Saturday, 20 December 2008
As the economic crisis deepens in the US, its human toll is becoming more apparent. A new survey of food charities has revealed a dramatic increase in hunger. Feeding America, the largest hunger-relief organization in the US, says that a growing number of families face difficulties in securing adequate nutrition. Food banks have proven ill-equipped to meet the increased demand caused by layoffs and increased food costs, and many have collapsed or have restricted the allotments of food they make.
In a nationwide survey of 160 local food assistance programs, with operations covering virtually every county in the US, Feeding America found that there has been a 30 percent increase in requests for emergency food assistance, and that every food bank has seen an increase in demand for food relief. An opinion poll commissioned by the organization and released simultaneously found that a growing number of low-income families lack sufficient nutrition.
In a chilling statement on social conditions in the US, 72 percent of surveyed food charities said that they are unable to meet the current demands of local communities for assistance. In most cases, the charities have responded by offering smaller distributions to the hungry, and some have been forced to close down.
This is taking place in every region of the country. To cite a few examples, the Food Bank of New York City reported that organizations under its direction "have regularly reported over the past year that their shelves are bare and that they have had to turn people away due to their lack of food." The Cleveland Foodbank reported that the crisis "is moving at a pace so fast that our staff cannot catch a breath." The Food Bank of Corpus Christi, Texas, said that "our agencies are seeing such a drastic increase in new clients that they are having a hard time getting the money to acquire the food we need," while "other agencies are burning out and we are seeing a number of agencies closing their doors." Second Harvest Food Bank of Northeast Tennessee reported that its agencies have asked that it not refer new clients "because they are running out of food."
Thursday, 18 December 2008
UNEMPLOYMENT is set to soar above TWO MILLION in the New Year as Britain’s economy suffered its darkest day on Wednesday with the announcement of the latest official figures that show the total rose by 137,000 in the three months to October. It now stands at 1.86million — the highest level for more than a decade.
The number out of work and claiming the dole rose by 75,700 to 1.07million, the sharpest rise since 1991.
Administrators said Woolworths would shut for good on January 5 — throwing a further 27,000 out of work — unless they receive a last-ditch bid for the store chain. Transport giant National Express announced it was shedding 750 jobs. And experts warned 40,000 jobs are at risk in the car components industry.
Employment Minister Tony McNulty said there was “a wide range of jobs” available in Jobcentres across the country.
But yesterday’s job figures — released by the Office for National Statistics — showed a drastic fall in vacancies.
The number fell by 49,000 between August and October to leave a total of 562,000 vacancies, the lowest on record.
The figures show that 438,000 people have been out of work for at least a year. And unemployment among 18-24 year-olds rose by 55,000 to 597,000 — the highest figure since 1995.
The number of jobs in manufacturing fell by 73,000 to 2.83million, the lowest total since records began in 1978.
One in three would be unable to pay their mortgage and other debts within two months of losing their job, a survey revealed yesterday. Just 26 per cent of people have insurance to cover loan payments if they are out of work.
Wednesday, 17 December 2008
Scenes of uproar in the Iraqi parliament as MPs discussed whether to free a journalist,who threw his shoes at the US president.
Scenes that forced the speaker to suspend parliament until Thursday.
They came as two of the journalist's brothers said he had appeared before a judge but not in public.
This is the democracy that Bush and Blair wilfully sent and sacrificed British, American servicemen and women too, not forgetting others from the so-called coalition of combined Nations and the many thousands of innocent civilian men, women and children needlessly overwhelmed by the boots, bullets and bombs of the New American Century that the likes of Bush, Cheney, Wolfowitz and Rumsfeld thought they were creating and that is turning out to be anything but. Of course the United States remains the world’s largest economy and easily most powerful country militarily. But its dominance is now visibly declining in a way that seemed improbable seven or eight years ago. Certainly the economic crisis – like its predecessors – will rearrange the international division of labour and with it the world political pecking order, but in ways that cannot yet be predicted.
The number of people out of work and claiming Jobseeker's Allowance jumped by 75,700 in November from the previous month - much more than expected - to hit 1.07 million, figures from the Office for National Statistics showed this morning. It was the biggest monthly rise since March 1991 and bigger than the 45,000 increase expected by most economists in the City.
Vicky Redwood at Capital Economics described the surprisingly large jump in unemployment as "shocking". "It far exceeded expectations and was above that symbolic 1 million mark," she said.
Marry Christmas Everyone?
The following is an article that I wrote for this months Socialist Standard. I was not planning to reproduce or publish it on the blog, but I was particularly pleased to have received this email from P.G. Morgan via a comrade. P.G Morgan is the producer of the film - 'Who Killed the Electric Car ?'
Thanks for your review of 'Who Killed the Electric Car ?'
As a Brit based in LA, I appreciated your references to 'Catweazle' - a fine
Thanks for your interest in the film - and for spreading the word !
'Who Killed the Electric Car?'
Catweazle was a television comedy series produced by London Weekend Television in the early 1970's. The series was conceived, and written by Richard Carpenter and ran for two seasons starring Geoffrey Bayldon as the irrepressible Catweazle. If, like me, you grew up in the constant presence of Doctor Who and the Goodies it is very likely you will also have fond memories of this well written and charming series.
Catweazle was a magician, who lived in the eleventh century, but however hard he tried, his spells hardly ever worked. One day was different. When Norman soldiers tried to capture him, in desperation he used magic to escape, and it worked! The only trouble was that instead of flying through space to flee his pursuers, he flew though time. Catweazle finds himself nine centuries into the future. Being a magician, everything he experiences in the twentieth century such as motor cars, telephones ("telling bone"), and electric light ("electrickery"), he believes is the result of magic. This basic premise and Catweazle’s quest to return to his own time, drives much of the humour in the series as Catweazle finds himself in situations that often become, well, hilarious.
Catweazle came to mind following the Socialist Party’s recent showing of the film “Who Killed the Electric Car”, as part of its season of free film evenings exploring issues and problems affecting our daily lives. This documentary covers the history of the battery electric vehicle: its birth, limited commercial development, and subsequent death, focusing mainly on the General Motors EV1 which was made available for lease in Southern California following the 1990 ZEV mandate of the California Air Resources Board. It also explores the role played in limiting the technology’s development and adoption by the US and Californian governments; manufacturers of conventional automobiles, hydrogen vehicles, and batteries; the oil industry; and of consumers, whilst also considering the implications of these events for Middle East politics, environmentalism, air pollution and global warming.
Electric car technology has been around for a long time: the first crude electric carriage was invented by Scotsman Robert Anderson in about 1889 and the electric car subsequently caught on in the US, enjoying success into the roaring 1920s with production peaking in 1912.
Its decline was brought about by several major developments. By the 1920s America had a better system of roads that now connected cities, bringing with it the need for longer-range vehicles. The discovery of Texan crude oil reduced the price of gasoline making it cheap and affordable to the average consumer. The initiation of mass production of the internal combustion engine as developed by Henry Ford (Fordism) made these vehicles widely available. And electric vehicles, by and large, were made with expensive materials the cost of which continued to rise: in 1912 an electric roadster sold for $1.750 while a gasoline car sold for $650.
Human-induced air pollution has been around at least since humans discovered fire; and everyday five hundred million car exhausts blow out some very nasty emissions as well as CO2, in fact roadside emissions are if anything on the increase. Traffic pollution has been blamed for tens of thousands of deaths every year. The Lancet has estimated that 6 percent of all deaths per year are due to air pollution. Half these deaths, it says, were linked to traffic fumes. In Britain researchers estimate that traffic fumes were responsible for more than 25,000 new cases of chronic bronchitis and more than 500,000 asthma attacks. Asthma is a chronic disease, in which sufferers have repeated attacks and difficulty in breathing and coughing, which is becoming common place amongst children. In Britain the cost of treating illness associated with traffic pollution amounts to 1.7 percent of the gross domestic product, exceeding the costs arising from traffic accidents.
California has almost perfect conditions for photochemical smog with the necessary ingredients: the type of pollutants put out by cars, and abundant sunshine. So here at least you would have thought the introduction and development of General Motors EVI would have been rationally embraced.. California already leads in electricity generation from hydroelectric power, that accounts for close to one-fifth of State electricity generation, and non hydroelectric renewable energy sources, such as wind, geothermal, solar energy, fuel wood, and municipal solid waste/landfill gas resources. (Interestingly, due to strict emission laws, only a few small coal-fired power plants operate in California, and the Mojave Desert is said to be one of the best sites in the United States for solar power plants. A facility known as “The Geysers,” located in the Mayacamas Mountains north of San Francisco, is the largest group of geothermal power plants in the world, with more than 750 megawatts of installed capacity.) These resources could have been harnessed to support the EVI, an emissions free vehicle. But we don’t live in a rational or even a remotely reasonable world. Profit and greed of the market are both master and ruler today.
Just ask yourself what short of a world is it where up to one billion people worldwide consume less than the minimum critical daily caloric intake needed to avoid hunger. In Africa in particular, hunger and disease are a vicious cycle. Hunger, along with many other effects causes the immune system to weaken, making the body more susceptible to other diseases. What kind of a world denies millions the medication to fight off illness and disease? What kind of world is it? Rational and Reasonable? Who killed the Electric Car?
The killers of the electric car are roaming the planet freely plundering it of its resources and all for profit – they will destroy a rain forest, pollute a river and poison the sea let alone empty an oil well or kill a car if there is a profit in it. It’s not “Electrickery.”
Published since 1904 Journal of The Socialist Party of Great Britain -Companion party of The World Socialist Movement
unemployment figures, due out tomorrow Wednesday, are expected to show that the slowing economy has taken its toll on the jobs market.
The number of people out of work hit 1.82 million in the three months to September and is likely to get to two million in the coming months.
People claiming Jobseeker's Allowance may have topped one million for the first time in eight years in November.
The government is to unveil a new training scheme for the unemployed.
It has allocated £158m to help those who have been made redundant develop new skills.
The fund is supposed to make it easier for workers to get advice on training and support employers who want to improve the skills of their staff.
The level of unemployment is already at the highest since 1997 and it is widely expected to keep rising.
BBC economics editor Hugh Pym said that the job losses in the service sector in general, and the banks in particular, have not yet shown up in the figures and will start to do so in the coming months.
The figures will be released by the Office for National Statistics at 0930 GMT.
The trades union umbrella body the TUC is predicting that two million people will be out of work by Christmas, and says that half a million people will be facing their second Christmas out of work.
It is calling for Jobseeker's Allowance to be raised from £60.50 to £75 a week.
"These people are not scroungers. They are blameless victims of a worldwide economic downturn and deserve to be treated as such," said TUC General Secretary Brendan Barber.
"As well as more support to get back into work, unemployed people need more immediate financial support to help them cope with life on the dole."
Tuesday, 16 December 2008
Consumer prices fell in November at the fastest rate since 1932 it is being reported in the US. Not since the darkest days of the Great Depression, the Labor Department reported Tuesday, has prices for energy, commodities and airline fares plunged across the country.” This is scary stuff," said Mike Schenk, an economist for Credit Union National Association. "We are teetering on the brink of a massive downward spiral. Deflation is a threat."
Energy prices declined by a seasonally adjusted 17%, the most since February 1957. Gasoline prices plunged by 29.5% in November, the most since the government began keeping records in February 1967. Fuel oil prices dropped by 7.2%. Commodities prices declined by 4.1% in November.
A deflationary spiral knows that when costs fall too far, too fast, it doesn't take long to start an economic cycle that's brutally hard to escape, the kind that turns recessions into depressions.
While lower prices are supposed to spur additional spending - to help stem the tide -
there's no way that's happening in the current economy, where people are cutting back on spending as fast as they can snap their wallets shut.
The brother of the Iraqi journalist who threw his shoes at US President George W Bush has said that the reporter has been beaten in custody.
Mr Zaidi threw his shoes at Mr Bush at a news conference, calling him "a dog".
He has been keept in custody and has since suffered a broken hand, broken ribs and internal bleeding, as well as an eye injury, his older brother, Dargham, has told the BBC.
Meanwhile, offers to buy the shoes are being made around the Arab world, reports say.
According to unconfirmed newspaper reports, the former coach of the Iraqi national football team, Adnan Hamad, has offered $100,000 (£65,000) for the shoes, while a Saudi citizen has apparently offered $10m (£6.5m).
Thursday, 11 December 2008
CHRISTMAS DAY IN THE WORKHOUSE
(A Poem by George R. Sims, 1847-1922)
It is Christmas Day in the workhouse,
And the cold, bare walls are bright
With garlands of green and holly,
Ad the place is a pleasant sight;
For with clean-washed hands and faces,
In a long and hungry line
The paupers sit at the table,
For this is the hour they dine.
And the guardians and their ladies,
Although the wind is east,
Have come in their furs and wrappers,
To watch their charges feast;
To smile and be condescending,
Put pudding on pauper plates.
To be hosts at the workhouse banquet
They've paid for — with the rates.
Oh, the paupers are meek and lowly
With their "Thank'ee kindly, mum's!'"
So long as they fill their stomachs,
What matter it whence it comes!
But one of the old men mutters,
And pushes his plate aside:
"Great God!" he cries, "but it chokes me!
For this is the day she died!"
The guardians gazed in horror,
The master's face went white;
"Did a pauper refuse the pudding?"
"Could their ears believe aright?"
Then the ladies clutched their husbands,
Thinking the man would die,
Struck by a bolt, or something,
By the outraged One on high.
But the pauper sat for a moment,
Then rose 'mid silence grim,
For the others had ceased to chatter
And trembled in every limb.
He looked at the guardians' ladies,
Then, eyeing their lords, he said,
"I eat not the food of villains
Whose hands are foul and red:
"Whose victims cry for vengeance
From their dark, unhallowed graves."
"He's drunk!" said the workhouse master,
"Or else he's mad and raves."
"Not drunk or mad," cried the pauper,
"But only a haunted beast,
Who, torn by the hounds and mangled,
Declines the vulture's feast.
"I care not a curse for the guardians,
And I won't be dragged away;
Just let me have the fit out,
It's only on Christmas Day
That the black past comes to goad me,
And prey on my burning brain;
I'll tell you the rest in a whisper —
I swear I won't shout again.
"Keep your hands off me, curse you!
Hear me right out to the end.
You come here to see how paupers
The season of Christmas spend;.
You come here to watch us feeding,
As they watched the captured beast.
Here's why a penniless pauper
Spits on your paltry feast.
"Do you think I will take your bounty,
And let you smile and think
You're doing a noble action
With the parish's meat and drink?
Where is my wife, you traitors —
The poor old wife you slew?
Yes, by the God above me,
My Nance was killed by you!
'Last winter my wife lay dying,
Starved in a filthy den;
I had never been to the parish —
I came to the parish then.
I swallowed my pride in coming,
For ere the ruin came,
I held up my head as a trader,
And I bore a spotless name.
"I came to the parish, craving
Bread for a starving wife,
Bread for the woman who'd loved me
Through fifty years of life;
And what do you think they told me,
Mocking my awful grief,
That 'the House' was open to us,
But they wouldn't give 'out relief'.
"I slunk to the filthy alley —
'Twas a cold, raw Christmas Eve —
And the bakers' shops were open,
Tempting a man to thieve;
But I clenched my fists together,
Holding my head awry,
So I came to her empty-handed
And mournfully told her why.
"Then I told her the house was open;
She had heard of the ways of that,
For her bloodless cheeks went crimson,
and up in her rags she sat,
Crying, 'Bide the Christmas here, John,
We've never had one apart;
I think I can bear the hunger —
The other would break my heart.'
"All through that eve I watched her,
Holding her hand in mine,
Praying the Lord and weeping,
Till my lips were salt as brine;
I asked her once if she hungered,
And as she answered 'No' ,
T'he moon shone in at the window,
Set in a wreath of snow.
"Then the room was bathed in glory,
And I saw in my darling's eyes
The faraway look of wonder
That comes when the spirit flies;
And her lips were parched and parted,
And her reason came and went.
For she raved of our home in Devon,
Where our happiest years were spent.
"And the accents, long forgotten,
Came back to the tongue once more.
For she talked like the country lassie
I woo'd by the Devon shore;
Then she rose to her feet and trembled,
And fell on the rags and moaned,
And, 'Give me a crust — I'm famished —
For the love of God!' she groaned.
"I rushed from the room like a madman
And flew to the workhouse gate,
Crying, 'Food for a dying woman!'
And the answer came, 'Too late.'
They drove me away with curses;
Then I fought with a dog in the street
And tore from the mongrel's clutches
A crust he was trying to eat.
"Back through the filthy byways!
Back through the trampled slush!
Up to the crazy garret,
Wrapped in an awful hush;
My heart sank down at the threshold,
And I paused with a sudden thrill.
For there, in the silv'ry moonlight,
My Nance lay, cold and still.
"Up to the blackened ceiling,
The sunken eyes were cast —
I knew on those lips, all bloodless,
My name had been the last;
She called for her absent husband —
O God! had I but known! —
Had called in vain, and, in anguish,
Had died in that den — alone.
"Yes, there, in a land of plenty,
Lay a loving woman dead,
Cruelly starved and murdered
for a loaf of the parish bread;
At yonder gate, last Christmas,
I craved for a human life,
You, who would feed us paupers,
What of my murdered wife!"
'There, get ye gone to your dinners,
Don't mind me in the least,
Think of the happy paupers
Eating your Christmas feast;
And when you recount their blessings
In your smug parochial way,
Say what you did for me, too,
Only last Christmas Day."
Friday, 5 December 2008
US jobless rate soars as recession deepens
More than 530,000 American jobs were lost in November - the worst monthly figure for 34 years - in yet another sign that the global economic downturn could be more severe than had been forecast.
It’s beginning to look like Christmas!
It's beginning to look a lot like Christmas
Everywhere you go
Take a look in the five-and-ten,
Glistening once again
With candy canes and silver lanes aglow.
It's beginning to look a lot like Christmas
Toys in every store
But the prettiest sight to see
Is the holly that will be
On your own front door.
I well remember this awful song that was often preformed by the likes of Johnny Mathis, Perry Como and others, on one of those big spectacular Christmas TV shows that would be offered to the American nation as family entertainment about this time of the year, and of course, as if by magic over on what they call the other side of the pond, we would be enjoying their lyrical tones belting out from thousands of radios in offices, factories, cars and at home. Their are many such seasonal classics that come to mind, but this one got somehow stuck in my head this morning whilst considering and studying the latest reports regarding troubled Woolworths.
The administrators of Woolworths have cut 450 jobs in support operations at Marylebone Road in London and Castleton in Rochdale. And to top that off on Thursday, Dragons' Den entrepreneur Theo Paphitis pulled out of the race to buy parts of Woolworths. Woolworths, witch employs more than 25,000 people launched what administrators called its "biggest ever sale". Discounts of up to 50% have been offered on toys and greeting cards, with prices for entertainment goods also being reduced across all ranges.
I think it would be fair to presume that for thousands, not just those employed by Woolies, but in all manor of employment. The last thing on their minds will have been Christmas.
Who wouldn’t feel a bit of depression setting in? If you read what an analyst with stockbrokers Pali International said about what the company Woolworths was "trying to get rid of unsold stock and to empty shops. It looks like a closing down sale."
If you read that you wouldn’t say? It’s beginning to look like Christmas, would you?
Wednesday, 3 December 2008
Following my recent post about US auto-industry it now seems possible that Washington may sling a lifeline to the big (General Motors, Ford and Chrysler) three after all.
If this happens, what it will demonstrate and quite clearly, without any doubt or question, is the role being preformed by capitalist governments in this world economic crisis. Its one thing for a government to intervene in a banking crisis and throw billions if not trillions of Pounds and Dollars of money into an enclosed chamber or raging furnace. It’s quite another, to start poring billions into a manufacturing industry that without help would otherwise go to the wall. But if that was to happen, some say it would likely trigger off a possible depression with thousands more out of work, more business hitting the brick wall, especially auto-industry related and may even be the cause of a domino effect throughout industry, dragging the rest of the economy down with it. This being a serious threat to capitalist stability as a system will force any capitalist government and in this case the US - to act and protect its capitalist interest, that’s the system, the capitalist system and its interests, that subjugates us all – profit!
One look at the grim numbers point to the deep pit Detroit finds itself in. Slashing prices to move cars to a public traumatized by contracting consumer credit, plunging home values and rising unemployment. Economists warn this is not likely to change any time soon. This recession gives whole new meaning to the term globalisation, all over the world; workers are losing their livelihoods, forcing their living standards down. Repossession of homes is only part of the picture frequently reported on in the media almost without mentioning the impact it has on people’s lives –Yet there is a human cost that will have an impact on our lives in numerous ways and yet go unnoticed - the growing pressure on families and the likelihood of larger numbers of families breaking up. This isn't just a tragedy for small numbers of people; it has huge implications for all of us.
Personal debt is more likely to build up during a recession and we should understand the part that it plays in family break-up, which in turn causes increases in drug abuse, failed education and economic dependency. Most figures show that family break-up leads to fewer life choices for children and an increase in future problems for them. A child from a broken home is 75 per cent more likely to fail at school, 70 per cent more likely to be a drug addict and 40 per cent more likely to have serious debt problems. Many of the voluntary groups who work with couples in danger of breaking up say that the families they were helping had not realised their problems began with financial worries, which themselves were often compounded by periodic bouts of unemployment. Only when they looked back over the breakdown of the relationship did it become apparent.
Returning to the theme of my thread and its main point the role of government in this crisis, we can see this desperate attempt in the US of the automakers making their second run at Washington, returning to Capitol Hill with detailed plans after an earlier appearance failed to convince lawmakers to extend aid. The plans are being submitted to the House Financial Services Committee and the Senate Banking Committee, where the Big Three CEOs will testify later this week. The Ford CEO Alan Mulally, Chrysler CEO Robert Nardelli and GM chief Rick Wagoner will reportedly drive to Washington for their Capitol Hill testimonies after being criticized for flying in private jets to testify in late November.
The auto makers presented wide-ranging restructuring plans to Congress in hopes of qualifying for a combined $34 billion in low-cost loans from the federal government. The auto makers, struggling to remain viable as they rapidly burn through cash, also announced steep declines in U.S. sales for November, underscoring the desperate situation facing the industry. Sales in November fell to their lowest annualized rate since October 1982, according to Autodata Corp. The annualized rate stood at 10.18 million in November, down 37% from a year ago.
Each of the top six auto makers on the U.S. sales list posted declines in excess of 30%, with three of them showing declines of more than 40%, as economic uncertainty and tight credit weighed on consumer sentiment. But get this Chrysler, GM and Ford have recorded sales declines of 47%, 41% and 31%, respectively.
So what are the plans in exchange for a government bailout?
General Motors Corp. (GM), the largest of the Detroit Three, said it will shutter more factories, slash executive pay and axe some of its brands as it seeks $18 billion in loans. The company, which once again rejected bankruptcy as an option, said it runs the risk of running out of the money it needs for operations by year's end without a cash infusion of $4 billion this month. GM also said it will negotiate with bondholders to lower the company's debt costs, and will discuss concessions with the United Auto Workers union.
Ford Motor Co. (F) seeks access to up to $9 billion in government loans, though the company - which has a better cash situation than its domestic peers - said it wouldn't tap the credit line unless business conditions worsen or a bankruptcy by another auto company increases financial pressure. Ford, which hopes to restore profitability in 2011, is boosting production of small cars and increasing spending on new technologies. Ford will also work with the UAW to cut costs further.
The chief executives of GM and Ford, stung by the public relations mess caused by recent comments at congressional hearings, said they will be willing to accept salaries of $1 a year. Ford plans to sell its five corporate jets, while GM will stop using corporate jets.
Chrysler is requesting a $7 billion bridge loan by the end of December. The company, which estimates its cash on hand could dwindle to $2.5 billion by year- end, said liquidity could drop below necessary levels by the first quarter. The company said it will continue to improve its cost structure, streamline its operations, introduce more-fuel-efficient products and focus on alliances as part of its restructuring.
It was interesting what GM sales chief Mark LaNeve had to say of the sales environment -"I've never seen anything remotely close to this,” adding that it was "breathtaking" to see declines of this magnitude across the board for auto makers.
The global financial crisis has not bottomed out yet. The impact is spreading globally and deepening, "Excessive bankruptcies and business closures will cause massive unemployment and stir social unrest" according to Zhang Pin, China’s head of the national development. Events are moving briskly in China too. Towns and villages in China have been torched by rioters this month in pitched battles with police. Violence has spread to the export hub of Guangdong as workers protest at the mass closure of toy, textile, and furniture factories. Last Saturday, about 300 striking cabbies in Chaozhou, a city in Guangdong, went on a rampage, venting their fury against illegal cabs and smashing the taxis of drivers who refused to go on strike.
The rage of China's taxi drivers has won them a victory. Now, officials in Guangdong province in southern China have slashed the monthly rental that taxi drivers cough up by 800 Yuan. China’s state capitalism run through its communist government joins with the rest of world capitalism, by either baling out or using force to prop up a system that’s caught more than just a simple cold.
Tuesday, 2 December 2008
Yesterday during her visit to Buckingham Palace Condoleezza Rice, the US Secretary of State gave a piano recital for the Queen.
Dr Rice performed music by Johannes Brahms accompanied on violin by Louise Shackleton, the wife of David Miliband, the Foreign Secretary. Three members of the London Symphony Orchestra offered backing to the high-profile duo.
Afterwards, the Queen presented Dr Rice with a recording of the performance as a gift. How nice for the Queen was that!
How nice for the Queen that America’s most senior diplomat a classically trained pianist was able to play at the palace. She was making her final trip to Britain before President-elect Barack Obama takes office next month. It remains to be seen what tunes will his administration be playing?
Thursday, 27 November 2008
The car industry has been one of the worst hit by the financial crisis as consumers low on confidence and credit buying of any new cars, almost comes to a full stop. In the US automakers Ford, GM, and Chrysler have been going to Washington to declare that if they are not given a bailout (or a subsidy) of $25 billion they won’t survive beyond 2009.The automakers have until Tuesday to submit a plan on how they intend to use the money and get out of the mess that they, the capitalist economy and Wall Street have created.
They might have a difficult time, though, convincing an already skeptical Congress that they can survive, even with a huge cash infusion. General Motors Corp. and Ford Motor Co. have lost a combined $30 billion in the first nine months of this year and are rapidly using up cash reserves. GM faces its worst financial crisis in nearly 80 years. So the big three in Automakers in the US have gone to seek help from the government, for what would in capitalist’s terms been referred to normally as otherwise, failing companies. The US auto industry, characterized by GM has long been regarded as the pillar and icon of US manufacturing. The question is whether Washington under an outgoing Bush administration would turn a blind eye and let the three automakers go into bankruptcy. Those in favour of a bailout plan maintain action should be taken immediately. They insist that the breakdown of auto industry could affect other trades through the supply chain, finally leading to millions of workers losing their jobs and possibly bringing the unemployment rate up by ten percent.
US recession deepens
New economic data released in recent days indicate that in the US the unfolding recession is developing at a pace and scale unmatched since the 1930s. No one can preach or prophesies that which is likely to come, as often as some do. Capitalism is by its very nature ruthless in its pursuit of profit; after all, profit is another word for capitalism. The present Bush administration has some very influential capitalist captains, particularly people like Richard Bruce Cheney, the current Vice President of the United States. As Vice President, Cheney is also the President of the United States Senate. He is also still very well connected to capitalism, particularly the oil industry, he served as Chairman of the Board and Chief Executive Officer of Halliburton.
Halliburton Energy Services is a US-based multinational corporation with operations in more than 70 countries. It has been at the forefront of several media and political controversies in relation to its previous work for the U.S. Government, its political ties, and its corporate ethics. Halliburton's major business segment is the Energy Services Group (ESG). ESG provides technical products and services for oil and gas exploration and production. Cheney is but one representative member of an administration that has looked out for the interests of US oil, particularly well. It came with an agenda that led to war over oil. Thousands have been consistently lied too, thousands have been needlessly killed. The world is notably by far, a much worse place to live in, in the opening decades of the twenty-first century. And as this worldwide despised and most detested gaggle of geese prepare to leave the world stage to everyone’s relief, as if something burdensome has been reduced or removed from our shoulders – or has it? Will they bankroll the auto industry, or will they allow it to go to the wall, if so what will be its consequences?
The news that a British shopping institution and high street icon, has been placed into administration – which is a technical measure that potentially allows a company to trade its way out of a crisis, but the administrators are legally bound to put the interests of creditors first, which has befallen upon Woolworths and MFI the furniture retailer may be the start of a steep dive in the capitalist economic crisis, a taster of what’s to come.
Woolworths owes £385 million. They have been squeezed by a downturn in consumer spending, and the concern by the banks that they were a poor risk, which meant that their suppliers have recently insisted on pre-payment of invoices, which is the immediate cause of their crisis. This represents a significant development with the storm centre of the recession moving from the banking sector to the real economy. There are several dangers, every high street has a Woolworths, and they employ a lot of staff. If they actually shut then this will be a visible manifestation of economic crisis destabilising confidence even further, as would a big increase in unemployment – in addition to the obvious problems for the workers concerned and their families. There is also a danger that Woolworths’s administrators may seek to improve the cash flow with a pre-Xmas fire sale, which would start a deflationary price war and push other weak retail firms out of business.
Monday, 24 November 2008
I recently came across this very interesting story of a First World War solder in the East London Advertiser and following a recent debate hosted by the Socialist Party, between Bill Martin and Dr Terence Kealey the Vice-Chancellor of Buckingham University. I thought it captured and condensed in some way the idea and proposition advanced by Dr Kealey that workers willingly participated in the First World War. Although the debate in question was on the subject ‘Have We Evolved To Make Money, working peoples involvement in the First World War was touched upon extensively by Dr Kealey in his contribution and his belief that workers soldiered that war somehow with eagerness’ indeed this very point needed and needs to be disputed as I felt no evidence can qualify the argument, if anything the evidence faces the opposite direction. Not wishing to make too much or even attempt to make a complete analyse of the war and it’s impact on British society, it remains the case, that the shortage of manpower in the trenches led to the Derby Scheme, that then, provided some groundwork that led to full conscription, at first no compulsion. Instead, by a mixture of suasion and blandishment, men where pressured into ‘attesting’ that is to say undertaking to serve if and when called upon to do so. As it affected society the Derby Scheme was a gigantic engine of fraud and moral blackmail and even after a fortnight the then Prime Minister Asquith put his finger up to the wind.
“If (he said) there should still be found a substantial number of men of military age not required for other purposes, and who, without excuse hold back from service of their country, I believe that the very same conditions which make compulsion impossible now – namely the absence of general consent – would force the country to view that they must consent to supplement, by some form of legal obligation, the failure of the voluntary system.”
And if that statement by Liberal Asquith was not enough then consider the view of Lord Derby, and his report on recruiting, and his view to take single men first,
“it will not be possible to hold married men to their attestation unless and until the services of single men have been obtained by other means, the present system having failed to bring them to the colours.”
Opposition to this war was widespread amongst workers, what I mean by emphasizing workers, is that most are in manual occupations, but by no means all. It can hardly be any clearer; amongst a large part of the population people had reservations about war, some against it in its entirety, 16,000 became registered conscientious objectors, whilst 3,300 accepted service in Non-combatant tasks. This opposition, challenging the authority of the state, was of a magnitude that can only be considered as significant.
There are many reports of large demonstrations, of demonstrations for peace being broken up, of Quaker meetings being disturbed men imprisoned, released, arrested, court marshalled, and so on, not forgetting that 70 conscientious objectors who actually died from their prison treatment. The organized resistance to the military conscription of the First World War is without doubt important because it provides evident proof of widespread unwillingness on the part of the working class. The war was executed by a ruthless ruling class on both sides of argument, who thought nothing of man’s most precious of possessions, his right of individual judgement!
Arthur Lovell’s story is not only a fascinating and moving real life story of one man’s life, it’s a demonstration of mans capabilities, physically and intellectually able to believe in each other, shearing whatever we have in the world, which is each other. I’ve posted this story because it really contributes to that which is against the divine madness of war.
By Gary Haines
TODAY marks the 90th anniversary of the Armistice which ended the First World War.
It is also the 80th anniversary of a hero from the trenches, a costermonger from London’s East End who joined up at the outbreak of war in August, 1914, and survived four years on the Western Front—only to die in a road accident on the 10th annual two minute silence to commemorate the Armistice and his fallen comrades.
The guns had fallen silent in 1918 on the 11th hour of the 11th day of the 11th month.
Tragically, the last day of the Great War saw 242 British personnel die, including three women. The total loss of life on this final day was 863.
The last British fatality recorded was a Private Ellison of the Fifth Royal Irish Lancers who was killed at 9.30am—just 90 minutes before peace.
The last Allied soldier believed to have fallen was a Canadian, Private George Lawrence Price of the 28th North West Battalion, Second Canadian Division, killed by a German sniper at 10.58am—two minutes before 11am.
Arthur Lovell had survived four years in the trenches, but would die exactly 10 years later on Armistice Day in 1928.
The war veteran—a costermonger market trader in peacetime—was observing the ‘Great Silence’ at his barrow at Burgess-street in Limehouse.
As the silence came to an end and the traffic resumed, the horrified veteran saw a four-year-old girl, little Rosie Wales, run into the road into the path of a steam lorry.
Arthur ran after her, without a thought for his own safety, pushing the child out of harm’s way.
But the brave veteran, who had cheated bombs and snipers’ bullets for more than four years, slipped and was hit by the truck.
He would die of his injuries in St Andrew’s Hospital in Bromley-by-Bow later that day.
It was an act of heroism which caught the imagination of the nation.
A week later, Arthur was given a full military funeral. The crowds which jammed the streets of the East End were even bigger than those that had turned out for Armistice Day seven days before.
Lovell’s son, also called Arthur, witnessed his father’s accident, which would leave a widow, Eliza, and seven children. His three eldest, all girls, were working in factories. The others, all boys, were aged 10 years to three months.
Arthur Lovell was one of the ‘Old Contemptibles’ who served in the 17th London Regiment, part of the Middlesex Battalion, who marched off to war at the very beginning in 1914.
He was wounded twice, but survived to finish the war at Mons on November 11, 1918.
His funeral 10 years later would see a great outpouring of grief with thousands lining the route through the East End.
The East London Advertiser reported on November 24, 1928: “Vast, silent and bareheaded crowds thronged every yard of the route which the funeral procession took from Halgood-street, Bow, to All Hallows Church, Bromley, and to Burgess-street, Limehouse.
“The coffin was carried on a gun carriage which was draped with a Union Jack. Many wreaths lay upon it including some composed entirely of Flanders poppies.
“The funeral procession was led by mounted police and the Band of the K Division Metropolitan Police. Following the gun carriage were costermongers with their barrows and carts, the hearse covered with wreathes, police marching four deep, men of the East London British Legion, buglers and men from the 17th London Territorials, a group of Girl Guides, Brownies and lastly a contingent of nurses.
“The procession stopped in Burgess-street where the mother of Rosie Wales (the little girl he saved from the lorry) placed a harp-shaped wreath on the coffin, bearing the words ‘From Little Rosie’.”
Crowds waited at Mile End outside the gates of Tower Hamlets Cemetery for hours for the burial. Mounted Police had to preserve public order when the crowd tried to rush the gates as the hearse left.
The service ended with the sounding of the Last Post and Reville. Crowds surged forward to get nearer to the grave and it was reported that many women fainted.
The story doesn’t end there. The Bishop of Stepney recalled at the funeral a strange tale from the day before.
“Last night there came to Arthur Lovell’s house a man who had been attracted by the name and asked if he could see the body,” the bishop recounted.
“He said quietly, ‘I thought so—this man saved my life in France during the war and I haven’t seen him since then until tonight’.”
Arthur had saved the man’s life during a German gas attack by lending him his gas mask, risking his own life for a comrade.
A memorial to Arthur Lovell was unveiled by Countess Haig at Bromley Public Hall in May, 1929, six months after his death. Costermongers joined the countess to honour their hero and the service ended as Rosie Wales presenting a bouquet to her.
The ceremony was broadcast through loud-speakers to the crowds gathered in the street.
An anonymous donation covered the expense of the portrait which was the centrepiece of the memorial and the costs of administering the Lovell Fund set up to look after Lovell’s family. The fund raised £2,190 from a-thousand contributors.
The memorial was inscribed “Arthur Lovell. Love is indestructible. Its holy flame for ever burneth; From Heaven it came, to Heaven returneth.”
Among those at the packed service were Arthur’s widow and seven children. Their dad had been a hero in peace as well as war.
Wednesday, 19 November 2008
THE postal region with Britain’s biggest financial debts is East London, a survey has found.
The E1 to E17 postcodes have been identified collectively as the most debt-heavy in the country, according to a report by Callcredit reference agency.
The agency assessed debt ‘status’ across the country, evaluating census data, age, property class and income as well as debt data.
Those with ‘East London’ postcodes were most heavily in the red, contrasting with the neighbouring EC1 to EC4 City financial district topping the poll as the country’s least-indebted area.
The East London region stretches from deprived districts like E1 Whitechapel to affluent leafy suburbs such as E4 Chingford.
Tuesday, 18 November 2008
With only two days left before people vote in a Tower Hamlets local by-election which could be a crucial indicator in the way London’s East End votes in any forthcoming General Election.
A four-cornered battle for Mile End East ward will take place on November 20.
Candidates represent all four parties at the Town Hall—the controlling Labour group is up against Conservative, Liberal Democrat and Respect opposition parties.
But all eyes are on the two current MPs whose present constituency boundary slices through Mile End.
Respect MP George Galloway in Bethnal Green & Bow to the west of the line is switching to neighbouring Poplar & Limehouse constituency to the east, to take on Labour’s Jim Fitzpatrick at the next General Election.
Mile End East sits on the current boundary between the two rival MPs’ constituencies and the November 20 poll could show which way voters are likely to go at the General Election in this deprived inner city borough. This will be an interesting contest because its outcome will give an indication as to the future fate for Galloway’s half of Respect following the split last year with the SWP. My own feeling is that it can go any way depending on who is able to influence best the leaders in the mosques. I will have more to say about this by-election later on.
Saturday, 8 November 2008
The above portrait is the image of my grandfather, from my mother’s side of the family. I first saw his likeness hang on the wall of my grandmothers flat in the early 1970s on a family Christmas visit to Germany.
Thousands of war veterans will March past the Cenotaph memorial in London to mark Remembrance Sunday. The Queen will lay the first wreath of poppies.
Senior Royals will follow suit,then the PM and leading politicians and other dignitary’s. Remembrance events will take place around the country and in the theatres of modern wars in both Afghanistan and Iraq.
This years Remembrance Sunday falls exactly 90 years after the ending of World War I, Armistice Day.
World War II was humanity's deadliest war, causing tens of millions of deaths. The total estimated human loss of life caused by World War II was roughly 72 million people, making it the deadliest and most destructive war in human history. The civilian toll was around 47 million, including 20 million deaths due to war-related famine and disease. The military toll was about 25 million, including the deaths of about 4 million prisoners of war in captivity. The Allies lost approximately 61 million people, and the Axis powers lost 11 million.
My grandfather Wilhelm Kahler was killed just weeks before the wars end, away from home in Russia at the ridiculously young age of less than forty years; he was one of 5.2 million German servicemen – that’s three in every ten mobilized, whose lives were prematurely taken along with 2.4 million innocent German civilians. More German soldiers lost their lives in the last twelve months of fighting than in the whole of the war. The crucial point is that to Hitler this monstrous toll meant nothing whatever, he once said; “life is horrible, coming into being, existing, and passing away, there’s always a killing. Everything that is born must later die. Humanity is a ridiculous cosmic bacterium.”
His statement only proving that war is evil, the dark side of humanity, it is the true tragedy, the triumph of disaster.
How can anyone praise war without stopping to reflect on the many horrors of pain and needless loss of life?
Capitalism in crisis by Adam Buik (Part 3)
Finally there’s the stock exchange though this is not part of the banking system
even if it too is a means of raising capital for trade and industry. It’s where shares, which are property titles giving their owners the right to a share in the profits of capitalist companies, are traded. What happens there tends to reflect the collective opinion of shareholders as to the profit prospects of individual companies and in the economy generally. But it isn’t always a true reflection as there can be irrational bubbles and as it can be manipulated by those with big money, engaging in such practices as “short-selling”, insider trading, spreading false rumours and other forms of skulduggery that the authorities are always trying to stamp out.
The real world
But to return to the real economy.
Marx realised that production under capitalism was cyclical. For short, we speak of boom/slump cycles. Actually, Marx went into more detail, describing the following cycle:
"feverish production, a consequent glut on the market, then a contraction of the market, which causes production to be crippled. The life of industry becomes a series of periods of moderate activity, prosperity, overproduction, crisis and stagnation".
We are now in the crisis stage, with a period of stagnation to follow.
What happens in a boom is that capitalist enterprises assume that it will continue and so they all plan to expand their production, investing in new machinery, building new factories, taking on more workers. But when this all comes on stream, it is found that productive capacity exceeds market demand. There is overproduction (in relation to paying demand, not real needs of course). This has both financial and economic consequences. Workers are laid off, orders with sub-contractors are not renewed, which in turn have a knock-on effect, leading to further lay-offs and factory closures.
The same has happened this time: the market that has overexpanded being that for housing in America. Beginning in 2000 there was an expansion in the construction of new houses for sale. There was also widespread renovation for resale of existing housing. The purchase of these houses was financed by loans from specialist mortgage lenders, which were supplied with money “wholesale” by investment banks. A boom in house-building and house-buying developed. House prices rose but workers’ incomes didn’t, so, to keep up demand, mortgage lenders lowered their standards. They began to grant more and more "sub-prime" loans, so-called because they were given to people whose income was below the normally accepted level and so had a higher chance of defaulting.
Eventually the inevitable happened. sub-prime borrowers did default, which represented a fall in paying demand for houses. By early 2006 house-building peaked. The boom came to an end and house prices began to fall. But far from stimulating the market this left millions with negative equity, which meant not only that they had to cut their consumption but also that the banks wouldn’t get all their money back even if they repossessed the houses. The housing boom could in theory have continued if people’s incomes had gone up and at the same rate. But it didn’t and it couldn’t have. Once borrowers began defaulting, the mortgage lenders suffered losses and so had less to lend. Credit tightened, which provoked yet more defaults.
What had happened was that more houses had come to be built than people could afford to pay for or, from another angle, than could be sold profitably. In other words, overproduction (in relation to what people could afford, not in relation to housing needs). A recent study by the Bank for International Settlements in Basle, entitled “The Housing Meltdown: Why did it happen in the United States?”, uses such terms as “an overhang of excess supply”, “overbuilding of new housing” and “a substantial oversupply of housing”, producing figures to show
“that between 2001 and 2006, the United States built more new homes than would have seem to been required by the growth of its population”
“The US housing construction sector seems to have managed to build up a substantial oversupply of housing. The United States was therefore more likely to experience a sharp fall in prices than some other countries, even before credit supply tightened.” (www.bis.org/publ/work259.htm)
This last point is important: the housing boom burst and house prices began to fall “even before credit supply tightened”. In other words, it couldn’t have been the credit crunch that contributed to the end of the housing boom. Rather it was the other way round, at least in America (even if the credit squeeze resulting from what happened there may well have burst the housing bubble in other countries). In other words, it was overproduction that triggered the “credit crunch”.
This then made things worse, both in America and in other countries. As more and more of the sub-prime borrowers began to default, i.e. did not have the money to carry on buying their house, the banks and other institutions that had invested money to buy houses suffered losses; which forced them to cut back on their lending as they still had obligations to their depositors and creditors.
This had a knock-on effect worldwide. Some of the investment banks (and the famous Fannie Mae and Freddie Mac) which had lent money to mortgage lenders to finance the sub-prime loans, had pooled these loans and sold them on as an interest-bearing bond (had “securitised” them). Other banks took these bonds and pooled them again with other loans. These bonds were taken up by banks, commercial as well as investment and by investment funds, in Europe as well as America, to a quite surprising extent in fact.
When these bonds became worthless or drastically depreciated as the sub-prime borrowers defaulted, the banks throughout the world that held them suffered losses, some huge losses, requiring them to cut back on their lending. Hence the world “credit crunch” that started in August last year.
But another whammy was coming. When it was realised that some of the bonds they held were "toxic", banks became reluctant to acquire any bonds which might contain a “toxic” element. The problem was that it was not easy to identify which and to what extent some of the bonds on the market were toxic. Confidence in trading in them fell and short-term interest rates went up.
It was this that represented a second whammy for some banks, who had borrowed on the money market to re-lend to buy housing. When they came to renew these loans they found that the rate of interest on the short-term bonds they borrowed on the money market had risen above that they were getting on their mortgages. They were making a loss, some to such an extent that they were technically insolvent. They were only saved from bankruptcy by being taken over by other banks or by the government, at a great loss to their shareholders. In Britain this happened to Northern Rock, Alliance & Leicester and Bradford & Bingley. In fact, none of the building societies which in the 1990s converted themselves into banks have survived as independent enterprises. All have been taken over by bigger, older established banks. So, incidentally, confirming that in a crisis the centralization of capital is speeded up. The Continent too has been affected, with two Belgian banks and one German, specialising in lending money to buy houses, having to be rescued. Even Switzerland. And of course Iceland.
But worse was to come. A third whammy. The collapse of the US housing market resulted in a change in the status and credit-rating of the bonds containing sub-prime loans. This reduced the capital-to-asset ratio of the banks holding them. Most banks were able to accommodate this to some extent out of the profits they were making on their other, more solid loans. But not all banks. Some were in danger of becoming technically insolvent. Thus, earlier this year, the Royal Bank of Scotland tried to raise a record amount of new capital. Now it’s 60 percent government owned.
But nobody knew to what extent individual banks had been affected by this. So all came under suspicion. As a result banks were reluctant to lend to each other. The London money market is international and, as British banks came under suspicion of possible technical insolvency, more cautious overseas banks (from, for instance, Japan, the Middle East and Scandinavia) became reluctant to lend on the money market. Transactions on the money market ground to a virtual halt and the interbank rate (LIBOR) - which is more important than the bank rate in influencing short-term interests rates - rose well above the bank rate.
There has been some argument amongst the experts as to whether there is a "liquidity crisis" (i.e. a reluctance to accept usual paper IOUs) or an "insolvency crisis" (banks capital-to-assets ratio falling too low). The British government's decision to provide money in the form of shares to banks who want it to increase their capital suggests that it has been decided that, in Britain at least, there is an insolvency element. The hope is that allowing banks to increase their capital-to-assets ratio by an injection of government money will restore the confidence of overseas banks in British banks and start them lending again. That other governments have followed suit suggests that possible bank insolvencies was a problem there too.
At the same time there is evidently also a liquidity crisis in that fear of acquiring "toxic" bonds and of lending to a bank that might be insolvent have also contributed to the blockage of money markets in America as well as Britain. In America, under the Paulson plan, the government is to buy up these toxic bonds so as to take them out of the market. In Britain the Bank of England has been giving Treasury Bills in place of other paper IOUs which are not circulating for the time being. In America the Federal Reserve has even decided to take commercial IOUs issued by non-banking enterprises, so becoming their "lender of last resort" to them as well as to the banks.
The banking system seizing up is a serious problem as it can no longer properly carry out its original, basic function of chanelling funds to productive industry. If this goes on for too long, it will have a serious effect on production. Governments have to intervene to unblock the situation. What they have to do is to restore confidence. They have no idea if their proposals will work but they have to give the impression that they think they will.
One annoying feature of the media reporting of the various government bail-outs of banks has been the description of them as “taxpayer” bail-outs. In other words, that it’s suggested that it is somehow “our” money that is spent or lent whereas it’s not; it’s the government’s money, which is not the same thing.. Of course if you accept the Marxian view that taxation is not a burden on the wage and salary working class but on the propertied class, then it is the “taxpayers” who are paying (but this is not quite what the media had in mind). The money to bail out banks has been put up by the rest of the capitalist class. These bail-outs are a case of the capitalist class paying to try to get the functionning and viable banking system that they must have. No doubt they will extract a price from the finance capitalists, but this is a conflict that doesn’t concern us as workers and as socialists.
The measures taken may well eventually end the banking crisis but they won't stop the economic crisis from continuing to develop. The lay-offs and cutbacks in industrial production and in services have already begun and the knock-on effects are spreading. This is generally accepted, and is reflected in the fall in share prices and also in the Baltic Exchange Dry Index which Dave Perrin drew our attention to in the September Socialist Standard. This is an index of something happening in the real economy - the shipping of raw materials. An article in the Guardian (14 October) was headed “Baltic Dry warns of tough times on the horizon” and subtitled “The index, a proxy for world trade flows, has fallen more than 80% since July and is now at a three-year low”, explaining:
“The index has long been seen as a good leading indicator of future economic production levels because it charts the cost of freight movements in 26 of the world’s biggest lanes of ‘dry’ materials, such as coal, iron ore and grain which feed into the production of finished goods some weeks or months ahead.” (http://www.guardian.co.uk/business/2008/oct/14/creditcrunch-marketturmoil)
So, there’s most probably going to be slump. The only question is how deep and how long is it going to be. Will it be a short, sharp shock as it was following the collapse of the secondary banks in 1973? Will it be a prolonged period of stagnation as over the last ten or so years in Japan? Will be a big depression like in the 1930s?
They say that money makes the world go round. Actually its labour that does this. But, far from money making the world go round, it gets in the way and sometimes, as now, money actually stops the world going round. Crises such as the present one show the ultimate irrationality of capitalism since, although the resources and the skills are there to produce enough to satisfy people’s needs, the system does not allow this to happen. But what is the aim of production if not to satisfy people’s needs? That’s not going to happen as long as capitalism exists. It can only happen when once the resources of the world have become the common heritage of the people of the world. In other words, socialism in its original sense.
Friday, 31 October 2008
Campaigners in London plan to petition the British government today for a posthumous pardon for the hundreds of people executed for witchcraft between the 16th and 18th centuries.
Witchcraft has not been punishable by death for nearly 300 years.
They said Halloween is a good time to highlight the "grave miscarriage of justice" suffered by the men and women falsely accused of being witches.
Their petition asks Justice Minister Jack Straw to recommend that Queen Elizabeth issue a pardon.
"We felt that it was time that the sinister associations held by a minority of people regarding witches and Halloween were tackled head-on," said Emma Angel, head of Angels, a large costume supplier in London.
"We were gobsmacked to discover that though the law was changed hundreds of years ago and society had moved on, the victims were never officially pardoned."
Around 400 people were executed in England for alleged witchcraft, and many more in Scotland, the campaigners said.
In the 16th to 18th centuries leaders of money put pressure on the judiciary to blame someone for society's problems -- so they decided to blame witches !
Thursday, 30 October 2008
The current financial crisis may be more far-reaching than even the 1929 crash, a Bank of England policymaker has warned.
Professor David Blanchflower a member of the Bank's Monetary Policy Committee (MPC), and has often been a lone voice in urging rate cuts.
"My view remains that interest rates do need to come down significantly - and quickly," Prof Blanchflower told an academic audience in Canterbury.
And Prof Blanchflower said international financial problems could turn out to have long-lasting repercussions.
"It is even possible that this event may turn out to be more significant than the 1929 crash which primarily involved bank failures in the United States," he said.
"The current difficulties in financial markets are more global in nature and more comparable to what happened in the First World War."
Wednesday, 29 October 2008
Capitalism in crisis by Adam Buik (Part 2)
As the US Fed just said, banks make their profit out of the difference between the rate of interest at which they borrow and the (higher) rate at which they lend. The ultimate source of this profit is the surplus value, produced by workers in productive activity which capitalists who have invested borrowed capital in production have to share, in the form of interest payments, with those who have invested in financing.
In America the law divides banks into two categories: commercial banks (which can take deposits) and investment banks (which can’t). British banking legislation is less rigid.
The commercial banks (High Street or retail banks as they are called here) are banks that accept individual deposits. But they are not entirely dependent on them. They can also borrow money "wholesale", on the money market where various types of short term bills and bonds are traded, and then lend this out. Of course they have to ensure that the interest they pay on the money borrowed this way is less than what they are going to get when they re-lend it. Building societies are a sort of bank, but are much more dependant on deposits than the commercial banks.
As stated (but it’s worth repeating again and again), banks can only lend what's been deposited with them or what they themselves have borrowed. Somewhat less in fact as they have to keep some of what has been deposited with them as cash to deal with withdrawals. At one time in Britain this was 8 percent. But I'm going to assume (as this is still the official ratio in America) that it is 10 percent. What this means is that for every £100 deposited banks have to retain £10 as cash. The other £90 they can lend out.
Some people misunderstand a 10 percent cash ratio to mean that if £100 is deposited with a bank, the bank can then lend out £900. This is an understandable mistake but one which currency cranks erect into a theory, claiming that what banks do is create money out of thin air by a mere stroke of the pen and then charge interest on it. But no bank does or can do this. I repeat, they can only lend what has been deposited with them or what they themselves have borrowed.
The other main type of bank is what in America is called an investment bank and what in Britain used to be called a merchant bank. Two notorious examples would be Barings and Lehman brothers, both now defunct. While in Britain (though not in America) some of these take some deposits, most of their banking activity consists in borrowing money “wholesale” at one rate of interest and re-lending it at a higher rate. Actually, it's not money (cash) that they deal in but various paper IOUs (variously called bills, bonds, securities). In the past it was mainly trade bills on exported goods, hence the name “merchant bank”.
Since the 1990s investment banks - and indeed some of the commercial banks - have been involved in two other activities: “securitisation” and “derivatives”.
Securitisation involves converting a future stream of income into a capital sum and selling it as a “security”, or bond, yielding the stream of income as interest. This - and vice versa, converting a capital sum into a stream of income - is a calculation that insurance companies have long been doing. Marx called a capital sum calculated in this way “fictitious capital”, though a better term might be “imaginary” or “notional” capital since there’s nothing dishonest or dodgy about it. One example is the price of land, which is based on the expected future rents expressed as a capital sum. The stream of future income that banks began to turn into interest-bearing bonds were, for instance, mortgage repayments but also the interest payable on other loans. In fact, different interest streams from different loans came to be packaged together into a single bond.
"Derivatives" are so-called because they are “derived” from real assets. These are essentially bets on how the price of real assets such as commodities or shares or government bonds or currency is going to change over time. When this are not pure gambling, it can be considered a form of insurance against a company or a loan failing (by betting that this will happen). Big money can be made out of derivatives if you win the bet, but so can big losses if you get it wrong. To obviate this risk hedge funds have come into existence to, precisely, hedge the bets.
Because both securitisation and derivatives are unregulated (one reason why banks resorted to them so much), dealings in them have become known as “the shadow banking system” which is also based on making a profit between borrowing at one rate of interest and lending at a higher rate. Its value is always estimated in “trillions” whether of dollars, pounds or euros. (A “trillion”, incidentally, is only what we in Britain used to call a billion, or a million million; the English billion having shrunk from a million million to a mere thousand million.)
The money market is where the banks lend and borrow short term to and from each other, mainly in the form of short-term bills such as Treasury Bills (90-day IOUs issued by the government). The rates of interest prevailing there depend on supply and demand; the going rate is known in Britain as the London Inter-Bank Offered Rate (or LIBOR). Normally, it is influenced by the bank rate, going up and down with it. This is because, as we will see in a minute, the bank rate is the minimum rate at which banks can borrow from the Bank of England.
This brings us to the central bank, in Britain the Bank of England, in America the US Federal Reserve System. This is the government's banker, receiving taxes, paying out what the government spends, and borrowing and repaying what it borrows (the National Debt). A central bank does have capabilities and powers beyond those of the other banks, in particular it controls the amount of currency that is issued. When, from the end of the Napoleonic Wars to the outbreak of WWI, the currency was convertible into gold at a fixed amount, if the Bank of England wanted to issue currency above a certain amount they had to keep the same amount of gold in its vaults to cover it; the part not backed by gold was known as the "fiduciary issue". Now that all countries have an inconvertible paper currency all this has ended. Governments don’t keep gold back their currencies anymore, only some to settle some international payments,
The currency is no longer backed by gold but only by the government's ability to raise money by taxes. All the currency in circulation is in effect now "fiduciary", or “fiat money” as they call it in America. The Bank of England does have the power to "create" extra purchasing power by putting more money into circulation, “out of nothing” “by a stroke of the pen” as the currency cranks might put it. But, if they issue more money than would be required by the economy had there been a convertible currency, this doesn't last for long as it results in an inflation and so a depreciation of the currency, so total purchasing power is not in the end increased.
In Britain the government, via the Bank of England, doesn't actually print more money and then use it pay civil servants or for its other activities (as has been happening in Zimbabwe, for instance). It's done in a much more roundabout way. When the Bank of England wants to inject more cash into the economy it sells Treasury Bills on the money market while at the same time lending the banks the cash to buy them. The effect is the same as if they'd printed more money.
At one time the government used to try to control the lending of the other banks by varying the "cash ratio" (the percentage of deposits they were required to keep as cash) or by requiring the banks to deposit money with the Bank of England. These powers still exist, but these days the main way that the government and the Bank try to control the lending of the other banks is via variations in the Bank Rate. This is the minimum rate at which the Bank of England, as “lender of last resort” to the other banks, will lend to them. If it goes down banks can borrow money from the government more cheaply and so all other short term rates can go down too (but not always, as now it isn’t).
The "cash ratio" is not the only ratio that banks have to try to respect. There is also a "capital-to-assets" ratio. Because of the particular nature of the banking business, only a small proportion of the assets on a bank's balance sheet actually belong to the shareholders, are part of the bank's own capital. Most are what the bank has borrowed, either from depositors or from the money market. International monetary bodies such as the Bank of International Settlements in Basle and the IMF have laid down guidelines as to what percentage of a bank's assets its capital should be: it’s about 6-7 percent.
This places a limit on the amount a bank can borrow to re-lend. If a bank's capital-to-assets ratio falls below this figure it is regarded as technically insolvent. So, if this happens a bank has to increase its capital or reduce its borrowing (which will of course reduce its lending) or a combination of both. This rule is aimed, it should be noted, not at protecting depositors but at protecting shareholders since, if the bank does go bankrupt, then the shareholders stand to lose everything since any assets that the bank has have to go first to its creditors.
That's the principle but there is a practical problem: how to measure assets? Since some assets are more risky than others the various types are valued by their degree of riskiness. The more risky the higher the weighting they are given. So, we're talking about a capital-to-weighted-assets ratio. Then there is another problem. Do you value them at the value they had when they were acquired, their replacement value or their market value? Currently they are supposed to be valued at market value, i.e. what they would get if they were sold on the day. This is known as "mark-to-market" accounting and has consequences on banks' solvability when market values are fluctuating wildly.
Tuesday, 28 October 2008
Strange, tangential and often unlikely events laid at the door of the credit crunch.
Horses are being abandoned as it costs so much to feed and house them - especially now the price of hay has shot up.
There may not be another Bond film for a while, says 007 actor Daniel Craig. "Economically the world is in quite a lot of trouble so who knows if we can afford to do another Bond movie anytime soon?"
The Queen will wear outfits she's worn before on a state visit to Slovenia and Slovakia.
And Coronation Street's Molly will wed in a dress bought for another actress as the wardrobe department cuts its coat.
England's cricketers taking part in the Twenty20 Stanford Super Series "swag-grab" - for which they are paid a king's ransom - are told not to enjoy the spoils too much.
Author Kathy Lette has given up taxis and instead walks - or jogs - all the way across London's picturesque Regents Park to get about.
Cobblers are getting more customers as shoe wearers try to make do and mend, rather than buy new shoes.
And prams are flying out of charity shops as soon as they are wheeled in.
Students may get lower degree marks because of working part-time to pay the bills.
Rather than drowning our sorrows, we are buying less
Monday, 27 October 2008
Incapacity benefit will be replaced with a new employment and support allowance today under the latest phase of the government's programme of benefit reform.
Under the new system, ill or disabled benefit claimants will have their capability assessed by an expert health professional within weeks.
The government said the changes reflect an end to "writing people off". Work and pensions secretary James Purnell said: "In the 1990s people were written off on incapacity benefit with no help to overcome their problems or support to get them into work.
"It is even more important during an economic downturn that we increase support for people not take it away.
"The introduction of employment and support allowance [ESA], which marks a significant landmark for the delivery of our welfare reforms, will offer the help and support disabled people and people with ill health are telling us they want in order for them to get back to work."
The Disability Alliance raised concerns that ESA rates were lower than incapacity benefit. "Jobcentre Plus must improve its decision-making standards, including consideration of medical evidence and the standard of medical examinations."
Reforms to the way single parents apply for child maintenance also come into force on Monday amid concerns that the changes could leave to fewer poor children receiving the benefit.
Under the arrangements single parents on benefits will have to decide whether to continue using the Child Support Agency, make their own arrangements, or do without child maintenance altogether.
Fiona Weir, chief executive of the One Parent Families/Gingerbread group, said: "We fear that many poor single parents on benefit will struggle to agree private child support arrangements and their children may end up doing without.
"This would be disastrous for the children affected and for the government's child poverty targets."
Capitalism in crisis by Adam Buik (Part 1)
We are living in interesting times, historic times even. We could be witnessing a once in a lifetime event, a major capitalist crisis and slump. What is now happening is an old-fashioned credit crisis such as used to occur at regular intervals in the 19Th century. But also in 1907 and 1929. It’s all there in Marx’s description and analysis of them in Volume III of Marx’s Capital. There’s the same panic, the same bank collapses, the same dash for cash, and the same government intervention to make cash available even by breaking its own rules.
What the existence of a credit crisis shows is that money has been unwisely lent by banks. The loans have turned out to have been unwise because the borrowers have found themselves unable to repay them. If these defaults are widespread and important enough then the whole financial system can be affected. Which is what has happened today?
But how does it come about in the first place that at the same time a large number of borrowers become unable to repay loans?
In the 19Th century the loans that turned bad were made, for instance, typically to cotton manufacturers to export to India or China and proved unsound when more cotton goods were produced than could be absorbed by these markets. Panic set in when the trade bills issued to finance these exports couldn't be honored. In other words, it was caused by some economic event : overproduction in some sector of the real economy in relation to the market (paying demand) for its products, an overproduction brought about by the anarchic pursuit of profits that is built-in to the capitalist system.
This time the loans that turned bad were made, in America, to individuals to buy a house. This stimulated, and then sustained, a boom in housing construction. In the end, paying demand was unable to keep up with the supply of new houses for sale, as demonstrated by the fall in house prices and the increasing number of defaults. In other words, there was overproduction in the US housing sector.
These defaults have had an impact on the whole global financial system because of the way in which the original loans had been financed - or rather re-financed. They had been pooled by batches into bonds by US investment banks, and then pooled again with other loans, into other bonds, and sold by them to other banks and other financial institutions throughout the world, but mainly in America and Europe. So that when the borrowers of the original loans defaulted in large numbers this had an effect on global credit markets.
The Banking System
I know that as Marxists we are more interested in the events in the real economy that have precipitated the current crisis but, as on the surface it is a banking crisis (which is real enough in its own right), I want to begin by describing the institutional framework within which this banking crisis is taking place.
Most people don't like banks, seeing them as institutions that in some mysterious way create money and then charge interest on it, so getting money for nothing. Actually, banks are financial intermediaries which can only lend money to people and businesses out of money that has been deposited with them or which they have themselves borrowed. As the US Federal Reserve put it in one of their educational documents:
“Banks borrow funds from their depositors (those with savings) and in turn lend those funds to the banks’ borrowers (those in need of funds). Banks make money by charging borrowers more for a loan (a higher percentage interest rate) than is paid to depositors for use of their money.” (http://www.federalreserveeducation.org/fed101/fedtoday/FedTodayAll.pdf. P. 57)
The IMF has even coined a new verb to describe what banks do: they “intermediate”.
Banks are profit-seeking capitalist enterprises in which the owners have invested capital with a view to making a profit. A bank has to have its own capital to invest in the buildings and office equipment and in the wages and salaries of bank workers. The business of a bank is to borrow and re-lend money, basically to channel unused money to where it can be used, most of it going in the end to capitalist enterprises to use as capital to invest in trade and industry.
Sunday, 26 October 2008
In just 30 years we have seen one earth and three planets worth of damage to our environment. In that time a one third decline in the populations of 1,300 fish, bird and animal species has taken place. Almost every other day the media reports on the damage that is being done whether it be the melting ice in Antarctica or the adverse weather conditions here at home, a simple test always reminds me of the man made damage to our environment; step outside on any clear London evening and look up to the heavens, you will never see a sky full of stars as you did say 30 years ago because light pollution has blacked them out! Recent research has shown that light pollution is killing off the birds; it’s killing off moths, spiders, sparrows and amphibians supporting the case that light pollution is considered a real threat to the environment as well as to astronomers.
Stray light from our towns and cities is illuminating the sky over great distances and is eradicating our enjoyment of night skies. This stray light phenomenon is known as skyglow and although an awareness of the problem has been around for many years, the mechanism of skyglow, how it is created and what the key causative agents are, have not been fully appreciated. Sky Glow occurs from both natural and human-made sources. The natural component of sky glow has five sources: sunlight reflected off the moon and earth, faint air glow in the upper atmosphere (a permanent, low-grade aurora), sunlight reflected off interplanetary dust (zodiacal light), starlight scattered in the atmosphere, and background light from faint, unresolved stars and nebulae (celestial objects or diffuse masses of interstellar dust and gas that appear as hazy smudges of light). Natural sky glow is well quantified.I do apologise for ranting on about modern light pollution but all too often the environmentalists and so-called eco-socialists bang on about everything else and forget about this harmful phenomenon.
Much, much more needs to be done if we are to save the planet and mankind from its own destruction not just a heavy duty on large, expensive ‘gas-guzzling’ cars or a levy on the carer bag.
The Governments own chief scientific adviser has said that Global warming and climate change is a far greater threat to the world than international terrorism. The defining challenge of the 21st century will be to face that reality, the reality that humanity shares a common fate, and that common fate requires global co-operation, a fundamental simplicity that New Labour and many world leaders refuse to understand.
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- Condolesszza Rice
- simple cold
- It’s beginning to look like Christmas!
- US jobless rate soars as recession deepens
- CHRISTMAS DAY IN THE WORKHOUSE
- 'Old Shoe'
- "here we go again"
- The following is an article that I wrote for this...
- Marry Christmas
- Iraqi Uproar
- 1.86m without jobs
- American Hunger
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