Is Green Growth possible?

by David

Two articles recently linked to on the UNITY Facebook page are worth reading. One is Sue Bradford’s criticism of the new “Pure Advantage” green marketing campaign and the government’s Green Growth paper: “Greed is good, as long as it's green”.

 The other was Nobel prize-winning economist Joseph E. Stiglitz’s article “The Ideological Crisis of Western Capitalism”.

Both agree that free market “neo-liberal” capitalism has no answers to the crises we face, Stiglitz calls for state intervention in the economy to reduce inequality and encourage growth, while Bradford argues that even so-called “green growth” will make the ecological crisis worse.

The contradiction between these two articles raise important questions for eco-socialists, especially those advocating some form of Green New Deal.

London: half a million march against cuts

Statement by British Socialist Workers Party

Over half a million people took to the streets of London on Saturday. They were marching against the Con-Dem [Conservative / Liberal Democrats coalition] government’s cuts. It was one of the biggest protests this country has ever seen.

France in revolt shows our power

By Charlie Kimber in Paris

from Socialist Worker UK

The fightback in France against attacks on pensions has shown magnificent resistance. 

Workers are fighting President Nicolas Sarkozy’s attempts to make them pay more for their pension and to work to 67 before they get a guaranteed full pension. 

It is the main symbol of the rich trying to make workers pay for the crisis.

‘The Long Emergency’, capitalism in PERIL

By Peter de Waal

James Howard Kunstler seems to have absorbed the ideas of Grant Morgan’s essay about the collapse of capitalism I forwarded to him some months ago: http://unityaotearoa.blogspot.com/2010/03/grant-morgan-beware-end-is-nigh.html

Kunstler’s version is encapsulated in his latest on-line Pod cast – “KunstlerCast #122: A Grand Wobble”: http://www.kunstlercast.com

At almost 49 minutes it is nearly a verbatim transcript of the essay’s key ideas. There are a few differences. Kunstler is unable to admit that “The Long Emergency” as he calls it could also mean the end of the capitalistic economic order as Grant suggests. You would expect that from an individual who describes himself as a “left-democrat.” Politics in the US seems unable to find another perspective. As Gore Vidal put it so succinctly: “America is a country governed by a single political party with two right wings.”

Kunstler is also fixated on the paramount importance of the “peak oil” crisis as the key to understanding the current situation capitalism finds itself in. Capitalism certainly is facing energy crises, but if you stop there you would fail to see the other four crises baring down on the system:

• Profitability crisis – squeezing the lifeblood of capitalism, capitalism has always had a "free lunch" from the earth and workers, now that’s over

• Ecological crisis – undermining the natural basis for civilisation

• Resource crises –  oil, water, food, minerals, land, you name it

• Imperial crisis – US Power is declining, but global capitalism cannot support a bigger hegemon. Forget China – it can’t happen

• Legitimacy crisis – both the leaders and the led are loosing faith in capitalism's destiny as it becomes more transparently undemocratic

This is our PERIL thesis. Essentially the system has a number of problems that it can't resolve. Political systems can withstand one or two problems and work around them, but this is five all at the same time with no solutions available. Typically this is how civilisations end.

Kunstler has an Americo-centric viewpoint. As my good friend Danny puts it: “You can’t read the label if you’re inside the bottle.” He would know, he’s from Texas, which generally has a reputation of being very inward looking and captured by Fox-thought from Chairman Murdoch. (not our Danny though, he’s a gem!)

To a dweller in the southern ocean like me, the issue is not just the problem with this or that aspect of capitalism in America, it’s the whole damn system that’s in trouble world-wide.

At one point Kunstler claims that financial speculation is counter-productive to the needs of humanity and what is instead needed is investment in the manufacture of real, useful products. This is ignoring the reason that capitalism turned in the late 1970s to financialisation in the first place, that is the falling rate of profit from investment in the production of ‘real objects’ due to market saturation.

To deal with the problem of working class power and union organisation in the 1970s, raising wages in absolute terms and reducing profitability, manufacturing jobs were off-shored to brutal police states, like China. This created the problem of falling consumption, threatening the survival of the system.
The answer was to lend Western workers and the middle classes, professionals and small businesses money via easy-credit schemes to maintain consumption, and therefore keep the third-world factories running.

This is called “compensatory borrowing” by economists and was funded by creating massive inflation, particularly in the housing markets. Vast quantities of fictitious capital was created by “fractional reserve banking systems” and loaned out. The crisis of 2007-08 was about the loss of nerve amongst lenders, because it became impossible to disguise the fact that off-shored manufacturing and an economy of casualised low-pay jobs in the “service sector” means that the money loaned to the West can never be paid back.

Essentially what we have is an economy that is a world-wide Ponzi scam. Unless “growth” can be maintained, asset values will plummet, halting the circulation of capital, world trade, etc. Sound familiar?

At the end of his PodCast Kunstler admits that the reason Obama is so quiet at the moment is that he probably realises or has been told that the US economy is totally dependent on profits from the financialisation industry. Quite an admission and a key idea from Grant’s thesis.

Still, listen to James Howard Kunstler on financialistion if you have the time. It’s a very good summary of how things are being run at the moment, an essentially is an admission that capitalism can’t fix it’s problems.

The crisis of the American working class

From Lenin’s Tomb

Obama and the Democrats are in trouble. Barring some unforeseeable development on a par with Katrina in terms of scale, the GOP is going to romp the mid-terms on a much reduced turn-out. The capitalist media will say that this is because of the Tea Party 'movement', or because the president moved too far to the left in a centre-right nation. Left-wing anger, and the disillusionment of working class constituencies previously supportive of Obama, will be ignored.

Obama's dual constituency in the 2008 election comprised the majority of the working class, and the dominant fraction of big capital, particularly the finance, insurance and real estate industries (the rentiers in other words) who gave Obama $37.5m toward his campaign. In the 2010 mid-term Congressional elections, the signs are that much of the working class component of that electoral coalition will fail to mobilise for the Democrats. This has already been foreshadowed in the Massachusetts by-election, where the core working class vote collapsed - and, of course, the media blamed it on Obama's excessive radicalism over healthcare, despite Massachusetts favouring socialised medicine by a wider margin than most states.

US trapped in depression

The US workforce shrank by 652,000 in June, one of the sharpest contractions ever. The rate of hourly earnings fell 0.1pc. Wages are flirting with deflation. 

by Ambrose Evans-Pritchard
From The Telegraph UK
July 04, 2010

“The economy is still in the gravitational pull of the Great Recession,” said Robert Reich, former US labour secretary. “All the booster rockets for getting us beyond it are failing.”

“Home sales are down. Retail sales are down. Factory orders in May suffered their biggest tumble since March of last year. So what are we doing about it? Less than nothing,” he said.

California is tightening faster than Greece. State workers have seen a 14pc fall in earnings this year due to forced furloughs. Governor Arnold Schwarzenegger is cutting pay for 200,000 state workers to the minimum wage of $7.25 an hour to cover his $19bn (£15bn) deficit.

Can Illinois be far behind? The state has a deficit of $12bn and is $5bn in arrears to schools, nursing homes, child care centres, and prisons. “It is getting worse every single day,” said state comptroller Daniel Hynes. “We are not paying bills for absolutely essential services. That is obscene.”

Roughly a million Americans have dropped out of the jobs market altogether over the past two months. That is the only reason why the headline unemployment rate is not exploding to a post-war high.

Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10pc of GDP.

The share of the US working-age population with jobs in June actually fell from 58.7pc to 58.5pc. This is the real stress indicator. The ratio was 63pc three years ago. Eight million jobs have been lost.

The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. Jeff Weninger, of Harris Private Bank, said this compares with a peak of 21.2 weeks in the Volcker recession of the early 1980s.

“Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m.”

Republicans on Capitol Hill are filibustering a bill to extend the dole for up to 1.2m jobless facing an imminent cut-off. Dean Heller from Vermont called them “hobos”. This really is starting to feel like 1932.

Washington’s fiscal stimulus is draining away. It peaked in the first quarter, yet even then the economy eked out a growth rate of just 2.7pc. This compares with 5.1pc, 9.3pc, 8.1pc and 8.5pc in the four quarters coming off recession in the early 1980s.

The housing market is already crumbling as government props are pulled away. The expiry of homebuyers’ tax credit led to a 30pc fall in the number of buyers signing contracts in May. “It is cataclysmic,” said David Bloom from HSBC.

Federal tax rises are automatically baked into the pie. The Congressional Budget Office said fiscal policy will swing from
a net +2pc of GDP to -2pc by late 2011. The states and counties may have to cut as much as $180bn.

Investors are starting to chew over the awful possibility that America’s recovery will stall just as Asia hits the buffers. China’s manufacturing index has been falling since January, with a downward lurch in June to 50.4, just above the break-even line of 50. Momentum seems to be flagging everywhere, whether in Australian building permits, Turkish exports, or Japanese industrial output.

On Friday, Jacques Cailloux from RBS put out a “double-dip alert” for Europe. “The risk is rising fast. Absent an effective policy intervention to tackle the debt crisis on the periphery over coming months, the European economy will double dip in 2011,” he said.

It is obvious what that policy should be for Europe, America, and Japan. If budgets are to shrink in an orderly fashion over several years – as they must, to avoid sovereign debt spirals – then central banks will have to cushion the blow keeping monetary policy ultra-loose for as long it takes.

The Fed is already eyeing the printing press again. “It’s appropriate to think about what we would do under a deflationary scenario,” said Dennis Lockhart for the Atlanta Fed. His colleague Kevin Warsh said the pros and cons of purchasing more bonds should be subject to “strict scrutiny”, a comment I took as confirmation that the Fed Board is arguing internally about QE2.

Perhaps naively, I still think central banks have the tools to head off disaster. The question is whether they will do so fast enough, or even whether they wish to resist the chorus of 1930s liquidation taking charge of the debate. Last week the Bank for International Settlements called for combined fiscal and monetary tightening, lending its great authority to the forces of debt-deflation and mass unemployment. If even the BIS has lost the plot, God help us.

NZ petition targets financialisation, the heartless heart of capitalism

by Grant Morgan

Michael Lewitt, who founded capital management firm HCM in 1991, has just authored a fix-the-system book titled “The Death of Capital: How Creative Policy Can Restore Stability”. He is a conservative free market capitalist.

In a recent column (see below), Lewitt bemoans how “the United States has strayed from a free market model to a system that privatizes gains and socializes losses”.

He continues: “During the last two decades, the American economy has suffered from a series of legal, fiscal and monetary policies that have favored speculation over production. The result has been the financialization of the economy, which has been characterized in economic terms by an unhealthy growth in debt at all levels of the economy and in cultural terms by the monetization of all values.”

Lewitt is calling for “a Tax on Speculation that would apply to the types of speculative activities that have so badly damaged the American economy, including naked credit default swaps, leveraged buyout, quantitative stock trading strategies and other stock and bond transactions”.

Lewitt’s strident criticisms of “speculation” and “financialisation”, and his call for a “Tax on Speculation”, personify the raging disunity within global elites which is starting to unravel their “Born to Rule” legitimacy. The Anti-Revolution is starting to eat its own babies.

Lewitt is trying to rein in financialisation in the belief this is required for American capitalism to overcome its critical “challenges”.

Marxists, however, understand that financialisation is capitalism’s main last hope of surviving a systemic crisis of profitability. If financialisation goes down the toilet, so does capitalism’s global economy. That’s why financialisation cannot be reformed into something else.

(For much more information on financialisation, and the convergence of systemic crises, see my essay, “Beware! The end is nigh! Why global capitalism is tipping towards collapse, and how we can act for a decent future”, http://unityaotearoa.blogspot.com/2010/03/grant-morgan-beware-end-is-nigh.html.)

On Budget Day, 20 May, it looks like the National-led government in New Zealand will raise GST to 15%. That is similar to save-the-speculators austerity measures by Europe’s governments which are sparking popular protests not only in Greece, but also Portugal and Spain.

On 22 May, two days after National’s budget, Socialist Worker and the Alliance are jointly launching a nationwide tax petition calling on Parliament to remove GST from food and tax financial speculation.

In effect, our petition is targeting financialisation, the heartless heart of neoliberal capitalism. As seen in Europe’s protests, financialisation is becoming the central battleground over what sort of economy we should have and who it should serve.

For more information on the tax petition, keep your eyes on UNITYblog website or email campaign co-ordinatir Vaughan Gunson at socialist-worker(a)pl.net.

The Death of Capital

taxMichael E. Lewitt
From John Mauldin’s “Outside the Box” newsletter
May 10, 2010

Two years ago, John Mauldin was kind enough to publish my initial proposals for reforming the financial system. Entitled “How to Fix It,” the April 2008 issue of The HCM Market Letter raised a lot of eyebrows and upset many established interests on Wall Street with its outspoken call for financial reform. Among the changes I called for were the following:

•    Compensation reform to better align the interests of Wall Street executives with those of society at large.

•    Requiring private equity firms and hedge funds to be registered with regulators.

•    Taxing private equity partners’ carried interests at ordinary tax rates instead of capital gains tax rates, and prohibiting private equity firms from going public.

•    Sharply reducing the leverage of financial institutions (including hedge funds).

•    Banning off-balance sheet vehicles such as Structured Investment Vehicles.

•    Reining in quantitative trading strategies.

•    Reinstituting the downtick rule with respect to short selling stocks.


At the time these proposals were considered controversial; in retrospect it is clear that they were not aggressive enough. While many of these suggestions have been adopted or are in the process of being adopted, much more needs to be done to stabilize the financial system.

In solidarity with the Greek people’s resistance against austerity

Joint statement from Asia-Pacific
May 13, 2010

[If your organisation would like to sign on, please email international@socialist-alliance.org.]
We, left and progressive organisations from the Asia-Pacific region, express our solidarity with the resistance of the Greek people against the harsh austerity being imposed upon them by the governments of the European Union (EU) and the International Monetary Fund (IMF). The proposed “rescue package” for the Greek economy by the IMF-EU has triggered a huge struggle that will have worldwide ramifications for working people.

Greeks protest against policies similar to what John Key will introduce on 20 May

by Grant Morgan


The heat on the street in Greece is rising towards red-hot as the social democratic PASOK government moves towards harsh austerity measures to save rich financiers from their own crisis.

Major cities in Greece are starting to see semi-spontaneous convulsions from below. These are the type of mass actions which just might turn into popular insurrection.

Angela Merkel, the German chancellor, says that “Europe’s future is at stake” in Greece. The destiny of the European Union, and Germany’s place in the EU, depended on the outcome of the Greek crisis, she added. (”Three killed as Greek austerity protest turns violent”, Times Online, 5 May 2010.)

So the geopolitical stakes are being raised in tandem with the escalating anger on the streets of Greece.

Citizens of Portugal, Spain, Italy, Britain and other European countries on the brink of financial crisis will be following Greek events very closely. They know their own governments are leaning towards austerity measures to bail out the bankers.

Many European states have already seen mass protests and strikes by workers, students and other grassroots folk over recent months.

The economics editor of The Independent newspaper in Britain has pointed towards “the start of the greatest demonstration of public unrest seen on the continent since the revolutionary fervour of 1968”. (Sean O’Grady, “Greece leads Europe’s winter of discontent”, The Independent, 24 February 2010.)

In my essay on the looming collapse of global capitalism, I ended the section on the profitability crisis with these words:

“The obscenity of governments protecting the rich at great cost to the poor is stirring up a social contagion. What cannot be foreseen is how far and how fast the contagion will spread around the globe.” (“Beware! The end is nigh! Why global capitalism is tipping towards collapse, and how we can act for a decent future”, UNITY journal, March 2010, http://unityaotearoa.blogspot.com/2010/03/grant-morgan-beware-end-is-nigh.html.)

The mass convulsions in Greece, and the upswing of popular protest across other European states, are signs that the social contagion is spreading at a fast rate across rich countries as well as poor ones.

Here, in far-away New Zealand, most people may think such events are a foreign phenomenon. Yet Kiwis are facing a rise in GST to 15%, which will blow many family budgets to bits so that the rich can be awarded massive tax breaks.

And Jayati Ghosh, an Indian professor of economics, forecasts the intervention of big financiers into the international food market as the driver for another gigantic bubble in global food prices. That too will badly hurt the grassroots of Aotearoa. (See Jayati’s video interview on The Real News, 5 May 2010, http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=5067.)

Financialisation, the central pillar of neoliberal capitalism, has been driving government measures which soak the poor in order to bail out financial speculators. New Zealand is no exception, as we will see from the National-led government’s tax changes on 20 May that blatantly favour the wealthiest few percent at the expense of everyone else.

What we need in New Zealand is a popular campaign to roll back financialisation. Watch this space for more news about what we can do!


[Picture shows Greek demonstration from March 2010]

Three killed as Greek austerity protest turns violent

John Carr in Athens and Joanna Sugden
Times Online, May 5, 2010


Three people were killed in a firebomb attack on a bank in central Athens today as protests against the Greek Government turned into violent riots.

Buildings and cars were set alight and burning barricades set up in the streets by demonstrators angry at proposed austerity measures.

Global food bubble on the way?

Jayati Ghosh: Food prices set to surge due to Wall Street speculation






From The Real News network

Bio

Dr. Jayati Ghosh is Professor of Economics and currently also Chairperson at the Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi. Educated at Delhi University, Jawaharlal Nehru University and the University of Cambridge, England, her research interests include globalization, international trade and finance, employment patterns in developing countries, macroeconomic policy, and issues related to gender and development.

10,000 US workers protest on Wall Street

Auckland wasn’t the only city to see big protests last week, on Thursday 10,000 trade unionists and grassroots activists marched on wall street, in what Russia’s RT News described as, “The largest anti-Wall Street rally since the credit crunch has taken place in New York. Thousands of workers and trade union leaders marched in anger over lost jobs and ruined lives, demanding answers from the source of the trouble – the banks.”



Hat tip Credit Writedonws

More coverage from Democracy Now:

General strike shuts down Greece

By Matthew Cookson reporting from Athens for Socialist Worker UK The usually bustling pavements of central Athens are almost deserted today [Wednesday]. More than two million people have walked out on strike in Greece – from a total workforce of five million. The 24 hour general strike unites both public and private sector workers against the government’s austerity measures. All flights in and out of the country have been cancelled, and schools, council offices and ministries are closed. Few buses or trains are running, and those that are have mostly been approved by strikers to allow workers to join protests. More than 30,000 people joined two separate marches. They shattered the unusual quiet in central Athens with angry chants as they marched on parliament. Workers are furious at the centre-left Pasok government which won last year’s general election after it promised not to freeze wages. Marchers shouted, “No sacrifices! Make the rich pay for the crisis!” Yiannis Anastakis, who works at the Olympic Stadium, told me, “Before the election the government said completely different things. Now it wants to cut salaries, and they are already very low. Most people take home around 700 euros [NZ$ 1,360] a month. “The people who have money in Greece don’t pay taxes. But the government won’t take money from the rich—instead it looks to get more from the low paid.” Post and telecoms workers, engineers, unemployed people, electricity workers, students, council workers and other marched together. A large group of African and Bangladeshi migrants joined the protest, demanding citizenship rights and an end to police harassment. African migrant workers joined the protests Police fired tear gas and batoned protesters around Syntagma Square, near the parliament buildings. A group of demonstrators flung red paint at the police squads. The police attack split the demonstration in two, but demonstrators defied the police and the march continued. Public and private sector workers struck together against the government’s aim to make massive cuts that will severely hit workers’ living standards. The Greek government’s budget deficit currently stands at 12.7 percent of Greece’s annual gross domestic product. The government wants to slash it to 2.8 percent. Early this morning, I joined a picket by trade unionists and students at the Metika metal company offices in Athens. Panos from the engineers’ union said, “The government says it is against the crisis, but in reality it is attacking the rights of working people. “We are also here because Metika has fired three workers, who were active in the union, in its factory in Volos.” Banners across the company’s gates read, “Stop the stability programme. Ban the sackings” and “No sacrifice for their profits.” Yiannis said, “The EU complains that Greeks have a very good life in comparison with other countries. This is completely untrue. Many of us have to do two jobs to survive. Look at the people here. Tell me that they are all rich.” The general strike is not the end of the fight in Greece. Different groups are planning their own strikes, while there are plans for more national days of action in the near future. Workers on the street (All pictures Guy Smallman) Greek activists speak out ‘We have agreed on an all-out strike to stop the government measures from being passed. We believe that if they push the cuts through in our sector, all workers’ wages will be cut. And on top of that, the government is raising the retirement age. It’s unacceptable that the cost of living also goes up so we work until we’re 80 and die before we even touch our pensions. All across the EU the message from governments is that public spending and wages must be slashed but that capital’s profits don’t get touched.’

Makis Daskalopoulos, worker at the General Secretariat for Information Systems

‘We’re fighting back, despite the rain, the police special forces and the tear gas. The government says we must be patient so it can impose stability measures. We say disobedience! We won’t let them take back the rights we fought for with blood.’

Giorgos Panagakis, unemployed nurse

‘People are outraged. Their blood is boiling! Now there is a mood to escalate the strikes. We shouldn’t pay for the crisis, the ones who caused it should pay.’

Vagia Gouma, public sector worker at the ministry for the environment, physical planning and public works

For more background on the econic and social crisis agcross Europe, see this feature from Socialist Worker UK: Europe – the gathering economic storm

Video: ASB Exposed as lying Banksters (MR NEWS)

Ensuring tax-payers money ends up in right hands

United States:

“It was Treasury Secretary Tim Geithner, then head of the Federal Reserve Bank of New York, who insisted that the nationalized insurance company AIG pay its debts at 100 cents on dollar — which meant that tens of billions in US taxpayer money flowed through AIG into the coffers of big US and European banks. “AIG paid $12.9 billion of taxpayer money to Goldman Sachs — and now, Goldman is set to pay out around $22 billion in bonuses … “So far, the U.S. government has loaned or guaranteed up to $13 trillion to financial institutions and other businesses — a figure nearly the size of the entire annual economic output of the U.S.”

— January 19 US Socialistworker.com article, “Laughing all the way to the bank”. Britain:

“[In November, 2009] it was revealed that the Bank of England had advanced £61.6 billion of our money to two banks, Royal Bank of Scotland (RBS) and HBOS, last autumn. “Bank governor Mervyn King explained to a committee of MPs that it had been necessary to send out a convoy of dumper-trucks filled with £50 notes to refill the coffers of the two busted banks so as to ‘prevent a loss of confidence spreading through the financial system as a whole’.”

— November 26 Belfast Telegraph article by Eamonn McCann. After bail-out, profits soar

“Profit at Goldman Sachs Group Inc. nearly doubled to US$8.4 billion during the first nine months of 2009 from the previous year's level, and analysts expect its full year profits to top US$10 billion. “Goldman set aside US$16.71 billion from January through September for compensation, which includes salaries, bonuses and associated costs such as benefits and payroll taxes. That puts it on pace to meet the record US$20.2 billion in compensation costs it had for all of 2007.”

— January 21 eTaiwannews.com article.

From: Green Left Weekly issue #823 27 January 2010.

Bad banks — New Zealand’s black sheep

By Paola Harvey
from Green Left Weekly, Australia
30 January 2010

Although New Zealand, like Australia, has not been as badly affected by the global economic crisis as the US or Europe, workers are facing hardship.

Bronwen Beechey, an activist from Socialist Worker New Zealand (SWNZ), told Green Left Weekly: “There’ have been a lot of redundancies, places have been closed down.”

Beechey and SWNZ activist Peter Hughes were in Sydney to attend the January 3-6 Socialist Alliance national conference. They spoke to GLW about the SWNZ’s “bad banks” campaign, which takes aim at the cause of the global financial crisis — neoliberal capitalism.

“For people on low incomes life’s just been getting tougher because [they are] losing their jobs and food prices and rents and all of it have not come down substantially”, Beechey said.

“All the indicators, the social services, people asking for assistance, for food parcels, people losing their homes — they’ve all skyrocketed.”

Hughes said employers have used the crisis to justify attacking workers’ wages and conditions. “In the last 12 months, there have been no less than eight lockouts of workers.

“One of the most shameful examples was a service provider for the elderly that insisted that if the workers in that field did not accept the minimum wage [NZ$12.50 per hour] they’d be locked out.

“That’s quite a serious indication of how they [the bosses] see the crisis being resolved to their advantage and workers’ disadvantage.”

The New Zealand government’s response has been the same as capitalist governments around the world — bail out the banks and the big capitalists, and make the workers pay.

But they are not getting it all their own way. The government’s attempt to impose an unofficial wage freeze in the public service was recently challenged. Support staff in the education sector won a small wage rise.

That win will set the tone for the upcoming nurses’ and general education unions’ wage negotiations. “No less than that, will be the call, I’m sure”, said Hughes. “So that’s a good sign.

“I heard at the [Socialist Alliance] conference, that [Australian Prime Minister Kevin Rudd] said that the recovery’s going to be worse than the recession.

“I’m quite sure that’s their intention for us in New Zealand as well, working people will be made to pay for the recovery — if there’s going to be one.

“But our assessment is that there can be no real recovery in the current market economy, not in the foreseeable future. That’s going to lead to all sorts of crises for them, which they will try to push on us.

“We have to organise people to resist that.”

The discussion about neoliberalism at the NZ Council of Trade Unions’ 2009 conference has opened up more space on the left to fight back against these future crises.

At the conference, union activists talked about workers’ cooperatives, building and strengthening the union movement and not accepting the neoliberal capitalist model as the only option.

Beechey said: “It also talk[ed] about climate change and the need for an alternative economic strategy which is an implicit criticism of neoliberal capitalism.”

Hughes added: “While it’s not a policy position as such, it’s a discussion that’s been opened up within the trade union movement.

“It’s not an accepted policy, it could be watered down significantly and it’ll come down to how different unions interpret that for building a broader perspective in the membership.

“[But] when you think about how closely linked the trade union movement has been to the Labour Party … this is a departure.

“The fact that they’re daring to criticise publicly this position opens up a space on the left for us to work with trade union activists in a much more healthy and progressive way.”

Many people in New Zealand continue to struggle with little indication of their situation improving in the near future.

There has been an increase in the number of houses sold due to people defaulting on their home loans. A large proportion of these have been people with one home — not property speculators.

Hughes said the defaulters “simply cannot pay because they’ve lost their job, they’ve been made redundant and they have reduced incomes”.

“That’s pretty devastating for families and has shown no sign of abating at all.”

The actions of the banks have been completely shameful. Before the crisis, banks were advertising loans for 100% of the price of a house.

But after the crisis, their ruthless approach to lending has meant many people who were lured into the property market by these loans have had their home repossessed.

“Our campaign around ‘bad banks’ is trying to make them pay really”, said Hughes. “Because they’re the ones that have played a big role [in the crisis] and they’re plundering the profits of working people.”

The bad banks campaign is focusing on demystifying what the banks actually do and how they caused the financial crisis. It is also calling for a financial transaction tax, as opposed to a goods and services tax.

A GST is a regressive tax, that is it affects the poorest the most, because the poor are taxed the same as the rich for goods despite having less ability to pay.

A financial transaction tax, on the other hand, would be a progressive tax. It would affect banks, corporations and the wealthy the most, because they account for the vast majority of financial transactions.

“We see the bad banks campaign as striking right to the heart of neo-liberalism”, Hughes said. “These banks have got their fingers in the lives of every working class person, whether it’s controlling their mortgage, their credit card, or their bank charges.

“They’re bloody pillaging basically. Their pockets are huge, they’re not paying their taxes.

“They’re not very popular with workers at the moment.”

GPJA Forum: ‘Is the Global Financial Crisis the beginning of the end of global capitalism?’

Jane Kelsey is to speak at first GPJA Forum for 2010. Her topic is"Is the Global Financial Crisis the beginning of the end of global capitalism?" This forum will be at 7.30pm, Monday 1 February at the Auckland Trades Hall, 147 Great North Rd, Grey Lynn. See also the public meeting organised by Socialist Worker on Friday 5 February at 8pm, Is Capitalism on the path to collapse?

Société Générale Predicts Global Economic Collapse In Two Years Time

by Ambrose Evans-Pritchard 22 December 2009 from Telegraph.co.uk Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, mapping a strategy of defensive investments to avoid wealth destruction. In a report entitled "Worst-case debt scenario", the bank's asset team said state rescue packages over the last year have merely transferred private liabilities onto sagging sovereign shoulders, creating a fresh set of problems. Overall debt is still far too high in almost all rich economies as a share of GDP (350pc in the US), whether public or private. It must be reduced by the hard slog of "deleveraging", for years. "As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," said the 68-page report, headed by asset chief Daniel Fermon. It is an exploration of the dangers, not a forecast. Under the French bank's "Bear Case" scenario (the gloomiest of three possible outcomes), the dollar would slide further and global equities would retest the March lows. Property prices would tumble again. Oil would fall back to $50 in 2010. Governments have already shot their fiscal bolts. Even without fresh spending, public debt would explode within two years to 105pc of GDP in the UK, 125pc in the US and the eurozone, and 270pc in Japan. Worldwide state debt would reach $45 trillion, up two-and-a-half times in a decade. (UK figures look low because debt started from a low base. Mr Ferman said the UK would converge with Europe at 130pc of GDP by 2015 under the bear case). The underlying debt burden is greater than it was after the Second World War, when nominal levels looked similar. Ageing populations will make it harder to erode debt through growth. "High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt," it said. Inflating debt away might be seen by some governments as a lesser of evils. If so, gold would go "up, and up, and up" as the only safe haven from fiat paper money. Private debt is also crippling. Even if the US savings rate stabilises at 7pc, and all of it is used to pay down debt, it will still take nine years for households to reduce debt/income ratios to the safe levels of the 1980s. The bank said the current crisis displays "compelling similarities" with Japan during its Lost Decade (or two), with a big difference: Japan was able to stay afloat by exporting into a robust global economy and by letting the yen fall. It is not possible for half the world to pursue this strategy at the same time. SocGen advises bears to sell the dollar and to "short" cyclical equities such as technology, auto, and travel to avoid being caught in the "inherent deflationary spiral". Emerging markets would not be spared. Paradoxically, they are more leveraged to the US growth than Wall Street itself. Farm commodities would hold up well, led by sugar. Mr Fermon said junk bonds would lose 31pc of their value in 2010 alone. However, sovereign bonds would "generate turbo-charged returns" mimicking the secular slide in yields seen in Japan as the slump ground on. At one point Japan's 10-year yield dropped to 0.40pc. The Fed would hold down yields by purchasing more bonds. The European Central Bank would do less, for political reasons. SocGen's case for buying sovereign bonds is controversial. A number of funds doubt whether the Japan scenario will be repeated, not least because Tokyo itself may be on the cusp of a debt compound crisis. Mr Fermon said his report had electrified clients on both sides of the Atlantic. "Everybody wants to know what the impact will be. A lot of hedge funds and bankers are worried," he said.

A Green New Deal - dead end or pathway beyond capitalism?

from LINKS – International Journal of Socialist Renewal [Originally published in Turbulence, 8 December 2009] A Green New Deal is on everybody’s lips at the moment. US President Barack Obama has endorsed a very general version of it, the United Nations are keen, as are numerous Green parties around the world. In the words of the Green New Deal Group, an influential grouping of heterodox economists, Greens and debt-relief campaigners, such a ‘deal’ promises to solve the ‘triple crunch’ of energy, climate and economic crises. Frieder Otto Wolf, an eco-socialist and early member of the German Green Party, argues that the challenge for the global movements is to hijack the Green New Deal, rather than reject it. Tadzio Mueller, an editor of Turbulence and involved in the Climate Justice Action network, begs to differ. He looks instead to an emerging movement for ‘climate justice’. Turbulence sat the two of them down for a chat, and kicked off the debate by suggesting that a Green New Deal might actually offer a weak-looking global left a great opportunity. The conversation is posted at Links International Journal of Socialist Renewal with permission. Tadzio Mueller: Before we start looking at the crisis of the (global) left, and whether or not a Green New Deal[1] might be an opportunity for its rejuvenation, I think there is a more important question to be answered first. Namely: to what extent is such a project a great opportunity for the rejuvenation of global capitalism? Profit rates (with the possible exception of those of bailed-out banks) are at rock bottom. And there is currently nothing – no sector (like cars), no technology (like IT), no process (like ‘globalisation’) – that is promising to push them back up again in the near future. Capital, in other words, is in crisis, and, as Nicolas Stern, author of a report on the costs and opportunities of climate change for the British government, argues, it needs ‘a good driver of growth to come out of this period, and it is not just a simple matter of pumping up demand’.

Continue