Printer FriendlyWhat caused the crisis?
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“Obama’s Bailout Bunch Brings Us More of the Same” by Jonathan Weil, Bloomberg.com, November 11. “[B]y my tally, almost half the people on Obama's economic advisory board have held fiduciary positions at companies that, to one degree or another, either fried their financial statements, helped send the world into an economic tailspin, or both….Many of them should be getting subpoenas as material witnesses right about now, not places in Obama's inner circle.”
“AIG Spa Trip Fuels Fury on Hill” by Peter Whoriskey, Washington Post, Oct 8, 2008. After getting a federal bailout, top executives of world's biggest insurance company “were rewarded with a week-long stay at the luxury St. Regis Resort in
"A Financial Crisis 30 Years in the Making" by Mark Brenner, Labor Notes. Excellent survey of the squeeze-workers policies that created the debt crisis of today.
“A Primer on Wall Street Meltdown” by Walden Bello, Oct 3, 2008. This very clear, step-by-step guide says overproduction (too much industrial capacity and not enough demand) was the root cause of this crisis.
“The Reckoning: Taking Hard New Look at a Greenspan Legacy” by Peter S. Goodman, New York Times, Oct 9, 2008. Federal Reserve Chairman Alan Greenspan said that regulation wasn’t needed because the new system spread risk around. When someone pointed out that this could pull down the whole system, he and Treasury Secretary Robert Rubin squelched the warning.
“The Current Crisis: A Socialist Perspective” by Leo Panitch and Sam Gindin, The Bullet, Sept 30, 2008. This in-depth analysis puts it all together -- the growth of finance capital since World War II,
“Economists’ Letter in Support of a New Stimulus Package,” Center for Economic and Policy Research. How big a stimulus do we really need? Recent losses housing wealth ($8 trillion) and stock markets ($5 trillion) are cutting consumption by roughly $470 billion a year. To make up for that, economists at CEPR say an annual government stimulus of $300-400 billion – in state and local aid, infrastructure projects, unemployment benefit extensions, food stamps and energy conservation - is needed.
“Green Recovery,” Center for American Progress. A $100 billion “green” stimulus package would create two million jobs for sheet metal workers, machinists, truck drivers, roofers, insulators, electricians, dispatchers….
“Back-to-basics banking” by Robert Kuttner, Boston Globe, Oct 11, 2008. “Once we have a functioning banking system again, banks need to go back to the basics - taking in deposits and making loans.... The plainer and more vanilla, the better.”
What’s up for workers in general?
Newsweek reported on October 20 that:
Meanwhile, according to the Economic Policy Institute:
EPI’s State of the Working Economy 2008/2009 says:
- the economic recovery of the 2000s was slower and weaker than in the 1990s. Job growth averaged only 0.6% per year—well below what was needed to keep up with labor force growth.
- the number of involuntary part-time workers rose to 5 million.
- median family income fell 1.1% from 2000 to 2006 while the top 10% captured almost all the income growth since 1989 – especially the top 1% whose incomes tripled (up 203.7%) and the top 0.01 whose incomes quintupled (up 425% to an average of $30.5 million) in that period.
- the American dream is dying. Sixty percent of the families who started in the bottom income fifth ten years ago are still there now. Fifty-two percent of families who started in the top fifth are still there.
- unemployment is rising now that we’re back in a recession, from 4.4% in March 2007 to 5.5% now. Economists expect it to hit 6.6%, worse for African-Americans (11%) and Latinos.- State of Working America (pdf)
Professor Michael Zweig says one in five workers are economically distressed. That reality, he says, calls for a new economic stimulus package and structural reforms of the economy, not just a bailout for Wall Street.