[NYTr] Banks bailout billionaires, Wall Street investors

[All the News That Doesn't Fit]

Workers World - Aug 23, 2007 issue
http://www.workers.org/2007/us/banks-0823/


Where is the relief for workers?

Banks bailout billionaires, Wall Street investors

By Jaimeson Champion

On Aug. 9, Aug. 10 and then again on Aug. 13, the central banks of many
of the world’s largest economies simultaneously came to the rescue of a
handful of billionaire investment bankers and hedge fund tycoons who
are enmeshed in the U.S. sub prime mortgage crisis. The United States
Federal Reserve, the European Central Bank, and central banks in nearly
a dozen Asian countries poured hundreds of billions of dollars into the
financial system, in a concerted attempt to stem the tide of the
growing global credit crisis.

The bailout plans came mostly in the form of massive central bank
purchases of collateralized debt obligations, commonly referred to as
CDOs. CDOs are securities backed by mortgages and other types of loans.
In the last decade CDOs have been packaged and sold in bulk to
investors, generating trillions of dollars in profits for investment
banks and hedge fund tycoons across the globe.

CDOs were the primary investment tool used to underwrite the predatory
sub prime mortgage loans in the U.S. that sparked the current meltdown.
Investors and financial institutions in the U.S., Europe, and Asia hold
these CDOs in large quantities.

Now that a large number of the mortgages and loans that these
investments are tied to are in default, many of the CDOs are, in
effect, worthless. The realization that these CDOs are worthless is the
underlying reason for the wild swings in global stock markets over the
past few weeks.

So to try and calm the market jitters, the central banks and finance
ministers are essentially handing billions of dollars to the very same
greedy banks and hedge funds that orchestrated the sub prime debacle.
Meanwhile, the working class families, who are entering into
foreclosure and bankruptcy at levels not seen since the Great
Depression, have yet to receive a dime.

In the U.S, the Federal Reserve injected nearly $60 billion worth of
bailout funds on Aug. 9 and 10 followed by at least an additional $2
billion on Aug. 13. In Europe, the European Central Bank injected some
$200 billion on the 10th, followed by an additional $63.5 billion on
the 13th. The central bank of Japan injected $8 billion into the money
markets on Aug. 10, with the central banks of Indonesia, Malaysia,
Taiwan, the Philippines and Australia all following suit. The war at
home and the war abroad

It is important to put these bailout numbers into perspective. The more
than $62 billion that the U.S. Federal Reserve essentially handed to
ultra-rich investors in just three days would have been enough to
provide health care for all the country’s uninsured for more than a
year.

Contrast this with the fact that the U.S. banks have yet to provide the
necessary funds to rebuild New Orleans and the Gulf Coast to allow the
survivors of Hurricanes Katrina and Rita to return home, two years
after the storms, but was able to instantly hand billionaire investors
over $62 billion in three days.

In a country where the infrastructure has fallen into such disrepair
that bridges are collapsing in Minneapolis and steam pipes are
exploding under the streets of NYC, the ultra rich are given billions
for behaving anxiously in the markets.

And these bailouts, remarkable in their size and scope, are still only
a fraction of what the U.S. is spending on war in Iraq and Afghanistan.
A trillion dollars that could have been spent on healthcare, education
and jobs has instead been funneled into the coffers of the military
industrial complex, bringing misery and suffering to millions of people
around the world.

In the book “Socialism, Utopian and Scientific,” Engels, referencing
Marx’s theory of capital, wrote, “Accumulation of wealth at one pole,
is, therefore, at the same time accumulation of misery, agony of toil,
slavery, ignorance, brutality, mental degradation, at the opposite
pole.” This fact has never been more evident than today.

But the military misadventures in Iraq and Afghanistan, coupled with
the growing economic crisis stemming from U.S. finance capital, have
highlighted the extreme volatility and vulnerability of the imperialist
world order. It is now clear that the U.S., which has brutally sought
to extend its influence across the globe as the world’s dominant
superpower, is now stumbling.

The wars in Iraq and Afghanistan have shown that the greatest military
power on earth can be hobbled by determined local anti-imperialist
resistance movements.

The growing economic crisis has shown that the U.S. is weakening as an
economic power. And it has shown how the processes of “globalization”
have increased the risk of contagious financial crises by interweaving
systems of finance capital across borders and continents in
unprecedented ways.

The world’s biggest capitalist markets and systems of finance capital
are now interwoven to such an extent that the ability of U.S.
homeowners to pay their mortgages now has a direct affect on the
availability of all types of credit in Europe and Asia. This
interconnection means a crisis in one imperialist country can quickly
spread to other countries, weakening them all.

And both the war and the economic crisis have given more proof of why
the elimination of capitalism and the installation of socialism—a
system under which human needs like housing, health care and education
would no longer be subject to the predatory profit-hungry instincts of
the military industrial complex, investment banks, hedge funds and
private equity corporations—are so vitally necessary for the
emancipation of the working class and oppressed across the globe.

While socialism remains a long term but inevitable vision, there is a
clear urgency now, however, for those activists already in motion,
including workers of all nationalities, to unite to demand a national
moratorium on foreclosures and debt payments.

These are just a few of many issues that will be raised at the Sept.
22-29 People’s Encampment and March on Washington initiated by the
Troops Out Now Coalition.

Articles copyright 1995-2007 Workers World. Verbatim copying and
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royalty provided this notice is preserved.

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