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Tuesday, September 30, 2008

NO bailout for the Banks- Seize their Profits!


Panic and division hits US ruling class

Karl Marx famously wrote that “the executive of the modern state is but a committee for managing the common affairs of the whole bourgeoisie”.
But the political leaders of the US looked more like a shambles when they met in the White House on Thursday of last week.
Republican congressmen ignored George Bush’s plea that “if money isn’t loosened up, this sucker could go down”. Hank Paulson, the US treasury secretary and ex-boss of Goldman Sachs, half-jokingly went down on one knee to Nancy Pelosi, Democratic speaker of the House of Representatives, to beg for her support.
Where does this chaos come from? Essentially, over the past three weeks the global financial system has completely seized up. The turning point seems to have been Paulson’s decision last month to let the Wall Street investment bank Lehman Brothers go bust. Since then banks have simply stopped lending to each other.
The basic problem is that banks are stuck with so called “troubled assets” – mortgages repackaged into dodgy financial securities – that no one wants to buy. Paulson wants the US Congress to vote him $700 billion to buy these assets to get the bad debts out of the banking system.
A White House meeting was supposed to rubber stamp this “Troubled Assets Recovery Programme”. Barack Obama and the Democrats were ready to back it. It was the Republicans who ignored Bush – now the lamest of lame ducks – and scuppered the deal.
This was partly because of John McCain launching another of those wild but meaningless gambles that may yet get him into the White House. More importantly there was a rebellion by the right wing Republican Study Committee in the House of Representatives.
These are the products of the “Republican Revolution” that swept through Congress in the mid‑1990s. Bush was meant to be their man, reversing the 20th century expansion of “big government”.

Budget deficit
Instead, Bush has presided over yet more public spending, with the budget deficit continuing to balloon. And to cap it all he is asking Republicans to sign up to what Senator Jim Dunning of Kentucky called “financial socialism” to rescue Wall Street.
They have a point. Paulson’s rescues of firms such as AIG and Washington Mutual have been, in effect, confiscations that wiped out the shareholders. He is willing to use state power ruthlessly to try and rescue US capitalism.
There are also technical problems with Paulson’s programme. For it to work the US government will have to buy the assets for higher prices than they would currently sell for on the market. Otherwise the banks wouldn’t be getting any extra money.
But if the state is pumping money into the banks like this, why not do this openly and take a share in them to reflect this investment? Indeed, the compromise plan announced on Sunday provides for the government to receive an equity stake in some of the companies it rescues.
The political disarray in the US isn’t surprising. Never in the history of capitalism has the state made such dramatic inroads into the private sector to prevent economic collapse. That this unfolds during the dominance of an ideology that proclaims that the market should rule unchallenged makes the shift all the more dramatic.
Despite all the manoeuvring, the House of Representatives threw out Paulson’s plan on Monday this week. And even if Congress does eventually accept some version of the bailout scheme, it is doubtful if it will work.
Nouriel Roubini, whose thoroughly pessimistic commentary on the evolution of the credit crunch has consistently been proved right, predicts “a severe US recession”, spreading to the eurozone, Britain and “most advanced economies”.
For Kenneth Rogoff, the former chief economist of the International Monetary Fund, the rise in US government borrowing demanded by the bailout “will certainly make it harder for the US to maintain its military dominance, which has been one of the linchpins of the dollar”. This really is a turning point.

The following should be read alongside this article: » No bailout for banks - seize their profits!» Europe’s economies teetering on the edge» Turmoil on Wall Street hammers Moscow’s markets» US war woes intensify as instability spreads» Africa: a continent living in fear of starvation» Shockwave hits China and Japan» Playing a dangerous game with our pensions

Stop Privatisation and Road Tolls- Meeting Oct 8




Stop SH20 PPP & Tolls: Public Meeting Oct 8
Citizens Against Privatisation announce public meeting
7pm, Wed October 8, Wesley Community Centre, Mt Roskill

The government continues to ignore public rejection of road tolls and so-called road pricing, privatised roads, and commercialisation and privatisation of public infrastructure and services. National threatens massive spending on public private partnerships (PPPs) - for roads, schools, hospitals, prisons...

"In 1996," Rose Hollins, co-spokesperson for Citizens Against Privatisation (CAP) says, "construction of the Mt Roskill/Waterview section of SH20 was costed at only $72 million. Now, the projected tunnel price is $1.89 billion, to be built by a PPP that's been decided over the heads of the public, and followed by up to 45 years of road tolls until it's handed back, probably in poor repair, to our great grandchildren. This is a massive rip off."

The government says this PPP will be the model for many to come. In Australia, PPPs have resulted in 200% returns to investors before a toll road even opened (M2, Macquarie Bank), secret clauses in contracts to close roads and funnel drivers into toll gates, public transport spending disallowed or diverted into PPP profits.
"How many times do we have to say no, before those in power listen?" asks Rose Hollins. "Now, of all times, it's obvious that private profit is an incompetent prescription for disaster. All over the world, communities are fighting back. Sydneysiders boycotting Cross City Tunnel tolls bankrupted its consortium in months. People on the Isle of Skye battled for 9 years to get tolls off the Skye Bridge and succeeded in also outlawing road tolls throughout Scotland."
"It's up to us ordinary people to defend what's left of our public resources and public services," she concluded.

Public Meeting
7pm, Wednesday October 8, 2008
Wesley Community Centre
740 Sandringham Rd Extension
Mt Roskill

For more information:
Contact CAP co-spokesperson, Rose Hollins
http://us.mc387.mail.yahoo.com/mc/compose?to=rose28@woosh.co.nz
ph 09 828-0238
Citizens Against Privatisation <http://us.mc387.mail.yahoo.com/mc/compose?to=capwaitakere@xtra.co.nz>

Saturday, September 27, 2008

Financial Meltdown: Why Capitalism is in a Mess


Guest commentary by Irish Marxist Kieran Allen,
School of Sociology, University College Dublin
Thursday, 25 September 2008

Most people are amazed to witness a new Wall St crash when the spectacle of the 1929 crash was supposed to have vanished forever.

For the past thirty years mainstream economists claimed that the market worked perfectly provided there was no state interference or strong trade unions. ‘You cannot buck the market’ was repeated like a mantra against anyone who dared to ask for higher wages, better environmental controls or a more developed welfare state. ‘Market forces’ were seen as wise spirits who knew best about how to run an economy. No one knew who or what they were but they appeared to work anonymously behind the scenes to make everything right. In almost every country, people were told to leave matters to these ‘market forces’ and not to seek too much regulation. In reality, these ‘market forces’ were gigantic financial houses which *could move money around the globe at will.

Today this mythology has been shattered. The US government is being asked to provide a $700 billion blank cheque to bail out the finance houses. This follows a series of other bailouts in recent weeks – amounting to another $400 billion. To put those figures into perspective, simply compare how this money could be used to solve world hunger. Each night 850 million people go to bed hungry. If the $700 billion blank cheque had gone to them rather than the finance houses, this dire level of hunger would be wiped out. If the combined package of more than a trillion dollars had been used, the 2 billion of the world’s 6 billion people could be lifted out of chronic poverty. In brief, the trillion which is being handed out to the speculators could have wiped out malnutrition and extreme poverty in the world for ever.

The power to use the latest $700 billion blank cheque will be handed over to Henry Paulson, the US Treasury Secretary. Paulson is the former CEO of Goldman Sachs, whose salary package in 2005 came to $36 million. As Treasury Secretary he has surrounded himself with former Goldman Sachs executives and will use US taxpayers’ money to save his former company which was a big player in the world of speculation. Meanwhile the 10,000 US citizens who face foreclosure each day will watch as the banks - which caused the speculation are saved – but they lose their houses. Instead of a free market, we are witnessing the ‘socialisation of losses and the privatisation of profit’.

The same will happen in Ireland quite shortly. Up to recently, an unholy alliance of the banks, Fianna Fail and the construction industry hyped up a property bubble. It is now estimated that Irish banks have about €7 billion of bad debt on their books. If they are faced with bankruptcy, these banks will look for the same type of handout that was given to AIB in 1985. After the AIB got their fingers burnt in speculation in the London insurance market, they demanded ‘corporate welfare’ from the Irish state. Legislation was quickly rushed through the Dail to give the bank over €127 million. Yet, later, economists from Goodbody Stockbrokers – the speculative arm of AIB - would lecture the population on the need for ‘restraint’ on wages and social welfare, without showing the slightest sign of embarrassment.

This latest crisis of capitalism has been triggered by ‘spivs and speculators’ but it would be wrong to regard them as a breed apart from the wider capitalist class. The division between finance capital and industrial capital has long since broken down and now ALL corporations engage in ‘financial engineering’. A corporation such as General Motors may have problems selling cars but the financial wing of the company made $2.9 billion in profit in 2004. Similarly, the French company Danone no longer simply makes yoghurt but has also engaged in absurd orgies of speculation, buying 31 million of its own shares in the past five years at a cost of €4 billion euros. Speculation is an intrinsic part of the system and there is no fine line between ‘greedy speculators’ and good clean capitalists.

The central issue is why has speculation come to play such an important part in modern capitalism? In the past decade, the system has stumbled from one speculative bubble to another. Think of the dot.com bubble in the nineties, the fiasco over ‘emerging markets’ in East Asia which brought their crash of 1997, the near collapse of the shadowy Long Term Credit Management Corporation in 1998 which almost brought the whole financial system crashing down after it lost €5 billion. (In those days, that was still considered a considerable loss.) There have been plenty of warnings but the transfer of resources to speculation has grown continually. It is estimated that FIRE – Finance Insurance Real Estate- accounted for 16 percent of total profits in 1965 but that it now accounts for 40 percent of profits today.


MARX ON CAPITALISM

To understand what is happening you need to return to two key contradictions which Marxists have noted about capitalism.

First, it suffers from periodic crisis that result from over-accumulation. Each capitalist seeks to profit by selling commodities. He or she will normally use those profits to re-invest back into their corporation in order to accumulate more profits. Strangely enough, the best capitalists are not those who live a life of absolute luxury –although many do – but those who are driven by the bug: ‘accumulate for accumulation’s sake’. In other words, don’t concern yourself about human needs, simply produce to make profit to make more profit.

Yet despite all the mysticism of conventional economics, the basis of profit is human labour. Each capitalist constantly tries to reduce unit labour costs in order to magnify their profits. The more they cut wages or the more they act collectively to cut the share of an economy distributed to workers, the more profitable they are. Yet if each capitalist is cutting wage costs AND simultaneously each is also trying to produce as much as they can, they run into a fundamental problem. Namely, over-accumulation - because workers cannot buy the goods that are produced. These goods may, of course, be desperately needed by human beings – but if they cannot be bought, there is no market. Sometimes, this problem can be overcome if capitalists themselves stimulate the economy by greater investment in capital goods – in machinery, factory space and office space – which creates more jobs and wage packets. But here the system runs into a second problem.

Capitalism also suffers from a longer term tendency for the rate of profit to fall. Marx’s argument was a little more complex on this score. But, essentially, this tendency arose from the fact that the ‘organic composition’ of capital changes over a period. This means that the level of capital investment to the amount of labour employed shifts dramatically in favour of the former. The first capitalist who tools up with new machinery manages to make greater profits. But as the entry level for capital investment in any one industry increases and fewer workers are taken on, the rate of return on investment drops. This occurs because labour is the source of profit. Different studies have come up with somewhat varying estimates but two French writers, Duménil and Lévy state that “the profit rate in 1997” was “still only half of its value of 1948, and between 60 and 75 percent of its average value for the decade 1956-65”.

In response to these combined problems, capitalists have reacted by intensifying the rate of exploitation within the workplace and by encouraging a debt-induced growth among the population outside the workplace.

Everyone is aware of the former trend as we are constantly confronted with demands for ‘flexibility’, ‘downsizing’ or cost cutting. But less attention has been paid to how the latest stage of neo-liberal capitalism relies heavily on debt. Yet the connection is absolutely intrinsic.

DEBT

As pressure has grown to reduce wages and shrink the state, working people have been encouraged to take out ever more debt in order to buy the goods produced by the system. The latest stimulus for debt has been the property bubble that has been stoked up in many countries. According the Economist, the world housing bubble between 2000 and 2005 was the biggest of all time, outrunning even that of 1929. On the basis of a supposedly rising assets, millions of consumers were encouraged to take out further debts on the based on the inflated values of their homes. It is estimated that American consumers cashed in about 10 percent of the apparent values of their home to take out new loans for cars, home improvements, and credit card debts. This debt- induced growth fuelled a consumer boom which sucked in goods from other economies around the world.

Debt was like elastic that could be stretched to cover the decline in real wages and used to stimulate economies. It also left working people with a massive hangover. In the US, household debt now stands at $ 12 trillion and the average person spends 14 percent of their income just on servicing their debts. In Ireland the personal debt ratio to disposable income has risen from 48 percent in 1995 to 113 percent in 2004. Debt-induced growth led directly to the sub-prime crisis because the lenders needed to ensure that property prices stayed high if they were ever to be repaid. They developed a strategy of lending to people who had a history of credit defaults or who were originally seen as simply too poor to pay back the mortgages. Through the use of ‘teaser mortgages’ which allowed repayments to start at a low level and then jump swiftly after a few years, they developed a sub-prime market. Today the sub-prime market accounts for 15 percent of all US mortgages and about 5 percent in many other countries.

Rising debt levels, however, are not confined to personal household debt. Government and corporate debt has also expanded dramatically. The US current account deficit runs at around €2 billion per day and its total debt has risen from 1.5 times its GDP in the mid 1970s to 3.5 times its GDP today. The US empire used its military power to ensure that the dollar remained the principal currency of the world. (One of the reasons for the Iraq war, for example, was to prevent Saddam Hussein denominating oil prices in euros rather than dollars) As the dollar was not tied to any fixed standard, they could increase its paper supply and so underpin enormous levels of debt.

These strategies to stimulate global capitalism became known as ‘privatised Keynesianism’ or more simply bubble economics. The system needed speculative bubbles and an intensification of its rate of exploitation of workers to overcome the problems that Marx pointed to more than a century ago.

But while rising levels of debt can sometimes stimulate an economy laid low by constant attacks on working class standards, there is also an intimate connection between debt and speculative activities. Higher levels of debt have helped banks and finance house to gain a greater role in the economy. But it has also co-incided with a host of new ‘financial instruments’ whereby supposedly clever techniques are used to ‘spread risk’. The sub-prime crisis itself is a prime example. This spread beyond the US because banks sought to minimise risk by ‘slicing and dicing’ toxic loans and mixing them with what appeared to be healthy loans and then spreading these throughout the global financial system. Despite claims to be ‘risk takers,’ big capitalists are, in fact, extremely cautious people who turned to the most bizarre strategies to minimise, spread or ‘hedge ‘ against risk. (Watch out in the coming weeks for how the bizarre spectacle of ‘credit defaults swaps’ starts to unwind as the insurance that speculators took out against risk falls apart.)

If debt is one logical outcome of a neo-liberal offensive to reduce the share of an economy going to workers, then ‘excess savings’ is another outcome which has developed at corporate level.

Capitalists, who make huge profits from intensifying the exploitation of workers, have become unsure about re-investing back in industry and services because of the problem of over-accumulation and declining rates of profits. Since 2001, the global system entered a new period of growth but it has been the lowest of any comparable interval since the 1940s. One of the main reasons is that the capitalists do not invest in new plant or equipment or in the creation of new jobs. The capital injected into plant and equipment is only one third of the post war average for the equivalent period in the business cycle while the number of jobs is two thirds below the average. Instead of increasing investment in productive activity, the capitalists have renewed their offensive on working conditions. They want to squeeze ever more productivity out of fewer workers.

The result of this failure to invest is that many corporations have ‘excess savings’. These ‘savings’ have sought a home and have increasingly found it in speculative activities. But, ironically, the more corporations have turned to speculation to use up their ‘excess savings’, the more they have also borrowed to gain more ‘leverage’ to join in the orgy of speculation. If you find for example that you can get a 30 percent rate of return on speculation rather than 7 or 8 percent through investing in industry or services, you will borrow more to take out a bigger bet. You will assume that your debts will be paid off so fast that you can enter new speculative activities. It is, of course, driven by greed – but capitalism is based on organised greed.

THE SPECULATIVE JUNGLE

The scale of the speculative activity of modern capitalism is truly awesome and we can only offer a sketchy picture. Here are a few pointers:

Stocks and Shares: These are simply pieces of paper that allow individual capitalists to sell rights to a share of the exploitation of workers. But these pieces of paper can become of the subject of speculative activity itself. In other words, bets can be taken not just on how much profit each share will generate but on how share prices can rise or fall. In 1975, 19 million stocks were traded daily on the New York Stock Exchange. Today 1,600 million stocks are traded, valued at $ 60 billion.

Currency: Corporations need to buy and sell currencies in order to facilitate trade. But once again, currency can also become an object of speculation if you think that dollars will fall below euro – or vica versa. It is estimated that less than 15 percent of currency transactions now facilitate trade and the rest is for speculation. In 1977, $18 billion was spent each day on currency transactions. Today it is a thousand time more – $1.8 trillion.

Futures: As speculative active grew, each corporation wanted to ‘hedge’ against rising costs by buying future raw materials or energy at designated prices today. But once again this mildly sensible activity became transformed into speculation. Today only 8 percent of the futures market is spent on real hedging and the rest is pure speculation. So each day 10 billion contracts are made which take bets on the future prices of currencies, government bonds, interests rates or just about anything. There is a whole industry which will speculate on the items such as the price of Argentinean wheat in 2012 in Japanese yen. And it is not because they need wheat to make bread – but just to bet!

Hedge Funds and Derivatives: These are really an extension of the futures market. Hedge funds purport to take the risk out of the market by buying and selling ‘derivatives’. A derivative is anything that derives its income from some other activity. So you can have derivatives based on shares, currencies, interest rates or again just about anything. You can sell and buy rights to buy or just options to buy items in the future. The hedge fund works by charging a fee for this activity and promises its rich participants that they can get an average of 30 percent return from its speculative activity. The most famous hedge fund (because he chose to write about it) is George Soros’ Quantum Fund which gained one billion dollars in speculating against the British pound in 1992. It is estimated that hedge funds are currently playing with $2 trillion of other people’s money and that they have $600 trillion of often fictitious capital floating around the globe. The vast discrepancy arises because hedge funds leverage or borrow cash to speculate.

Leveraged Buy Outs: The nineties saw a wave of mergers as huge corporations such as Pfizer, for example, bought up Warner Lambert to forge mega corporations. But often these mergers were driven by ‘leveraged buy outs’ whereby the predator company put up one third of the price of its rival’s shares and then sought to pay off the rest by loading the company it purchased with debts. Last year, there was another frenzy of mergers and acquisition with $3 trillion spent on buying shares of other companies. According to the Wall Street Journal, 20 percent of companies who issued new shares are so saddled down with debt that might be literally worthless. Leveraged buy outs has become a bizarre game whereby speculative capital seizes weak companies and tears them to pieces. As Business Weeks put it, the aim is to ‘Buy it, Strip it and Slice it’.

SOLUTIONS

These activities have become so obscene that even the right wing French President, Sarkozy is calling for a return to ‘a regular and regulated capitalism’. Yet this dream of returning to the Golden Age when capitalism appeared to respect the rules is a fantasy.

For one thing the sheer scale of the funds controlled by corporations means that any government would find it difficult to control them. Lehman Brothers, for example, made a loss of somewhere between $30 billion and $80 billion. To get that in proportion, the GDP of Kenya is about €30 billion. In other words, more wealth was wrapped up in one secretive speculative company than was possessed by the 40 million people of a middle sized African country. Lehman Brothers may have lost out but others such as Goldman Sachs survive and their man, Henry Paulson, has effectively become the economic dictator of the US. The resources that giant corporations control allow them to evade or re-write regulations in a variety of ways. They employ lobbyists to bribe or buy politicians; they promote their views through a corporate media to shape public opinion; they threaten economic sabotage if any measure decreases their profits. In brief, they engage in a perpetual game of economic blackmail because they hold the vast majority of the resources of society in their hands. Far from states controlling corporations, it would appear that corporations control states and make them serve their purpose.

Secondly, as we have seen speculation is intrinsic to capitalism and this is why every panic over speculation never leads to change – but rather a new speculative bubble. The only answer that capitalists give when their system hits a crisis is to ask working people to accept greater sacrifices. In Ireland, most trade union members are being asked to do without a pay rise for eleven months to ‘help the country’. The €1 trillion that US taxpayers stumped up to rescue the speculators will be taken from budgets for welfare recipients, government employees and the poor generally. But these cries to make the poor pay only exacerbates the problems of over-accumulation and creates ever more surplus capital which seeks new avenues for speculation.

The only rational answer to the obscenities we are currently witnessing is to tackle the very system that produces them. The problems arise from the fact that Boards of Directors – composed normally of about 15 or 20 people of different corporations - make the most fundamental decisions in our society. They form the core of one particular class which dictates the very purpose of human economic activity. Behind the elaborate veil of mysticism, the games on Wall Street are being played with the resources of the world. Some of that wealth is literally fictitious but some has also been drained off from the sweat and efforts of millions of people. Instead of allowing a tiny corporate elite to waste and destroy the fruits of our labour as they have done, we need to take over control of the products of our labour.

Socialism, therefore has returned to the agenda with three simple propositions.

* That instead of bail outs for the rich, banks and large corporations should be taken into public ownership so that the wealth they control is used for the good of society and not squandered on insane games of greed.

* Instead of relying on ‘market forces’ to determine how the resources of society is used, we need conscious democratic planning. Society as a whole should have a say in how our resources are deployed and to what future purposes it is directed.

* Instead of giving CEOs and Boards of Directors a free had to intensify the exploitation of the many, we need economic democracy whereby the producers control units of production.

The fight to replace capitalism with a system that puts people before profit has well and truly begun.

Friday, September 26, 2008

Climate Change- Wake Up, Freak Out - then Get a Grip


Wake Up, Freak Out - then Get a Grip from Leo Murray on Vimeo.

Bush on Capitalism- "This sucker could go down"

The Bush administration and congressional Democrats are agreed on a bank-robbery-in-reverse to bail out the titans of Wall Street--but the Republican free-market madmen are getting in the way.

Rep. Barney Frank, George Bush, House Speaker Nancy Pelosi, Rep. John Boehner

BY DAY, it looked like an honorable agreement among thieves--Democratic and Republican lawmakers joining together over a White House conference table to hammer out the basic points of a $700 billion bailout of the Wall Street financial system at the expense of the vast majority of Americans.

But by nightfall, the deal was falling apart--with consequences so dire from the point of view of the corporate and political elite that even George Bush could grasp it. "If money isn't loosened up, this sucker could go down," Bush said during the White House summit meeting, according the New York Times' account.

Just to be clear: When he said "this sucker could go down," Bush wasn't talking about the bailout plan.

He was talking about the American financial system.

Even the mainstream media were stunned by the details emerging Thursday night of what went on behind closed doors in the White House Cabinet Room at a meeting that brought together leading members of Congress from both parties; the two presidential candidates, Barack Obama and John McCain; and George Bush and assorted administration officials.

Beforehand, Congressional leaders said they were basically united on the bailout plan. It seemed like Bush and the two presidential candidates would give their stamp of approval, and the deed would be done.

But then, according to reports, House Minority Leader John Boehner announced that he and fellow Republicans just couldn't go along with a proposal that violated their free-market principles by putting the private sector's financial assets--worthless though they may be--into the hands of the federal government. The meeting then devolved into shouting matches and recriminations, according to reports.

The irony is that the wider public opposes a bailout on the terms that the Bush administration--that neoliberal scourge of "big government" when it comes to other countries--wants to impose: take immense sums that could be used to help ordinary people suffering through foreclosures and growing joblessness, and hand it to the bunch of rich, corrupt parasites who caused the problem in the first place.

But in Washington, opposition to the bailout is coming from the right--from the "free-market fundamentalists" of the Republican Party, whose proposal to resolve the financial meltdown on Wall Street isn't more regulation, but less. Oh yes, and--of course--cut the capital gains tax and other taxes on the tiny minority at the top of society that has grown unimaginably rich during the 2000s, not to mention the preceding two decades.

In other words, the Republicans are opposing a plan put forward by the incumbent president of their own party--and the Democrats are fronting for their supposed sworn enemies in the Bush administration, having given up on any real measures to help working people suffering through the current crisis.

No one knows what will happen next--even by the time this article appears on Friday morning. But it certainly won't be a return to stability and certainty that the politicians promised when they gathered at the White House.

Oh, and by the way? While all that stuff about what happened at the White House was emerging Thursday night?

This one other thing happened: The U.S. government seized Washington Mutual, the largest savings and loan in the country, and promptly sold off the bulk of its assets to super-bank JPMorgan Chase at bargain-basement prices.

The financial press has been warning ominously about the imminent collapse of WaMu, as it's known, for weeks. But the actual event looks destined to be the second story on a Friday morning where uncertainty about whether the financial system stands on the brink of outright collapse is that much more grave.

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

NO ONE should be fooled by the demagoguery of the right-wing Republicans, who claim to be standing up for ordinary Americans. The Bush administration plan, supported by Congressional Democrats, to funnel $700 billion of taxpayers' money into bank vaults is about saving the corporations and super-rich investors that the Republican Party serves above all else.

Under the scheme proposed by Treasury Secretary Henry Paulson, the government would buy up bad debts--in the form of bonds and securities that are tied to mortgages--from banks and other financial institutions. According to Paulson and Federal Reserve Bank Chair Ben Bernanke, once relieved of these bad debts, banks would resume lending in the normal amounts that will keep the economy moving.

Under the original draft of the plan, Paulson and future treasury secretaries would get dictatorial powers over the use of this money, making a mockery of the U.S. Constitution. The only people influencing Paulson's decisions would be the Wall Street bankers he hires to advise him.

What's more, Paulson says, the deal has to be passed immediately to prevent the crisis from triggering a meltdown of the world financial system. George W. Bush did his best to stir up such panic in a nationally televised speech on September 24. "Without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold," Bush declared.

With a job approval rating of just over 30 percent, Bush hardly has the credibility to rally people to support such a drastic measure. This is the man who said that the Patriot Act had to be rushed into law to defeat terrorists, that Saddam Hussein was threatening the U.S. with weapons of mass destruction, that Iraqis would welcome U.S. invaders, and that the U.S. had accomplished its mission in Iraq by May 2003.

Who, then, would leap into action over anything this lame duck--make that dead duck--administration says at this point?

No one. Except Congressional Democrats, of course. As popular discontent brewed over Paulson's outrageous proposal, Wall Street's favored Democrats--Sens. Chuck Schumer and Chris Dodd and Rep. Barney Frank--looked for ways to sell the bailout proposal.

They came up with a few fig leafs. These reportedly include a toothless oversight board for Paulson's program, limits on executive pay for the already super-rich CEOs of companies that participate in the program, and a means by which the government could acquire stock in companies in order to recoup taxpayers' money if the bailout succeeds.

But none of these add-ons change the thrust of the plan, which empowers Treasury Secretary Paulson--himself a former Wall Street executive--to single-handedly control $700 billion, and send that money straight to his banker colleagues.

And unlike the savings-and-loan crisis of the early 1990s, when the U.S. government acquired the real estate assets of bankrupt S&Ls, the U.S. is planning to buy bonds tied to mortgages, and even more obscure financial instruments indirectly tied to those bonds. Much of this paper is worth little or nothing, given the decline in house prices and the rise in foreclosures.

Nevertheless, Fed Chair Bernanke had the nerve to argue that the government should overpay for these securities on the ground that their value will increase over time.

In effect, Paulson and Bernanke--and the Democrats who are fronting for their plan--are acting like highway bandits with a gun to the head of a hostage, and saying: Hand over the $700 billion right now, or the economy gets it!

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

THE CRISIS and its phony bailout solution beg a question so obvious that even some politicians are asking it: Why should the banks and financial institutions that caused this catastrophe get rescued, but ordinary people at risk of losing their homes or their jobs have nowhere to turn.

If the government is willing to spend at least $700 billion on banks, why can't it find a fraction of that for the other victims of this crisis--the vast majority of them completely blameless, unlike the banks?

Such questions can't be answered except with the obscene truth--in this twisted system, the lives of a small minority of rich and powerful matter more than everyone else's.

Voices of outrage against this deal are being heard everywhere--thus, hundreds turned out on Wall Street Thursday for a protest against the bailout. This points to the potential for similar organizing in the future.

Whatever the fate of the Paulson bailout, though, this crisis is an indictment of capitalism. Even with regulations and government oversight, at the heart of the free market is blind, irrational competition, with the primary priority being the enrichment of a few at the expense of society as a whole.

The scale of this crisis has led to what many are calling "Wall Street socialism"--the gains left in private hands, while the public gets stuck with the losses. It's time to revive a discussion of genuine socialism: a planned economy, democratically controlled, so all the vast resources and potentials in this world are used for meeting everyone's needs.

Wednesday, September 24, 2008

EMERGENCY- Fundraising for Locked out Bus Workers


Over 300 Go Wellington bus drivers who took industrial action to protest $12.72 poverty wages will be locked out from Thursday 25th September unless they accept the companies meagre offer.

This is a clear attack by a large transport corporation on poor but staunch workers. If the company wins then it will boost the confidence of the entire employing class who will attempt to use lock outs to beat poor workers during industrial action.

Come along and help collect funds to support Wellington Bus Drivers.

300 Wellington bus drivers locked out and need our support & solidarity

TVNZ news HERE

Host:
Unite Union
Type:


Time and Place
Date:
Thursday, September 25, 2008
Time:
1:00pm - 2:00pm
Location:
Outside Whitcoulls,
Street:
Corner of Queen and Victoria Streets
City/Town:
Auckland, New Zealand

Contact Info
Phone:
0212306783
Email:

Give Workers A Fair Ride- FRIDAY ACTION

Rally in support of Go Wellington Bus Drivers demands for fair pay.

For more information see: http://indymedia.org.nz/feature/display/71951/index.php

Meet 4pm on Friday outside Stagecoach HQ. (Infratil Corporation owns Go Wellington and Stagecoach.)

Protest at Stagecoach HQ, Owners of Go Wellington








Date:
Friday, September 26, 2008
Time:
4:00pm - 6:00pm
Location:
Stagecoach HQ
Street:
100 Halsey Street
City/Town:
Auckland, New Zealand






GO Wellington strong-arms vulnerable workers
Wednesday, 24 September 2008, 1:44 pm
Press Release: Wellington Tramways Union

Wellington Tramways Union

September 24, 2008
Media Release
GO Wellington’s decision to lock out more than 300 low wage bus drivers from 5.30am tomorrow morning is a disgraceful act of bullying, says the Wellington Tramways Union.

The lockout comes after union members took a one hour strike action this morning to protest the company’s refusal to provide a decent pay increase to drivers who are currently on just $12.72 an hour.

Wellington Tramways Union secretary Kevin O’Sullivan says the company’s lockout threat is a clear attempt to intimidate union members into submission.
“GO Wellington’s decision to lock out our members after just an hour of strike action is a gross overreaction that is clearly designed to bully our members into backing away from their claims for a fair deal.

“Wellington bus drivers earn close to minimum wage and in recent years have seen their hours cut and their real incomes fall by up to 19%. All we’re asking for is a fair wage so we can afford to live decent lives and provide for our families.

“The fact is $12.72 an hour doesn’t stretch very far these days, and the company knows the offer they’ve given us will barely even compensate for recent increases in the cost of housing, petrol and food.

“GO Wellington’s decision to lock us out means we are now literally locked out of the workplace without pay until the company decides to let us back, and they know that on the poverty wages they’re paying this will hit us and our families hard.

“This is a disgraceful act of bullying against low wage workers but we are determined to stand strong together and fight for decent pay. We hope the public will see this situation for what it is and support us in our actions.”

GO Wellington has advised the union that the lockout will begin at 5.30am tomorrow and continue indefinitely.

The lockout notice means GO Wellington can bar union members from the workplace without pay until they submit to the company’s demands.

ENDS

A copy of the lockout notice follows:

NOTICE OF LOCKOUT

TO: The New Zealand Tramways and Public Passenger Transport Employees Union Incorporated (Wellington Branch) 2nd Floor, 126 Vivian St, Wellington and BY EMAIL

AND TO: The Manufacturing and Constructions Workers Union (Inc) (Wellington Branch) 2nd Floor, 126 Vivian St, Wellington and BY EMAIL

This Notice of Lockout relates to bargaining for a collective employment agreement between The New Zealand Tramways and Public Passenger Transport Employees Union Incorporated (Wellington Branch) and the Manufacturing and Construction Workers Union Union (Inc) (“the Unions”) and Wellington City Transport Limited as initiated by way of notice received in or about May 2008

TAKE NOTICE that Wellington City Transport Limited hereby gives notice pursuant to s94 of the Employment Relations Act 2000 of its intention to lockout those employees named in Schedule A of this notice.

The period of notice given is at least 24 hours and shall commence for each Union on receipt of this notice by that Union and shall conclude at 5:30am on Thursday 25 September 2008.

The lockout will begin at 5:30am on Thursday 25 September 2008, unless this notice is earlier revoked in writing.

The nature of the lockout will be a complete and continuous discontinuation of the employment, including (without limitation) the requirement to perform any duties and the payment of any remuneration of those employees listed in Schedule A of this notice.

The lockout will occur at every place where the employees listed in schedule A of this notice would or might otherwise have been directed to work. The lockout will affect each and every service that Wellington City Transport Limited would otherwise have provided during the period of the lockout.

The lockout will continue at all times thereafter until Wellington City Transport Limited gives notice to the Unions that the lockout is lifted.

Wellington City Transport Limit will revoke this lockout notice (without limitation) on the occurrence of the earlier of the following:
a) Each Union lifts the strike notice which they have served on Wellington City Transport Limited and both Unions agree to resume bargaining; or
b) the members of the unions who are covered by the bargaining ratify an agreement which accepts the terms and conditions of employment set out in Wellington City Transport Limited’s offer to the unions dated 23 September 2008.

Monday, September 22, 2008

Convention of the Left- who should workers vote for?

Don't Just Vote- Get Active!


Socialist Aotearoa forum on the 2008 Elections-
where guest speakers from the electoral tickets meet the extra-parliamentary campaigns.

featuring-

Jared Phillips, Workers Party
Elliot Blade, Residents Action Movement,
Xavier Goldie, Green Party,
Omar Hamed, Auckland Anarchist Network
Sarita Divis, the Alliance

Chaired by Tania Lim, Socialist Aotearoa

Don't Just Vote- Get Active!

Host:





Date:
Thursday, September 25, 2008
Time:
7:00pm - 9:00pm
Location:
Room 260-219, Owen Glenn building
Street:
School of Business, Auckland University
City/Town:
Auckland, New Zealand


Phone:
0211861450
Email:


Living Wages! Living Communities!

Volunteers Organising Meeting

This summer the Unite Union, a community union of low paid workers is taking on some of the biggest, ugliest corporations in the land to secure living wages and fair working conditions for workers.

Workers in call centres and fast food restaurants like McDonalds are organising for justice but they need community support!

We need you and your mates to help us build our campaign for fairness and justice. This isn't just about workers rights, this is about building a movement of ordinary Aucklanders who are sick of corporations exploiting and abusing the underpaid and overworked.

So come along and find out about how you can put your skills and talents to good use in helping us get rid of poverty wages and poor working conditions!

Host:
Unite Union





Date:
Wednesday, September 24, 2008
Time:
7:00pm - 8:00pm
Location:
Unite Union Office
Street:
6a Western Springs Road, Morningside
City/Town:
Auckland, New Zealand


Phone:
0212306783
Email:



Socialists condemn Labour Party's Free Trade deal with the USA


A secret Free Trade Deal with the USA was sprung on an unsuspecting public, as the neo-liberal NZ Labour Party revealed both its contempt for democracy and its affinity with the blood soaked regime in Washington. However, the fact that this deal was done in secret also betrays the fact that such bilateral Free Trade deals are deeply unpopular with workers, despite being supported by most mainstream political parties and the craven CTU.

The support of both Labour and the CTU for the preceding Chinese Free Trade deal with the Butchers of Tienanmen Square has already resulted in disaster for Chinese workers. Fonterra gained a 43% stakehold in the corrupt Sanlu corporation, whose Managing directors are also provincial leaders of the murderous Communist Party. Sanlu ensured that the poisoning of Fonterra's dairy products were covered up during the "scandal free" Olympics, which also saw the imprisonment of leading activists and the oppression of Tibetan and Uighur independence movements. For Fonterra, Labour and the CTU, human rights and democracy were not more important than making money with a Stalinist regime so ruthless, it would cover up the poisoning of its own children.

In contrast, socialists were on the streets championing Chinese workers rights and the right of Tibetans to independence. We also opposed the many wars of the USA, and campaign to bring NZ troops home from Iraq and Afghanistan. Socialists also helped to build the Global Justice movement which was a significant factor in the collapse of the Doha round and the World Trade Organisation. Corporate Globalisation has lost the battle for political legitimacy, and free market capitalism itself now faces a gigantic ideological crisis as it appeals to States to intervene and prop up its banks.

The US ruling class are caught in a blind panic. Last Monday they allowed Lehman Brothers (US third biggest bank) to go to the wall, the very next day they bailed out the world’s biggest insurance company AIG. What we have seen is the biggest state intervention in world history. Over the last few days the World Bank and US governments have spent hundreds of billions of dollars buying up debts and bailing out collapsing institutions. This has certainly given them a temporary breathing space. But the problems of the system have not gone away.

The New Zealand economy now finds itself open to these rapacious forces which will be eying its remaining public assets for privatisation. Socialist Aotearoa will be to the fore in resisting any attempts by capital, foreign or domestic, to steal that which should be for the public good, not private profit.

Socialist Aotearoa
23 September 2008




Saturday, September 20, 2008

Te Hunga Mahi- The Internationale (in Maori)


Maranga mai te hunga mahi
Wetekina ngä here
Ko te mana hinengaro
Ko te waka mö tätou
Käti rä te wehi noa
E te iwi, e tü, e tü
Ka huri rä te ao katoa
Ka eke rä te taumata

Anei te whana kai tangata
Whakapiri mai, aku hoa
Ko te hunga mahi,
Ko te ao katoa
Anei te whana kai tangata
Whakapiri mai, aku hoa
Ko te hunga mahi,
Mö te ao katoa

Friday, September 19, 2008

Big Mac Under Attack as McStrikes break out again!

A giant union rat will be appearing outside McDonald’s restaurants throughout Auckland over the coming weeks. Unite union is asking the public to support workers who will be striking to gain pay equity with other fast food companies.

‘The Rat’ joined McDonald’s workers at Otara McDonald’s yesterday as they wakled off the job in protest over pay negotiations that have been stalled by the company. Negotiations between Unite union and the fast food giant have been underway since March this year but broke down this week after McDonald’s failed to meet the deadline for a revised offer.


FROM TV3 NEWS- Watch it HERE

McDonald's workers in Auckland have begun a series of short strikes which they are planning to stage during the busiest times of the day - lunch and dinner.

The workers say while McDonald's claims to be looking after coffee growers overseas, it is not providing the pay and conditions staff deserve here in New Zealand.

Tearoa Rio hoped working at McDonald's would get her finances on-track at university, and ready to kickstart her career.

"I started working at McDonald's because I wanted to go to MIT and I didn't want a student loan," says Ms Rio.

She earns $12.75 an hour, and after four years with McDonald's she still has not paid off her $6,000 dollar loan, and says her pay is only enough for everyday expenses.

"It's hurting us real hard, especially people with children," she says. "The gas and stuff at the moment, it's just ridiculous and we need more pay."

McDonald's says on average, workers are paid more than 15 percent above the minimum rate. But the union says chains like KFC and Pizza Hut have a higher starting pay.

"The difference is about 50c an hour for the crew, but it's up to $4 an hour for the supervisory managers," says Mike Treen of Unite.

The union is also concerned that some staff are on contracts with no fixed hours.

"What it means is that people can be punished for things by having their hours mucked around with, or sloppy managers can just change people's shifts without giving consideration to people being able to pay their rent every week," says Mr Treen.

McDonald's says it is not to blame for stalled negotiations, which began in March.

"That's up to the Unite union to tell us why it's taken five months with their members," says McDonald's' Mark Hawthorne. "We've been given three weeks to discuss the latest round with our franchisees."

Organisers say today's protest is just the beginning of the campaign. Workers throughout Auckland are planning to strike over busy lunch and dinner periods over the next few weeks. It may then extend to the rest of the country.


FURTHER READING- BEAT THE BRANDS
the story of how New Zealand's fast food workers unionised and led the SupersizeMyPay.Com campaign of 2006

Capitalism on trial


The neoliberal dogmas that have dominated for more than 25 years are discredited, but they need to be replaced by more than proposals for re-regulating the banks.

Capitalism on trial

THE WORLD financial system is in the grip of the most severe crisis since the Great Depression of the 1930s--and there's worse to come, not only for the banks and speculators of Wall Street, but far beyond, in every part of the U.S., and around the globe.

The business world has been struck by a man-made earthquake, and people will be paying for this economic disaster for years to come in a number of ways--higher prices for food and other necessities, millions of foreclosures and evictions, greater unemployment, growing poverty, government programs cut back or eliminated, and rising tensions throughout society.

The claim will echo around the corporate media that this was the inevitable consequence of all Americans "living beyond their means." Don't believe it. The vast majority of people who will have to pay the price for this disaster are blameless. They did nothing wrong.

The crisis was caused by an irrational free-market system and the insatiable greed of a small class of rulers who continually seek greater wealth and power, without regard for the costs.

Wall Street's meltdown is an indictment of the capitalist system, which has, once again, proven itself "unfit to rule," as Karl Marx and Frederick Engels wrote more than 150 years ago.

The immensity of this crisis demands an alternative that goes far beyond new regulations on the banks and government interventions to save whichever band of corporate parasites is failing this week. Ultimately, it demands a vision of a different kind of society altogether--a socialist world dedicated to the principles of solidarity, democracy and liberation, rather than the wealth and power of a tiny minority.

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

IT'S IMPOSSIBLE to exaggerate the scope of what has taken place in the financial world in the past several weeks. Scenarios that would have been dismissed as the fantasies of radical doomsayers a month ago now appear as accepted fact on the front pages of newspapers like the Wall Street Journal.

The latest previously inconceivable turn of events--latest, as of Thursday afternoon, when this article was being written, but that doesn't mean it will last the week, much less the month--was the U.S. government's effective nationalization of the largest insurance company in the world, American Insurance Group (AIG).

When desperate efforts by Treasury Department and Federal Reserve Bank officials to find a private-sector rescuer for AIG failed, the government stepped in with an $85 billion loan, payable over two years, in return for effective control of the company.

Set together with the takeover of mortgage giants Fannie Mae and Freddie Mac less than 10 days before, the U.S. government--that neoliberal scourge of nationalization in other countries--now owns the two largest mortgage companies and the single largest insurance company in the world.

Why, you might wonder, is an insurance company like AIG on the verge of bankruptcy because of a crisis associated with the bursting of the housing bubble and the resulting foreclosures on sub-prime mortgages?

Good question.

AIG got into trouble almost entirely because of an obscure part of its business--selling what are called "credit default swaps," which amount to an insurance policy on investments in bonds. Basically, AIG was selling financial protection to investors and companies that bought bonds--if the seller of those bonds defaulted on the promise to pay back the principal, plus interest, investors could cover their losses.

Credit default swaps are pretty much an invention of the last 10 years. Yet these financial insurance policies today may cover as much as $62 trillion worth of debt, according to estimates--greater, that is, than the total annual production of goods and services of every country of the world.

The sales of credit default swaps accompanied a massive--and little-examined, until now--boom in investments based on debt, and especially mortgage debt. Essentially, Wall Street pushed the expansion in mortgage financing and refinancing to feed a demand for bonds that packaged together large numbers of these loans for sale to big investors. As these "mortgage-backed securities" became bigger--and as they came to include a greater and greater proportion of risky sub-prime loans pushed on homebuyers by aggressive mortgage companies--the big investors who bought the bonds looked for protection against investments going bad. So the demand for credit default swaps boomed as well.

To AIG executives, it looked like easy money. They could sell the promise to pay off in the event of defaults, which never seemed to happen while the housing market was booming. But then the bubble burst, and AIG was suddenly on the hook for immense sums of money.

Essentially, AIG was gambling that they could take in more money by selling this specialized form of insurance than they would ever pay out. But when this bluff was called by the mortgage crisis, AIG was busted out of the game.

Or it would have been, if AIG had to play by the rules that ordinary people do. Instead, the insurance giant got help from "the house"--in the form of the Federal Reserve, which made an $85 billion emergency loan this week that put the U.S. government on the line for AIG's bets on mortgage-backed bonds.

Fed Chair Ben Bernanke and Treasury Secretary Henry Paulson had just finished putting their foot down against pleas that they put government funds behind a bailout of the investment bank Lehman Brothers. Instead, Lehman Brothers filed for bankruptcy. Meanwhile, another investment bank, Merrill Lynch, sold itself to Bank of America at a bargain price.

But AIG was different. The threat of its bankruptcy wasn't so much about the company itself, but all the other firms, struggling already because of the crisis, that would incur another loss if AIG went down. And because AIG's credit default swap business was unregulated, no one could say with assurance how extensive the damage would be if it failed.

So the government intervened, most of all to protect the other players. Financial institutions around the world all have their own tangle of high-stakes gambles on everything from the value of mortgage-backed bonds to the future price of oil to the direction of the stock market. Whether they survive or go under might depend on the money owed to them by a single busted insurance company.

It's easy to get lost in the details of what has happened--both the mind-boggling scope of the financial shell game that has been taking place for the last decade, and the unprecedented consequences as government officials and surviving players try to figure out how to unravel the mess.

But it's important not to lose sight of a larger point: No one could possibly claim that Wall Street's high-stakes casino contributed anything to the good of society as a whole. The entire world of credit default swaps, hedge funds, collateralized debt obligations and the rest of the alphabet soup concocted by Wall Street in this latest boom was directed toward one thing--make a tiny group of people rich beyond most people's wildest dreams.

The financial catastrophe unfolding on Wall Street is the product of blind greed and arrogance. And now that the house of cards is collapsing, the U.S. government's series of rescues carry another lesson: The bigger the bet and the wider the potential damage if it loses, the more likely the Feds will have to come to the rescue to stop the whole game from coming to an end.

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

NOW THAT the full fury of the financial storm has struck, the neoliberal dogmas of the last several decades are out the window--above all, the belief that the free market can only function at its efficient best if government oversight and regulation is kept to a minimum, if not eliminated outright.

Even Republican presidential nominee John McCain, in his latest speeches, is displaying a previously hidden zeal for financial reform of the "reckless management and a casino culture on Wall Street."

Unfortunately for him, McCain's record of support for deregulation is long. "You are interviewing the greatest free trader you will ever interview, and the greatest deregulator you will ever interview," he told a reporter last year.

Barack Obama is likewise talking tough about Wall Street--notwithstanding the huge sums he and fellow Democrat Hillary Clinton collected from the financial industry during this election cycle as part of a significant shift in business support away from the Republicans. Nevertheless, Obama, like McCain, is promising tough regulations to put Wall Street's house in order--though that certainly won't have much effect on the disaster unfolding right now.

Probably, the more accurate assessment came from Senate Majority Leader Harry Reid, who told reporters that Congress likely wouldn't pass legislation overhauling financial regulations this year "because no one knows what to do."

Reid at least deserves points for honesty compared to the substance-less bluster of the two presidential candidates.

But "no one knows what to do"? Really?

After all, now that the U.S. government has carried out several quasi-nationalizations on an emergency basis, an obvious question looms, as the Financial Times' Willem Buiter pointed out:

If financial behemoths like AIG are too large and/or too interconnected to fail, but not too smart to get themselves into situations where they need to be bailed out, then what is the case for letting private firms engage in such kinds of activities in the first place?

Is the reality of the modern, transactions-oriented model of financial capitalism indeed that large private firms make enormous private profits when the going is good, and get bailed out and taken into temporary public ownership when the going gets bad, with the taxpayer taking the risk and the losses?

If so, then why not keep these activities in permanent public ownership? There is a longstanding argument that there is no real case for private ownership of deposit-taking banking institutions, because these cannot exist safely without a deposit guarantee and/or lender of last resort facilities, that are ultimately underwritten by the taxpayer.

William Greider of The Nation poses the question more bluntly: "People have the right to ask: What exactly are the rest of us getting for our money?"

Greider is right. For example, now that they have bailed out the mortgage giants Fannie Mae and Freddie Mac, shouldn't U.S. taxpayers have a say in the companies' operations? Why shouldn't the public owners of these companies insist on a moratorium on foreclosures on the loans owned or guaranteed by Fannie and Freddie--nearly half of all mortgages in the U.S.? That would do a hundred times more for working people struggling with the mortgage crisis than the weak housing law passed this summer, whose main aim anyway was to enable the government takeover of Fannie and Freddie.

Now that the federal government has gotten into the insurance business with the takeover of the largest insurance company in the world, is there any justification for anyone in the U.S. going without health care coverage, much less 45 million people?

And when the objection comes that the U.S. government will have to cut spending to pay for the Wall Street rescues, there should be no question about where the money should come from. The federal government could get the whole sum for the AIG takeover from the Pentagon budget and still leave the U.S. military with more money--many times over--than any other country in the world.

If the U.S. needs to raise some quick cash, it could end the occupations of Iraq and Afghanistan--and not only cover the cost of the Fannie and Freddie takeover in a year-and-a-half at most, but, more importantly, begin to right a terrible injustice committed halfway around the world in the name of ordinary people in the U.S.

But of course, none of this is on the agenda of any political leader in Washington, from either of the mainstream parties--because any effective measure that would help ordinary people would strain at the boundaries of the profit system they are dedicated to preserving.

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

NO ONE knows what's next in this new and frightening stage of the economic crisis.

The financial world is grasping for explanations, so it is no surprise that ordinary people, who were kept in the dark about the scale of the theft and the degree of danger, are struggling to understand what happened. Every new day brings new questions, and answering them will be a process--here at SocialistWorker.org, as at any other media source, independent or mainstream.

But we have no problem drawing one conclusion from the start--that the capitalist system has proved, once again, to be a failure in serving the needs of any but a small minority of society.

For more than 25 years, the theology of neoliberalism--with its worship of the free market and its demonization of "big government"--has reigned supreme in the U.S.

But it is obvious that the market is in crisis precisely because of the ceaseless, irrational and unplanned pursuit of the greatest profit for a few. And it is equally obvious--and even grudgingly acknowledged by virtually all sides of the political mainstream--that the state, and not some "responsible" section of private capital, is needed to stop the system from grinding to a halt.

This is not the first guilty verdict against capitalism. As socialist filmmaker Ken Loach told the Guardian newspaper: "You look around the world, and you see massive need on the one hand, and massive wealth on the other, and the two never connect. The market is massively inefficient, capitalism is massively unstable and turbulent, and it's insane that we are all bound to this terrible wheel of instability."

But the present crisis is laying bare the failure of the system for more and more people to see--and opening up opportunities to make the case for a socialist society, where the blind and irrational pursuit of profit and power is replaced by a commitment to freedom and equality for everyone in it.

Such a society won't be achieved by dreaming about it. Those who are convinced that an alternative is necessary to end the injustices of this world need to be organized to struggle for another one.

Saturday, September 13, 2008

NZ Elections- Don't Just Vote, Get Active!


Aotearoa goes to the polls on November 8th, in what many see as one of the tightest electoral contests in New Zealand's history,where the main choices are between the Coca Cola-Labour led bloc and the Pepsi-National opposition. Trade union militants and genuine socialists bemoan the fact that there is no credible united left electoral ticket, and although there are candidates and campaigns from groups such as the Workers Party, the Alliance and the Residents Action Movement, none expect to get any MPs elected, let alone break through the 5% list vote threshold necessary to secure representation. So what should be done?

Many anarchist comrades will refuse to take part in the electoral charade, refusing to vote for another bunch of leaders whose promises transform in a Cinderellic sparkle into lies once the votes have been cast. Activists in Socialist Aotearoa have great sympathy with this position, but are not dogmatically opposed to people using the weapon of the ballot box tactically- indeed, many leading anarchists will be sneaking off round the corner to give their vote to the Green Party, on the strength of work done by MPs like Keith Locke and Sue Bradford.

Left greens and watermelons see a left-right dichotomy at work in the Green party, and a possible parting of ways between the reds and blues if the Green Party make an Irish style deal with National in the future. Bradford and Locke both have their roots in the revolutionary socialist tradition, and have been a constant and dependable presence on many picket lines, demonstrations and protests on the streets. Many left greens would see the loss of Sue and Keith as a great tragedy, and are thus out to maximise the Green vote to ensure the 5% threshold is reached. Unlike other electoral vehicles, this is both a real possibility and a looming danger for the Greens, and every vote really does count for them.



The Maori party stayed staunch when the State's Terror Raids demonised and criminalised whole Maori communities in the Urewewa's, in what was their political highpoint of the last parliamentary term. The Maori party are also championing the removal of GST on food in tandem with the Residents Action Movement, as well as opposing the Emissions Trading Scheme from the left. Here, they point to the naked emperor, saying that creating a market for carbon pollution will not guard the land, and for this they are to be applauded as true tangata whenua. Many supporters of Tino Rangatiratanga and self determination see the upcoming contests between Maori and the Labour Party in the Maori seats as a chance for a clean sweep by Sharples, Hone and co- one that will strengthen their power as kingmakers in the next parliament. But here lies the danger....

Like so many smaller parties that fall into the "Neither Left nor Right" trap, the Maori party has also rang a few gongs in its three years in parliament. Their tardiness in opposing Wayne Mapp's 90 days bill disgusted many union delegates- a huge groundswell of Maori working class anger forced the party hierarchy to change its tune. A leading member's hatred of the Labour party she resigned from means that their rhetoric about going into coalition with National cannot be discounted as a clever horse trading strategy- the real possibility of a Blue-Brown government that seeks to strengthen the Browntable Maori capitalists at the expense of the flaxroots is still there.

A minority of radical socialist opinion calls for a vote for the social-liberal Labour Party, either offering the support of the rope for the condemned man in the case of Dave Bedgodds's CWG, or a genuine reformism that points to the limited crumbs cast off the table over the last 9 years- Working for Families, Kiwibank and Kiwisaver, increases in the minimum wage from $9.25 to $12, as in the case of the SFWU's Jill Ovens. Here the argument is that in a straight fight between the True bright pink of the social liberals and the mildest of Keysian cyans of National, we should plum for the Coca Cola. Many ex Trotskyists have now become born again Trotterists, as the collapse in support of the once strong Alliance party leaves left social democrats floundering on Labour's edges.

Here the materialist left needs to concede the fact that reforms such as the increases to the minimum wage and Working for Families have had tangible material results for the poorest of Aotearoa's workers. Of course, the $12 per hour minimum wage was one of the central demands of the Unite union's highly successful SupersizeMyPay.Com campaign, and although it is correct to say that pressure on the streets forced Labour's hand on the issue, it wouldn't have forced National's. Those who remember the great Labour betrayals of 1984 need to connect with the dubstep generation of 2008, for whom those battles are a distant memory, and whose experience of 9 years of Labour led government is lacklustre, not livid.

The great tragedy of the whole affair is the continuing electoral fragmentation of the radical left, despite its ability to punch above its weight in other fields and activities. The Alliance, RAM and the Workers Party are all running electoral campaigns in competition for the 5% vote threshold that none of them seriously expect to achieve. Here, the idea is either to keep the red and green flag flying, to brand the broad left ticket for the next national electoral outing, or to propagandise about revolutionary socialism and recruit to the party.

It is a pity that here we don't see the unity of the radical left that we did in projects like the Unite union or the Supersize campaign. The exact demarcation lines of a radical left electoral ticket will be fought over till kingdom come, yet there are several important points worth looking at.

Revolutionary socialists who've read their Rosa Luxemburg know that revolution and reformism are not two different paths to the same goal, but are two different goals entirely. Here, the Workers Party stand in a revolutionary socialist tradition and the Alliance in a left social democratic tradition. And never the twain shall meet? Indicative of a new evolutionary mood and a break from preceived dogmatic stiffness by some sections of the NZ left, WP comrades do not insist that one needs to be a revolutionary to join the WP, never mind vote for the party. Their electoral campaign is based around tangible reforms that non revolutionary workers can relate to, as well as making solid points about what socialism could be. It will be interesting to see how comrades like Daphna Whitmore and Don Franks do in the ballot boxes, and we wish them the best.

In contrast, the revolutionaries of Socialist Worker have made a coalition with some people from various other backgrounds to form the Residents Action Movement, around a set of ten commandments that include free public transport and abolishing GST off food. However, this "broad left" does not include many outside the orbit of SW, in particular militants in the union movement, and there are also concerns about how "broad" broad is, with leading figures claiming the party is neither Left nor Right, or that it admires the economic nationalist politics of other NZ politicians, etc.

Comrades in Socialist Aotearoa are enthused about the successes of the Left Party in Germany, whose slogan is "we will be the resistance, inside parliament and in the streets". We look forward to the day when comrades from the Workers Party, Alliance and RAM can unite in a New Left party with Tino activists, watermelons, class struggle anarchists and union militants from Unite, the NDU and the SFWU. Within this New Left, we should co-operate but maintain our autonomy and political identities. In the past, we have done this through campaigns like SupersizeMyPay.com that captured the imagination of working people outside left activist ghettos.

To further this goal, we invite comrades to two upcoming events-

Don't Just Vote- Get Active!
Socialist Aotearoa forum on the 2008 Elections-
where guest speakers from the electoral tickets meet the extra-parliamentary campaigns.
7pm Thursday September 25th
Room 260-219
Owen Glenn building, School of Business, Auckland University

MARCH AGAINST LOW PAY-
$15ph minimum wage NOW.

2pm Saturday November 1st
Aotea Square, Auckland.