Monday, July 10, 2017

AMERICAN BANKSTERS: Sucking the Blood of a Nation

Global financial parasitism and the political strategy of the working class

By Nick Beams
10 July 2017
The statement authored by Joseph Kishore and David North on behalf of the Political Committee of the Socialist Equality Party (US) on June 13 (“Palace coup or class struggle: The political crisis in Washington and the strategy of the working class”) draws out the objective processes driving the class struggle in the United States and the strategy which must be adopted and fought for in the building of a mass socialist movement.

Their analysis is firmly grounded on a vitally important conception advanced by Marx. He explained that the revolutionary role of the working class was not determined by “what this or that proletarian, or even the whole of the proletariat at the moment considers as its aim. The question is what the proletariat is, and consequent upon that being, it will be compelled to do. Its aim and historical action is irrevocably and obviously demonstrated in its own life situation as well as in the whole organisation of bourgeois society today.” [1]

In its elaboration of the necessary political strategy of the American working class, the statement therefore outlines its “life situation”:

There are many signs of growing social anger among broad sections of the working class, for whom conditions of life are becoming intolerable. The old phrases used in the past to describe life in the United States—“the land of unlimited opportunity,” “the American Dream,” etc.—have become meaningless because they bear no relation to reality. It is becoming obvious to the great mass of working people that the existing society serves exclusively the interests of those who are already very wealthy. Access to the basic necessities of life, such as high-quality education, a safe environment, decent housing, secure employment, adequate leisure time and affordable medical care, is determined at birth—that is, by the class and economic status of the family into which an individual is born.

Changing what has to be changed—that is, the various ways in which the capitalist class and its defenders in every country seek to promote the society over which they preside as the best of all possible worlds—it is clear that the characterisation of the situation in the US applies internationally.

The rising social anger to which the statement points is likewise an international phenomenon, which is finding expression in the observations of some of the more perceptive political commentators.

Writing last month, the European economics commentator for the Financial Times, Wolfgang Munchau, pointed to the surprise results of the Italian referendum last year, called by the now ousted Prime Minister Matteo Renzi, the Brexit referendum called by the then-British Prime Minister David Cameron, and the outcome of the British election of June 8—all of which took place in opposition to what opinion polls had indicated.

Even more extreme was the outcome in France, where the electorate “managed to eradicate virtually the entire political establishment in a short sequence of elections.”

“In all these counties,” he continued, “the global financial crisis has become a historical turning point, caused by the effect of crisis resolution on income distribution and on the quality of the public sector.”

Reflecting a growing sense of bewilderment in sections of the ruling classes confronted with rising opposition from below, Munchau noted that the financial crisis had not only challenged long-held beliefs about economic policy and financial regulation, but also “how we think about politics.”

Previous economic and political models had broken down and the financial crisis had turned what seemed to be an outwardly stable political and financial environment into a “dynamical” system, the main characteristic of which is “radical uncertainty.” He could offer no prescription for the political establishment for which he speaks to resolve this situation, advising that the best that could be done was to “muddle through and keep your eyes wide open.”

But he had no doubt about some of the longer-term implications of the crisis, concluding: “Once we accept that our globalised world has characteristics of a dynamical system, many of our assumptions will fall like dominoes, and so will the political parties that cling to them.”

A comment published in the Financial Times of June 14 by Michael Power, a strategist with Investec Management, entitled “Has Western-style democracy become too expensive for capitalism?” pointed to some of the underlying economic trends fuelling rising social anger.

He cited the McKinsey report that found that almost 70 percent of households in the 25 most advanced economies, some 560 million people, had seen their real incomes fall or remain flat since 2005, and that in the US there had been a 12 percent decline in real median household income since 2000.

According to Power: “The central reason why Western democracy is in decline is that its capitalist bedfellow can no longer afford the financial demands that full-blown democracy is placing upon it.”

The political demands of democracy were able to cohabit with the economics of capitalism for a century because of the redistribution of income via taxes and a social welfare system in what Power called the subsidisation of those who fell behind.

“This persuaded those whose livelihoods required subsidisation to support this marriage of convenience. The rise of populism [the termed used by Power and many others for the social anger of the working class], the deepening divide between generations and the growth of anti-establishment political movements on both extremes of the political spectrum suggest this grand bargain may be losing its attraction. This cohabitation is threatened because the economic surpluses generated can no longer cover the level of political demands for subsidisation.”

Power is unable to answer the obvious question posed by his analysis: why is it that in the face of the enormous growth of the productive forces resulting from the development of technology, the social position of the working class is worsening?

We shall examine the reason for that in the course of this comment. But Power does point to some of its consequences. He holds out no prospect for any restoration of the “grand bargain” within the present economic framework, noting that in the US growth rates have declined from 3.5 percent to 2 percent.

Moreover, he points out, citing the work of the French economist Thomas Piketty, the economic rewards have flowed to the upper-income layers—the top 1 percent. A mutation of this logic is reflected in the “growing disenchantment of youth with this unequal arrangement, as most are being progressively shut out of decent job opportunities that were open to their parents’ generation.”

He continues: “The recent UK election—which saw the electorate start to swing towards the hard left on the back of an energised under-25s vote—and the fact that the youth of the US have made a socialist, Bernie Sanders, America’s most popular politician, are indications of this growing trend.”

The disquiet about the political consequences of post-2008 capitalism extends to major economic institutions.

In its annual jobs report, published in June, the Organisation for Economic Cooperation and Development (OECD) noted that while the number of people employed in the developed world had surpassed pre-crisis levels, there was a rising tide of social anger.

“While the Great Recession left deep scars in many countries, the economic discontent also centres on the perception that deeper international economic integration disadvantages many workers while offering the lion’s share of the benefits to large corporations and a cosmopolitan elite. The perception that the international economic system is ‘rigged’ clearly challenges the democratic legitimacy of current policies and needs to be taken seriously.”

It noted that between 1995 and 2015 what it called the middle-skill share of employment fell by 9.5 percentage points in the OECD area, and that this trend had been aggravated by a cumulative loss in output per capita since the 2008 crisis of around 50 percent.

The OECD, which has been notoriously in favour of “free market” economic policies, even offered something by way of a self-criticism. It was “important to assess whether labour market policy choices—including those consistent with OECD policy advice—have inadvertently contributed to a growth model that has not prevented a disproportionate share of the gains from economic growth to benefit already high-income segments of the population.”

However, reflecting the bankruptcy of the entire framework of bourgeois policy-making, the OECD report offered no way out. It said there had to be a focus on increasing skill level, as if oblivious to what has taken place over the past decade and more. Tens of millions of young people all over the world have sought to increase their qualifications and skill levels at universities and colleges only to find that when they graduate there are no positions available and they are saddled with massive student debts.

The descriptions of the deepening economic and social crisis of capitalism and its political consequences put forward by various bourgeois pundits and commentators point to the decisive role of the 2008 financial crisis. However, these descriptions are accompanied by the delusion that its transformative effects can somehow be overcome if only some kind of economic adjustment—usually nothing more than a call to governments to take some heed of social distress—is carried out within the framework of the capitalist system itself.

An altogether different conclusion arises—and this is decisive for the development of the political strategy of the working class—from a scientific analysis of the roots of the 2008 breakdown.

The immediate cause of the crisis was the criminal and semi-criminal activities resulting from financialisation. At its core, financialisation, the domination of the economy by banks, hedge funds, financial institutions and financial markets, involves the accumulation of profit in ways very different from the period in which the so-called “grand bargain” was struck.

In that period, profit accumulation arose in the main from expanded investment in production, leading to increased economic output and employment and an increase in wages and real living standards. That is no longer the dominant form. It has been replaced by the accumulation of vast wealth through financial operations.

It would, however, be the greatest mistake to think that this parasitism and its dominance over the economy as a whole are the result of the activities of some “evil serpent” that managed to slither into the Garden of Eden of the “free market,” and that the process can be reversed if only the serpent is scotched.

One of the most crucial advances made by Marx in the science of political economy was to draw the distinction between surplus value, extracted from the working class in the process of capitalist production, and its various forms of appearance as revenue flowing to the different property owners—as industrial profit, interest payments, rent and the gains acquired by share trading and other financial operations.

Surplus value is the ultimate basis for the expansion of capital. But it is divided up among the different property owners, whether or not they are directly involved in its extraction.

Financial activity by hedge funds, financial investors, speculators, bond market and currency traders, etc., involves the accumulation of massive profits. But these activities do not involve the extraction of surplus value. Rather, they are the way in which the holders of money and other forms of property, including, most importantly today, the owners of intellectual property in the high-tech and pharmaceutical industries, appropriate surplus value created elsewhere.

This process, in which money seems to simply beget money, is not somehow extraneous to the fundamental logic of capital itself—a kind of “bad side” that develops in opposition to the “good side” of real wealth-creation as such. It must always be remembered that the driving force of capital is not the production of real wealth—increased output, providing rising wages, jobs, social services, etc.—but the self-expansion of value in the form of money.

Marx drew out that the process of capital accumulation, the expansion of value, starts and finishes with money, its “independent and palpable form,” and, consequently, “the production process appears simply as an unavoidable middle term for the purpose of money making.”

And as Engels commented: “This explains why all nations characterized by the capitalist mode of production are periodically seized by fits of giddiness in which they try to accomplish the money-making without the mediation of the production process.” [2]

Over the past three decades and more, starting in the 1980s, rather than “fits of giddiness,” this form of accumulation has increasingly taken a central role in profit accumulation, above all in the US, but also in other major developed economies.

It was a period characterised by a series of mounting financial storms—the US savings and loans scandal of the late 1980s, the stock market crash of October 1987, the collapse of the Japanese stock market bubble of 1990-91, the bond market sell-off of 1994, the Asian financial crisis of 1997-98, the collapse of Long Term Capital Management in 1998 (prompting a rescue operation by the New York Federal Reserve Bank), the Enron bankruptcy and the bursting of the high-tech stock market bubble in 2000-200—leading to the financial meltdown of 2008.

At every point, the response of the financial authorities to these mounting storms was the same—to pump more money into the financial system to enable the orgy of speculation to continue.

There was, however, a qualitative leap in this process after September 2008. Now it was no longer a question of dealing with the collapse of a particular firm or a crisis in one sector of the financial markets, but preventing the collapse of the global financial system as a whole.

Rather than taking action to reverse the growth of financial parasitism, government and financial authorities have raised it to new heights by pumping ultra-cheap money into the financial system—the US Federal Reserve alone has expanded its balance from $800 billion to $4.5 trillion, a more than five-fold increase, through the purchase of financial assets since 2008.

The result has been the accumulation of wealth in the upper echelons of society on a previously unimaginable scale, to the point that eight billionaires now own and control more wealth than half of the world’s population combined.

At the same time as providing trillions of dollars to fuel wealth accumulation at the heights of society, governments, central banks and financial authorities have been engaged in a ferocious and unending assault on the social position of the working class.

These two processes—accumulation of fabulous wealth at one pole and ever-worsening wages and social conditions at the other—are organically connected. This is because however much capital tries to lift itself into a kind of financial heaven where money simply begets money, it cannot entirely escape its earthly roots and generates irresolvable contradictions.

To the extent that finance—capital in its essential form as money—turns to parasitism and away from productive investment, it is involved in a process, so to speak, of sawing off the branch of the tree on which it is sitting. Consequently, it actively intervenes and exercises its domination over the economy as a whole to ensure that this does not take place. While siphoning off surplus value in the form of financial wealth, it exerts a tremendous pressure to ensure that the mass of surplus value in other areas of the economy, on which it ultimately depends, is increased. This takes place in two ways.

It strives, in the first instance, to ensure that in every area of the economy the exploitation of the working class is intensified through the lowering of real wages, the destruction of working conditions, the introduction of new forms of labour contracts such as part-time work and casualization, zero contracts, and so on.

But in and of themselves these measures are not sufficient. At the same time, all the social conditions won by the working class in previous struggles—the provision of health services, education, social welfare measures, pensions, etc.—must also be eviscerated.

This is because these social facilities, which formed a key component of the so-called “grand bargain,” are, in the final analysis, a deduction from the mass of surplus value necessary for the self-expansion of capital. This is why, in every country, whatever the political colouration of the government of the day, the period since the 2008 financial crisis has seen an intensification of social attacks on the working class.

An examination of the political economy of parasitism, its essential logic and driving forces, underscores the necessity set out in the SEP (US) statement for the unification of the struggles of the working class in workplaces, communities, schools and colleges on a socialist program aimed at the conquest of political power. In every area, whatever the immediate form of social struggles, the working masses confront the same enemy.

Not a single economic, social, political or environmental problem confronting working people in America and the mass of humanity on a global scale can be resolved without the overthrow of the capitalist profit system, the depredations of which reach down into every corner and aspect of social and individual life.

And as the statement draws out, this struggle is, by its very essence, international in scope, because the working class in every country confronts the same powerful enemy—globally integrated and organised capital. It can be overturned only by an even more powerful force, the global working class, unified on the basis of an international socialist program.

To return to the point made by Marx cited at the beginning of this comment, a coherent political strategy for the working class, as outlined in the SEP statement, must be based not on the existing level of consciousness—that will undergo vast shifts in the course of the social struggles now unfolding and the even bigger explosions to come—but on its “life situation,” determined by the “whole organisation of bourgeois society,” and what it will be compelled to undertake.




……….. It’s just begun!!!

“This amnesty for corporate bribery and criminality reveals the essence of the Trump administration’s scorched earth campaign against business regulations.”

“Under Obama, not a single leading banker was prosecuted for the 

criminal activities that led to the biggest financial disaster and 

deepest slump since the 1930s, destroying the jobs, life savings 

and living standards of tens of millions of workers in the US and 

around the world.”

 “Our entire crony capitalist system, Democrat and Republican alike, 

has become a kleptocracy approaching par with third-world hell-holes.  This

is the way a great country is raided by its elite.”

 ---- Karen  McQuillan THEAMERICAN




The chief motivating factor behind the rise on Wall Street is 

the understanding that the incoming Trump administration 

will not only carry out policies to benefit the financial elites, 

but that responsibility for implementing this agenda will be 

in the hands of some its foremost representatives.

"The economy has thus come to resemble a giant vacuum cleaner in which the real wealth produced by millions of workers is siphoned off to the semi-criminal and criminal elements (so clearly established by their activities that led to the financial crisis) who occupy the heights of society."

 “The passing grades on the Fed’s stress tests pave the way for banks to pay their largest dividends in almost a decade,” the newspaper reported. “The hands-down winners will be shareholders and bank executives, who could see their stock-based compensation packages advance even further.”

Fed stress test results unleash “party time” for US banks
By Nick Beams
8 July 2017
Anyone looking for conclusive evidence that the US financial system and more broadly the entire economy is run of, by and for the ultra-wealthy need go no further than the Federal Reserve decision to give all the major banks a pass on its stress tests at the end of June.
In what one financial analyst characterised as “party time,” the major banks responded by handing out billions of dollars to their super-rich shareholders in the form of dividends and other benefits.
The head of Berkshire Hathaway, Warren Buffett, alone is expected to benefit to the tune of $1.6 billion as a result of bank share purchases he made following the global financial crisis in 2008–2009. With decades of experience in financial circles and knowledge of how government operates, he bet that the authorities would rescue the banks and payoff time would come.
As a result of the Fed decision, the market value of US banks is estimated to have risen by $40 billion, with the six largest banks increasing in value by $25 billion.
Stress tests were introduced in 2011 in the wake of the financial crisis. They are supposed to ensure that the banks have sufficient capital to meet adverse circumstances and do not again require a bailout from public funds.
According to the Fed’s calculations, the capital held by the largest American banks was nearly 14 percent of assets, weighted by risk at the end of 2016—deemed sufficient to meet any financial problems. But according to the New York Times, alternative definitions of capital, in line with international, rather than American, accounting standards, the capital ratio is only 6.3 percent.
“The passing grades on the Fed’s stress tests pave the way for banks to pay their largest dividends in almost a decade,” the newspaper reported. “The hands-down winners will be shareholders and bank executives, who could see their stock-based compensation packages advance even further.”
The amounts run into scores of billions of dollars, which are going to be handed out via dividends and stock buybacks to increase share valuations.
According to one estimate, the six largest US banks—Bank of America, Citigroup, Goldman Sachs, Morgan Stanley, JPMorgan Chase and Wells Fargo—are set to return to shareholders between $95 billion and $97 billion over the next year. This is 50 percent more than they returned last year.
The inclusion of Wells Fargo in the pass list is particularly striking. It was found guilty last year of schemes that set out to defraud customers by collecting fees on two million unauthorized accounts in order to boost its bottom line and balance sheet. Now it has lifted its dividend on shares and announced an $11.5 billion share buyback scheme.
Bank of America said it would increase its dividend by 60 percent on each share and unveiled a $12 billion share repurchase plan.
Goldman Sachs CEO Lloyd Blankfein offered a measured, but obviously satisfied, response to the Fed decision, saying his bank was “well positioned to continue to return capital to shareholders while expanding our client franchise.” Blankfein once famously remarked that in the finance industry he was doing “God’s work.”
At JPMorgan Chase, the payout to shareholders will be $27 billion over the next year. Citigroup, which almost went belly up in the financial crisis, will return $18.9 billion to shareholders, an 82 percent increase on the year before.
The stress tests, together with supposedly tighter regulations under the Dodd-Frank Act, were introduced to give the impression that the government and financial authorities were taking some action in response to the financial crisis, set off by the dubious and, in some cases, outright criminal activities of the banks.
But no one was charged, let alone jailed and the only penalties have been fines that the banks paid out of their profits as operating expenses. The Dodd-Frank measures have largely proved to be toothless, presenting only a minor inconvenience.
Even these measures are now set to be significantly watered down, if not scrapped outright. Last month, US Treasury Secretary Steve Mnuchin said stress tests should be performed only every second year and banks that maintained a sufficient level of capital should be exempted altogether.
Capital Alpha Partners analyst Ian Katz expressed the sentiments circulating in bank boardroom and executive offices, but not usually voiced publicly. He said the Fed decision was “payout party time.” Katz forecast more to come, declaring: “The highly positive report card puts more wind at the backs of the Trump administration and others who want to soften Dodd-Frank era regulations.”
One slightly sour, but significant, note in the stress test assessment was the Fed’s decision to give the Capital One Financial Group only conditional approval to make payouts while it fixes “material weaknesses” in planning.
Capital One derives most of its revenue from credit card operations and the Fed referred to a “recent uptick in delinquency rates” in this financial area. This points to deep and growing problems in the US economy as working families and young people increasingly struggle to make ends meet under conditions of falling real wages and the replacement of full-time jobs with low-paying, part-time and casual positions.
Furthermore, there is a causal connection between the cash-rich banks and the deepening economic malaise of the working population.
In banking and finance, it appears as if profit comes almost out of thin air, as money begets still more money. But in the final analysis, all financial profits represent a claim on the surplus value extracted from wage workers.
Consequently, the period since the financial crisis has seen the development of two interconnected processes. While the banks and finance capital have been sustained and expanded by bailouts and the Fed’s provision of ultra-cheap money, workers, and especially young people, have been subjected to ever-lower wages and worsening working conditions.
At the same time, social facilities have been slashed on the grounds that there is no money.
The economy has thus come to resemble a giant vacuum cleaner in which the real wealth produced by millions of workers is siphoned off to the semi-criminal and criminal elements (so clearly established by their activities that led to the financial crisis) who occupy the heights of society.

Wikileaks exposes Obama’s bankster-infested



BARACK OBAMA …… the banksters’ RENT BOY!
 “Citigroup’s recommendations came just three days after then-

President George W. Bush signed into law the Troubled Asset 

Relief Program, which allocated $700 billion in taxpayer money 

to rescue the largest Wall Street banks. The single biggest 

beneficiary was Citigroup, which was given $45 billion in cash 

in the form of a government stock  purchase, plus a $306 billion 

government guarantee to back up its worthless mortgage-

related assets.”


“As president, Obama not only funneled trillions of dollars to the banks, he saw to it that not a single leading Wall Street executive faced prosecution for the orgy of speculation and swindling that led to the financial collapse and Great Recession, and he personally intervened to block legislation capping executive pay at bailed-out firms.”

“So when Clinton was hobnobbing with  

Goldman Sachs CEO Blankfein in 2013, while  

investigations of wrongdoing by 

Goldman and the other Wall Street banks were 

still ongoing, she was consorting with a man 

who belonged in prison.”




There’s more than one way to destroy America’s white middle class!

HSBC laundered hundreds of millions 

and perhaps billions of dollars for drug 

cartels responsible for the deaths of tens 

of thousands of people over the past 

two decades. The bank transferred at least 

$881 million of known drug trafficking 

proceeds, including money from the Sinaloa 

Cartel in Mexico, which is known for 

dismembering its victims and publicly 

displaying their body parts.



And while the Obama administration worked systematically 

to bail out the banks and make the financial oligarchy richer 

than ever, shielding the architects of the Great Recession 

from criminal prosecution, it did impose fines for some of 

the banks’ grossest swindles, including the sale of worthless 

subprime mortgage-backed securities, the rigging of key 

global interest rates such as the London Interbank Offered 

Rate (Libor), drug money laundering, illegal home 

foreclosures and other illicit activities.




Barack Obama’s 8 year sabotage of Homeland Security: His Crony Banksters, La Raza Drug Cartels and MS-13 are right behind his sabotage of U.S. borders!

The American oligarchy, steeped in criminality and parasitism, can produce only a government of war, social reaction and repression. In its blind avarice, it is creating the conditions for unprecedented social upheavals. It is hurtling toward its own revolutionary demise at the hands of the working class.

KAINE AND CLINTON-OBAMA’S CRONY BANKSTERS…. Has their golden age of looting America only gotten brighter?
"Between 2009 and 2011, Kaine served as the head of the Democratic National Committee, the leadership body of the Democratic Party. He is close to Wall Street, having recently backed measures to deregulate banks."


“Clinton has also stepped up her efforts to woo billionaires 

who have traditionally supported Republican campaigns on 

the grounds that she will be a more effective “commander in 

chief” and defender of the interests of Wall Street.”

OBAMA-CLINTON-TRUMPERnomics: The Massive Transfer of Wealth to the Super Rich Ratcheted up!


Daniel Greenfield, the award-winning Shillman Journalism Fellow at the Freedom Center, believes (OBAMA'S POLITICAL PARTY) “OFA will be far more dangerous in the wild than the Clinton Foundation ever was.”

“Barack Obama and his henchmen would not have been emboldened in their ostensible machinations to undermine an election and then a presidency if it were not for the fecklessness of the Republican  Party and the blind eye as well as the tacit support of the mainstream media.”

THE DEMOCRAT PARTY and the final collapse of AMERICA:



The FDIC paid OneWest $1 billion, which Stein said went to “billionaire investors … to cover the close of foreclosing on working class, everyday American folks.”
“But the bank came under fire for its foreclosure practices as housing advocacy groups accused it of being too quick to foreclose on struggling homeowners. In 2011, dozens of demonstrators descended on Mnuchin's $26.5 million home in he wealthy Bel Air neighborhood to protest OneWest's eviction tactics, according to the Los Angeles Times.”

"Far from Trump’s demagogic claims that he would 'drain the swamp,' the corrupt nexus between Wall Street and Washington is tighter than ever."
OBAMA-CLINTONOMICS is now the new TRUMPERnomics!
There is a vast chasm between this empty populist rhetoric and the personnel that Trump has selected to populate his government. The speech followed a series of cabinet picks, including billionaire asset strippers, Wall Street bankers, and dedicated opponents of financial and corporate regulations, public education and Medicare and Medicaid, to lead the Treasury, Commerce, Education and Health and Human Services departments.
TRUMP  IMPOSES  OBAMA-CLINTONOMICS:  Cut Federal Pensions and Medicare to Cover Tax Cuts For the Super Rich
"Trump is not the initiator of this class war against working people. It has been underway for decades, beginning in earnest with the election of Ronald Reagan in 1980 and continuing under every succeeding administration, including the eight-year tenures of Democrats Bill Clinton and Barack Obama. The colossal redistribution of wealth and income from the bottom to the top of American society reached record proportions under Obama, whose legacy of falling living standards and worsening economic crisis for tens of millions of workers was a decisive factor in the victory of the fascistic demagogue and con artist Trump."



"At one point she hailed the “record profits” of the auto companies. She did not mention that these profits came at the expense of the jobs, wages and retirement benefits of thousands of auto workers, decimated under the terms of the auto bailout organized by the Obama administration."


"Between 2002 and 2015 annual earnings for the bottom 90 percent of Americans rose by only 4.5 percent, while earnings for the top 1 percent grew by 22.7 percent, according to the Economic Policy Institute. Under the Obama administration, more than 90 percent of
income gains since the so-called “recovery” began have gone to the top one percent."
"The New York Times quoted a top executive at Manpower 
North America, who said: “We have not before seen 
unemployment drop, low participation rates and wages not 
move. That tells you something’s not right in the labor 
Wages and Wall Street
15 July 2017
Despite mounting geo-political conflicts, economic stagnation and governmental crises in country after country, stock markets in the US and around the world continue their spectacular upward climb. On Friday, as new revelations in the Trump-Russia saga intensified the crisis facing the deeply unpopular US administration, Wall Street chalked up another banner day. The Dow and the S&P 500 closed at new record highs and the Nasdaq recorded its best week of the year. Since its post-2008 crisis low point in March of 2009, the Dow has risen by 340 percent.

The other persistent economic trend, particularly in the United States, is the stagnation and decline of wages. This is despite a nominal US unemployment rate of 4.4 percent, a low level by historical standards, and what the media characterizes as “robust” job-creation.

Last week’s US employment report for June, despite a better-than-anticipated growth in payrolls, sparked unease even in some bourgeois circles because wages rose a mere 2.4 percent from the year-earlier period, well below the 3 percent rate in the months preceding the 2008 financial meltdown. The New York Times quoted a top executive at Manpower North America, who said: “We have not before seen unemployment drop, low participation rates and wages not move. That tells you something’s not right in the labor market.”
According to the most recent “Real Wage Index,” posted earlier this month on the PayScale website, five of the 32 metro areas included in the index saw wage declines in the second quarter of this year. Four of the five were in Midwest regions hardest hit by decades of deindustrialization: Detroit, Kansas City, Chicago and Minneapolis.
Adjusting for inflation, real wages in the US have, according to this index, fallen by 7.5 percent since 2006. In real terms, average wages in the US peaked more than 40 years ago.
Unlike the 1929 stock market crash, which was followed in the US by social reform and a modest redistribution of wealth away from the rich, the 2008 Wall Street meltdown ushered in an intensification of attacks on the working class combined with a further enrichment of the financial aristocracy and a record rise on the stock market. Social inequality has accelerated and continues to climb.
The share of the US gross domestic product 
going to labor has fallen to the lowest level 
since the end of World War II, while the share
going to corporate profits has hit record 
How is this situation to be explained, and what is the relationship between the staggering rise on Wall Street and the decline in working class paychecks?
The Wall Street boom and profit bonanza for the rich are not the result of a growth in production or a new upward spiral of the productive forces. On the contrary, the International Monetary Fund has placed at the center of continuing economic and trade stagnation a persistent decline in productive investment and, related to that, a slump in productivity growth.
What has happened is that the process of 

financialization and the growth of parasitism 

that led to the 2008 crash—triggered by the 

outright criminality of the major banks and 

investment firms—have accelerated in its 

aftermath. Far from diverting a small portion of corporate profits to finance social reforms, governments and central banks have overseen an unprecedented plundering of the world economy to rescue the financial aristocracy and make it even richer, at the direct expense of the working class.
The US Federal Reserve has led the way. After the Bush and Obama administrations seized $700 billion in public funds to finance an initial bailout of the major Wall Street banks, the Fed set about buying trillions of dollars of worthless assets to remove them from the banks’ books (dubbed “quantitative easing”), resulting in a five-fold growth of its balance sheet. At the same time, it lowered interest rates to near-zero and kept them at ultra-low levels to pump liquidity into the financial markets and drive up stock prices.
The banks used their super-profits to provide a windfall for the financial aristocracy in the form of dividend increases, stock buybacks and corporate mergers. Just this month, the Fed gave the green light for banks to raise their payouts to big investors. Bank of America said it would increase its dividend by 60 percent and unveiled a $12 billion share repurchase plan.
This was accompanied, under Obama, with a policy of austerity and wage-cutting directed against the working class. This included the bailout of the auto corporations on the basis of an across-the-board 50 percent cut in the wages of newly hired workers, the gutting of health care for millions of workers in the form of Obamacare, and an assault on pensions signaled by the Detroit bankruptcy.
That this attack continues unabated was made clear last week when the state of Missouri cut the already derisory $10 minimum wage in St. Louis to the statewide starvation level of $7.70.
What has made this social counterrevolution possible is the nearly complete suppression of working class opposition. When the Great Depression hit in the 1930s, the example of the Russian Revolution and the existence of the Soviet Union continued to haunt the bourgeoisie and inspire working class resistance internationally. The social reforms of the New Deal were not the result of beneficence on the part of Franklin Roosevelt, but the explosive eruption of working class struggle, particularly between 1934 and 1938, including general strikes that paralyzed entire cities and a wave of sit-down strikes in auto and other industries.
The current period is dominated by the opposite—the artificial suppression of the class struggle. The US Labor Department reports that over the past four decades major work stoppages declined 90 percent. The period from 2007 to 2016 was the lowest decade on record, averaging approximately 14 major work stoppages per year.
There are many signs of growing anger and militancy in the working class. But there is no basis for social struggle in any of the existing organizations. The Democratic Party has moved ever further to the right and today functions openly and directly as a party of Wall Street, war and the CIA.
The AFL-CIO and the rest of the unions—corporatist organizations of a corrupt and reactionary bureaucracy—devote their efforts to suppressing working class opposition to layoffs, wage cuts, speedup, casualization of labor and attacks on health care and pensions. They block strikes wherever possible and sabotage them when they break out.
The AFL-CIO web site reflects the organization’s indifference and contempt for the working class. On the issue of wages, it notes, as part of a few perfunctory paragraphs, that “Ninety percent of Americans’ wages are lower today than they were in 1997.” Its plan of action to confront this astonishing and damning fact? A petition addressed to Congress!
Wage stagnation and the ever-greater concentration of wealth at the very top will not be halted by appeals to the bribed stooges of Wall Street in Congress or any of the other institutions of the corporate-financial oligarchy. Only the renewal of working class struggle on the basis of an anti-capitalist and socialist program will change the situation.
The long and highly uncharacteristic period in which the class struggle in America has seemed to disappear is rapidly coming to an end. Anger is rising as is a desire to fight back. Last year’s Verizon strike was one of the longest and largest in many years. This growth of militancy is accompanied by a broad political radicalization and rise of anti-capitalist sentiment, which found an initial expression in the mass support for the Bernie Sanders campaign in 2016, based on the misplaced belief that Sanders is really a socialist and opponent of the “billionaire class.”
The brutal attacks on social conditions and democratic rights by Trump’s government of oligarchs will provoke growing resistance among workers and young people. This emerging movement must, however, find a new organizational form and be guided by a conscious political perspective. It must not allow itself to be channeled behind the Democratic Party or sabotaged by the unions.

Barry Grey

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