Capitalist financial crisis September 2008

Financial crisis: working families need protection

IR and labour law policy issues in other posts commenting on the Labor governmen cannot but be connected to the capitalist crisis dramatically unfolding with bank and business crashes daily. It is on-going and impacting on working families.

This is clear reading the weekend’s press, following Stephen Long daily on the ABC and taking note of the financial economist Steve Keen and New Matilda comments crash-and-burn-wall-st-burn and economist John Quiggin

At the time of writing the ‘Wall-St’ bail-out is not yet finalised, but even when US finace capital is subsidised, still the crisis will get more severe as US and world-wide recession deepens. Hope for stability, recovery, growth etc is a long way away.

I fear that working families will bear too much of the burden of the greed of the rich financiers.

What is startling is the Rudd government’s disconnect with this most severe capitalist financial crisis in that the planned IR and labour law reforms for Fair Work Australia should be even more designed to meet the needs and to protect the interests of working families.

Higher unemployment with increasing redundancies in many sectors and individual debt pressures will increase and looking after ordinary people must feature.

But the pressure on DPM Julia Gillard is from business now saying that with the crisis they will not be able to afford new workplace reforms. The press reports industry lobbyists are renewing pressure to ensure even much more of WorkChoices remains. But the reverse ought to be happening. DPM Julia Gillard repeats that WorkChoices is going, but what YRAW activists know of the plans this is just ‘spin’.

On a related point, all agree on the necessity of the bail-out for the US Banks. This is the main focus. Another focus that is widespead is like the US union movement AFL-CIO ( same as the ACTU) campaigns for changes that benefit working families (I recieve campaign updates):

‘George Bush, Henry Paulson and Ben Bernanke came to Congress last weekend with a request for a $700 billion blank check to bail out Wall Street. Thankfully, our allies in Congress are pushing back against this dangerous and ill-conceived bill.

To ensure that the bill Congress passes is a balanced one… tell them “no blank checks” for Wall Street.

Our nation is facing a real financial crisis, brought on by seven years of Bush-McCain financial policies, that calls for action that is thoughtful and swift—but not hasty. The actions we take at this perilous time must set the stage for a real recovery that benefits Main Street as well as Wall Street.

The last thing we should do is compound the enormous imbalances in our economy with an enormously imbalanced rescue package. To accomplish this, any bailout must:

• Be governed by an independent board with transparency and effective public and congressional oversight.

• Use the full array of financial and legal tools available to the government to stop foreclosures and restructure home mortgage loans for working families.

• Address the cause of the crisis on Main Street in addition to the symptoms on Wall Street. Congress should pass a second stimulus package in its entirety.

• Work to address the disastrous weaknesses in our financial regulatory system and corporate governance system that allowed this disaster to happen.

The current Bush-Paulson-Bernanke proposal does nothing for families facing foreclosure or for working people hit hard by the economy, and it does nothing to hold those who caused this crisis accountable. Meanwhile, it grants unlimited authority to the Bush administration to spend $700 billion of the public’s money to prop up whomever they wish on Wall Street, without any rules or independent oversight.

This is not acceptable.

The stakes are enormous. If this plan ends up squandering hundreds of billions of dollars of the public’s money, the damage will not be limited to the financial system. As a nation, we must address the health care crisis, the infrastructure crisis, the energy and environmental crisis and the jobs crisis. Our future and our children’s future depend on focusing our nation on these challenges in the real economy.’

PM Rudd in New York argued for the international regulation of the greed/fear financiers in the global capitalist system whose reckless system and actions have gone too far.

Voices are now being heard of the interests of ordinary working people and the poor saying they should not pay for this fear/greed crash of the finance corporates. Plans have to be put in place to assist home owners impacted adversely and for the people rather than just the banks. We shall see.

When the financial crisis was evident a year ago I recommended a deeper critical analysis of the financial capitalist system. An analysis from Monthly Review Press is one alternative,

The Financialization of Capital and the Crisis by John Bellamy Foster

With the benefit of hindsight, few now doubt that the housing bubble that induced most of the recent growth of the U.S. economy was bound to burst or that a general financial crisis and a global economic slowdown were to be the unavoidable results.

Warning signs were evident for years to all of those not taken in by the new financial alchemy of high-risk debt management, and not blinded, as was much of the corporate world, by huge speculative profits. This can be seen in a series of articles: “The Household Debt Bubble” (May 2006), “The Explosion of Debt and Speculation” (November 2006), “Monopoly-Finance Capital” (December 2006), and “The Financializ-ation of Capitalism” (April 2007).

A Turning Point for the Global Economic System by Manas Chakravarty
But does the credit crisis call for a drastic change?

In 1985, Sweezy, together with economist Harry Magdoff, summed it up rather succinctly. In an article called “The Financial Explosion,”
they wrote,

“Does the casino society, in fact, channel far too much talent and energy into financial shell games? Yes, of course. No sensible person could deny it. Does it do so at the expense of producing real goods and services? Absolutely not. There is no reason whatever to assume that if you could deflate the financial structure, the talent and energy now employed there would move into productive pursuits. They would simply become unemployed and add to the country’s already huge reservoir of idle human and material resources. Is the casino society a significant drag on economic growth? Again, absolutely not. What growth the economy has experienced in recent years, apart from that attributable to an unprecedented peacetime military build-up, has been almost entirely due to the financial explosion.”

Please recommend more.


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