Economic crisis

The United Nations’ Department of Economic and Social Affairs has forecast world growth this year of negative 2.6 percent. World trade is expected to decline by 11.1 percent—the sharpest annual contraction since the 1930s: here.

The elections to the European parliament next weekend take place in the midst of the deepest crisis of capitalism since the 1930s and an extremely tense social situation: here.

General Motors cartoon

General Motors—once the largest and most profitable corporation in the world—will file for bankruptcy protection this morning. The bankruptcy of what was long the iconic symbol of the power of American industry signifies the failure of not only one company, but of American capitalism as a whole: here. See also here.

G.M.’s Road From Prosperity to Crisis: here.

Workers at car giant Vauxhall voiced fears for the future today as they were warned it could be two months before they know if their jobs are safe: here.

Two reports released last month reveal rising levels of financial stress in Australian households, particularly among those cut off welfare or denied any relief in the Rudd government’s May 12 budget: here.

Attempts by opposition Liberal leader Malcolm Turnbull to force the resignation of Prime Minister Kevin Rudd and Treasurer Wayne Swan over alleged corrupt ties to a Queensland car dealer backfired yesterday after it was revealed that an email at the heart of the “scandal” was a forgery: here.

2 thoughts on “Economic crisis

  1. U.S. Chamber of Commerce: Betting Against the American Middle Class

    By Leo Gerard Camapign for America’a Future

    May 26, 2009

    Randel K. Johnson, vice president of that esteemed
    group, the U.S. Chamber of Commerce, recently revealed
    a corporate-squelched truth in a slip of the tongue.

    During a debate on May 15 with Stewart Acuff of the
    AFL-CIO about the Employee Free Choice Act, Johnson
    admitted – finally – that the act preserves secret
    ballot elections for unions. The act would allow
    workers – rather than employers – to decide whether to
    form a union by conducting a secret ballot election or
    by collecting signed membership cards from a majority
    of workers.

    Incredibly, for as much as unearned-bonus-grubbing-CEOs
    have lied about secret ballots in their relentless
    campaign against the Employee Free Choice Act, that was
    not Johnson’s revelation.

    No, here’s what he disclosed: If the act passes, he
    said, “It would be a rare union that would decide to
    risk a normal secret ballot election.”

    Risk. Interesting word, Mr. Johnson.

    The Chamber of Commerce knows there’s a huge risk to
    secret ballot elections. And the Chamber likes it that
    way. Employers stack the deck against workers in secret
    ballot elections. They don’t publicly admit it though.
    That’s why Johnson’s use of the word “risk” was so

    The Chamber and big corporations like Wal-Mart are
    intent on defeating the act because it would remove
    from employers the power to force workers to conduct
    secret ballot elections. It would strip from employers
    that ability to generate risk, to defeat unions, and
    thus to further shrink wages and the American middle

    A Cornell University professor, Kate Bronfenbrenner,
    who has researched labor issues for a quarter century,
    issued a new study last week that clearly illustrates
    the risk of secret ballot elections and how employers
    have labored long and hard to increase that risk in
    recent years. It’s called, “No Holds Barred: The
    Intensification of Employer Opposition to

    Among the tactics she documents employers using in the
    weeks before the “secret ballot” election to thwart
    unionization are firing of union organizers, threats to
    close the plant or cut wages and benefits, and forcing
    workers to meet one-on-one with supervisors who
    intimidate and interrogate them to determine whether
    they support the union.

    Bronfenbrenner concluded, “This combination of threats,
    interrogation, surveillance, and harassment has ensured
    that there is no such thing as a democratic `secret
    ballot’ in the NLRB (National Labor Relations Board)
    certification election process. The progression of
    actions the employer has taken can ensure that the
    employer knows exactly which way every worker plans to
    vote long before the election takes place.”

    Her study showed employers implementing these tactics
    more frequently than in the past. When she compared
    organizing campaigns in this five-year period to those
    in the studies over the previous 20 years, she
    discovered two disconcerting facts: the cases in which
    employers used 10 of these threatening techniques in
    the run-up to elections more than doubled. And
    employers focused much more on coercive and punitive
    methods rather than positive procedures such as
    unscheduled raises and promotions.

    Not surprisingly, she also found that as employers
    exploited harsher tactics and intensified their attacks
    in the weeks before “secret balloting,” the union was
    more likely to lose. And, conversely, she found that in
    campaigns where public sector workers tried organizing
    and government agencies refrained from coercive and
    illegal tactics, the union was significantly more
    likely to win.

    If it weren’t so easy for employers to create risk for
    workers, millions more could get the union protection
    they want. Surveys show an increasing number of
    American workers desire a union. In the mid 1990s, it
    was 40 percent. Now it’s 53 percent. Yet only 12.4
    percent of American workers have that protection – and
    the better wages and benefits that go with it.

    Bronfenbrenner addressed this issue in her report: “Our
    findings suggest that the aspirations for
    representation are being thwarted by a coercive and
    punitive climate for organizing that goes unrestrained
    due to a fundamentally flawed regulatory regime that
    neither protects their rights nor provides any
    disincentive for employers to continue disregarding the

    She continues: “Unless serious labor law reform with
    real penalties is enacted, only a fraction of the
    workers who seek representation under the National
    Labor Relations Act will be successful.”

    That reform is the Employee Free Choice Act, and
    there’s the point of Johnson’s use of the word risk.
    The Chamber of Commerce intends to kill the act and
    leave risk fully on the shoulders of workers. As
    Bronfenbrenner showed, that would mean fewer will be
    unionized. Middle class wages and benefits would
    continue to decline.

    It is time for American workers to stop bearing all of
    the risk. They’re working for less and bailing out the
    very people who are obstructing their ability to fairly
    bargain for more.

    In October, Bank of America, which has received more
    than $45 billion in taxpayer bailout money, hosted a
    conference call with conservatives and business
    officials, including a representative of AIG, which has
    received more than $100 billion in taxpayer bailout
    money, to organize opposition to the Employee Free
    Choice Act. Then in March, just days after the act was
    introduced, Citigroup Inc., which got $50 billion in
    bailout money, hosted a similar conference call, this
    one led by Glenn Spencer of the U.S. Chamber of

    During the October call, Bernie Marcus, co-founder of
    Home Depot, said he should be on a 350-foot boat in the
    Mediterranean, but he thought fighting the Employee
    Free Choice Act was more important because, “This is
    the demise of a civilization. . . This is how a
    civilization disappears.”

    Yes, the Employee Free Choice Act could contribute ever
    so slightly to dissipation of a decadent class.
    Unionization is how the middle class re-emerges.
    America could do without a few filthy-rich boys lolling
    on yachts in the Mediterranean. At the heart of
    America, however, must be a strong and broad middle


  2. Grand Theft Auto: How Stevie the Rat bankrupted GM

    by Greg Palast
    Monday, June 1, 2009

    Screw the autoworkers.

    They may be crying about General Motors’ bankruptcy today. But dumping 40,000 of the last 60,000 union jobs into a mass grave won’t spoil Jamie Dimon’s day.

    Dimon is the CEO of JP Morgan Chase bank. While GM workers are losing their retirement health benefits, their jobs, their life savings; while shareholders are getting zilch and many creditors getting hosed, a few privileged GM lenders – led by Morgan and Citibank – expect to get back 100% of their loans to GM, a stunning $6 billion.

    The way these banks are getting their $6 billion bonanza is stone cold illegal.

    I smell a rat.

    Stevie the Rat, to be precise.Steven Rattner, Barack Obama’s ‘Car Czar’ – the man who essentially ordered GM into bankruptcy this morning.

    When a company goes bankrupt, everyone takes a hit:fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what’s left. That’s the law.What workers don’t lose are their pensions (including old-age health funds) already taken from their wages and held in their name.

    But not this time. Stevie the Rat has a different plan for GM: grab the pension funds to pay off Morgan and Citi.

    Here’s the scheme: Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance. Cash in the insurance fund would be replace by GM stock. The percentage may be 17% of GM’s stock – or 25%. Whatever, 17% or 25% is worth, well … just try paying for your dialysis with 50 shares of bankrupt auto stock.

    Yet Citibank and Morgan, says Rattner, should get their whole enchilada – $6 billion right now and in cash – from a company that can’t pay for auto parts or worker eye exams.

    Preventive Detention for Pensions

    So what’s wrong with seizing workers’ pension fund money in a bankruptcy? The answer, Mr. Obama, Mr. Law Professor, is that it’s illegal.

    In 1974, after a series of scandalous take-downs of pension and retirement funds during the Nixon era, Congress passed the Employee Retirement Income Security Act. ERISA says you can’t seize workers’ pension funds (whether monthly payments or health insurance) any more than you can seize their private bank accounts. And that’s because they are the same thing:workers give up wages in return for retirement benefits.

    The law is darnn explicit that grabbing pension money is a no-no. Company executives must hold these retirement funds as “fiduciaries.” Here’s the law, Professor Obama, as described on the government’s own web site under the heading, “Health Plans and Benefits.”

    “The primary responsibility of fiduciariesis to run the plan solely in the interest of participants and beneficiariesand for the exclusive purpose of providing benefits.”

    Every business in America that runs short of cash would love to dip into retirement kitties, but it’s not their money any more than a banker can seize your account when the bank’s a little short. A plan’s assets are for the plan’s members only, not for Mr. Dimon nor Mr. Rubin.

    Yet, in effect, the Obama Administration is demanding that money for an elderly auto worker’s spleen should be siphoned off to feed the TARP babies. Workers go without lung transplants so Dimon and Rubin can pimp out their ride. This is another “Guantanamo” moment for the Obama Administration – channeling Nixon to endorse the preventive detention of retiree health insurance.

    Filching GM’s pension assets doesn’t become legal because the cash due the fund is replaced with GM stock.Congress saw through that switch-a-roo by requiring that companies, as fiduciaries, must

    “…act prudently and must diversify the plan’s investments in order to minimize the risk of large losses.”

    By “diversify” for safety, the law does not mean put 100% of worker funds into a single busted company’s stock.

    This is dangerous business: The Rattner plan opens the floodgate to every politically-connected or down-on-their-luck company seeking to drain health care retirement funds.

    House of Rubin

    Pensions are wiped away and two connected banks don’t even get a haircut? How come Citi and Morgan aren’t asked, like workers and other creditors, to take stock in GM?

    As Butch said to Sundance, who ARE these guys? You remember Morgan and Citi. These are the corporate Welfare Queens who’ve already sucked up over a third of a trillion dollars in aid from the US Treasury and Federal Reserve. Not coincidentally, Citi, the big winner, has paid over $100 million to Robert Rubin, the former US Treasury Secretary. Rubin was Obama’s point-man in winning banks’ endorsement and campaign donations (by far, his largest source of his corporate funding).

    With GM’s last dying dimes about to fall into one pocket, and the Obama Treasury in his other pocket, Morgan’s Jamie Dimon is correct in saying that the last twelve months will prove to be the bank’s “finest year ever.”

    Which leaves us to ask the question:is the forced bankruptcy of GM, the elimination of tens of thousands of jobs, just a collection action for favored financiers?

    And it’s been a good year for Señor Rattner. While the Obama Administration made a big deal out of Rattner’s youth spent working for the Steelworkers Union, they tried to sweep under the chassis that Rattner was one of the privileged, select group of investors in Cerberus Capital, the owners of Chrysler.”Owning” is a loose term.Cerberus “owned” Chrysler the way a cannibal “hosts” you for dinner. Cerberus paid nothing for Chrysler – indeed, they were paid billions by Germany’s Daimler Corporation to haul it away.Cerberus kept the cash, then dumped Chrysler’s bankrupt corpse on the US taxpayer.

    (“Cerberus,” by the way, named itself after the Roman’s mythical three-headed dog guarding the gates Hell.Subtle these guys are not.)

    While Stevie the Rat sold his interest in the Dog from Hell when he became Car Czar, he never relinquished his post at the shop of vultures called Quadrangle Hedge Fund. Rattner’s personal net worth stands at roughly half a billion dollars. This is Obama’s working class hero.

    If you ran a business and played fast and loose with your workers’ funds, you could land in prison. Stevie the Rat’s plan is nothing less than Grand Theft Auto Pension.

    It doesn’t make it any less of a crime if the President drives the getaway car.


    Economist and journalistGreg Palast, a former trade union contract negotiator, is author of the New York Times bestsellers The Best Democracy Money Can Buy and Armed Madhouse. He is a GM bondholder and card-carrying member of United Automobile Workers Local 1981.

    Palast’s latest reports for BBC Television and Democracy Now! are collected on the newly released DVD, “Palast Investigates:from 8-Mile to the Amazon – on the trail of the financial marauders.”


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.