage of about $28 per hour, thanks to a contract concession made several years ago.

That means that the UAW, once the pacesetter in winning improvements in wages and conditions for U.S. workers, is now collaborating with Corporate America in its race to the bottom. As Labor Notes' Jane Slaughter put it, "From now on, working for the auto companies will be just another bust-your-hump factory job."

Full article here

domingo, 31 de maio de 2009

Mexico’s Other Crisis: Foreign Banks

by Kent Paterson, Special to CorpWatch
May 15th, 2009

Cartoon by Khalil Bendib

In the early 1990s, U.S. tycoon Ross Perot criticized the proposed North American Free Trade Agreement (NAFTA) for threatening to suck U.S. jobs south. In the 15 years since the trilateral agreement, another giant sucking sound is coming – but from the flow of pesos across the Rio Grande and over the Atlantic into the coffers of foreign banks that are charging millions of Mexicans usurious rates that can top 100 percent.

Jorge Sanchez is feeling the effects. A modestly paid government employee in his 40s, Sanchez fell into the plastic trap. Trying to close the gap between a stagnating salary and a desire for a higher standard of living, he took out a bank-issued credit card. Soon he had a half-dozen of them in his billfold. Even before the peso went into free-fall last autumn and a wave of lay-offs added economic stress, more than 10 percent of Mexico's 50 million consumer credit accounts – issued by banks, cell phone companies and department stores – were delinquent, according to a spokesman for Mexico’s Credit Bureau.

Panic over Influenza A(H1N1), or swine flu, will further impact ordinary Mexicans as dollars from tourism and other income sources dry up.

“A moment came when my entire paycheck went to pay off credit cards,” recalls Sanchez. “There was hardly anything left over to eat with or for the house, which has a mortgage.” Sanchez took out a $5,000 loan from a private savings and loans fund. As interest and fees accumulated, his nearly $1,000 credit card debt with Citigroup-group owned Banamex bank doubled and was turned over to bill collectors. Sanchez says he faced two separate groups of attorneys with “very aggressive” attitudes and no willingness to negotiate.

Up against the wall, the Aguascalientes resident filed a complaint with the federal government’s National Commission for the Protection and Defense of Financial Services Users (Condusef), an agency that works out agreements between credit card debtors and lending institutions. Sanchez’s Banamex problem was resolved, but what really saved him was a lump-sum payment owed to him and other workers by the federal government. Without the extra money, Sanchez muses, his future could be bleak.

“I don’t want to even think about it,” he adds. “It surely would’ve been hell.”

Sanchez is a survivor of the Mexican debt trap. Many others are not so lucky. According to the latest press reports, more than 5.1 million credit card accounts in Mexico are now considered bad. Esteban Sotelo, regional director for Condusef in the southern state of Guerrero, says bad credit card debt in Mexico has reached “unprecedented levels.”

Javier Taja, president of the Guerrero state branch of the El Barzon organization, a national debtors’ advocacy group, estimates that of 200,000 credit card holders in Acapulco alone, some 85,000 people are in arrears. Taja says he knows people who earn less than $800 a month but have credit card balances exceeding $23,000.

“Many young people are landing in the Credit Bureau, and this will cause an economic contraction later on because we aren’t going to have consumers,” Taja says. “All we’re going to have is people in the Credit Bureau.”

Sotelo blames the crisis on free-wheeling lending practices by banks as well as consumers' poor personal finance management skills. Last year, Sotelo’s Acapulco office handled 7,025 cases of people seeking to resolve a problem with financial institutions, mostly having to do with credit cards. The case load was nearly a 30 percent increase over the previous year.

“People don’t know how to use credit,” Sotelo insists. “The problem is that people aren’t paying because they have more than one card.”

It used to be very difficult to obtain a credit card in Mexico. Then, like street hustlers hawking passes to strip shows, young “promoters” working for the banks appeared on the streets virtually handing out credit cards. From 2001 to 2008, the number of credit cards circulating in Mexico soared from 6.1 million to 26.1 million, according to Condusef. Maintaining offices in Los Angeles and New York, Banamex USA even offered a cross-border credit card program aimed at clients with friends or relatives in Mexico.

Full article here