Bank failures in the U.S. and Europe

[Thinking Man's Idiot]

Handout to the rich ignites people’s anger

Against a background of bank failures in the U.S. and Europe and appeals from the White House and the Treasury secretary, the House of Representatives on Sept. 29 defeated the bailout bill, 228 to 205. Following the vote, all three U.S. stock markets had historic drops, global stock markets initially plunged, and credit markets tightened up as fear struck Wall Street....

‘Money for people’s needs, not bankers’ greed’
Activists march through the streets of New York on Sept. 27 to protest the proposed $700 billion bailout of the banks by Congress and also endless war....
Blaming Wall Street’s victims
People are furious at the trillion-dollar handout being given to Wall Street by Bush and Congress. So what are the capitalist media mouthpieces doing? They’re targeting the victims who are being swindled out of their homes....
The Pentagon bailout
The giveaway to the Wall Street bankers wasn’t the only shell game being played out in Congress these past weeks. Wall Street got all the attention, but there was another huge giveaway that Congress approved with little discussion....

NYC Central Labor Council takes on Wall St.
Responding to the rising anger of its members, the New York City Central Labor Council held an emergency demonstration Sept. 25 near the Wall St. stock exchange to protest the anti-worker bailout bill that appeared to be sailing through Congress....

Bailout plans spark nationwide protests
In the week since Bush announced plans to use $700 billion in public funds to rescue Wall Street banks, nearly 200 demonstrations have been organized throughout the U.S. to oppose the bailout and express the righteous anger of workers and poor....

[Thinking Man's Idiot]

Hunt for social ownership

(Thursday 02 October 2008)

GREGOR GALL weighs up the left's prospects of putting social ownership back on the agenda.



State intervention and nationalisation are both back with an incredible bang.


The claim that there is no alternative to the free market suddenly looks as hollow as Gordon Brown's promise to end the cycle of boom and bust.


Taxpayers' money has been ploughed into backing up the so-called free market. This just goes to show that, in this age of globalisation and neoliberalism, the state and market regulation are still very important to capitalism, particularly when it is facing financial and economic meltdown.


The downright annoying aspect of all this is that the bailouts that we've seen in Britain and the US are nationalisations carried out by the right and for the bosses.


The senior management may have changed when Northern Rock was nationalised, but one set of capitalist managers was replaced by another. The same will be true of Bradford & Bingley.


The nationalisations were not to safeguard jobs or workers' conditions or people's savings but the financial system in Britain upon which capitalism and profits heavily depend.


If they had been carried out at the behest of the left and for the workers, taxpayers and citizens, the picture would look entirely different.


If the left is to make headway right now, we must start getting our ideas about public and social ownership out into the media, into trade union members' heads and onto people's radar screens.


We need to start off by stating what public and social ownership are not.


We're not calling for a return to the age of nationalisation where civil servants ran industries in an undemocratic and unaccountable ways. Jobs were not safeguarded and services were often poor.


We're also not calling for a command economy where the centre dictates what is produced without consulting the consumers and local populations.


The lessons of the past are that, while co-ordination and planning are needed, their implementation requires decentralised structures that allow participation and a process of bottom-up democracy rather than top-down diktat.


One possible model of social ownership - for, say, public transport - would be to appoint management boards where a third of seats are allocated to representatives from the travelling public, a third from the workforce and a third from the local authorities. This would create a balance between producer and consumer interests.


But there would be issues to resolve. Would unions be the only representatives of the workforce?


Would businesses be entitled to seats? Are local authorities closely connected enough to their constituency to be the genuine representatives of the public?


Another possibility would be a directly elected management board composed of citizens. Here, people who wanted to become board members would stand on platforms representing workers', businesses' or passengers' interests.


But such issues can be explored in more depth once the debate on the need for public or social ownership has been won.


The primary purpose of placing these services, including financial services, into public ownership would be that they are run on the basis of social need and not private profit.


Organisations would not then have to be concerned with chasing profits, market value, market share or being taken over by a rival.


Socially owned banks would operate to create social justice and social inclusion, not least by keeping open wide branch networks, practising safe lending and conducting ethical investments. They would plough any surplus back into their operations to increase services.


The left must question each and every government action, asking: "Whose interests are being served by this?" "Whose money is being used for this?" and "If public money is being used, where is the public control?"


There is a role for left MPs here. They can put Bills before Parliament to place organisations into social ownership instead of allowing the government to remain the bankers' friend by doling out handouts to the private financial sector.


Trade unions could use their influence inside and outside Parliament to support these measures.


Rather than concentrating on windfall taxes and smaller bonuses, unions could tackle the underlying causes by supporting social ownership. The occasional call for public ownership of the utilities needs to instead be shouted from the rooftops.


In New Zealand, after a period of brutal Thatcherism in the 1990s, the left-leaning coalition government has started to bring some services and sectors of the economy back into state control.


This may not be exactly what we are after in Britain, but it does show that our calls do not have to be silent cries in the dark if we pitch them in the right way and loudly enough.


One good starting point is a new pamphlet just published by the Left Economic Advisory Panel, part of the Labour Representation Committee chaired by John McDonnell MP.


It's called Building The New Common Sense: Social Ownership In The 21st Century. Contributors include RMT general secretary Bob Crow and Morning Star economics correspondent Jerry Jones, among others.


Copies can be bought for £3 either online at www.l-r-c.org.uk or by sending a cheque payable to LRC to LRC, PO Box 2378, London E5 9QU.


Gregor Gall is professor of industrial relations at the University of Hertfordshire.

[Thinking Man's Idiot]

How the Media Sold Their Souls to Wall Street

by Josh Silver

If you are like me, the pundits, and 99.9% of the American public, you really don't know much about economics. And despite Monday's refreshing moment of rebellion in the Congress, in all likelihood the House and Senate will pass a modified version of the $700 billion handout this week to fat cat Wall Street financiers.


The likely result, according to Nobel economist Joseph Stiglitz: "The unemployment rate will still increase, growth will remain anemic, house prices will continue to fall, the number of houses in foreclosure will continue to rise, credit will be harder to get, states and localities will remain in a fiscal crisis, and there will be cutbacks in basic public services. .... Our living standards in the future will be lower than they otherwise would have been. "


Here's the problem: None of us really know that the hell is going on, and what the largest financial bailout in the history of our nation would actually achieve. Based on McCain and Obama's hasty support of the bailout, it would seem they are both too far under the thumb of Wall Street to look at viable alternatives to an unprecedented handout to the same reckless bankers who got us into this mess.


And like they did in the run-up to war in Iraq and the passage of the Patriot Act, the media are compounding the problem rather than helping it. While TV devotes 24/7 coverage to pretending that mudslinging Democrats and Republicans represent the full range of debate, while right-wing radio hosts scream socialism, and while pundits like Thomas Friedman implore Congress "to give them the capital and the flexibility to put out this fire," the American people are getting virtually no hard economic analysis about what the bailout would achieve or what the range of options are.


Why aren't Luc Laeven and Fabian Valencia on television right now? They just submitted a comprehensive report to the International Monetary Fund after studying 42 banking crises over the past 37 years. Their conclusion: Bailouts often do not work, they often result in more bad practices, and they distort economies by transferring wealth from taxpayers to bankers and their customers.


Why hasn't economist Dean Baker been invited onto a single television program in the past week ? He is one of the guys who actually predicted the current crisis. He wrote this week: "There is no way that the failure to do a bailout will lead to more than a very brief failure of the financial system. The worst case scenario is that we have an extremely scary day in which the markets freeze for a few hours. Then the Fed steps in and takes over the major banks. The system of payments continues to operate exactly as before, but the bank executives are out of their jobs and the bank shareholders have likely lost most of their money. In other words, the banks have a gun pointed to their heads and are threatening to pull the trigger unless we hand them $700 billion."


Why isn't New York University economist Nouriel Roubini all over the news right now? He says the claim that "spending $700 billion of public money is the best way to recapitalize banks has absolutely no factual basis or justification. This way of recapitalizing financial institutions is a total rip-off that will mostly benefit - at a huge expense for the U.S. taxpayer - the shareholders and even unsecured creditors of the banks. ....The pockets of reckless bankers and investors (will) have been made fatter under the fake argument that bailing out Wall Street was necessary to rescue Main Street from a severe recession."


Roubini continues, "Instead, the restoration of the financial health of distressed financial firms could have been achieved with a cheaper and better use of public money. It is pathetic that Congress did not consult any of the many professional economists that have presented alternative plans that were more fair and efficient and less costly ways to resolve this crisis. ... and it is a scandal that even Congressional Democrats have fallen for this Treasury scam that does little to resolve the debt burden of millions of distressed home owners."


But turn on your television - the place where more than 60% of Americans get their primary news - turn on your radio, or open your local newspaper, and you're not going to see what these top economists are saying. It's a McCain quote, an Obama sound byte, and the same pundits who have proven their incompetence over and over. The result is an American public that is fundamentally uninformed about the issues that matter most - like economics, health care, and war - and over-informed about those that matter least: sports, celebrity, the latest campaign ad, and horserace analysis of elections.


We have no reason to believe that the press -- and along with it, most politicians -- will ask the tough questions, expand the range of debate, and bring the facts to the American people. But until they do, our economy - and our democracy -- will continue its race to the bottom.

Josh Silver is the Executive Director of Free Press a national, nonpartisan organization that he co-founded with Robert McChesney and John Nichols in 2002 to engage citizens in media policy debates and create a more democratic and diverse media system.

[Thinking Man's Idiot]

Steve Fraser:
The Specter of Wall Street