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What’s new in USA ?

Saturday 23 November 2013, by Robert Paris

What’s new in USA ?


Retirements on the Chopping Block

Across the country, state and city governments are using the excuse of budget deficits to cut funding for whatever they think they can get away with. After continuously cutting funds for education, social services, transportation, and housing, the latest item on their chopping block is public workers’ pensions. Politicians try to blame the budget shortfalls on the big price tags of these services when the real reason for the shortfalls is that banks and local corporations have gotten away with stealing billions of dollars of public money – way more than enough to pay for all of the cutbacks.

Robbing the Pensions

Politicians involved with robbing public workers’ pensions is nothing new. Before the economic crisis hit in 2008, politicians had already stolen billions of dollars from the pension funds of workers. Governments are legally obligated to pay fixed amounts of money into the pension accounts of public workers. But since there is little oversight on this, for years governments would take billions of dollars from these accounts and use them to pay for massive handouts and tax breaks to banks and corporations. A 2011 Wall Street Journal study showed that some states only contributed about 27 percent of the total pension funds they were supposed to cover over the last ten years, and most states paid less than 75 percent of the required amounts. Over the years, the amount of money that was stolen from these pensions has added up to an estimated $4.1 trillion nationwide. City and state governments just figured they could keep getting away with it – that is, until the housing bubble came crashing down in 2008.

Cities Stuck With the Bill

The politicians who stole all that money assumed someone would have to eventually put some of it back. But then their finances got even worse. During the decade of 2000, many state and city governments took out new loans with banks. The banks were offering all sorts of loans because they had so much money on their books due to all of their scams in the housing bubble. Once this international financial scam came crashing down, the banks no longer had money to lend out but the states and cities had to keep paying the banks – billions of dollars. In 2010 alone, researchers estimated that $28 billion was paid by governments to the banks. And most of these banks are the largest in the world, the very same banks behind the scams that caused the crash in the first place.

Five banks were responsible for the majority of the loans to these governments: JPMorgan Chase, Citibank, Bank of America, Goldman Sachs, and HSBC. Together they control $150 trillion in loans to public agencies, most of which are loan contracts with city and state governments.

Making Us Pay For Their Crisis

Now state and city governments all over the U.S. are using the excuse of these debts to banks to gut public funding – with the latest round of cuts focused on workers’ pensions. Even though the banks caused this crisis, even though they received trillions of dollars in bail out funds, and even though the amount of money already paid by local governments to these banks more than covers these governments total debt across the country – we are still being forced to pay them for their crisis. Using their enormous wealth to pay all sorts of lobbying groups, law firms, and media propaganda outlets, these banks are teaming up with local governments to try to blame the enormous debts on the high cost of public services and workers’ pensions. And it is working.

In states and cities across the country, so-called pension reform legislation has been pushed through. Local governments say they don’t have enough money to cover the pensions – both because they already stole so much of the money over the years, and because they went into massive debt to banks at the same time. But state and local governments aren’t actually bankrupt. In fact, nationwide they spend an estimated $120 billion a year on corporate handouts, which is about three times the total budget deficit for all the public workers’ pensions. So never mind the debt payments to the banks, just the yearly tax breaks alone to these corporations would cover all the public workers’ pensions in the country combined.

Everywhere, the new terms of the pension plans look the same. Workers are now required to pay more into their pensions as local governments pay less. Wall street banks have more access to these accounts, with less oversight, and this means the banks are able to charge enormous fees for handling the money, and are legally protected to invest the money as they see fit, without having to pay any of the money back if they make bad investments. These changes are happening all across the country. For example, last year, the city of San Jose passed a referendum to force public workers into these new types of pension plans. And currently similar efforts are happening at the state level too.

In other words, the very same banks who caused this crisis in the first place are now gutting our retirements and making a fortune off of it. The massive increases in wealth these banks have seen in the past few years have been made by robbing workers and our families of education, housing, social services, and our retirements.

Detroit: A Destroyed City Coming To You

The economic crisis has hit cities across the U.S. almost like some sort of natural disaster. People have been forced out of their homes, jobs destroyed, schools shut down – everywhere cities are being ripped apart. This is no natural disaster but a man-made one, a disaster orchestrated by the big banks and corporations in order to force down wages and benefits, drive cities into bankruptcy, and profit from the privatization of public services. This is happening all over the U.S., but the worst hit city by far has been Detroit.

The destruction that has taken place in Detroit is incredible. A city which was once the home of two million people has been reduced to a population of 700,000. Houses stand in the middle of fields of vacant lots, abandoned by their owners. Electricity and other utilities only function occasionally. This is the outcome of an economic attack on a working class city by some of the wealthiest banks and corporations in the world, led by their political servants in office.

Detroit was once the center of the U.S. auto industry. Companies like Ford, General Motors, and Chrysler had factories in Detroit and the surrounding area, employing thousands of people. But in the last decades this has changed. Plants were modernized with new technology, allowing companies to lay off thousands of workers. Then in the 1980s and 90s, these companies moved much of their production to other countries where labor is cheaper. Those workers that remained in Detroit and held on to jobs suffered huge attacks. Today only one in four adult residents of Detroit has a job. The median income level is only $27,000 per year. About 19 percent of working adults are making $10,000 per year or less.

The result has been a shrinking city whose remaining population has only gotten poorer. And as a consequence, housing, public services, education, and everything else has suffered. In the 1990s, the banks preyed upon the poor with predatory loans known as “sub-prime” mortgages. Hundreds of thousands of people holding onto their housing by taking out unstable mortgages were suddenly put out of their homes when the housing market crashed in 2008.

The crisis has also resulted in a massive growth of public debt. By 2012 the city was $12 billion in debt, about $17 billion including interest. The result is that public services in Detroit have been severely cut. In the last six years, 136 public schools were closed. One third of the fire department was laid off, and the department has lost half of its firetrucks and ambulances. Only 40 percent of the streetlights are working. Garbage is collected only once per week.
The debt that Detroit faces was not a result of financial mistakes by public officials. For example in 2005 mayor Kwame Kilpatrick facilitated a deal with USB Financial Services to invest public money. This supposedly profitable investment resulted in Detroit owing $2.6 billion. GM, Chrysler and Ford all received hundreds of millions of dollars in tax breaks on their property.

Today Detroit is filing for bankruptcy. The bankruptcy will result in the cancellation of retiree pensions for city workers. And plans are being drawn up to privatize the cities’ infrastructure. In other words, the electricity, water, sewage and other services developed and paid for with public money will be handed to companies so they can begin to profit. The impact of this policy is already clear. In 2011 Detroit’s public transit system was handed over to a private management company, Transpro. This company immediately fired two thirds of the transit workers and eliminated 24-hour service. Similarly, many of the public schools, closed due to lack of funds, were soon re-opened by private charter school companies. New proposals are on the table to privatize the city’s water and sewage department, reducing the current 2,000 person workforce to about 600. What’s clear is that Detroit’s debt is being used as an excuse to put public services on the table for the profits of private companies.

Detroit is a glimpse of the agenda the wealthy elite are bringing to other cities in the U.S. Nothing could show more clearly that the interests of working people cannot be met while the resources are controlled by private interests and a government that serves them. These are our cities and our society – we should decide what to do with them!


The Destruction Of West Virginia

A look at what is going on in West Virginia shows us how ruthless corporations can be to make profits. In West Virginia and all over the Appalachian region, there is a massive push to destroy the landscape and to get at the last deposits of coal available. The new technique is called mountaintop removal, a process of blowing up tops of mountains in order to get at the coal underneath, and then dumping all the debris into nearby valleys. The explosives that are used are up to 100 times stronger than those used in the Oklahoma City bombing, equal to one Hiroshima per week in West Virginia.

Once the mountains are destroyed and the coal harvested, workers scoop out the excess soil and dump it into nearby valleys and rivers. When rainwater runs through this pulverized rock, it is more easily dissolved, releasing highly toxic metal ions (such as mercury, lead, cadmium, arsenic, manganese, beryllium, chromium and other carcinogenic substances) into local streams, rivers and groundwater. So far, the coal companies have destroyed more than 500 mountains. The Environmental Protection Agency estimates that almost 1,200 miles of Appalachian streams have been buried since 1992.

The water has become so contaminated that it is poisoning people. According to 21 peer reviewed studies, people that live near mountaintop removal sites have a 50 percent greater risk of fatal cancer and a 42 percent greater risk of birth defects than the general population. Because people can’t rely on locally sourced water, they are forced to depend on bottled water. What were once biologically diverse ecosystems have now been pulverized into barren wastelands. Plant and animal wildlife have lost their homes. Around 100 different species of birds are now gone.

Because many of these regions are economically devastated, mining companies are able to buy off the land from families that have lived there for generations, ripping apart local communities. There has been a massive drop in employment in the mining industry due to the industry’s widespread reliance on mountaintop removal, which employs far fewer workers. In a couple decades, employment in the industry has dropped from its peak of 130,000 to 14,000, almost one-tenth of what it once was. This has meant that areas with a lot of heavy mining have the highest unemployment rates in the region. In the city of Welch, 93 percent live on less than $10,000 per year, 40 percent of families live below the poverty line, and 28 percent of high school students dropout, compared to eight percent nationally.
The extent of destruction in areas such as rural West Virginia shows how far capitalists will go to squeeze the last drops of profit from nature and humanity. They are literally willing to blow up the country.

The Violence of Poverty

We should all have the right to live in communities where we can feel safe without the threat of violence but unfortunately many of us face crime and violence in the streets. It shouldn’t be a surprise that in poorer neighborhoods, high levels of unemployment bring higher crime rates and more violence.

The violence which the media tends to focus on is the violence of mass shootings such as the one at Columbine High School in 1999. Since the massacre at Columbine, there have been about 246 deaths from mass shootings. As tragic as these incidents are, they are nothing compared to the epidemic level of street violence. In 2012, there were 131 homicides in Oakland, 513 in Chicago, 500 in Los Angeles, 414 in New York, 410 in Detroit, 324 in Philadelphia and 200 in Baltimore, totaling 2492 deaths in these cities alone. This number is over ten times as many as the deaths from dramatic mass shootings. There isn’t such a massive public outcry against these deaths because they are tolerated and even expected in this society.

Why is this violence accepted? Because it is the violence that comes along with poverty and exploitation. A recent study found that a young Black male in Oakland has the equal probability of being killed than to go to college. Oakland has nearly twelve robberies per day, has the highest crime rate in California, and leads the country in the number of robberies per 100,000 people. In Oakland the official unemployment rate is 11.9 percent while in East Oakland it is 27.9 percent. Chicago and Los Angeles, which have the two highest murder rates, are also the most unemployed metropolitan cities. It is not news that poverty and violence go hand in hand.. The only violence that makes the headlines is when an exceptionally violent act takes place in a normally safe, middle class, and usually white community.
Really dealing with the violence will mean first dealing with the day to day violence inflicted by the system. If people have jobs, homes, hope and a future to look forward to, you can bet the desperation which leads to crime and violence will be a thing of the past.

Too Poor to Live Here

We are living in a period of unmatched wealth inequality in the U.S. The 400 richest Americans now have more wealth than the bottom 150 million of us. And the vast majority of all the economic gains in the last 20 years have gone to the richest one percent of society. Banks, corporations, and wealthy individuals have so much money they don’t know what to do with it. So, one market many of them are flocking to is real estate. In big cities across the country, the rich are swooping in, buying up properties, and making a killing. The Bay Area is no exception to this housing robbery.

One area of the economy that is growing is the tech sector – though based in silicon valley, many workers in the sector are moving to San Francisco and Oakland. This creates a market for high-priced condos and apartments for the employees of the tech companies. As a result, home prices and rents have become increasingly more expensive. Large-scale investors buy up entire neighborhoods at a time, and sell them back at prices that most locals can’t afford. Investors outbid local buyers and can often pay all cash while a working family often needs a 30-year mortgage. All-cash sales have increased and now make up about half of all purchases. Many of these homes that are bought are called “fix and flips” – the buyer slaps on some new door-knobs, new paint, and a higher price tag. In Oakland, home purchase prices went up 64 percent between 2012 and 2013. In San Francisco the average price for a home is $841,800, among the highest in the country.

The Bay Area is the toughest area in the country to be a renter, but one of the best places to be a landlord and apartment investor. San Francisco and Oakland hold the top two slots for fastest rising rents in the country, followed by San Jose holding fifth. Rent in the Bay Area has increased more than twice as much as the rest of the nation. The average price for a one-bedroom apartment in San Francisco is $2,800, the highest in the country. For Oakland, the average rent for a one-bedroom in 2012 was $1,925, a 20 percent rise from 2011.

These skyrocketing rents are happening in a backdrop of record levels of evictions. An act called the Ellis Act, allows landlords to evict all tenants if the landlord is converting the type of property. This creates an opportunity for landlords to turn apartment rentals into condos or single-family million-dollar homes – all of which cater to the rich, kicking out poorer families in the process. Ellis Act evictions jumped by 170 percent from February 2010 to February 2013. During the same period, there was a 38 percent increase in total evictions, and home prices in San Francisco rose by 22 percent. And this past year, from March 2012 to February 2013, there were 1,716 total evictions.

The Bay Area is already one of the most expensive areas to live. With investors coming in and using our neighborhoods and communities as playgrounds for their money, living here is only becoming more expensive. For workers, this means working in Oakland and San Francisco while we have to move to Tracy, Antioch, Stockton, and even farther. With shrinking wages and skyrocketing rents and housing prices, we are being priced out of our own neighborhoods.

A Vote Against Capitalism in Seattle

The City of Seattle just had its city-wide elections. Unlike most elections where voters had to choose between candidates all of whom represent the interests of the wealthy and big businesses, this election had a different voice. Kshama Sawant, a community college teacher and activist with the revolutionary group Socialist Alternative, ran for city council.

Sawant’s campaign made a number of immediate demands, including a $15 per hour minimum wage. She also called for a millionaires’ tax to return some of the wealth to the communities that produced it, and to fund education and social services that have been cut as working class communities have been forced to pay for the economic crisis. With this platform, Sawant’s organization mobilized a grassroots campaign, and she was elected with 56 percent of the vote. The support she received forced other candidates, including both mayoral candidates, to pledge support for a $15 per hour minimum wage in Seattle.

More importantly, Sawant’s campaign stood for a different kind of politics. In her speeches and in her writings, Sawant insisted that it is time for workers to have their own voice and stop looking to the corporate-funded Democrats or Republicans for representation. Sawant spoke openly about the need to build a working class party which will fight for socialism – a society without exploitation, organized to meet human needs, where industry, health care, transportation, and everything else is controlled by the people who do the work.

Dow hits new record amid deepening world slump

By Andre Damon

The Dow Jones Industrial Average stock index broke 16,000 for the first time Monday before falling back slightly to a new record close of 15,976. The index has set new records in six of the last seven trading sessions and is up by 26 percent over the past year, having doubled since 2009.

As the Wall Street Journal noted, "It took the Dow 136 trading days to notch its latest 1,000-point gain. That is the sixth-fastest rally of that magnitude in history."

The other major US stock indexes are likewise booming. The Standard & Poor’s 500 Stock Index broke 1,800 for the first time ever in intraday trading Monday and is up by 31 percent over the past year. The NASDAQ has gained even more, rising 38 percent over the same period.

Throughout the world, stocks are surging. The FTSE All-World Index hit its highest levels since 2007 on Monday. Over the past year, Japan’s Nikkei is up by 67 percent, Germany’s DAX has climbed 33 percent, and Britain’s FTSE 250 has soared 32 percent.

The most remarkable aspect of this bull market is that it occurs in the context of stagnant economic growth or recession in the US and Europe and signs of a slowdown in much of Asia and Latin America. Just last week, the European Union published figures showing that growth in the euro zone was essentially flat in the third quarter of this year, while consumer prices rose at the slowest level since 2009, pointing to major deflationary pressures.

More than five years after the financial crash of September 2008, the real economy in most of the world remains mired in slump and mass unemployment. There is no recovery for the vast majority of the planet’s population.

How is the unprecedented stock market boom to be explained? It is the intended outcome of a policy being pursued by the governments and central banks of the major powers to pump virtually unlimited quantities of cash into the financial markets, in order to bail out and further enrich the financial elite.

Earlier this month, the European Central Bank announced that it would slash its benchmark interest rate from 0.5 percent to a record low of 0.25 percent, and hinted that it might seek to drive the rate below zero.

On the other side of the Atlantic, the nomination of Janet Yellen to replace outgoing Federal Reserve Chairman Ben Bernanke, which is moving through Congress with virtually no opposition, has sent a clear message that the US central bank intends to continue and possibly expand its trillion-dollar-per year money-printing operation.

To pay for the historically unprecedented subsidy to the banks—in the form of cash bailouts, near-zero interest rates and the money-printing operation known as “quantitative easing”—national treasuries are being looted and the full burden of the resulting budget and debt crisis is being imposed on the working class, in the form of austerity measures, mass layoffs, wage-cutting, and the destruction of pensions, health care and public education.

A redistribution of wealth from the bottom to the very top is taking place on a scale never before seen in history. But the resulting financial bubble, resting on an almost dormant real economy and growing poverty and inequality, is unsustainable. In response to the financial crash of 2008, produced by the bursting of a massive housing and credit bubble, the ruling class has engineered an even bigger bubble.

No one can say for certain when this bubble will burst, but it is certain that when it does, the economic consequences will be catastrophic. The drunken orgy of greed on Wall Street will turn overnight into a spectacle of fear and panic.

Already, the central banks’ policies are exacerbating global tensions and creating rifts between major powers. Money-printing and near-zero interest rates in the US and Europe are undermining global currency relations, fostering competitive devaluations and igniting trade conflicts. Within Europe, the recent interest rate cut by the European Central Bank provoked a split between Germany, the Netherlands and Austria, on the one side, and France and the southern European countries on the other.

Tensions between the US and Europe are mounting. Earlier this month, the US Treasury took the extraordinary step of denouncing Germany’s export-driven policy and its trade surpluses in the Treasury’s semi-annual report on currency policy, which usually focuses its fire on China.

Despite the Federal Reserve’s talk of seeking to foster a “robust recovery” and lower unemployment, the cash it is handing out is going directly into the coffers of the banks and the super-rich. The Fed is underwriting record stock prices, record corporate profits, and record CEO pay.

The combined net worth of the world’s billionaires has doubled since 2009, according to a report published earlier this month by UBS Bank and Wealth-X, and the total number of billionaires has grown from 1,360 to 2,170. This has taken place even as the incomes of the bottom 95 percent of the US population have dropped in real terms.
The chasm between the rich and super-rich at the top and the rest of mankind is growing ever wider, the inevitable result of the policies of the Obama administration in the US and capitalist governments—whether nominally “left” or conservative—all over the world.
The other side of the diversion of public resources to the financial elite is a policy of social counterrevolution toward the working class. The impoverishment of the workers in Greece has set the standard for attacks against workers internationally.

The US government has just carried out the first-ever nationwide reduction in food stamp benefits and imposed tens of billions of dollars in “sequester” cuts. It is preparing to end extended unemployment benefits at the end of this year, followed by historic cuts in the basic social programs left over from the New Deal of the 1930s and the Great Society of the 1960s—Social Security, Medicare and Medicaid.
The ever-widening gap between the super-rich and the broad mass of working people—summed up in the rise in stock prices and corporate profits alongside record poverty and continuing mass unemployment—is a socially combustible situation. It is preparing the eruption of a new period of revolutionary class struggles.
The burning issue for the working class is the need to build a new leadership—entirely independent of and opposed to the old trade union apparatuses and all of the parties of the ruling class—that will arm the coming struggles with a socialist program to reorganize economic life to meet social needs, not private profit.

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