Saturday, March 9, 2013

Fwd: SEP Newsletter: The stock market bonanza and inequality in America

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Date: Mar 9, 2013 9:52 AM
Subject: SEP Newsletter: The stock market bonanza and inequality in America
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Socialist Equality Party Newsletter

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The stock market bonanza

6 March 2013
Tuesday, four days after President Barack Obama signed the budget sequestration order unleashing brutal cuts in social programs, there was general jubilation in the media as the Dow Jones Industrial Average crashed through its previous high, dating from 2007.
The intervening period has been an unmitigated disaster for the vast bulk of humanity, including the broad mass of working people in the United States. The signs of social decay and suffering are everywhere. Unemployment remains at near-Depression levels. Poverty, hunger and homelessness continue to rise. Those workers with a job are working harder and longer than ever for lower wages and fewer benefits. The buying power of the wages of newly hired autoworkers is at or below the levels that prevailed in the 1930s.
Thousands of schools have been closed, hundreds of thousands of teachers laid off, and the public education syst em gutted to make way for for-profit charter schools.
Detroit, once a thriving metropolis and center of the world auto industry, has been turned into an impoverished and desolate city whose inhabitants face Third World conditions. It is about to be placed under a bankers' dictatorship and very likely thrown into bankruptcy.
On Tuesday, as the New York Stock Exchange was hitting new heights, New York's Coalition for the Homeless was reporting a different record. In January, an average of more than 50,000 people slept each night at a homeless shelter in the city, including over 21,000 children--more than 1 percent of the city's youth.
Now the US government, with the sequester cuts as the down payment, is preparing to dismantle the core social programs remaining from the reforms of the 1930s and 1960s--Medicare, Medicaid and Social Security.
This so cial counterrevolution was inaugurated by the Wall Street crash of September 2008--the result of financial fraud and criminality on a colossal scale. Yet, amidst the still steaming rubble of the social tsunami they unleashed, the lords of finance are today able to celebrate their biggest heist ever.
How is this to be explained?

The media offers no explanation. The network commentators, in line with their six- and seven-figure salaries and their bulging portfolios, hail the new record on the stock market as though it were a national achievement. Rejoice, one and all!
In reality, the record highs on Wall Street are a measure of the scale of the theft of social resources carried out since the financial crash by the very parasites who were responsible for the collapse.
The obscene profits that are being made by the corporations and banks, the gargan tuan pay packages that the CEOs are awarding themselves, the shameless fortunes that are being made through the manipulation of financial assets--in the midst of mass unemployment and austerity--none of this is seriously raised or questioned. The obvious contradiction between the official claims of "no money" for social needs and the vast sums sloshing around Wall Street is not even hinted at.
It is a fact that not a single leading banker or hedge fund speculator has been criminally prosecuted, let alone jailed, for crimes that have caused a level of misery, destruction and death that is incalculable. Instead, the Obama administration, both political parties and the entire panoply of official institutions--including the trade unions--have made it their business to ensure that every dollar lost by the financial aristocracy in the crash was paid back many times over.
Paid back by whom? By the working class in th e US and the world, through the greatest assault on its living standards in history.
The latest surge in the stock market--which has soared almost without a hitch since the start of the year--is bound up with the fact that those in the know had been assured the White House and Congress would push through the sequester cuts. As a leading Bank of America executive told the New York Times this week, "The market wants more austerity."
More broadly, since day one of the crisis the government has provided the banks with unlimited funds. Besides the trillions in cash injections, virtually interest-free loans and credit guarantees handed out by the Bush and Obama administrations and the Federal Reserve in the immediate aftermath of the September 2008 crash, the Fed has pumped trillions more into the financial markets through the dollar-printing operation knows as "quantitative easing." This is currently runni ng at $85 billion a month, or over $1 trillion a year--enough to cover the current budget deficit of the federal government.
Notwithstanding the pious disavowals of the Fed, it is financing the biggest financial bubble in history--with stocks, bonds and other financial assets at vastly inflated prices. With the White House and Congress refusing to impose any real bank reforms, the Fed has a green light to underwrite the same types of frenzied speculation that triggered the last financial meltdown, but on an even more vast scale.
The conditions are being created for another, more disastrous crash, but the financial plutocrats continue to plunder the country secure in the knowledge that they will, once again, be bailed out.
The events of 2008 definitively exposed the complete subordination of the government to the financial aristocracy. The developments since then have only confi rmed this fact.
The record highs on Wall Street underscore the irreconcilable antagonism between the social needs of the people and the existing economic and political system. There are ample resources to guarantee every worker and young person a job at decent pay, a high quality education, decent housing and nutrition, access to culture, and a secure retirement--the basic social rights which every person should enjoy.
But they cannot be secured except through the mass struggle of the working class. The ill-gotten fortunes of the financial parasites must be expropriated and used to provide jobs, schools and housing. A revolutionary struggle is required to break the stranglehold of the financial oligarchy over the productive forces and place them under the democratic control of working people--that is, a struggle for socialism.
Barry Grey

The financial aristocracy and the growth of working class struggle

4 March 2013
Last year, nine executives at four major private equity companies received a combined total of $1 billion in pay and dividends in what was likely the largest payout in the companies' histories.
This extraordinary fact was reported in an article in the weekend edition of the Wall Street Journal. The article noted that dividend payouts alone amounted to more than $100 million each for Stephen Schwarzman, CEO of Blackstone Group LP; Henry Kravis and George Roberts, the co-founders of KKR; and Leon Black of Apollo Global Management LLC. All of these men were already billionaires, with Schwarzman worth $5.2 billion, followed by Kravis at $4 billion, Roberts at $3.7 billion, and Black at $3.5 billion.
The average payout for each of the nine executives was about 2,000 times the median household income in the United States.
This report is another example of the obscene concentration of wealth in America that has raised inequality to a level not seen in more than a century. Wages for workers in the United States are at their lowest level since the 1930s.
Meanwhile, massive cuts are being implemented at every level of government, justified by the claim that "there is no money" for health care, education or other basic social needs.
The same day that the Journal reported the income of the Wall Street private equity executives, the federal government began the implementation of $1.2 trillion in "sequester" budget cuts, and Michigan Governor Rick Snyder announced that he would appoint an emergency financial manager with dictatorial powers to impose cuts in Detroit.
The Obama administration has indicated that the brutal cuts under the "sequester" will not be reversed. The across-the-board cuts in social spending are the outcome of calculated maneuvers by the Democrats and Republicans to impose extremely unpopular measures that both parties support. Among the many consequences, those receiving long-term unemployment benefits will see their weekly income fall 11 percent to $260. The weekly take of each of the Wall Street executives cited by the Journal was more than 7,000 times this amount.
These figures point to the overwhelmingly dominant factor of American life: social inequality. Repeated surveys have shown that the great mass of the people significantly underestimate the scale of the wealth concentrated in the hands of the financial elite. It is little talked about in the media, and for most people the sums of wealth controlled by this layer are simply incomprehensible.
An immense and unbridgeable chasm exists between the conditions of life for masses of people--suffering from the greatest economic and social crisis since the 1930s--and a ruling class whose wealth is almost entirely divorced from productive activity in the real economy.
In terms of the political response, the contrast to the 1930s is instructive. In introducing the Revenue Act of 1935, which increased tax rates on high incomes and estates, President Franklin D. Roosevelt stated, "Great accumulations of wealth cannot be justified on the basis of personal and family security."
Such a conception--advanced by Roosevelt as part of the effort to save capitalism from the threat of social revolution--belongs to another age. It is completely outside of the boundaries of contemporary bourgeois politics. Now the watchword is for ever greater attacks to make the working class pay for the crisis of the capitalist system.
The American ruling class bears all the hallmarks of an aristocracy, with all that implies for social and political stability. When the existence of the ruling class and the economic system upon which it is based become inimical to any progressive development--when instead they become the driving force for an immense historical retrogression--society is on the verge of revolution. This was true in France before 1789 and Russia before 1917, and it is true in the United States today.
For 30 years, the American ruling class has built up its wealth through a process of financialization, in which the productive forces of the economy were steadily undermined. This process led to the Wall Street collapse of 2008, which has become the occasion for an even more frenzied orgy of speculation.
Definite policies have been pursued, first under Bush and then vastly expanded under Obama, to ensure that this process continues. The financial elite is addicted to an unending stream of virtually free money pumped into the markets by the US Federal Reserve. After a quick fix of bailouts in the wake of the 2008 crash, the American central bank is mainlining a steady supply of dollars by means of asset purchases on the order of $85 billion a month.
This is what is behind the massive rise in stock prices upon which the wealth of the private equity executives is based, and it is the reason why the Dow Jones Industrial Average is within a few percentage points of setting a new record, even as economic growth stalls and begins to go in reverse.
The malignant character of social relations infects every political institution. The entire organism stinks of corruption. Both political parties, the Democrats and Republicans, function as direct instruments for the enrichment of the ruling class.
Nothing can be changed through this political system. Social struggle is required. The working class must fight back, countering the dictates of the ruling elite through collective action. Social conflict is, indeed, inevitable. It has already begun to emerge in explosive forms in countries around the world, and the first signs of the coming eruption can be seen in the United States itself.
For these struggles to succeed, however, opposition must be based on a clearly worked out political program--one that is directed against the entire structure of the existing social system. Capitalism is historically bankrupt. It must be replaced by a new and higher organization of society--socialism.
The Socialist Equality Party is leading the fight to build a working class movement to overturn the capitalist system and reorganize society on the basis of social need, not private profit. We propose the following measures:
* The taxation of all income over $1 million at a rate of 90 percent. An increase in taxation to this level would only return tax rates to where they stood in the 1950s. However, this measure is completely excluded by the existing political system, in which the two parties haggle over whether to raise the top rate a couple of percentage points while plotting to slash corporate taxes.
* The confiscation of all wealth accumulated through financial speculation. The members of the financial aristocracy should be treated as what they are: social criminals. They should face prosecution, along with those who have abetted their crimes.
* The nationalization of the banks and major corporations--with compensation for small shareholders--and their transformation into public utilities run in the interest of social need, not private profit. The wealth they produce must be utilized for the betterment of society.
Through such measures, the resources can be found to meet the basic needs of society and secure the social rights of the working class, including the right to a job at a decent income and the right to housing, health care, education and a comfortable retirement.
The socialist transformation in the United States must be part of an international movement. All around the world, the same basic questions are posed. We urge all those who agree with these demands to contact and join the Socialist Equality Party and fight to popularize this program among working people and youth.
Andre Damon and Joseph Kishore

WSWS 15th Anniversary Chronology: The Year in Review 2001

This week, the WSWS posted its fourth installment in the year-by-year chronology marking 15 years of continuous publication. We urge SEP supporters to study the Chronology, and review how the great events, political issues, social processes, and cultural and intellectual controversies of the last 15 years were reported on and analyzed by the WSWS. Read the full essay for 2001 and previous years here.
The year 2001 began with the culmination of the right-wing political coup engineered by the US Supreme Court: the installation of George W. Bush as president. It quickly became apparent that what was unfolding was a dramatic shift to the right, not only in the United States but in world politics as a whole.
Bush dropped his pretense of moderation, summed up in the election campaign claim that he was a "compassionate conservative," and advanced an ultra-right program centered on the largest tax cuts for the wealthy in history. He named a cabinet filled with corporate executives and Christian fundamentalists. He expanded the US bombing of Iraq, ostensibly to enforce a "no-fly" zone, and set up a secretive energy task force, headed by Vice President Dick Cheney, to plan the seizure of oil and gas resources in the Middle East and Central Asia.
Plans for wider military action were developed, requiring only a suitable pretext to implement. This was provided by the terrorist attacks of September 11, 2001, which killed nearly 3,000 people. The simultaneous hijacking of four airliners, under circumstances that have never been seriously investigated, was carried out by Al Qaeda, an organization that arose from the CIA-backed Islamic fundamentalist insurgency in Afghanistan. The 9/11 attacks became the all-purpose justification for a program of militarism and destruction of democratic rights not only in the United States, but in all the major capitalist countries.
Less than a month after 9/11, the United States was engaged in a major war in Afghanistan, and the Pentagon had begun to ready contingency plans for an invasion of Iraq, which had no connection to the terrorist attacks. Members of the NATO alliance, including Britain, France, Germany and Canada, and non-NATO powers such as Japan and Australia joined in the invasion and occupation of Afghanistan.
By the end of the year, the Bush administration had declared an open-ended "war on terror" that encompassed the entire globe. Congressional Democrats and Republicans endorsed both the military action in Afghanistan and an enormous buildup of state repression at home, embodied in the passage of the USA Patriot Act and the creation of the Department of Homeland Security.
Read the full essay for 2001 and previous years here.

Hugo Chavez and socialism

8 March 2013
Hundreds of thousands of Venezuelans filled the streets of Caracas to accompany the casket of President Hugo Chavez to the military academy where he began his career and where his body lay in state before today's funeral.
The former paratrooper lieutenant colonel had been in power for 14 years, and the outpouring reflected popular support for the undeniable, albeit limited, improvements in social conditions for the country's most impoverished layers under his presidency. This includes a halving of the poverty rate, which still remains above Latin America's average.
In Washington, the Obama administration issued a cautious statement calling Chavez's demise a "challenging time" and declaring its hope that the change in leadership in Caracas would promote "a constructive relationship with the Venezuelan government."
Republican leaders in Congress openly celebrated the Venezuelan leader's death. Typical was Ed Royce, chairman of the House Foreign Affairs Committee, who declared, "Good riddance to this dictator."
Chavez's nationalist rhetoric, his government's diversion of revenues from the country's protracted oil bonanza to pay for social assistance programs and its forging of extensive economic ties to China earned him the hatred of both Washington and a fascistic ruling class layer in Venezuela. They did not, however--as both he and his pseudo-left supporters claimed--represent a path to socialism.
Chavez was a bourgeois nationalist, whose government rested firmly on the military from which he came and which continues to serve as the crucial arbiter in the affairs of the Venezuelan state.
While bitterly resented by a reactionary Venezuelan oligarchy, whose preferred method of dealing with the country's impoverished masses is murder and torture, Chavez's misiones, or programs to improve living standards, housing, health care and education, made no serious encroachment on profit interests.
Both the share of the country's economy controlled by the private sector and the portion of national income going to employers as opposed to labor were greater under Chavez than before he took office. An entire new ruling class layer--dubbed the boliburguesia-- was spawned by chavismo, growing rich off of government contracts, corruption and financial speculation.
Meanwhile, the "Bolivarian revolution" has done nothing to alter Venezuela's status as a nation dependent upon and oppressed by imperialism. The country's economy is still wholly dependent upon the export of oil (the largest share to the US) and the import of both capital and consumer goods.
In last November's presidential election, Chavez publicly appealed for the support of the wealthy and privileged, insisting that his policies promoted social peace and stability and warded off the threat of civil war.
Chavez had ample reason to promote his policies with the left rhetoric of an ill-defined "21st Century Socialism." The aim, first and foremost, was to divert and contain the militancy of the Venezuelan workers, whose struggles, to the extent they escape the control of the ruling PSUV (Unified Socialist Party of Venezuela) and its affiliated Bolivarian trade union federation, are often branded as "counterrevolutionary."
However, an entire layer of the international pseudo-left--including various organizations and individuals who have in the past cast themselves as "Trotskyists"--attempted to lend credence to this "socialist" rhetoric. This reached ludicrous levels, such as the hailing of Chavez's call for a "Fifth International," which was issued in a rambling speech to a November 2009 gathering of "left" parties in Caracas that included delegations from the Chinese Communist Party, the Brazilian Workers Party, Argentina's Peronist Partido Justicialista and the PRI of Mexico.
The reaction of Francois Sabado, a leading member of both the Pabloite international and the French New Anticapitalist Party, was typical. He described this bringing together of right-wing, anti-working class ruling parties as "an important instrument to fight the ruling classes, not only in Latin America, but in the whole world." He went on to insist that political "divergences" could be overcome and that there was no need of "discussing the historical balance sheets of different currents."
Such "balance sheets" could only lay bare the long and tragic historical experience--particularly in Latin America--with the attempts by political charlatans like Sabado to portray bourgeois nationalist regimes as "revolutionary" and "socialist," subordinating the struggles of the working class to them.
In the 1970s, this took the form of the political tendency led by Nahuel Moreno working to subordinate the Argentine working class to both Peronism and Castroism, politically disarming it in the face of the savage military coup of 1976. A similar role was played by the party of Guillermo Lora in Bolivia in 1971 in relation to the "left" general, J.J. Torres, whose presidency was ended with the right-wing military coup of Gen. Hugo Banzer.
Similar adaptations to the regimes of Gen. Velasco Alvarado in Peru and Gen. Omar Torrijos in Panama led to betrayals and defeats for the working class in these countries, as did the promotion of Castroism and Guevarism throughout the continent.
The painting of chavismo in socialist colors by today's pseudo-lefts is a matter not merely of failing to learn these historical lessons, but rather of deep-rooted class interests. They are drawn to Chavez's "21st Century socialism" precisely because of their hostility to the Marxist conception that a socialist transformation can be carried out only through the independent and conscious struggle of the working class to put an end to capitalism and take power into its own hands. These petty-bourgeois political elements are instead attracted to a policy designed to save capitalism from revolution, imposed from above by a charismatic comandante. These layers have moved far to the right since the hey-day of their adaptation to Castroism in the 1960s and 1970s. Indeed, before his death, some of them who had lauded Chavez turned against him because of his opposition to the US wars for regime change in Libya and Syria, which they thems elves have embraced along with imperialism.
Whatever the immediate fate of the unfolding attempts to fashion a new chavismo without Chavez, the class struggle in Venezuela and throughout Latin America will intensify under the impact of the deepening global capitalist crisis. The crucial question is the building of new, independent revolutionary parties, sections of the International Committee of the Fourth International, to fight for the independent political mobilization of the working class as part of the worldwide struggle against capitalism.
Bill Van Auken