Advertisements

American Corporate Executives Cash In as Austerity arrives for the Rest

By ANDRE DAMON | WSW | MARCH 22, 2013

As the US government prepares to furlough 1 million federal workers and slash hundreds of billions in social spending, corporate executives in the United States are receiving among the highest payouts in history. USA Today reported Thursday that at least ten CEOs took in $50 million apiece in 2012, largely as a result of cashing in stocks that have soared in value with the rising market. According to the newspaper, “Early 2013 proxy filings detailing 2012 compensation show a growing number of CEOs reaping $50 million or more, gains that could prove unmatched in breadth and size since the Internet IPO craze enriched tech company executives more than a decade ago.”

In its own analysis, the Wall Street Journal observed that executive pay has become ever more directly tied to stock values, noting that last year, more than half of compensation at major companies was tied to “stock or financial performance,” compared to 35 percent in 2009.

Among the top pay packages according to preliminary calculation is that of Starbucks CEO Howard Schultz, which included stock options valued at $103.3 million this year, on top of $30 million in other compensation and stock, as well as $10.2 million in vested shares, according to USA Today.

Ford CEO Alan Mulally likewise took home $61 million by cashing in shares that vested last year, added to his compensation of $21 million. This payout was based on a sharp rise in the company’s profitability that has been made possible by downsizing and the slashing of wages for newly hired workers to $15 per hour. Mulally’s pay is more than 2,500 times that of a new auto worker.

Apple’s Tim Cook got $139.7 million from restricted shares that vested last year, while Oracle CEO Larry Ellison was granted $90 million in stock.

These payouts are only a sampling of the huge sums that the ruling class is handing itself. The stock market, inflated through $85 billion a month handed to the banks by the US Federal Reserve, is the central transmission belt for this enrichment.

The engorgement of the ruling class has been facilitated by the actions of the state, and in particular the Obama administration. After the financial collapse of 2008, facing widespread public outrage at executive compensation, the administration explicitly opposed any constraints on pay. “We don’t disparage wealth,” Obama said repeatedly. Proposals for CEO pay centered on encouraging companies to tie this pay more directly to “performance”—i.e., share values.

Even while the corporate CEOs and other members of the financial oligarchy rake in astronomical payouts, the constant refrain from the media and big business parties is that there is no money to pay for social spending, and that health care and retirement programs must be cut and workers’ incomes slashed.

Next month, as a result of $85 billion in “sequester” spending cuts, over 1 million federal government employees will begin scheduled furloughs, resulting in effective pay cuts of 20 to 35 percent. These furloughs come together with tens of billions in cuts to public education, anti-poverty programs, and unemployment insurance.

With both Democrats and Republicans acknowledging that the cuts will be permanent, the turn now is toward working out an agreement to slash hundreds of billions of dollars from Medicare, Medicaid, and Social Security. The ultimate aim of the ruling elite is to dismantle everything that remains of the social safety net, plunging the working class into Dickensian poverty and social misery.

The argument that there is no money to pay for these programs is rendered absurd by the vast amounts of cash being handed out to executives or simply sitting around on corporate balance sheets. In 2012, the amount of cash held by US non-financial corporations rose by 10 percent, to $1.45 trillion, according to Moody’s. This figure is enough to pay for the sequester cuts 17 times over.

In fact, Apple, whose cash hoard rose to $137 billion, could itself pay for this year’s sequester cuts, with $50 billion to spare.

Loaded with cash and unwilling to invest, corporations have dramatically increased dividend payments to investors. The New York Times reported earlier this month that S&P 500 companies are expected to hand investors $300 billion in dividends this year, an increase over last year’s payout of $282 billion. American corporations bought back $117.8 billion in their own stock last month, the highest total on records going back to 1985.

The relationship of the American ruling class to the rest of society is a fundamentally parasitic one. Over the course of three decades, under conditions of economic decline, stock market speculation, rather than production, has become the central mechanism of wealth accumulation.

The 2008 crisis, far from reversing this process, has strengthened it. The ruling elite seized on the crisis to escalate the transfer of wealth. The soaring CEO pay and investor payouts on one hand, and vast social misery on the other, are in reality two sides of the same process.

The American ruling class proceeds with an almost shameless disregard for the consequences of its own actions. Amidst mass poverty and unemployment, as it dictates the most brutal austerity measures all around the world, the financial aristocracy engages in an uncontrollable orgy, propelled by its own social being.

Such actions, however, do not go unnoticed. They are producing within the United States an immense wellspring of social opposition that will take the form of working class struggle.

Advertisements

More Austerity as a “Solution” to Austerity?

By KEVIN ZEESE and MARGARET FLOWERS | IT’S OUR ECONOMY | FEBRUARY 21, 2013

As the economy shows signs of recession, the leeches return. Alan Simpson and Erskine Bowles have issued a new report calling for even deeper austerity. It is not what the economy needs as it stagnates and sputters toward a possible new collapse. Their report combined with President Obama’s State of the Union, the sequestration and Republican dogma are all combining to bring on another round of budget cuts, which will only make recession more likely.

It is important to put the current economic debate in context. Dr. Jack Rasmus, an economist who gets it right more than any other we are aware of, provides the framework with his in-depth analysis of the US GDP over the last 15 months.  He summarizes the present dismal situation:

“Nearly the entire European Union, including its core economies of Germany, France, and the United Kingdom are all now clearly mired in recession. The Euro southern periphery is in a bona fide depression. Japan has entered its third recession since 2008. China, India, and Brazilian growth rates have fallen by half. And the US in the fourth quarter 2012 has come to a virtual economic standstill, the second time in two years in which a quarterly GDP recorded virtually no growth.”

Rasmus predicts “The dual strategy of capitalist politicians across the globe—of QE and money injections into the banks and financial system combined with austerity for the rest—has clearly failed and will continue to fail even more visibly.” Rasmus foresees a double dip recession, with the shrinking US GDP of the last quarter as a harbinger of things to come.

Simpson and Bowles come into this situation recommending the wrong prescription – more cuts to Medicare, Medicaid, Social Security and other social programs, as well as closing corporate tax loopholes.  They want to cut $2.4 trillion from the federal deficit over the next decade, $1.5 trillion more than President Obama has called for and this is on top of the $2.7 trillion in reductions that have already been implemented causing the most rapid fall in deficit to GDP ratio since World War II. All of this means an ‘Obama recession’ becomes more likely.

No doubt Republican dogma of shrinking federal government and low taxes deserve a lot of the blame, but President Obama does as well.  His State of the Union address kept the Grand Bargain of cuts to essential programs along with closing corporate tax loopholes on the table.

Dr. Richard Wolff cuts through the rhetoric of “fiscal cliff,” “austerity” and “market” to pinpoint who benefits from austerity, writing that those who own the “US public debt are easy to list: large banks, insurance companies, large corporations, wealthy individuals and central banks around the world. Austerity justified as satisfying ‘the market’ in fact serves those US creditors first and foremost.”

Multiple  commentators have noted President Obama’s sly language on Medicare cuts and his silence on protecting Social Security. Symptoms of a sick health care system continue to show.  Executive salaries at non-profit hospitals continued to rise despite a frail health care system. And though the US ranks dead last in male life expectancy and near the very bottom in prevention of premature deaths, infant mortality, total health care coverage, number of practicing doctors, and prevention of deaths due to heart disease among developed nations; we may begin to look better in the international rankings soon – not because health care is improving here but because bankers are now demanding privatization of European heath care systems which will bring their outcomes down too.

The more we learn about Obama’s Treasury Secretary appointment, Jacob Lew, the less hopeful we are of decent policies coming from his leadership.  Confirmation hearings have brought out his Romney-like economics: personal investment in the Cayman Islands,  creating foreign tax havens for customers when he was at Citi, and that prior to Citi, when he was an executive at NYU, he steered students to expensive Citigroup loans. Of course, we remember his $950,000 bonus when Citigroup was bailed out. It seems impossible for Americans to trust Lew’s economic ethics and plutocratic economic behavior.

All this talk about austerity comes as we learn that the Federal Reserve continues to bailout the big banks, not only by pumping $85 billion each month into banks through Quantitative Easing, but court documents revealed that the Fed also forgave $7 billion in mortgage security losses by Bank of America. Bailouts continue but outside of the public eye and should lead to more calls for Fed transparency, which is unlikely to come from the two Wall Street parties.

And, austerity comes at a time when new census analysis shows that during the Obama ‘recovery’ only the rich got richer; the poorer got poorer.  According to a new analysis by Emanuel Saez. perhaps the leading economist on incomes in the world, from 2007-2009 the “average  real income for the bottom 99% . . . fell sharply by 11.6%, . . . by far the largest two year decline since the Great Depression.” And new data covering 2009-2011 indicate that “Top 1% incomes grew by 11.2% while bottom 99% incomes shrunk by 0.4%. Hence, the top 1% captured 121% of the income gains in the first two years of the recovery.” [Emphasis added.] We got a glimpse into the rigged system this week when it was reported that Facebook, which made $1 billion in profits, will be paying no income taxes, indeed will receive a $429 million refund. Why? Tax deductions allowed for executive pay in stock options.

And, don’t believe that the rich getting richer will create jobs. The claim that the wealthiest are job creators has been proven to be a myth. Another myth exploded in this week’s news was that it was important to pay CEO’s exorbitant pay to prevent their unique talents from being lured away. Both myths are not consistent with the facts.

What will another economic collapse cost us?  The GAO issued a report this week that indicated the last collapse cost the US economy $22 trillion; that is about 1.5 years of total GDP.  And, most of that came on the back of homeowners suffering from the housing collapse.

What is the alternative? Countries that are breaking from the Washington Consensus are showing the way. This week an analysis by the Center for Economic and Policy Research of Ecuador found “government’s taking control of the Central Bank, implementation of capital controls, increased taxation of the financial sector, and other regulatory reforms. It concludes that these played a major role in bringing about Ecuador’s strong economic growth, increased government revenue, a substantial decline in poverty and unemployment, and other improvements in economic and social indicators.”  Unemployment has fallen to 4.1 percent, the lowest level in 25 years and poverty has been cut 27 percent below its 2006 level.

The report gives us hope finding: “Ecuador’s success shows that a government committed to reform of the financial system, can – with popular support – confront an alliance of powerful, entrenched financial, political, and media interests and win.” By the way, Raphael Correa won re-election on Sunday by a landslide with more than 60% of the vote in a race with 8 candidates.  Is there any US politician that wants to get on the side of the people?

Rich European nations meet to plot against the poor

By LUIS MIRANDA | THE REAL AGENDA | FEBRUARY 7, 2013

In the twentieth century, political Summits were seen as meetings to achieve common ground for the benefit of one or two nations. Then came globalism, a movement that intended to transform the world into one slave system governed by the fewest people possible. Summits turned into opportunities to confabulate against those who were not aligned.

This scenario is reflected at its best in Europe, where politicians and their masters create and manage their dream power-grabbing projects. In the 21st century, Summits have been all about imposing austerity and financial control on all member nations in Europe through Brussels and the rest of the world through existing supranational entities such as the IMF and the World Bank.

Right now, the UK is demanding more austerity while ensuring that it will keep intact the rebate negotiated by Margaret Thatcher back in the day with her battle cry, “I want my money back”: the ensign of the British, and of many others. France, which is in favor of growth policies, has not gotten a single one of his proposals looked at, which demonstrates that the continent is in the middle of a fight for political power among the different factions that aim to control the world.

The Summit of Heads of State and Government starts today in Brussels to decide the EU budget for 2014 to 2020. It is marked by three principles: austerity, lack of solidarity — which the controllers use as a way to impose austerity on anyone who does not want it — and political crisis. Rich Europe will again conspire to cut budgets for all its members.

This time the deal is possible, many believe. All members, without exception, agree that the EU budget can not be alien to the culture that permeates the European economic policy. For the first time in the relatively young history of the Union, the budget will be lower than the previous period, 2007-2013, some experts predict. But lower budgets will not be the only issue to be negotiated during the Summit.

The President of the Council, Herman Van Rompuy, a globalism advocate, was close to closing the deal in November. He introduced a cut of 80,000 million compared to the Commission’s proposal — about 1 billion euros for seven years, which is equal to a 1% of European GDP and twenty times less than the U.S. budget. In Germany, the UK, Holland and Sweden seemed little. So there was no sign the agreement and the cuts, which will have an extra 15,000 million in cuts.

With those numbers, budgets can not serve as an impetus to go anywhere. They won’t help to fight youth unemployment either, even though it supposedly adds some patches to work on it. It will not stimulate growth, as it has been proven by the inefficacy of the measures approved in June. The results obtained after politicians aligned with bankers to transfer public and private money to their coffers as supposed to helping solve the crisis, is not an accident. As we have explained many times before, the technocrats who are in charge of guarding against their own policies never intended to have a recovery. They are attempting to collapse the world economy as slowly and seamlessly as possible, achieving the largest creation of debt imaginable before flushing the system to leave taxpayers ‘holding the bag’.

The theater is assured: “It is now or never,” said a senior participant of the Summit. The meeting will be as dramatic to the public as the main stream media is able to portray it. At the end, it is likely that each representative will accept the bribe offered by the European cabal so it can go back home praising the wonders of the agreement signed in the wee hours of the night and whose details will probably not be fully known.

The new austerity measures will not only affect the amount of money countries can depend on as members of the EU, it will also include deep cuts to expenditures for maintenance. The thesis of the rich countries led by Van Rompuy calls for deep cuts on infrastructure (mainly telecommunications and energy. This is a chapter called Connecting Europe, which will suffer cuts for 10,000 million. The result of this measure can be easily seen years into the future: collapsing infrastructure everywhere except in the large mega-cities, where the new world order wants people to be packed into so they can be controlled and spied on more easily.

Austerity, however, is not valid for everything. For example, the globalist led World Economic Forum, called for massive austerity all over the planet, except for programs that directly affect globalist organizations. Another example is the British rebate cheque, which remains more or less shielded with 3.000 million a year. Some exceptions are untouchable: the check would remain intact even if there was agreement among the leaders.

And what if there is no agreement? There will always be a plan B. For example a controlled acceleration of the financial decay, a world war or an unknown, invisible threat that justifies cutting budgets or enrolling the military industrial complex to once again drive the continent’s economy out of shambles. Anything that helps impose austerity, erode national interests and sacrifice growth, especially in the poorest regions will be adopted, passes, approved; even if a tunnel needs to be dug from one side of the Earth to the other.

The Real Agenda encourages the sharing of its original content ONLY through the tools provided at the bottom of every article. Please DON’T copy articles from The Real Agenda and redistribute by email or post to the web.

IMF presses Euro countries to hand over Sovereignty

By LUIS MIRANDA | THE REAL AGENDA | NOVEMBER 9, 2012

The International Monetary Fund (IMF) has urged countries that are under pressure from markets and high financing costs, including Spain, to seek the help of the European bailout funds to enable the debt purchase program created by the European Central Bank (ECB) to be initiated.

“Countries should implement plans to adjust and, if necessary, seek appropriate support from the EFSF / ESM. This would allow the ECB to intervene using the recently established program,” said an IMF document prepared for the meeting of Finance ministers and central bank governors of the G20 for the past 4 and 5 November.

In this regard, the organization stresses that although the ECB’s decision has removed some of the main risks for the eurozone, political and economic factors can cause these countries to not seek help from European partners and the ECB at the right time.

The institution led by Christine Lagarde said that although progress has been made, the resolution of the eurozone crisis will require “timely and decisive” policy implementation.

The IMF warns that access to finance at a reasonable cost is “essential to enable successful economies to adjust. While the economies of the periphery must continue to adjust their fiscal balances at a rate that they can afford in the current fragile environment, they should also adopt the right policies.” The document warned that changes that do not include a so-called rescue may not be sufficient to fully recover the confidence of the markets, especially risk implementation.

So, the supposed solution provided by the bankers is not only not effective, but also a double whammy. On top of keeping countries in debt, the bankers also want to deepen the crisis by issuing more debt so that more risk can be created and nothing will ever change. That is why the banks want to take complete control, micromanaging every single country’s fiscal and monetary policies, so that they can risk as much as they want with other people’s money without having to be accountable to anyone.

The IMF disingenuously stresses that measures adopted because of the crisis should be accompanied by a roadmap towards creating a banking union and greater fiscal integration to strengthen the monetary union. That is exactly the mechanism that would, once and for all, given them the complete control of all financial decisions in Europe. They also intend to export this to the rest of the world once the EU nations are fully absorbed.

In the opinion of the IMF, the union should be based on a unique mechanism of supervision — controlled by the banks who created the crisis –, a resolution mechanism at the level of the Euro zone, with support from all members and a scheme where all countries pitch in to have a deposit guarantee scheme for the entire currency union. That money will also be spent at the banker’s discretion and countries or banking institutions will be ‘rescued’ only if they agree to all terms in the contracts.

The IMF also stresses that continued implementation of financial, fiscal and structural reforms is “essential”, while acknowledging that several years will pass before all policies are fully implemented. This means that bankers, at least for now, do not intend to collapse the European financial system at once, as long as they can continue to postpone it by creating more debt and adding sovereign nations to their portfolio of debt slaves.

The bankers have smartly warned about using austerity as a way to curb out of control spending, and instead advocate for perpetual indebtedness. That is because this is the most efficient mechanism for them to get to control nations directly from the inside. The truth is however, that the IMF is one of the main pushers of austerity as a first step in the acquisition of indebted nations. Once government bureaucrats are no longer able to cut anything else, the bankers pose as saviors by lending fake money so the countries can begin another cycle of debt-based ‘development’.

The Real Agenda encourages the sharing of its original content ONLY through the tools provided at the bottom of every article. Please DON’T copy articles from The Real Agenda and redistribute by email or post to the web.

Greek government imposes more Austerity

By LUIS MIRANDA | THE REAL AGENDA | NOVEMBER 8, 2012

The same worn out ineffective policies that have done nothing to help Greece come out of the dire situation it has been for years have found more support at the highest levels of the Greek government. Congress in that country had the guts to adopt more of the same hunger causing measures that took Greece from being in a bad recession to a complete and open economic depression.

The Greek government managed to give new impetus to the austerity policies demanded by the EU and the International Monetary Fund but that were again rejected on the streets and partially in Parliament, where the new austerity measures were approved with a very small majority. For Greece, however, this late awakening by some of its congressional leaders, may be too little, too late.

On Wednesday the Greek Parliament approved the latest round of austerity measures with 153 votes in favor, 128 against and 18 abstentions. One congressman was absent during the voting.

The so-called coalition government led by banker accomplice and Prime Minister Andonis Samaras, gained control of 175 of the 300 seats in Congress which facilitated the approval of the measures, despite the last-minute challenges issued by some opposition leaders.

The new austerity package includes, among other goodies, the dismissal of about 25,000 government employees by the end of 2013, reduced pensions and health co-payment.

“We voted to remain within Europe or return to the drachma, international isolation, social insurrection and civil war,” Samaras said in Parliament during the debate period previous to the approval of the list of demands written by bankers in Brussels.

“Some of the measures included in the bill that we voted today should have been adopted years ago. Others, such as wage and pension cuts are unfair and that is something we should not hide,” confessed Samaras. During the debate, which was hoarse and thick with shouts and interruptions, the opposition branded the new austerity package as “unconstitutional” in both its content and the procedure for approval.

As in many other countries, the artificial sense of emergency, gave Congress little or no time to actually read the 279 pages of the proposal that did not get to Parliament until late Monday. The same has been done in countries like the United States, when George W. Bush and the American Congress approved the TARP legislation and when they decided to bailout banks and General Motors.

Congressman Dimitris Papadimulis, warned after the vote that the new measures “will hurt seriously the Greek society and the economy” and called on the population to “prevent it” fighting against a government which he said had experienced significant losses. The rejection of the new austerity measures, both before and after the approval was clearly felt on the streets of Athens, as people participated of a general strike of 48 hours.

Before the vote was taken, anywhere between 100,000 and 200,000 people showed up to Syntagma Square, just outside Congress to demand the rejection of the legislation. Although the protests remained largely peaceful, the approval of more austerity resulted in riots between protesters and police. The disturbances spread along the avenues and squares nearby, where protesters resorted to burning garbage containers and destroy barricades placed along the streets.

Police actions against the protesters rendered at least 70 people arrested. Most of the Greeks who tried to put some pressure on Congress to reject the new austerity policies remained outside Parliament premises while they shouted and demanded that their voice be heard. As in all other occasions, the Greek leadership did exactly the opposite; they listened to the bankers and not their people.

The Real Agenda encourages the sharing of its original content ONLY through the tools provided at the bottom of every article. Please DON’T copy articles from The Real Agenda and redistribute by email or post to the web.