Huh?

NEW YORK, Nov. 13 /Standard Newswire/ -- The following text is of remarks by President Bush on Financial Markets and the World Economy:

History has shown that the greater threat to economic prosperity is not too little government involvement in the market - but too much.

Huh?

Hoover proves lack of government involvement led to the Great Depression. Here is Republican historical revisionism in it most blatant stupidity.Right wing American ideologues whether Republican, Conservative or Libertarian all try and avoid this obvious fact instead blaming the Smoot Hawley Act which was protectionist for the long Depression. In fact it was Hoovers hands off approach to the markets for three years that created the spiral downward. Smmot-Haweley and protectionist measures in Europe only agrivated that downward rush.

Bush, the Republicans, heck the liberals and the Libertarians in America live in a cloud cookoo land, one that imagines an artisan/farmer free market, free of monopolies, cartels and special business interests tied to the state. A time that is a fiction, a myth, of American Capitalism.

Ain't ever been such a creature nor is it the nature of American Capitalism and Imperialism.

Bush admits that capitalism is in a crisis; Faced with the prospect of a global financial meltdown
nations have responded with bold measures, and at Saturday's summit, we will review the effectiveness of our actions. This crisis did not develop overnight, and it will not be solved overnight.

And his solution is to keep on keeping on, capitalism is great, yep it has crisis, but heck its still the best system ever devised by humans.

This is a decisive moment for the global economy. In the wake of the financial crisis, voices from the left and right are equating the free enterprise system with greed, exploitation, and failure. It is true that this crisis included failures - by lenders and borrowers, by financial firms, by governments and independent regulators. But the crisis was not a failure of the free market system. And the answer is not to try to reinvent that system. It is to fix the problems we face, make the reforms we need, and move forward with the free market principles that have delivered prosperity and hope to people around the world.
Like any other system designed by man, capitalism is not perfect. It can be subject to excesses and abuse. But it is by far the most efficient and just way of structuring an economy. At its most basic level, capitalism offers people the freedom to choose where they work and what they do, the opportunity to buy or sell the products they want, and the dignity that comes with profiting from their talent and hard work. The free market system also provides the incentives that lead to prosperity – the incentive to work, to innovate, to save and invest wisely, and to create jobs for others. And as millions of people pursue these incentives together, whole societies benefit.

A nation that gave the world the I-Pod which is manufactured in China. Because as Reason magazine announced in 1999 that the world of the 21 Century was no longer America as the producer nation but America the consumer/service industry nation. A predicition that failed to understand that this would ultimately lead to a credit crisis, when a nation fails to produce value but rather lives on the value produced by others and lent to them.

Free market capitalism is far more than an economic theory. It is the engine of social mobility – the highway to the American Dream. It is what makes it possible for a husband and wife to start up their own business, or a new immigrant to open a restaurant, or a single mom to go back to college and begin a better career. It is what allowed entrepreneurs in Silicon Valley to change the way the world sells products and searches for information. And it is what transformed America from a rugged frontier to the greatest economic power in history - a nation that gave the world the steamboat and the airplane, the computer and the CAT scan, the Internet and the I-Pod.

Bush went on to defend capitalism, specifically post WWII American Capitalism, which itself is not a free market economy, but one of protectionism combined with state capitalism of the Military Industrial Complex. America subsidizes its aircraft manufacturerers, its agribusiness cartels, its auto industry, and has since WWII. To hear the President proclaim the glory of free markets and free peoples, is to also deny the hisorical reality which is American Capitalism. He further equates Japan's economic boom with American Capitalism, when in reality it is the result of State Capitalism. Japan used the Military Industrial Banking model for its development.

Ultimately, the best evidence for free market capitalism is its performance compared to other economic systems. Free markets allowed Japan - an island nation with few natural resources - to recover from war and grow into the world's second-largest economy. Free markets allowed South Korea to make itself one of the most technologically advanced societies in the world. Free markets turned small areas like Singapore, Hong Kong, and Taiwan into global economic players. And today, the success of the world’s largest economies comes from their embrace of free markets.

South Korea which itself is an other model of State Capitalism, with Military and Finance capital under a pro-USA military dictatorship finally evolving into a manufacturing fordist economy modeled on the success of Japan. As for Singapore and Hong Kong these two islands of free market economies are ruled by dictators, proving that capitalism can function without democracy.

Meanwhile, nations that have pursued other models have experienced devastating results. Soviet communism starved millions, bankrupted an empire, and collapsed as decisively as the Berlin Wall. Cuba, once known for its vast fields of cane, is now forced to ration sugar. And while Iran sits atop giant oil reserves, its people cannot put enough gasoline in their cars.

Oh sure free markets really work well, except Cuba is rationing sugar because they cannot compete with American subsidized sugar and the American led economic boycott of their country. No free market here.

As for the Soviet Union it collapsed because it lost the military race under Reagans expansion of military spending, the USA Military Industrial Complex defeated the Soviet Unions Military Industrial Complex. Capitalism did not defeat Communism, rather the American model of State Capitalism proved to be more flexible than the autarchic command economy model used in the Soviet Union. Unfortunately China proves that this autarchic command model can be flexible, and now American Capitalism is beholden to China for its national debt.

But Bush was not the only one to proclaim that Capitalism may be melting down but its still not the problem. In listening to their Republican masters voice, our own Finance Minister and PM echoed Bush's doctrine that capitalism has not failed.

In a piece in the Financial Times, meanwhile, Mr. Flaherty too had rare kind words for the invisible hand, downplayed grand global financial architectural plans and suggested that reform -- like charity -- should begin at home. "The open market system did not fail in this crisis," he said.

Prime Minister Stephen Harper is expected to join U.S. President George W. Bush in a defence of free-market capitalism and resistance to international calls for dramatic re-regulation of financial markets.


The ruling class recongizes that capitalism has once again failed, the bubble burst, the market crashed, what goes up must come down, the business cycle has not been superceded by globalization. The elephant in the room is socialism. The Republican Libertarian argument is to let the market decide, except contrary to their Libertarian dogma that market has come cap in hand to its State to bail it out. Opps. Guess real capitalism does not like the discipline of the marketplace. In attempting to not bail out the working class who is really suffering from this crisis with record home foreclosures, record unemployment and the very real threat of the meltdown of America's core manufacturing centre; Michagan, Bush and Harper need to couch the argument as a question of state intervention. The strawman they set up is to equate state capitalism, state intervention as socialism. Which it is not.

Capitalism cannot continue as it is. Temporary fixes like increased regulation, government bailouts etc. are not a solution to the crisis nature of capitalism. Socialization of capital is what is required. The fact that workers create captial, not business which only produces 'jobs', without workers capitalism collapses. This was clearly seen in Alberta last year during the height of the boom, when neither for love nor money could businesses find enough workers.
The result was many small businesses, you remember them they are the core of the economy according to Bush and Harper. closed.

Workers create captial, they circulate that capital by home purchases and by consuming the products they produce. They fund capital through their pension and benefit plans, pensions are called institutional investors in Wall Street, one of the largest sources of capital available currently.

The Canada Pension Plan fund said Wednesday it ended its latest quarter with a loss of more than $10 billion in the value of its assets, primarily because of the stock market turmoil that has battered share prices around the world.
But president and CEO David Denison said Canadians shouldn't worry that the loss will affect their current or future retirement benefits.
"This fund is designed to be able to withstand this short-term market volatility that we are living through, quite frankly better than any other fund in this country," Denison said in an interview with The Canadian Press.

Here is the true source of capital the working class blue, white and green collar, that produce and consume. And it is the means to change capitalism, the use of workers productive value matched by their pension funds and the corporate pension liabilities which are owed them, with capital from public pension funds, workers can then fund the corporations and run them themselves.

In Quebec there are labour funds as well as the Cassie Popular, the credit unions which have enormous reserves of workers capital to be able to use for promoting workers control of industry. In the rest of Canada workers whose credit unions are mimicing banks, need to take control of them and use this vast reserve of capital to invest in worker controled industries.

With the socialization of capital under workers control, the question of bail outs and regulation of the market become moot.

This is the socialism that Bush and Harper fear. This is why they distort the definintion of socialism equating it with state capitalism and command economies. Which socialism never was about. It is about the need to socialize captial to benefit those who create it; the working class.

It is the working class who are the real investors in capitalism, not those investors on Wall Street who play the market. The working class exists because of capitalism and capitalism exists because of the working class. As this crisis deepens and government intervention fails to stop the melt down, the only solution that will become clear is the need for socialization of capital under workers control.


SEE:
STFU 'W'
October Surprise Was The Market Crash
No Austrians In Foxholes
CRASH
The Return Of Hawley—Smoot
Canadian Banks and The Great Depression
U.S. Economy Entering Twilight Zone
What Goes Up...
Wall Street Mantra
Bank Run

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Business Unionism Offers No Solution To Capitalist Crisis

You know that the labour movement is no threat to Canadian Capitalism when it can agree with the bosses on a band aid to the current economic crisis.;

'Job killing' EI premiums hurt workers, employers as manufacturing sector lags

Critics say the current EI program fails jobless workers, many of who don't qualify for EI benefits because they have not worked the required number of hours, as well as employers, who worry about having to pay what Liberal MP John McCallum, an economist, calls 'job killing' EI premiums.
On the employee side of the debate, the push is for more generous benefits.

Not surprisingly, one of the few things employer and employee representatives agree is the need to refrain from increasing the 2009 EI premiums for employees or employers. The chief actuary of the EI commission has already recommended a freeze for 2009, and the commission is expected to take the advice when it announces the 2009 rates this week.
Corinne Pohlmann, vice-president of national affairs for the Canadian Federation of Independent Business, said the commission should go further and cut employer premiums. Continuing surpluses in the EI fund, estimated at $600 million for the last year, should be used to reduce the rate from the current of $2.42 per $100 of insurable earnings, she said in an interview.
The federation also wants the formula rewritten so employers and employees share the cost of the EI plan 50/50, or so that the government picks up a share of the cost. Employer premiums are currently 1.4 times higher than the $1.73 paid by employees.
The business federation and the CLC have both advocated - unsuccessfully so far - to give employers a 'premium holiday' for a period of time if they use the money to train employees.
The Conservative government's plan to move to a new system for setting EI premiums, starting in 2010, is causing jitters in some circles too. A newly-created EI financing board will set the premium rate each year "to generate just enough premium revenue during that year to cover expected payments" and to ensure a $2-billion reserve is maintained, according to government documents. Legislation establishing the new system became law last June.
Diane Finley, named last week to her former post as human resources minister, declined requests to discuss the EI system on grounds she is still getting briefed on the portfolio.
But Georgetti and McCallum said the system means that if the country's jobless rate worsens, as is expected, the board will either have to raise premiums the following year or cut benefits to meet its mandate.
"It has to be one or the other," said Georgetti. "That's the only way I have ever learned to balance the books. And neither one, in this environment, is the way to go."



Once upon a time the labour movement opposed child labour now they decry unemployment of the youth sector of the economy. These are kids working at Wal-Mart, MacDonalds etc., all of course in the non unionized sector.

Canadian Labour Congress: Public Works!
Now That the Election is Over, it's Time to Invest in Jobs That Last

Young workers, many of whom work in accommodation and food services, took a big hit in October. In total, 34,400 workers aged 15 to 24 lost their jobs. At the same time 27,000 people who earned their livelihoods in the accommodation and food services sector were out of a job last month.



And in their recently released paper on the global meltdown they sound more like economic apologists for capitalism than the voice of the working class. There is no discussion of using public and workers pension funds to finance the creation of worker controlled take overs of manufacturing in Canada. Showing that Canada's labour movement has lost the vision of building a new world within the shell of the old. Instead true to its nature as business unions the CLC calls for the state to bail out its bosses.



The Meltdown, Seen from Below
What union leaders, labour experts and anti-poverty activists say needs to be done.

The CLC has just issued a paper on its response to the current crisis titled "Global Capitalism: On the edge of the abyss." The paper says the global economy is now "almost certainly headed for a deep and prolonged recession," and notes that global markets have already fallen as far as they did in the Great Crash of 1929.
The labour group blames deregulated global finance for the crisis, pointing to what it calls "the unregulated shadow banking system of investment banks, hedge funds and private equity funds," and decrying the creation of "fiendishly complex and sometimes outright fraudulent products." The face value of these highly abstract and uncertain financial instruments, the paper notes, was recently estimated at over $50 trillion.
The CLC paper quotes Nouriel Roubini, professor of economics and international business at the Stern School of Business at New York University: "The crisis was caused by the largest leveraged asset bubble and credit bubble in the history of humanity.... a housing bubble, a mortgage bubble, an equity bubble, a bond bubble, a credit bubble, a commodity bubble, a private equity bubble, a hedge funds bubble are all now bursting at once in he biggest real sector and financial sector deleveraging since the Great Depression."
The CLC paper calls on Canada to play a role in creating a co-ordinated international response to the crisis that features re-regulation of both local and cross-border transactions and the imposition of a small transaction tax on all securities trading, including commodity futures. This Tobin Tax, named for the Nobel Prize winner who first suggested it, is designed to discourage short term speculation and to raise the government revenues that will be necessary to fund appropriate investments in social services and infrastructure repair.
Bail out tied to regulation
While many critics of the official response so far are asking why so much money is going into the banks and finance houses that created the crisis, the CLC endorses some bail-out activity as necessary to avert a systemic collapse. The bail out money must come, it cautions, tied to effective regulatory rules.
The CLC wants Canada Mortgage and Housing to re-finance distressed Canadian home mortgages at lower rates, dismissing the view that Canada is not experiencing a housing bubble as a myth. The $10 billion a year in new infrastructure investment the CLC calls for, says the paper, would create 200,000 new Canadian jobs rebuilding roads and bridges, mass transit projects, water works and the like as well as replenishing the country's diminished stock of social housing. A public letter recently signed by 80 prominent Canadian economists has echoed this call for an active and interventionist response by government to the economic crisis.
Further corporate tax cuts should be cancelled, the paper argues, in favor of direct government support for new investments in machinery and equipment, research, development and training.
Even if all these reforms are put into place, says the CLC paper, Canada may well experience serious increases in unemployment, which will expose weaknesses of the Employment Insurance program. Far fewer workers are eligible for EI as it now exists than was true in years past, and maximum rates and time allowed for coverage are both inadequate, according to the paper, which calls for broadened eligibility, higher maximum payouts and longer terms of coverage for the unemployed. The EI system currently has a surplus of over $50 billion.
Call for new pension protection
The CLC paper predicts the current financial crisis will create a severe pensions crisis, and a follow-up paper issued on Oct. 29 calls for the creation of a new pension benefit insurance scheme (financed by the proposed tax on financial transactions) to insure annual pension and RRSP benefits for individual Canadians up to $60,000 a year.
Pensions are a concern for Bill Saunders, too. Saunders, the president of the Vancouver and District Labour Council, says that Canadian workers and their pensions are more exposed to risk during market trouble because of the successful campaign over the past decades to move from defined benefit pensions, which guarantee a certain monthly amount when you retire, to defined contribution plans, promoted by market enthusiasts.
Contribution plans shovel a defined amount every month into mutual funds and other stocks, creating pension payouts that can vary widely depending upon the health of the market, as many Canadians are discovering this year as their RRSP holdings have shrunk dramatically.
"Twenty years ago," said Saunders, "60 per cent of Canadian private pension plans were defined benefit. Now that share has been cut in half. Defined contribution plans just don't deliver the goods for workers the way defined benefit plans do, and the current crisis illustrates that."

The final irony is that despite calls by the CLC to meet with Harper government it appears that labours agenda was accepted by the Premiers and the PM at their first ministers te'te' today.

Harper, premiers agree on infrastructure, pensions

Once again proving Herr Doctor Professor Marx correct:



Trades Unions work well as centers of resistance against the encroachments of capital. They fail partially from an injudicious use of their power. They fail generally from limiting themselves to a guerilla war against the effects of the existing system, instead of simultaneously trying to change it, instead of using their organized forces as a lever for the final emancipation of the working class that is to say the ultimate abolition of the wages system.Karl Marx, Value, Price and Profit, Addressed to Working Men, The First International Working Men's Association, 1865.



SEE:

Concessions Don't Work

And Then There Was One

October Surprise Was The Market Crash

No Austrians In Foxholes

Pension Rip Off



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CLC
Labour

Last One Out Turn Off The Lights

Nortel has been shedding jobs for over a decade as it lost money every year since the dot com bubble burst. But of course the guy at the top responsible for Nortel's losses keeps his job. Whle advocating layoffs and concessions as the solution to Nortels problems. Unfortunately that has been tried for a decade and it ain't worked.

Nortel has now lost more than $4.5 billion since Chief Executive Officer Mike Zafirovski took over at the end of 2005, pushing him to cut 18 percent of the workforce. Today he said he plans further reorganization aimed at saving as much as $400 million next year, freezing travel, ending salary increases and getting rid of at least four top executives.

The more than 32,000 people who work for shrunken telecom giant Nortel, its investors who have seen share value plunge from $20 to pennies in a year, and analysts following the firm awoke Monday expecting a financial tsunami of an announcement.What they got as Nortel announced a $3 billion red ink bath for the third quarter was a series of announcements that might slosh water out of a nearly full bathtub.Did a reorganization plan accompanied by some job trims and the booting of some top executives save the S.S. Nortel, or did management just reshuffle deckchairs on what many analysts are growing to believe is a business Titanic?

Deregulation and the optical boom
In 1983, due to deregulation, Bell Canada Enterprises (later shortened to BCE) was formed as the parent company to Bell Canada and Northern Telecom. Bell-Northern Research was jointly owned 50-50 by Bell Canada and Northern Telecom. The combined three companies were referred to as the tricorporate.[5][6][7]
As Nortel, the streamlined identity it adopted for its 100-year anniversary in 1995, the company set out to dominate the burgeoning global market for public and private networks.
In 1998, with the acquisition of Bay Networks, the company's name was changed to Nortel Networks to emphasize its ability to provide complete solutions for multiprotocol, multiservice, global networking over the Internet and other communications networks. As a consequence of the stock transaction used to purchase Bay Networks, BCE ceased to be the majority shareholder of Nortel. In 2000, BCE spun-out Nortel, distributing its holdings of Nortel to its shareholders. Bell-Northern Research was gradually absorbed into Nortel, as it first acquired a majority share in BNR, and eventually acquired the entire company.

After the Internet bubble

Nortel Networks Corp (NYSE: NT) stock price (source: ZenoBank.com)
In the late 1990s, stock market speculators, hoping that Nortel would reap increasingly lucrative profits from the sale of fibre optic network gear, began pushing up the price of the company's shares to unheard-of levels despite the company's repeated failure to turn a profit. Under the leadership of CEO John Roth, sales of optical equipment had been robust in the late 1990s, but the market was soon saturated. When the speculative telecom bubble of the late 1990s reached its pinnacle, Nortel was to become one of the most spectacular casualties.
At its height, Nortel accounted for more than a third of the total valuation of all the companies listed on the Toronto Stock Exchange (TSX). Nortel's market capitalization fell from C$398 billion in September 2000 to less than $5 billion in August 2002. Nortel's stock price plunged from C$124 to $0.47. When Nortel's stock crashed, it took with it a wide swath of Canadian investors and pension funds, and left 60,000 Nortel employees unemployed.
CEO John Roth retired under controversy to be succeeded by former CFO Frank Dunn. Despite some initial perceived success in turning the company around, he was fired for cause in 2004 after being accused of financial mismanagement. Dunn and other former Nortel officers have been accused of engaging in accounting fraud by the SEC (for more information, refer to "Accounting scandal").[8]
Retired United States Admiral Bill Owens was hired as the CEO to replace Dunn. In late 2004, Nortel Networks returned to using the Nortel name for branding purposes only (the official company name was not changed).
Nortel acquired PEC Solutions in June, 2005, renaming it Nortel Government Solutions Incorporated or NGS. The wholly-owned subsidiary provides information technology and telecommunications services to a variety of government agencies and departments.[9]
On August 17, 2005, LG Electronics and Nortel signed an agreement to form a joint venture to offer telecom and networking solutions in the wireline, optical, wireless and enterprise areas for South Korean and global customers. Nortel owns 50 percent plus one share in the joint venture.

Here are some key dates in the company's history:
May 1, 2000 - BCE Inc (BCE.TO: Quote, Profile, Research, Stock Buzz), Canada's biggest telecommunications group, completes spinoff to shareholders of 35 percent stake in Nortel, worth about C$88.5 billion ($75.6 billion)
Feb. 15, 2001 - Nortel cuts 2001 earnings and sales forecast in half, blaming severe erosion in U.S. economic conditions. The warning triggers a 33 percent drop in its stock and brings class-action lawsuits.
May 29, 2002 - Nortel plans to cut 3,500 jobs and sell more assets as it pares its revenue forecast.
June 4 - Nortel shares collapse to decade-long lows on concerns a new financing will further dilute its stock. Cash-hungry Nortel raises $1.49 billion June 7.
Oct. 23, 2003 - Nortel reports a quarterly profit, but says it will restate results going back to 2000.
March 15, 2004 - Nortel says it will likely restate results for a second time and delay filing its annual report.
April 5 - The U.S. Securities and Exchange Commission launches a formal investigation into Nortel's accounting
June 29 - Nortel exits manufacturing business, sells plants to Flextronics International, transfers 2,500 staff.
Sept. 30 - Nortel cuts almost 10 percent of its staff, 3,250 jobs, and vacates offices worldwide.
Jan. 11, 2005 - Nortel restates its results and says 12 senior executives will repay $8.6 million of bonuses.
Oct. 17 - Motorola's No. 2 executive, Mike Zafirovski, is appointed CEO, promising renewed growth and focus.
Feb. 8, 2006 - Nortel says it will pay $2.47 billion to settle two class-action suits from its accounting scandal.
Feb. 7, 2007 - Nortel slashes 3,900 jobs and shifts 1,000 positions to lower-cost locations such as China and India.

Oct. 15 - Nortel pays $35 million to settle civil charges filed by the SEC related to its accounting scandal.
Feb. 27, 2008 - Nortel says it will cut 2,1000 jobs as it faces persistently slow demand for its products.
Sept. 17, 2008 - Nortel cuts revenue forecast, plans another round of restructuring and the sale of its Metro Ethernet Networks business. It says it may also look for a partner to develop fourth-generation wireless technology.
Nov. 10 - Nortel announces 1,300 layoffs, a freeze on salary increases and a review of its real-estate portfolio after posting a $3.4 billion quarterly loss.

SEE:

Nortels Chickens Roost

NORTEL: Canada's Enron

Nortel Slash & Burn

NORTEL: REDUX

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Whiners and Losers

This is the same line used by the provincial tories in Alberta since the days of King Klein; the government should not pick winners and lossers iin the capitalist marketplace. But of course it does, as we have seen with Alberta's support of privatiziation initiatives like K-Bro contracting outhospital laundry services, not to mention of course oil and gas development royalty and tax holidays, and dare I say investment in the mythical CO2 coal extraction process that will supposedly reduce methane gas.

Now the Feds are denying the obvious as Jim Flaherty explains about a pending bail out for the auto industry in Canada, with nary a recongition that yes he indeed just did pick winners and losers in Canada's auto industry. Canada: Government is open to selective industry support

Mr. Flaherty said most economists would consider a bailout unwise, since such a
package puts government in the dicey business of choosing winners and losers.
Rather, he said, he would be guided by which plants have the best chance of
remaining viable over the long term.
"So if General Motors is going to build a hybrid car in Oshawa, people can understand that that is a good investment for the longer term. Operating a large truck plant, pickup trucks - probably not a good investment of taxpayers' money," Mr. Flaherty said.
His top priority, however, is to ensure that banks are lending to each other, and that credit is
available to corporate and household borrowers at a decent price. A
well-functioning credit market, he said, will help the manufacturing sector as
much as any kind of direct aid.
David Paterson, vice-president of corporate and environmental affairs for
General Motors of Canada Ltd., said the largest auto maker in Canada has not
outlined specific proposals to Ottawa, but supports calls for both immediate
assistance and a longer-term Canadian program similar to an existing $25-billion
fund Washington created this year. That fund is supposed to help the industry
develop more environmentally friendly technologies.
Mr. Paterson said GM is in the midst of transforming its business in Canada
to meet the sustainability objective Mr. Flaherty has outlined.

There ya go Jim ya picked a winner. But of course this is not a real industrial policy, nor what is needed to create a Made In Canada Auto Industry. Which of course is workers control of production through 'workers cooperatives owning the factories. Now that would be worth taxpayers dollars. Anything is else is the same old same old neo-con crap; public funding of private capitalism.

SEE:

Concessions Don't Work

And Then There Was One

October Surprise Was The Market Crash

No Austrians In Foxholes

Pension Rip Off

Deja Vu

The Failure of Privatization



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Super Bubble Burst

As Eric Janzen in the February issue of Harpers Magazine warned this is a super bubble that just burst.

A financial bubble is a market aberration manufactured by government, finance, and industry, a shared speculative hallucination and then a crash, followed by depression. Bubbles were once very rare—one every hundred years or so was enough to motivate politicians, bearing the post-bubble ire of their newly destitute citizenry, to enact legislation that would prevent subsequent occurrences. After the dust settled from the 1720 crash of the South Sea Bubble, for instance, British Parliament passed the Bubble Act to forbid “raising or pretending to raise a transferable stock.” For a century this law did much to prevent the formation of new speculative swellings.

The housing bubble has left us in dire shape, worse than after the technology-stock bubble, when the Federal Reserve Funds Rate was 6 percent, the dollar was at a multi-decade peak, the federal government was running a surplus, and tax rates were relatively high, making reflation—interest-rate cuts, dollar depreciation, increased government spending, and tax cuts—relatively painless. Now the Funds Rate is only 4.5 percent, the dollar is at multi-decade lows, the federal budget is in deficit, and tax cuts are still in effect. The chronic trade deficit, the sudden depreciation of our currency, and the lack of foreign buyers willing to purchase its debt will require the United States government to print new money simply to fund its own operations and pay its 22 million employees.


But unlike the South Sea Bubble or the Tulip Bubble, or even the Dot Com Bubble this one has brought capitalism to its global knees.

Bank of Canada Governor Mark Carney underscored the deteriorating situation when he said Canada’s business conditions will worsen alongside other industrialized countries next year and the Canadian economy may slip into a recession for the first time since 1992.
“We are predicting very marginal growth in 2009,” Carney said in an interview with Bloomberg News, when asked if he thought a recession might happen. “By definition that’s close to negative growth, and if we have a balanced forecast you can see it going either side, so it’s a possibility."
Carney cut the Bank of Canada’s key interest rate to 2.25 per cent last month and said the world’s eighth-largest economy would shrink this quarter and stall in the first three months of 2009, just skirting the two quarters of contraction that most economists call a recession. He has said further rate cuts may be needed to prop up economic growth.
In Brazil, Flaherty also said the world is facing what appears to be a runaway economic downturn. He noted that the International Monetary Fund continues to lower its growth forecasts month by month. The IMF now predicts the major industrialized Group of 7 countries will fall into a recession next year - with the exception of Canada, which is forecast to post a minuscule 0.3 per cent growth.

For the leading spokespeople of capitalism to say they didn't see it coming well thats laughable. It could be excused as Hegelian black humour if the mouthpieces of capital were not so sincere in denying the obvious; recession and the dreaded follow through; depression.

Hegel remarks somewhere that history tends to repeat itself. He forgot to add: the first time as tragedy, the second time as farce.

Karl Marx, The Eighteenth Brumaire of Louis Bonaparte (1852)

SEE:

And Then There Was One

Concessions Don't Work

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Concessions Don't Work

Concession bargaining is always a defeat for workers, it never results in any real gains, and is always presented by the bosses as the alternative to unemployment and job loss. Want job security give us back wage and benefit gains you have made. It is an example of one step forward two steps back. And it is the contradicition which exposes the fallacy that business unions are weapons to defeat capital, rather they bargain workers labour for a seat at the table of capitalism, but that seat keeps getting kicked out from under them and they are shocked.

Trades Unions work well as centers of resistance against the encroachments of capital. They fail partially from an injudicious use of their power. They fail generally from limiting themselves to a guerilla war against the effects of the existing system, instead of simultaneously trying to change it, instead of using their organized forces as a lever for the final emancipation of the working class that is to say the ultimate abolition of the wages system.
Karl Marx, Value, Price and Profit, Addressed to Working Men, The First International Working Men's Association, 1865.


As these news stories show nothing has changed. Concessions are demanded and plants still close. And the current crisis of capitalist credit is used as an excuse to demand more from workerrs in order for the bosses to capitalize their bottom line.

The union representing 85 striking and soon-to-be unemployed workers at Mercury Graphics Corp. has filed charges against the company for poor bargaining practices.
A major sticking point of plant closure negotiations is severance pay, said Cossar. Under the collective agreement and the provincial Labour Standards Act, employees should recieve two weeks of pay per year of employment. For people who have worked for the company for 25 to 30 years, that means a severance payment between $40,000 and $50,000.
The company has offered its employees $2,500 in severance, she said.
"It's an absolute insult to offer someone twenty-five hundred bucks for someone who has invested 25 years in a company," Cossar said. "It's appaling behaviour on the part of a company who didn't need to close down in the first place."
At the company's request, the union agreed to some concessions -- worth $300,000 -- to keep the plant open, Cossar explained. Mercury Graphics, however, wanted more, she said.

Court Rules in Favor of Wage Concessions for Frontier Airlines
Bankruptcy Court today granted Frontier Airlines relief it requested regarding its collective bargaining agreement with the International Brotherhood of Teamsters (IBT). The court granted Frontier's request for wage concessions from the IBT and adopted the airline's proposed heavy maintenance plan. Frontier's plan allows the company to furlough its heavy maintenance workers during periods Frontier does not require heavy maintenance work and recall these workers during periods Frontier has work available.
"Our inability to reach agreement on outsourcing heavy maintenance, given our reductions in fleet size, would have put Frontier at a competitive disadvantage and required heavier operational outlays than we feel are appropriate in this competitive market and in these difficult economic times," Collins said. "This ruling allows us to continue to perform heavy maintenance with our trusted employees, while providing us the option to outsource if court-approved milestones are not met."

Toronto workers to fight for 'sick bank'
Unionized City of Toronto workers will strongly resist any attempt to take away a perk that gives them up to six months' pay from cashing in unused sick days when they leave the job.
The issue of the "sick bank" – a relic of the days before short- and long-term disability programs – came up in 2005 contract talks, and management is expected to raise it again in talks due to start soon, said Brian Cochrane, chief negotiator for the Canadian Union of Public Employees, Local 416.
"We understand that they are going to try and take away the sick banks," Cochrane said. "To what extent we won't know until we hit the bargaining table."

Issaquah school unions file unfair labor charge
“The Issaquah School District is not negotiating with their employees,” Powell said. “The district is not negotiating in good faith. The district is demanding language concessions in our agreement that has nothing to do with economics and that our members will never agree to.”
If district officials are found, regarding either of the unions’ charges, in violation of state law by not passing through the cost of living adjustment and added health benefit increases, commission investigators can mandate that district officials pass through each, dating back to Sept. 1.
Neither union’s employees are receiving their cost of living adjustment nor their health benefits increase this year.
Each employee is paying an additional $25 per month to compensate for district officials not passing those through, in addition to their out-of-pocket medical expenses, Powell said.

Michael Russo's Sunday Insider: NHL players brace for concessions
Goals and assists, wins and losses are issues NHL players care most about, but Paul Kelly is giving his players a lesson on economics.
As the NHL Players' Association executive director began his second fall tour last week, one key topic was explaining why the union has decided to put 13.5 percent of each player's salary into escrow.
Under the collective bargaining agreement, players put money into escrow in case salaries exceed 57 percent of hockey-related revenues. If that happens, money is refunded to the owners from the escrow account after the season.
NHL revenues reached a record $2.6 billion last season, but because of the uncertainty in today's economy and the decline in value of the Canadian dollar (down to 83 cents against the U.S. dollar Friday), Kelly proposed the record escrow number.

It was the tactic of the bosses during the recession of the eighties. A recession directly caused by the neo-con agenda of Reagan and Thatcher. And both of them challenged the unions with state power giving the signal to the bosses that concession bargaining was ok.Reagan attacked PATCO air contollers and Thatcher the powerful Mine Workers Union. And again during the debt nd deficit hysteria in Canada during the ninties concession bargaining was demanded by Bob Rae and the NDP in Ontario of public sector workers, and in Alberta with Safeways demanding concessions and a 5% roll back from UFCW leading to Ralph Klein calling for wage and benefit cuts to Alberta's public sector workers.

Canadian unions, like their counterparts in most other developed countries, were on the defensive from neoliberal policies of wage restraint and fiscal austerity long before the crisis hit. Struggling with hostile employers – whose anti-union repertoire includes shutting down locations where workers are involved in organizing drives, to back-to-work legislation against public sector strikers, the re-organization of work processes and the deployment of organizational forms that are resistant to the control of industrial and craft unionism – unions were pushed back and forced to accept concession bargaining. Thus, they may not be in a position to successfully resist employers' pressure for wage-cuts

During the fifties and sixties wages and benefits for private sector and public sector workers, who actively fought for the right to unionise, increased. With the oil crisis and post Viet-Nam war downturn in the economy a recession occurred and the State attacked workers rights through wage and price controls. The latter being far less effective than the former.

Taking its lead from the state right wing think tanks like the Cato Instititue and Fraser Institute promoted the idea that their neo-con state could reduce workers wages and benefits increasing the bottom line by attacking the uniion movement. Their ultimate plan has always been to smash unions but when this could not be done, the bosses demanded concessions and claw backs from workers. The bottom line was to increase profits, the threat was plant closure or lay offs.

Even as the economy boomed workers were asked for concessions and as taxpayers were asked to bail out companies like the Big Three automakers. Who came with cap in hand in the eighties to ask taxpayers (workers by any other name) to bail them out. And returned again over the past two years as the market for their SUV's and Trucks collapsed.

The recent downturn in the economy is only an excuse to demand more concessions, and whipsaw workers by moving jobs out of Canada. Here is another reason we need to nationalize the auto industry under workers control. Clearly tax investments as well as concessions do not mean job protection nor are they an industrial strategy.

Navistar to slash jobs at Ontario truck plant
TORONTO, Nov 6 (Reuters) - Navistar International Corp confirmed on Thursday it will lay off as many as 499 workers at its Chatham, Ontario, truck plant early next year due to deteriorating market conditions.
The union and the company squared off in 2003 when Navistar said it was going to close the plant in Chatham, which is about 65 kilometers (40 miles) east of Detroit and has a population of about 100,000, and move production to Mexico.
In the end, the CAW said it agreed to significant concessions to keep the plant in Ontario and the federal and provincial governments kicked in C$65 million ($54.6 million) to sweeten the pot.
"We had an incredible struggle five or six years ago in that community to save that manufacturing plant," said CAW President Ken Lewenza.
"We believe it (the layoff announcement) violates the spirit of the agreement that we struck," he said, adding that the company now plans to increase production in Mexico.

Ontario could claw back investment in Chatham truck plant
Navistar International Corp. "will pay" if hundreds of job cuts at its truck plant in southwestern Ontario violate the terms of a government bailout agreement it signed five years ago, Economic Development Minister Michael Bryant vowed Thursday.
The Illinois-based company (NYSE: NAV) received millions of taxpayer dollars to keep open the plant in Chatham, Ont., and will have to pay some of that back if it fails to live up to its end of the deal, Bryant said.
"There is an agreement in place. Taxpayer dollars have been spent," he said.
"Navistar has to fulfil their obligations, which is what we want them to do. But if they don't, we will enforce that contract and we will make them pay."
The job cuts announced Wednesday will affect 470 employees at the Navistar-owned International Truck and Engine Corp., which faced closure in 2003 during a downturn in the heavy-truck market.
The layoffs start Jan. 31 and will leave the plant with about 400 employees.
Bryant didn't provide any details Thursday about the amount of money the company received, the terms of the agreement or how much it may have to repay.
But the Canadian Auto Workers union says International Truck received a $60-million government bailout package to remain open, along with $44 million in annual concessions from workers.
Bryant called the job cuts "totally unacceptable" and warned that Navistar would face repercussions if the layoffs breach the contract it signed back in 2003 under Ontario's previous Conservative government.
"I'm sure that Navistar would not want to damage their international reputation by not responding to a government – provincial and federal – that provided millions of taxpayer dollars in exchange for investments and jobs," Bryant said.
"What's important here is that taxpayer dollars are spent as they are supposed to be. But there is no free lunch, I say to Navistar, when it comes to investments in the province of Ontario."
NDP Leader Howard Hampton dismissed Bryant's remarks as "nothing more than media spin" as the province continues to be hammered by massive job losses in its troubled manufacturing sector.
The governing Liberals invested $235 million to help General Motors (NYSE: GM), only to see thousands of workers laid off, he said.


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