The people of the United States will soon own the debt of nearly every major capitalist bank, investment and finance house, mortgage guarantor and insurance company affected by the economic crisis. This finance sector-wide bailout, first leaked on Sept. 18, was drawn up by the heads of the world’s largest banks, in conjunction with Federal Reserve head Ben Bernanke and the Bush administration, most notably Treasury Secretary and former Goldman Sachs CEO Henry Paulson.
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Whatever the details, the bottom line is this: The sweeping financial bailout is the biggest giveaway of the workers’ money to capitalist bankers and corporations of all time.
This bailout is not the first. For months, the government has been nationalizing the banks’ debt without nationalizing people’s personal debt. What’s different now is that the scope of the nationalization spans the entire finance industry.
All the nationalized debt is truly owned by the people, who will be forced to pay it back. As a consequence, jobs will be lost, factories and offices will shut down, tax money available for schools and housing will be severely cut—and much more. It will increase the hardships already faced by tens of millions of people.
Ordinary taxpayers will have no say in their fate. The entire process is controlled by the capitalists. It is totally undemocratic.
Why does the U.S. government spend countless billions to save banks and corporations, while flat out refusing to help the millions of workers who will lose their homes and jobs this year? Why do 18.6 million houses sit vacant while millions of people are being thrown into the streets and tent cities are popping up around the country?
The answer is simple—it’s capitalism. Capitalism is squarely to blame for the crisis that has rocked Wall Street and brought despair to millions of workers. The criminal capitalist system exists only to make profits for the rich. The capitalist government and state function to protect the system at all costs. We are witnessing this essential function right now.
The economic crisis is very real and widespread. It has sparked the biggest financial turmoil since the Great Depression. Originating in the subprime home mortgage market, it has since moved into manufacturing, car loans, student loans, insurance, credit card debt—everything.
The crisis is rooted in more than just a few bad investments, or even many—it is built into the boom-and-bust nature of the system. As the mortgage and housing market expanded rapidly in recent years, so did profits for the industry and the financiers who backed it. U.S. banks and investment firms reaped billions. Top corporate executives enjoyed seven- and eight-figure salaries; many still do. Eventually, the market expanded beyond its ability to profit, reaching a state of overproduction and deep market contraction.
Corporate bailouts
Capitalist politicians, who sing the praises of the “free market” in times of economic expansion, have suddenly changed their tune. Nearly all support sending a river of taxpayers’ money to the world’s richest institutions to end the crisis. The “free market” is a myth. When a crisis hits, everyone lines up to support aggressive government intervention.
Some progressive commentators have mistakenly referred to the bailout schemes as “corporate socialism.” This couldn’t be further from the truth. It is the capitalist state jumping in to save the capitalist system. It has nothing to do with socialism—an entirely different system anchored in meeting human needs.
In an attempt to stop the meltdown, the government has given banks a lifeline for more than a year. The Federal Reserve, the country’s central bank, has doled out hundreds of billions to save banks and their owners. In March 2008, the government guaranteed the fire sale of investment behemoth Bear Stearns to the tune of $29 billion.
Earlier this month, housing finance giants Fannie Mae and Freddie Mac were nationalized. The government has spent billions of taxpayer dollars to become the proud owner of Fannie and Freddie’s $5.3 trillion in mortgages—much of it now worthless. Until the government announced its “sweeping” bailout plan, this was the largest corporate bailout in U.S. history.
AIG, the world’s biggest insurance company, was partially nationalized a week later. The government loaned AIG $85 billion to bail it and its corporate partners out. Just days after came the announced plan to nationalize all bad debt held by banks and finance firms.
Where do the interests of workers fit into the mix? Hundreds of thousands of workers at these corporations are losing their jobs, healthcare, savings and pensions, while the CEOs responsible are given multi-million dollar “golden parachutes.”
Meanwhile, unemployment is skyrocketing, food and gas prices are double what they were four years ago, inflation is the highest it has been in two decades, pensions and 401(k)s are spiraling downward with stock prices, and wages have remained stagnant for over 30 years.
Thousands of people’s homes were destroyed in Texas by Hurricane Ike the same week that the government bailed out Fannie and Freddie. Where are the billions to save them? Where are the billions to repair the Midwest after the summer floods, or to rebuild New Orleans three years after Katrina?
This is how capitalism functions. It will do anything to bail itself out of a crisis, while continuing to steal from workers. In this crisis, just like any other, important decisions are made by a handful of the richest bankers and their bought-and-paid-for politicians: who gets shut down, who gets laid off, who loses their homes and who gets bailed out.
These capitalists fund both the Democrats and Republicans equally. Barack Obama’s single largest campaign contributor is Goldman Sachs. McCain’s biggest contributor is Merrill Lynch, which was just taken over by Bank of America.
Fight back
The capitalists are plunging the U.S. working and middle classes into misery because of their crisis, but working people shouldn’t have to shoulder the burden. Workers can have a say.
The Party for Socialism and Liberation’s La Riva/Puryear presidential campaign rejects the government bailouts. Money should be directed to help workers in need, not big banks and corporations.
There should be an expropriation of these banks now. The workers own AIG’s debt—why shouldn’t workers own the rest of it too and reap the benefits?
The unfolding economic crisis is expected to deepen. A long period of recession, of economic contraction, may be what is coming. This will cause untold suffering for the working class.
But workers can win major concessions from the rich and their government. During the Great Depression of the 1930s, Unemployed Councils were organized in cities and towns to fight for jobs and defend workers from losing homes. They engaged in mass marches and blocked evictions.
Economic recession and depression also lay the basis for the working class to unite and fight the corporate owners and generals who rule the country. Channeling the outrage and frustration of millions into an organized movement that speaks for working-class interests is what is needed now more than ever. For workers, saving capitalism isn’t worth it.
To read more about the La Riva/Puryear campaign, click here.
