No responses on the biggest bailout it history. Lets discuss if Barry is an Islamist, thats more important. Or how wonderful Palin is.
On Sep 10, 2:25 pm, Frank <[EMAIL PROTECTED]> wrote: > Record corporate bailout reveals the bankruptcy of American capitalism > By Barry Grey > 10 September 2008 > > The US government takeover of the mortgage finance giants Fannie Mae > and Freddie Mac has dealt a shattering blow to the ideology of market > capitalism, which has been used for decades to justify a relentless > assault on the working class and a vast transfer of wealth to the > American ruling elite. > > The endless invocations of the virtues of private enterprise, > individual entrepreneurship and self-reliance, used to demonize > socialism and defend a system that exploits the vast majority for the > benefit of a financial elite, have been exposed as frauds. When it > comes to big capital, losses are socialized. Only profits remain > private. > > The same forces who year after year have inveighed against “big > government” in order to justify the removal of all legal impediments > to the accumulation of corporate profits and private fortunes, and > carry out the destruction of social safeguards for the working class, > have engineered a massive expansion of government power to safeguard > the interests of the financial elite. > > The bailout has as well exposed the real relations of political power > and influence behind the façade of American democracy. The largest > government bailout of private companies in world history—whose > ultimate cost to taxpayers is likely to reach hundreds of billions—was > sanctioned in advance by the Democratic Congress and given instant > approval by the leadership of both parties and both of their > presidential candidates. > > There have been no investigations into the greatest financial scandal > in world history. Neither party has any interest in bringing to light > the swindling and skullduggery of the Wall Street moguls, because they > are both bound hand and foot to those responsible for the financial > debacle. > > What has been revealed is the existence in the United States, behind > the increasingly tattered veneer of democratic institutions, of a > plutocracy—the political rule of the rich. When it comes to the basic > interests of the financial aristocracy, both parties and all of the > official institutions of society snap to attention and do the bidding > of their Wall Street masters. > > The bailout of the two mortgage giants—which account for 80 percent of > new home mortgages in the US—is a demonstration of the historic > failure of American capitalism and the profit system on a global > scale. It was precipitated by the deepest economic crisis since the > Depression of the 1930s, whose epicenter is the United States. The > Bush administration moved to take over Fannie Mae and Freddie Mac > under conditions of a rapid erosion of international confidence in the > solvency of not only these two companies, but of the United States > government itself. > > Over the past several months, global investors, including central > banks and government investment funds, primarily in Asia and Russia, > have been dumping their vast holdings in mortgage-backed securities > issued by the US government-sponsored firms. Fannie Mae and Freddie > Mac have a combined liability of $5.3 trillion in mortgage-backed > securities which they own or guarantee. The run on their assets has > not only intensified the crisis of the two companies, which are > massively leveraged and have suffered billions of dollars in losses as > a result of the collapse of the US housing market, it has thrown into > question the status of all US government debt, including US Treasury > bonds. > > The US, by far the world’s largest debtor nation, with a current > account deficit of nearly $800 billion, is sustained by the inflow of > hundreds of billions of dollars from abroad. It currently imports $1 > trillion in foreign capital every year, or over $4 billion every > working day. > > But the assumption by the US government of the debts of the two > mortgage companies, while averting an immediate financial meltdown, > only compounds the crisis of American capitalism. As Martin Wolf, the > financial correspondent of the Financial Times wrote on Tuesday, “As a > result, US housing finance has been brought under direct government > control and, in the process, the gross liabilities of the US > government, properly measured, have increased by $5,400 billion, a sum > equal to the entire publicly held debt and 40 percent of gross > domestic product.” > > At a stroke, US sovereign debt has doubled and is now roughly equal to > America’s gross domestic product. On July 14, one day after US > Treasury Secretary Henry Paulson called for legislation to give him > unilateral and unlimited powers to use public funds to rescue Fannie > Mae and Freddie Mac, the Wall Street Journal editorialized on the > implications of a government bailout of the two companies. It wrote: > “But with financial woes mounting, some investors are betting they may > profit from weighing the unthinkable question: Could the US government > default?” > > This immense increase in US government indebtedness can only further > undermine international confidence in the credit-worthiness of US > Treasury bonds, resulting in a further decline in the dollar and a > sharp increase in the interest paid by the US to borrow from its > international creditors. > > The claims made by the Bush administration, echoed by the US media, > that the bailout of the two mortgage finance companies will consume at > most $200 billion in public funds—itself a massive amount that > eclipses previous corporate bailouts, including the $160 billion > bailout of the savings and loans industry less than two decades ago— > are not credible. An indication of the sums envisioned by US policy > makers is the fact that the legislation passed last July giving > Paulson the power to bail out Fannie Mae and Freddie Mac raised the US > debt limit by $800 billion, increasing the cushion between the debt > limit and current government indebtedness to $1.1 trillion. > > Some sense of the social priorities of the US ruling elite and its two > parties can be gleaned from a comparison between the sums being > extended to bail out just these two companies and those allocated by > the federal government in 2008 for education ($67.5 billion), > unemployment benefits ($37.3 billion), highways and mass transit > ($53.1 billion) and housing ($7.4 billion). > > Moreover, the bailout of Fannie Mae and Freddie Mac is only the > prelude to a far broader use of public funds to bolster the balance > sheets of major corporations. Democratic presidential candidate Barack > Obama and his Republican opponent John McCain are both supporting a > $50 billion bailout of the US auto companies, which will inevitably > entail further cuts in jobs and wages. And the plunge of the Wall > Street investment bank Lehman Brothers toward bankruptcy—the firm’s > stock fell by 45 percent on Tuesday—poses another rescue operation > similar to the $29 billion bailout of Bear Stearns last March. > > It is already being widely broached that the government establish a > permanent mechanism for using taxpayer funds to buy billions of > dollars in failing assets from major banks and financial companies. > The Wall Street Journal wrote on Tuesday, “Creating a government- > backed entity to buy up these assets could jump-start the market for > home loans and relieve banks and other financial institutions, which > are taking big hits to their balance sheets as they fall in value.” > > The Financial Times sounded the same theme, declaring, “The US > government might end up having to support the recapitalization of a > much wider range of financial institutions in order to curb the credit > crunch.” > > These statements give the lie to the attempt to portray Fannie Mae and > Freddie Mac as aberrations, which in their reckless speculation and > pursuit of super profits departed from the norm. On the contrary, they > typify the financial parasitism and outright criminality that have > become pervasive characteristics of the workings of American > capitalism and the social physiognomy of the US corporate elite. > > The operations of the two government-sponsored firms are entirely in > line with the unbridled speculation, based on an immense expansion of > debt, that has become the hallmark of American capitalism. Their role > in the housing and credit boom that has now come crashing down was of > a piece with the creation of the vast edifice of paper values, > engineered through the so-called “securitization” of debt, which > sustained the super profits and immense salaries raked in by Wall > Street. > > In the wake of the bailout, press reports have noted the bloated > salaries of the companies’ CEOs. Before they were sacked as part of > the government takeover, Fannie Mae CEO Daniel Mudd and Freddie Mac > chief Richard Syron took in between them $29.5 million over the > several years they headed their respective corporations. And they > stand to receive another $29 million as part of their exit packages. > > But these sums are by no means exceptional. The Financial Times > reported last week that compensation for major executives of the seven > biggest US banks totaled $95 billion between 2005 and 2007. > > The collapse of Fannie Mae and Freddie Mac is a paradigm of the US > economy as a whole. Over the past three decades, the decay of American > capitalism has taken the form of a vast growth of financial > parasitism. At its heart, this involves the separation of wealth > creation from the creation of real value in the production process. > The American ruling elite has largely dismantled the productive base > of the US economy, ruthlessly downsizing manufacturing at the cost of > millions of jobs and the destruction of working class living > standards, in order to reap higher profits from increasingly reckless > forms of financial speculation. > > The indices of the growth of financial speculation in the US economy > are staggering: In 1982, the profits of US financial companies > accounted for 5 percent of total after-tax corporate profits. In 2007, > they made up 41 percent of corporate profits. > > This process has generated ever greater levels of social inequality, > the most telling symptom of the degenerate state of the US profit > system. A report by the Congressional Research Service, updated July > 31, provides a measure of the ever growing chasm between the ruling > elite and the broad mass of the American people. It states that the > share of national income accounted for by the top 1 percent of earners > (as reported on tax returns) reached 21.8 percent in 2005—a level not > seen since 1928. The report further noted that in 2006, corporate > profits totaled 12.4 percent of national income, a level not reached > in 50 years. > > The cost of the ever-expanding bailout of American big business will > be borne squarely by the working class. Even in the midst of growing > unemployment and poverty and a flood of home foreclosures, there is > much talk in the media about the American people “living beyond their > means.” > > That the next administration, whether headed by McCain or Obama, will > sharply intensify the assault on working class living standards was > spelled out by the New York Times, which editorialized Tuesday: > “Senators John McCain and Barack Obama have both voiced support for > the bailout, which shows good judgment. But what the next president > will need to worry about, and both candidates need to talk about, is > the depth of the country’s economic problems. It will take discipline > and sacrifice to address them.” > > The only alternative to a rapid lowering of working class living > standards and the only rational and progressive solution to the > financial crisis is a socialist program of nationalization of the > entire financial system under the democratic control of the working > people, with provisions to secure the investments of small depositors > and share-holders. The wealth and resources of the country must be > developed and allocated to meet the social needs of the population, > not the money-mad strivings of financial speculators. > > This policy can be carried out only through the independent political > mobilization of the working class in opposition to the two-party > system and the financial aristocracy which it serves. The Socialist > Equality Party is dedicated to the building of such a mass socialist > movement of the working class. > > (I know, Islam extremism is to blame) --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum * Visit our other community at http://www.PoliticalForum.com/ * It's active and moderated. Register and vote in our polls. * Read the latest breaking news, and more. -~----------~----~----~----~------~----~------~--~---
