Spain Officially under Brussels Rule

By requesting a financial bailout of its banking system and accepting all measures recommended by Brussels, Spain has effectively walked into the wolf’s den.

By LUIS MIRANDA | THE REAL AGENDA | JUNE 26, 2012

The reaction to Spain’s decision to accept a financial bailout for its banking system had immediate reactions everywhere in that country and abroad. First, the decision to request over $100 billion dollars to Brussels to rescue what the country’s Prime Minister says is 30 percent of the banks caused the collapse of the stock market. Second, by the mid afternoon, the adoption of new rules from the European bankers caused Moody’s to downgrade 28 Spanish banks and left Spain’s credit rating just above junk status. Third, The European Union will, as it did with other countries that were rescued, assumed complete power of the budgetary policy of the Spanish government.

On Thursday, European finance ministers will meet to discuss the details of the latest European rescue which implies that Spain will have to adopt every single recommendations originated in Brussels. Any violation to such rules will consequently bring harsh penalties against the peninsular nation. Another issue that will be discussed on Thursday and Friday will be the guidelines that the European government will give each nation that requested a bailout in regards to the supervision that the euro zone leaders will exercise over the banking system and the amount that each government will spend, how and when they will spend it.

Now that Spain is in the bag, European leaders like Herman Van Rompuy, Jose Manuel Barroso, Jean-Claude Juncker and Mario Draghi are proposing to establish a system where there is complete centralized control over the financial sector in each of the countries which will include the economic and budgetary matters. In Spain, economists and TV commentators are already analysing the implications of such a decision, since Spain has no longer anything to say about what is done with its finances. The Prime Minister Mariano Rajoy has said on national television that new and more difficult measures are still to come. Those measures include a 10 percent increase in the sales taxes, which will reach 18 percent. This increase is surely to affect the prices and food and other basic needs.

After the increase in the sales tax or IVA, Spain will have to ‘reform’ its pension system, which will mean that Brussels will also take control over the retirement of millions of Spanish people. Those who have contributed into the retirement system, will have to retire later and take a significant haircut to their benefits once they decide to stop working. That is if they receive any retirement benefits at all. Additionally, the government will also propose a cut in the salaries it pays to workers in the public sector and a considerable reduction in the number of people it will employ once Brussels recommendations are effective.

Although the details of Spain’s bailout are not fully disclosed to the public or the media, leaks provided to some economists in that country detail that the country will have to take care of the bankers’ debt for at least the next quarter of a century while paying an interest rate of between 3 and 5 percent. Spain’s incapacity to meet its obligations was the caused cited by Moody’s for its most recent downgrade, Meanwhile, and as a consequence of such downgrade, Spain will have to continue paying higher interest rates at bond auctions. This situation would get even worse of Spain needed another financial bailout in the near future.

French junior budget minister Jerome Cahuzac, one of the people who meets today with the rest of his European colleagues to work out the details of Brussels meeting on Thursday, has said that it is only fair that Spain also submits its sovereignty just as his own country and many others in the euro zone have done it as a condition to receive so-called rescue packages. “This is what we are talking about, budget solidarity in Europe which implies that not only that the French budget, but also the German, Italian and Spanish budgets be subjected to a review by all our partners,” Cahuzac said.

As we reported yesterday, Spain is now finalizing a memorandum of understanding which will be presented before the Eurogroup on July 9, where the final decisions will be made by the 17 finance ministers who work on behalf of the European bankers. The Spanish economy minister explained that the money loaned to Spain will be managed through the Fund for Orderly Bank Restructuring (FROB), which is supposed to be a state-backed cashier, but that in reality is a banker-controlled window that dictates where will the funds recently requested by Spain will be directed.

As it has happened throughout Europe, most of the measures adopted by governments to supposedly deal with the economic crisis have only tightened the belt of the working class, the people who always take on the heaviest burden when banks decide to collapse a country’s financial and economic system. In the case of Spain, as we have said, the financial rescue of its banks means prices going through the roof, later retirement, less or no retirement benefits, a reduction in the purchasing power for the middle and lower classes and a perpetual state of indebtedness for the next 2 or 3 generations of Spanish people, who will have to work all of their lives to pay the debt incurred into by the Spanish banking system.

How Globalism Destroys Jobs, Businesses And Wealth

American Dream
July 14, 2011

As most Americans stand around waiting for the U.S. economy to return to “normal”, there is a never ending parade of jobs, businesses and wealth heading out of the United States.  The jobs and businesses that are leaving are gone for good and will not be coming back.  This is causing unemployment to soar and government debt to skyrocket but our politicians are doing nothing about it.  Instead, politicians from both parties keep insisting that they will solve all of our problems if we will just give them our votes.

Meanwhile, American families continue to fill up their shopping carts with cheap plastic crap made on the other side of the world.  Globalism is slowly destroying the greatest economic machine that the world has ever seen and most Americans don’t even realize it.  Today, the U.S. government has surrendered massive amounts of economic sovereignty to global organizations such as the WTO, the IMF and the World Bank.  The United States has also entered into a whole host of very damaging “free trade agreements” such as NAFTA that are costing our economy huge numbers of jobs.  Our politicians always promised us that globalism would bring us to a new level of prosperity, but instead that “giant sucking sound” that you hear is the sound of the U.S. economy being hollowed out.

Our politicians and the talking heads in the mainstream media always seem to be puzzled as to why there seems to be such a lack of jobs in this country.

But it really is no great mystery.

Jeffrey Pfeffer recently wrote an article for Fortune in which he stated the following….

The U.S. seems to be shocked that its economy isn’t creating many jobs, and each monthly report on the unemployment rate and the number of new jobs somehow stimulates more handwringing. I’m not an economist, labor or otherwise, but simple observation suggests one significant contributor to the nation’s job crisis — for a long time, maybe even decades, we have been waging war on jobs and those who hold them.

That is exactly what the policies of the U.S. government have been doing for decades – they have been waging war on jobs.

Both political parties have been eagerly pushing us into a globalized economy.  Both political parties have told us not to worry as thousands of businesses, millions of jobs and trillions of dollars have left the country.

Well, so much damage has been done by this point that more Americans than ever are starting to wake up and realize that maybe globalism is not such a great thing after all.

Here is how globalism has destroyed our jobs, our businesses and our national wealth in 10 easy steps….

#1 Globalism has merged the U.S. economy with economies that allow slave labor wages.

The “minimum wage” became a whole lot less meaningful once we merged our economy with the economies of nations where it is legal to pay workers 50 cents an hour.

American workers have enjoyed all of the cheap products that have come flooding into our shores, but our politicians never told them that globalism would also mean that they would soon be directly competing for jobs with workers on the other side of the globe that are willing to work for 5 or 10 percent as much.

One big, global labor pool means that the standard of living of the hundreds of millions of workers on the other side of the world will come up slightly while the standard of living of American workers will come crashing down at a blinding pace.

Advocates of globalism never can seem to explain how U.S. workers are supposed to compete with teenage workers in Vietnam that often work seven days a week for as little as 6 cents an hour making promotional toys for big corporations.

#2 U.S. companies make bigger profits by sending jobs overseas.

If U.S. corporations can find a place where they can legally pay workers slave labor wages, what do you think they are going to do?

Corporations have a “duty to maximize shareholder wealth” and U.S. government policies actually have the effect of encouraging the offshoring of jobs.

This is even happening in industries that are on the cutting edge of new technology.

Andy Grove, the former CEO of Intel, says that our advanced technology companies are creating far more jobs overseas than they are in the United States….

Some 250,000 Foxconn employees in southern China produce Apple’s products. Apple, meanwhile, has about 25,000 employees in the U.S. That means for every Apple worker in the U.S. there are 10 people in China working on iMacs, iPods, and iPhones. The same roughly 10-to-1 relationship holds for Dell, disk-drive maker Seagate Technology (STX), and other U.S. tech companies.

#3 Globalism has allowed foreign countries to dominate a whole host of industries that used to be dominated by the United States.

U.S. companies are having an incredibly difficult time competing against the low labor costs and the much less stringent business regulations found on the other side of the globe.

In May, the United States spent 50 billion dollars more on goods and services from the rest of the globe than they spent on goods and services from us.

This happens month after month after month.

Every month we get tens of billions of dollars poorer and the rest of the world gets tens of billions of dollars richer.

We are getting clobbered even in industries that we invented.

Do you remember when the United States was the dominant manufacturer of automobiles and trucks on the globe?  Well, in 2010 the U.S. ran a trade deficit in automobiles, trucks and parts of $110 billion.

In 2010, South Korea exported 12 times as many automobiles, trucks and parts to us as we exported to them.

How did this happen?

Well, there are a lot of reasons, but one big reason is that the business environment in the United States has become incredibly toxic.  Businesses in this country face a nightmarish web of rules and regulations and that is a big reason why so many businesses are choosing to leave this country.

In a recent article for Forbes, John Mariotti made a list of just a few of the bureaucracies that U.S. businesses must contend with on a daily basis….

#4 Jobs and manufacturing infrastructure are being lost at an astounding pace and they are not going to come back.

Jobs and manufacturing facilities are leaving this country at a blinding pace.  Nothing is being done to stop this from happening.  These jobs are not coming back and they are not being replaced.

Just consider the following statistics….

*The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

*Between December 2000 and December 2010, 38 percent of the manufacturing jobs in Ohio were lost, 42 percent of the manufacturing jobs in North Carolina were lost and 48 percent of the manufacturing jobs in Michigan were lost.

*The United States has lost an average of 50,000 manufacturing jobs per month since China joined the World Trade Organization in 2001.

*Since 2001, over 42,000 manufacturing facilities in the United States have been closed down.

So what are all of those workers doing today?

There are sitting at home trying to figure out what has happened to the once happy lives that they enjoyed.

Today, there are 6.3 million Americans that have been unemployed for more than 6 months.  That number has risen by more than 3.5 million in just the past two years.

Right now, it takes the average unemployed worker almost 40 weeks to find a new job.  There are not nearly enough jobs for everyone and the competition for the few job openings that are available is brutal.

Only 66.8% of American men had a job last year.  That was the lowest level that has ever been recorded in all of U.S. history.

We have millions upon millions of very hard working Americans that are sitting around hoping that someone will give them a job.

But labor costs about 10 percent as much on the other side of the world so that is where all the jobs are going.

#5 Workers without good jobs can’t buy houses or cars.

A huge factor in the housing crash has been the lack of good jobs.  There are now approximately 10 percent fewer middle class jobs than there were a decade ago.

As competition for jobs increases, wages are being depressed because employers know that they have all the power.

So working class American families are being squeezed like never before.

Only the top 5 percent of U.S. households have earned enough additional income to match the rise in housing costs since 1975.  A nice home is becoming out of reach for a lot of Americans.

Meanwhile, the cost of food and the cost of gas continue to rise.

One recent survey found that 9 out of 10 U.S. workers do not expect their wages to keep up with soaring food prices and soaring gas prices over the next 12 months.

#6 If American workers don’t have jobs they aren’t paying taxes.

Most Americans have no idea how much our trade deficit contributes to our government debt problems.  When Americans are not working, they are not paying taxes to support our federal, state and local governments.

In the years since 1975, the United States had run a total trade deficit of 7.5 trillion dollars with the rest of the world.

That is money that could have gone to U.S. workers and U.S. businesses.  That is money that taxes could have been paid on.

Instead, our workers are sitting at home and our federal, state and local governments are starving for cash.

#7 Instead of receiving taxes, the government must pay out money to our unemployed workers instead.

We are going to support our unemployed workers one way or another.  Either we are going to give them good jobs or we are going to give them welfare payments.

During the recent economic downturn, millions of American workers have been receiving unemployment benefits for up to 99 weeks.  It has become soul-crushingly difficult to find a job in America today, and we have developed a whole new class of people that have become totally dependent on the government because they simply cannot find work.

Everywhere you look, government anti-poverty programs are exploding in size.

As 2007 began, there were 26 million Americans on food stamps.  Today, there are more than 44 million Americans on food stamps, which is a new all-time record.

#8 As jobs and businesses leave our shores, many of our once great manufacturing cities have been transformed into hellholes.

In a recent article entitled “American Hellholes“, I talked about the economic decay that we are seeing all over the United States….

All over the nation many of our greatest cities are being slowly but surely transformed into post-apocalyptic wastelands.  All over the mid-Atlantic, all along the Gulf coast, all throughout the “rust belt” and all over the entire state of California cities that once had incredibly vibrant economies are being turned into rotting, post-industrial hellholes. In many U.S. cities, the “real” rate of unemployment is over 30 percent. There are some communities that will start depressing you almost the moment that you drive into them. It is almost as if all of the hope has been sucked right out of those communities.  If you live in one of those American hellholes you know what I am talking about.  Sadly, it is not just a few cities that are becoming hellholes.  This is happening in the east, in the west, in the north and in the south.  America is literally being transformed right in front of our eyes.

#9 The United States ends up borrowing back most of the money that it sends overseas every single month.

Every month tens of billions of dollars of our national wealth gets transferred to foreign countries.  In order to make ends meet, our federal, state and local governments end up borrowing gigantic amounts of money from the countries that we have sent our wealth to.

So now we have a national debt that is well over 14 trillion dollars and we owe massive amounts of money to countries like China and Saudi Arabia.

But when we borrow money from other countries that makes us even poorer in the long run.  Debt is never the answer to anything.

#10 Foreign countries are using up some of the wealth that we send them every month to buy up our infrastructure.

Most Americans don’t realize that our state and local governments are selling off our infrastructure piece by piece.  Foreign governments are literally buying pieces of America with the money that we keep sending to them.  In a recent article entitled “Our Politicians Are Selling Off Pieces Of America To Foreign Investors – And Goldman Sachs Is Helping Them Do It“, I talked about this phenomenon….

State and local governments across the country that are drowning in debt and that are desperate for cash are increasingly turning to the “privatization” of public assets as the solution to their problems.  Pieces of infrastructure that taxpayers have already paid for such as highways, water treatment plants, libraries, parking meters, airports and power plants are being auctioned off to the highest bidder.  Most of the time what happens is that the state or local government receives a huge lump sum of cash up front for a long-term lease (usually 75 years or longer) and the foreign investors come in and soak as much revenue out of the piece of infrastructure that they possibly can.  The losers in these deals are almost always the taxpayers.  Pieces of America are literally being auctioned off just to help state and local governments minimize their debt problems for a year or two, but the consequences of these deals will be felt for decades.

Sadly, neither political party seems concerned about the effects of globalism at all.

In fact, both parties continue to push for even more globalism.

But large numbers of ordinary Americans are waking up.

According to a recent Washington Post poll, only 36 percent of Americans consider “the increasing interconnection of the global economy” to be a positive thing.  Back in 2001, 60 percent of Americans believed that the globalization of the economy was a positive thing.

So maybe there is a glimmer of hope.

But until fundamental changes are actually made, globalism will continue to destroy our jobs, our businesses and our national wealth.

US media demands Greek-style austerity for American workers

WSNM

In recent days, the US media—led by the standard bearer of American liberalism, the New York Times—has insisted that workers inseek truth the US, like their brethren in Greece, have been living the good life for far too long and must accept a drastic and permanent reduction in their living standards.

In a May 9 piece, Times columnist Thomas Friedman denounces workers in the US and Western Europe for believing in the “tooth fairy” and expecting government services without paying for them. In America, Friedman says, the baby-boom generation, which supposedly had inherited the prosperity of the post-war years, had “eaten through all that abundance like hungry locusts.”

“After 65 years in which politics in the West was, mostly, about giving things away to voters, it’s now going to be, mostly, about taking things away. Goodbye Tooth Fairy politics, hello Root Canal politics.”

Describing what he has in mind, two days later Friedman wrote about his meeting with Greek Prime Minister George Papandreou in a rooftop restaurant in Athens. Praising Papandreou for defying mass protests, theTimes columnist hails the government for carrying out a “revolution,” including raising the retirement age and slashing wages and pensions for public sector workers, imposing regressive consumption taxes and wiping out two-thirds of the country’s publicly owned companies.

Another May 11 article, appearing on the front page of the Times, is entitled, “In Greek Debt Crisis, Some See Parallels to U.S.” Its author, David Leonhardt, led the newspaper’s campaign to promote Obama’s health care overhaul, explicitly supporting limits on medical treatments ordinary people could receive. (“In truth, rationing is an inescapable part of economic life”).

“It’s easy to look at the protesters and the politicians in Greece—and at the other European countries with huge debts—and wonder why they don’t get it,” Leonhardt writes. “They have been enjoying more generous government benefits than they can afford…

“Yet in the back of your mind comes a nagging question: how different, really, is the United States?… Both countries have a bigger government than they’re paying for. And politicians, spendthrift as some may be, are not the main source of the problem.

We, the people, are.”

It is rich to hear demands for sacrifices and lectures about “the people” living beyond their means, particularly from the likes of Leonhardt and Friedman. The latter, who is paid $50,000 per speaking engagement, is married to the heir of a multi-billion dollar real estate fortune. According to theWashingtonian magazine, the couple owns “a palatial 11,400-square-foot house” in suburban Washington, DC, valued in 2006 at $9.3 million.

In these circles it is taken for granted that massive cuts must be imposed on the living standards of the working class, but not a word is said about the hundreds of billions that are funneled into the personal fortunes of the financial aristocracy and the subordination of the entire economy to increasing their piles of wealth.

The events of the last several years have revealed to the world that the greatest burden on society is not ordinary working people but the anti-social activities of an unproductive and parasitic financial elite. The grotesque consumption and appropriation of social wealth by this oligarchy is not a minor factor in the crisis of the global capitalist system itself.

The bankrupting of whole countries—chiefly through the transferring of the bad debts of the financial speculators onto the books of various governments—is being used to demand austerity from workers and ever-greater riches for the elite.

The four biggest US financial firms—Bank of America, Citigroup, Goldman Sachs and JPMorgan Chase—made money from trading every single day during the first quarter of the year, according to their financial filings. The banks, which all benefited from the Wall Street bailout, reaped hundreds of millions in profits from betting on the movement of currency, commodity and sovereign debt markets, including in relation to Greece.

At the same time, the value of corporate shares has risen, chiefly through a campaign of job cutting, wage and benefit concessions and a staggering 3.8 percent increase in worker productivity in 2009. As a result, corporate CEOs, who took stock options in lieu of pay increases when profits were down, are now cashing in, according to an Associated Press report, entitled, “America’s top CEOs are set for a once-in-a-lifetime pay bonanza.” Yahoo’s Carol Bartz, for example, received a $47.2 million package during her first year on the job, 90 percent of which came from stock awards and options.

While these vast personal fortunes have been made, there has been no recovery in the wages and benefits workers have lost during the recession. The Organization for Economic Co-operation and Development (OECD) reported that real wages fell last year by 2.7 percent in Japan and Ireland, 1.1 per cent in Germany and 0.8 percent in the US.

The unbridled greed of America’s ruling elite—and the complete subservience of the political establishment, from Obama on down, to its needs—can only be compared to the ancien régime in France. The parasitism and extravagance of the aristocracy became a major factor in the country’s breakdown, and ultimately the eruption of the French Revolution in 1789.

Workers must reject the demand for austerity. The working class did not create this crisis and must not pay for it. Instead, the ill-gotten gains of the ruling elite must be confiscated and used to meet the interests of society as a whole, instead of gutting social programs and destroying jobs.

This must include a multi-trillion dollar program of public works to put the unemployed to work—at decent wages and full medical care—to rebuild the cities and suburbs, repair the nation’s infrastructure and provide high quality housing, medical care and education for all.

In the midst of the Great Depression, the founder of the Fourth International, Leon Trotsky, argued in the Transitional Program that it is “impossible to take a single serious step in the struggle against monopolistic despotism and capitalistic anarchy—which supplement one another in their work of destruction—if the commanding posts of the banks are left in the hands of predatory capitalists. In order to create a unified system of investment and credits, along a rational plan corresponding to the interests of the entire people, it is necessary to merge all the banks into a single national institution. Only the expropriation of the private banks and the concentration of the entire credit system in the hands of the state will provide the latter with the necessary actual, i.e., material, resources—and not merely paper and bureaucratic resources—for economic planning.”

The nationalization of the banks, however, will produce positive results, Trotsky explained, “only if the state power itself passes completely from the hands of the exploiters into the hands of the toilers.”

For this to be realized the working class must build its own mass political party, independent of and irreconcilably opposed to the two parties of big business, and dedicated to the fight for a workers’ government to replace capitalism with socialism.