Are we on the deck of another Titanic?
The US housing bubble is what caused the global economic meltdown, but politicians are still dawdling.
US Treasury Secretary Timothy Geithner’s TARP legislation reportedly helped just 30,000 people
New York, NY – Are we in a countdown to an economic collapse?
The other day, I was in a restroom papered over with pages of the New York Times from the Great Depression. It was very eerie – some of the stories sounded very contemporary.
Every day we seem to be reading about new waves of layoffs and cutbacks, when we hoped to be reading about new jobs and recovery.
Sony just announced it will “shed” ten thousand jobs worldwide (is that like a sheep shedding wool?). That’s six per cent of its staff. Yahoo has also announced thousands of layoffs. Maybe, Facebook will offer us one its pricey new infographics showing where all the jobs are going.
Last week, world stock markets were in the toilet, with European markets leading the descent. Corporate profits are said to be way down.
Not surprisingly, writing in the Financial Times, billionaire moneyman George Soros now sounds like a very worried man:
“Far from abating, the euro crisis has recently taken a turn for the worse. The European Central Bank relieved an incipient credit crunch through its longer-term refinancing operations. The resulting rally in financial markets hid an underlying deterioration; but that is unlikely to last much longer.
“The fundamental problems have not been resolved; indeed, the gap between creditor and debtor countries continues to widen. The crisis has entered what may be a less volatile but more lethal phase.”
That’s another term to worry about – “lethal”.
In the US, the Republicans are about to dump $200 million dollars into partisan TV commercials to blame Obama for the whole crisis, as if one politician can press a button and order the intricate global capitalist system to rise and fall.
At the same time, their failure to pass any legislation that can ameliorate the crisis has been motivated by kamikaze politics driven by the desire to bring Obama down, no matter the cost to the public.
The only new economic initiative they and the Democrats have agreed to is a so-called JOBS act that many experts fear will neutralise financial regulations and lead to a new wave of financial crime.
That doesn’t mean that Obama doesn’t share responsibility by what he’s done, or failed to do.
For example: The total failure of Obama and Treasury Secretary Tim Geithner to help homeowners in distress. TheTARP bill, allegedly, was not just for bank bailouts, but for mortgage relief. Thanks to incompetence, only 30,000 people were helped over two years – despite the millions in, or facing, foreclosure. That is a disgrace.
The International Monetary Fund, aware that it was the US housing disaster that was behind the international financial meltdown, is appealing to Washington to provide mortgage relief as a global economic priority.
Reports the Washington Post: “Ahead of the IMF’s spring meetings next week, agency analysts have been warning that household debt – in particular, mortgages that are in default or that exceed the value of the borrower’s home – is dragging down growth in developed countries at a time when the global economy is struggling to revive.”
But, even if anyone in Washington is listening, there’s no evidence that they have had the capacity or commitment to act after all these years. They were too busy on the campaign trail recently, focused on the so-called Buffett Rule reforms that don’t go far enough – and were rejected by the Senate anyway.
Romney is even more of a joke. His cowboy capitalist antics in the private equity markets diverted millions into his own pocket. And now he backs the Ryan budget which proposes taking an axe to all government programmes with no new jobs or revenue in sight.
Both parties may have been complicit in creating this mess, but it is that corporate party with no logo that is to blame, whatever accusations the politicians bandy about.
I asked the Canadian economist Leo Panitch about how this unnamed corporate “party” operates, and he assured me it’s a system thing, not just a matter of decisions made by a conspiratorial elite.
“Globalisation is not a matter of markets escaping states,” he told me. He continued:
“It’s states that make markets, that free markets, that organise markets, and that when a crisis happens, as they inevitably do, take the responsibility not for preventing those crises which they can do, but containing them.
“I don’t think there’s an external force controlling the American state. The American state is capitalist to its core in the very way it’s organised. If you put Danny Schechter on top of the Federal Reserve, the Federal Reserve would keep on doing what it’s doing, right? We need a very differently organised Federal Reserve.
“So we need to restructure the capitalist state so that it functions in a way that doesn’t reproduce capitalism and capitalist-socialist relations. It doesn’t do it because there’s too much influence from Wall Street. It does it because it is structurally embedded with Wall Street … the state is structured to be reproducing their power and authority in the society.”
At the same time, the so-called free market state is more involved in backing capitalism than protecting the people a democratic state should be protecting, and that is irrespective of political party.
What’s pathetic is that the media rarely explains why we are in the situation we are in – that is how the ruling forces in our so-called “free enterprise” system encourage policies that transfer wealth away from the working class and the middle class in the US, and into their own pockets.
At the same time, Occupy Wall Street seems to be banking on a general strike it hopes to pull off on May Day. Not a few political observers worry that calling for a massive shut down at this point is premature – and not the same as having the organisational network to pull it off.
Rhetoric and reality may be at odds here.
The movement still seems a bit lost after it lost its base camps in parks across the country. It is hard to be an Occupy Movement with nothing being occupied – and no strategy for mobilising the mainstream of the 99 per cent.
As activists take to sleeping on sidewalks on Wall Street, some of their boosters at the Canadian magazineAdbusters are calling for a “fight to the finish”, not against the upholders of the status quo in the one per cent, but against those who don’t subscribe fully enough to their anarchist principles and theories of “horizontalism”. This litmus test is a prescription for a serious schism.
With the only opposition focused on economic inequality about to be divided, and politicians focused on power games, the real problems of the “lethal” future that George Soros fears may be drawing near.
Like the Titanic that sank a hundred years ago this week, the western economy is facing icebergs it doesn’t want to see or navigate around.