Fightback measures are called for

By Fred Goldstein

By the time the stock market closed on Jan. 26, 11 large U.S. corporations had announced a total of 60,000 new layoffs in just that one day.

Caterpillar, the largest manufacturer of construction and mining equipment in the world, announced 20,000 layoffs, or 18 percent of its global work force.

Home Depot, the largest home equipment dealer in the U.S., announced 7,000 layoffs and the closing of 34 of its high-end EXPO Design Centers.

Sprint Nextel will lay off 8,000, or 13 percent of its workforce.

The giant drug company Pfizer is projecting 8,300 layoffs after its $68-billion purchase of another huge pharmaceutical, Wyeth.

Toward the end of the day Texas Instruments announced another 3,400 layoffs, 12 percent of its workforce, and there was a belated announcement that IBM had sent out pink slips to another 2,800 workers.

Caterpillar, which had sales of $12.92 billion last quarter and is a bellwether for the economy because of its global reach and its crucial role in construction worldwide, predicted that 2009 would be its worst year since the end of World War II.

Altogether, large U.S. companies publicly announced more than 170,000 layoffs (see accompanying chart) in the first four weeks of this year, but hundreds of thousands more are expected to be added when the government releases its monthly statistics early in February.

As workers lose their incomes, the defaulting on mortgage payments, credit cards, auto loans and student loans keeps rising. As the defaults rise, the bad debts on the books of the banks go up. The deepening crisis of the workers aggravates the financial crisis of the bankers.

Gov’t rushes to save banks

The capitalist government in Washington has not been trying to solve the banks’ problem of insolvency by rushing to the aid of the millions of workers who are defaulting on their debts and losing their homes and jobs. Instead, it has put limited aid to the workers on the slow track while it rushes to find ways to bolster the banks.

Citigroup and Bank of America had merely to apply to the government, filling out a perfunctory request form, and they immediately received $45 billion each in installments, with guarantees of $300 billion and $100 billion, respectively, to cover bad debts. Other banks have received similar handouts, adding up to hundreds of billions of dollars in direct infusions of capital and in bad debt guarantees.

As fast as the Obama administration draws up plans for its stimulus package, the deterioration of the economic situation outpaces these modest plans to deal with it.

So far $700 billion has been officially appropriated for the financial crisis. But, according to an article in the Washington Post of Jan. 24, “with the economy deteriorating rapidly, financial companies are incurring trillions of dollars in losses on failing mortgage loans and other assets, forcing the federal government to consider substantially expanding its response to the crisis. ... Leading economists and lawmakers calculate that hundreds of billions more could be required.” There is talk of raising the official bank bailout fund to $1 trillion—in cash.

As for the foreclosure crisis, the administration has officially pledged $50 billion to help homeowners avoid foreclosures. But Goldman Sachs estimates there is more than $1 trillion outstanding in bad mortgage debt. At a private luncheon on Jan. 22, economists were talking about needing $250 billion for the foreclosure rescue program.

“Foreclosures have skyrocketed,” according to the Post, “with an estimated 8 million families expected to lose their homes over the next four years.”

Losing 500,000 jobs per month

Mark Sandy of Moody’s Economy.com told the Post: “Conditions are eroding far more rapidly than anyone anticipated. ... The job market is now consistently losing 500,000-plus jobs per month, something you couldn’t have envisioned eight to 12 weeks ago. Losses in the banking system over the last week or two have been much larger than people had been expecting. We’re coming to the realization that these things are self-reinforcing and the problems aren’t developing in a linear way. They’re getting worse very rapidly.”

The bourgeois “experts” cannot fathom their own system. They are utterly taken aback when capitalism behaves the way it has been behaving since the first real global collapse in 1825.

The capitalist system goes through a cycle of expansion that leads to a glut of goods, stocks, land deals and so on that always ends up in a crash. As each capitalist or capitalist grouping fights for market share of commodities, gambles on speculative gains in the stock market, the bond market, the real estate market, etc., things always end up in a catastrophe, which the bosses then push off onto the workers.

As capitalism has decayed under imperialism, has become more financial, more parasitic, more speculative, the tendency increases for the crashes to be more devastating.

Only the tunnel vision of capitalists driven by profit lust could keep them and their experts from seeing the inevitable end of this anarchic system of production and finance:

• No capitalist knows if the commodities produced can be sold.

• No one knows if the stock they buy will go up or down.

• No one knows when the upward cycle of speculative buying and selling of land or houses will reverse itself and come crashing down with a vengeance.

Furthermore, it was clear to all who wished to see that selling junk mortgage bonds around the world to institutions, municipalities and states alike, while calling them AAA, highest-rated, could only result eventually in a global crisis.

The financiers who stand at the pinnacle of capitalist society, the bankers who control the financial resources of society and therefore dictate the fate of hundreds of millions of workers all around the world, have used those resources in a mad race after profits—by any speculative, fraudulent means necessary. And they have brought the system to ruin.

Now the capitalist government must step in with trillions taken from the workers and the middle class and bail out the banks, because that is the only way they can conceive of under present circumstances to bail out the capitalist profit system.

Government intervention shows above all, however, that bankers are completely unnecessary to the functioning of society. Their only role is to get rich by financing exploitation and debt.

What capitalist ‘nationalization’ means

Right now “nationalization” of the banks is being discussed. It is a measure of the feeling of powerlessness to control their own capitalist system that economists, politicians and advisers are even contemplating the very thought of nationalization of the banks. In the days before this crisis, no one in the establishment would have dared to introduce this idea, even into the most private conversation. The word “nationalization” was not in the vocabulary of U.S. bourgeois society.

But this crisis has forced sections of the ruling class to think the unthinkable.

Nationalization under the capitalist class, that is, the takeover and running of a bank or an industrial corporation or an industry, has historically been used for the purposes of rescuing the capitalist bank or enterprise from complete ruin. The goal has been to take it over temporarily, put the enterprise back on its feet until it becomes profitable again, and then sell it back to the bosses.

In other words, it has been used to strengthen the system of exploitation when some aspect of the system has become weakened.

The nationalization of the major enterprises of British industry after World War II is a classic example. It was carried out by successive Labor governments with understandable popular support from the workers and was presented as a socialist measure. But it left the capitalist ruling class intact. Once the economy had completely recovered, Prime Minister Margaret Thatcher began to give back to private capitalists what was profitable.

Time for a people’s fightback

In the meantime, workers are losing their homes and livelihoods. They are being battered from pillar to post on a daily basis by the inhuman wave of layoffs and foreclosures. The capitalist government in Washington and the financial authorities at the Treasury Department and the Federal Reserve Board have already given the banks over a trillion dollars and are now rushing to give them more on an emergency basis.

What is the real emergency, which needs immediate attention? It is that tens of millions of workers and their families are rapidly being driven to the wall by the economic crisis. Social tensions are increasing. Racist killings and beatings are increasing, especially by the police. Arrests of the poor are rising as more workers are driven to commit crimes of survival. The scapegoating of immigrant workers is growing under the impact of the crisis.

The workers and the oppressed are not just losing paper wealth. They do not have millions of dollars stashed away in personal wealth to be tapped for a rainy day. They are losing the means to sustain living.

The only way out of this crisis for the working class is to organize a massive fightback.

A movement is taking shape to launch peoples’ assemblies and community-labor alliances whose aim is to broaden the struggle by uniting the various movements into a common front.

This is an essential first step for the workers and oppressed to put their needs on the agenda, ahead of the Wall Street billionaires.

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