The most powerful nations in the world met recently at the G-20 in Toronto and managed to agree on only one thing of significance: the need to reduce deficits, “half by 2013.” Implied by the statement is the need to lower deficits via “austerity,” meaning eliminating or reducing social programs.
Why does every mainstream political pundit or corporate CEO fanatically agree that reducing deficits is the most important thing to do now? Let Obama explain:
“… if financial markets are skittish and don’t have confidence in a country’s fiscal soundness, that is also going to undermine our recovery.”
Apparently, the most important policy for the world economy cannot be said in plain English. What does Obama mean? Essentially, he is saying that “financial markets” should determine how wealth is distributed and how the economy is directed.
What are financial markets? And why must every country be at their mercy?
A financial market is anyplace the super-rich invest their money. It can be done through a bank, hedge fund, or a private equity firm, etc. The rich demand that their investments are safe and therefore are especially “skittish” at the slightest hint of inflation or other economic distress.
The rich who dominate financial markets advocate only one solution to balancing budgets: reducing or eliminating social programs. They ignore the other solution— a massive public works project— because it directly affects them in a negative way: raising taxes on the wealthy.
This raises another issue. The investors who control financial markets know that a day of reckoning is coming: the massive debt that was pushing forward the world economy for years needs to be paid back, and those who own the banks don’t want the responsibility. Better for millions of workers to sacrifice social services, pensions, wages, etc., than for thousands of rich investors to be taxed.
Some people will argue that it is counterproductive to tax the rich, since they will then choose not to invest their money, causing further harm to the economy. But this is already happening and happens every time a recession hits.
The New York Times describes one example of the rich hoarding their money, until better, profitable times return:
“Only on Wall Street, in the rarefied realm of buyout moguls, could you actually have too much money…. Private equity firms, where corporate takeovers are planned and plotted, today sit atop [are hoarding] an estimated $500 billion. But the deal makers are desperate to find deals worth doing…” (June 24, 2010).
Rich investors are not investing in companies because consumers are not buying the products that corporations produce. And where mainstream economists blame “consumer confidence” for this problem, the real issue remains “consumer impoverishment.”
It is the rich investor that lacks the “confidence” that the unemployed or low-waged worker can buy enough of the products produced by corporations. This is the problem that will continue to haunt the establishment economists, who will incessantly preach that the economy is on a perpetual verge of recovery.
This illusion of recovery is being instituted into government policy. The Obama administration has argued that federal stimulus money is only needed in small doses to put the economy back on track. With politicians agreeing that the recession is “basically over,” less stimulus money is being offered.
Indeed, Congress has had a terrible time passing the tiniest stimulus bill, which would extend unemployment benefits and help states with Medicaid costs. If such a bill is eventually passed, it will be a mere fraction of what is needed.
Because Obama insists that “reducing deficits” is the new governmental priority, the stimulus faucet will quickly dry up (since government stimulus is financed through deficit spending).
But for millions of U.S. workers, the debate over stimulus spending is not theoretical, but a matter of life and death. If no federal stimulus is passed— and the current one has virtually died in Congress— millions of unemployed people will have zero income. Meanwhile, the states budget crises will worsen, shutting off state-run health care, social services and education, while slashing public sector jobs by the thousands.
Both Democrats and Republicans agree that “financial markets” should dictate the economic policy of the U.S. The two parties disagree only to what degree and how quickly to implement the same policy.
The American labor movement must find an independent voice to demand that a stimulus bill be passed. Labor — especially public sector workers — must ally themselves with the unemployed, students and teachers, and other victims of the states’ budget crises who will suffer real tragedies unless a federal stimulus bill is passed.
Shamus Cooke is a social service worker, trade unionist, and writer for Workers Action (www.workerscompass.org). He can be reached at [email protected]
Shamus Cooke is a contributor to the following Global Research title:
The Global Economic Crisis
The Great Depression of the XXI Century
Michel Chossudovsky and Andrew Gavin Marshall (Editors)
Montreal, Global Research Publishers. Centre for Research on Globalization (CRG), 2010.
ISBN 978-0-9737147-3-9 (416 pages)
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This book takes the reader through the corridors of the Federal Reserve, into the plush corporate boardrooms on Wall Street where far-reaching financial transactions are routinely undertaken.
Each of the authors in this timely collection digs beneath the gilded surface to reveal a complex web of deceit and media distortion which serves to conceal the workings of the global economic system and its devastating impacts on people`s lives.
Michel Chossudovsky is an award-winning author, Professor of Economics (Emeritus) at the University of Ottawa and Director of the Centre for Research on Globalization (CRG), Montreal. He is the author of The Globalization of Poverty and The New World Order (2003) and America’s “War on Terrorism” (2005). He is also a contributor to the Encyclopaedia Britannica. His writings have been published in more than twenty languages.
Andrew Gavin Marshall is an independent writer both on the contemporary structures of capitalism as well as on the history of the global political economy. He is a Research Associate with the Centre for Research on Globalization (CRG).
“This important collection offers the reader a most comprehensive analysis of the various facets – especially the financial, social and military ramifications – from an outstanding list of world-class social thinkers.” -Mario Seccareccia, Professor of Economics, University of Ottawa
“In-depth investigations of the inner workings of the plutocracy in crisis, presented by some of our best politico-economic analysts. This book should help put to rest the hallucinations of ‘free market’ ideology.” -Michael Parenti, author of God and His Demons and Contrary Notions
“Provides a very readable exposé of a global economic system, manipulated by a handful of extremely powerful economic actors for their own benefit, to enrich a few at the expense of an ever-growing majority.” -David Ray Griffin, author of The New Pearl Harbor Revisited
The complex causes as well as the devastating consequences of the economic crisis are carefully scrutinized with contributions from Ellen Brown, Tom Burghardt, Michel Chossudovsky, Richard C. Cook, Shamus Cooke, John Bellamy Foster, Michael Hudson, Tanya Cariina Hsu, Fred Magdoff, Andrew Gavin Marshall, James Petras, Peter Phillips, Peter Dale Scott, Bill Van Auken, Claudia von Werlhof and Mike Whitney.
Despite the diversity of viewpoints and perspectives presented within this volume, all of the contributors ultimately come to the same conclusion: humanity is at the crossroads of the most serious economic and social crisis in modern history.
“This meticulous, vital, timely and accessible work unravels the history of a hydra-headed monster: military, media and politics, culminating in “humanity at the crossroads”; the current unprecedented economic and social crisis… From the first page of the preface of The Global Economic Crisis, the reasons for all unravel with compelling clarity. For those asking “why?” this book has the answers.” –Felicity Arbuthnot, award-winning author and journalist based in London.
“The current economic crisis, its causes and hopefully its cure have been a mystery for most people. I welcome a readable exposition of the global dimensions of the crisis and hope for some clarity on how to better organize money locally and internationally for the future.” -Dr. Rosalie Bertell, renowned scientist, Alternative Nobel Prize laureate and Regent, International Physicians for Humanitarian Medicine, Geneva
“This work is much more than a path-breaking and profound historical analysis of the actors and institutions, it is an affirmation of the authors’ belief that a better world is feasible and that it can be achieved by collective organized actions and faith in the sustainability of a democratic order.” -Frederick Clairmonte, distinguished analyst of the global political economy and author of the 1960s classic, The Rise and Fall of Economic Liberalism: The Making of the Economic Gulag
“Decades of profligate economic policies and promiscuous military interventions reached a critical mass, exploding in the meltdown of globalization in 2008. Today, the economic meltdown is reconfiguring everything – global society, economy and culture. This book is engineering a revolution by introducing an innovative global theory of economics.” -Michael Carmichael, prominent author, historian and president of the Planetary Movement
The Global Economic Crisis
The Great Depression of the XXI Century
Michel Chossudovsky and Andrew Gavin Marshall (Editors)
TO READ THE PREFACE CLICK HERE
TABLE OF CONTENTS
Preface Michel Chossudovsky and Andrew Gavin Marshall
PART I THE GLOBAL ECONOMIC CRISIS
Chapter 1 The Global Economic Crisis: An Overview Michel Chossudovsky
Chapter 2 Death of the American Empire Tanya Cariina Hsu
Chapter 3 Financial Implosion and Economic Stagnation John Bellamy Foster and Fred Magdoff
Chapter 4 Depression: The Crisis of Capitalism James Petras
Chapter 5 Globalization and Neoliberalism: Is there an Alternative to Plundering the Earth? Claudia von Werlhof
Chapter 6 The Economy’s Search for a “New Normal” Shamus Cooke
PART II GLOBAL POVERTY
Chapter 7 Global Poverty and the Economic Crisis Michel Chossudovsky
Chapter 8 Poverty and Social Inequality Peter Phillips
PART III WAR, NATIONAL SECURITY AND WORLD GOVERNMENT
Chapter 9 War and the Economic Crisis Michel Chossudovsky
Chapter 10 The “Dollar Glut” Finances America’s Global Military Build-Up Michael Hudson
Chapter 11 Martial Law, the Financial Bailout and War Peter Dale Scott
Chapter 12 Pentagon and Intelligence Black Budget Operations Tom Burghardt
Chapter 13 The Economic Crisis “Threatens National Security” in America Bill Van Auken
Chapter 14 The Political Economy of World Government Andrew Gavin Marshall
PART IV THE GLOBAL MONETARY SYSTEM
Chapter 15 Central Banking: Managing the Global Political Economy Andrew Gavin Marshall
Chapter 16 The Towers of Basel: Secretive Plan to Create a Global Central Bank Ellen Brown
Chapter 17 The Financial New World Order: Towards A Global Currency Andrew Gavin Marshall
Chapter 18 Democratizing the Monetary System Richard C. Cook
PART V THE SHADOW BANKING SYSTEM
Chapter 19 Wall Street’s Ponzi Scheme Ellen Brown,
Chapter 20 Securitization: The Biggest Rip-off Ever Mike Whitney
TO READ THE PREFACE CLICK HERE
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