US layoffs mount amid signs of economic slowdown

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By Andre Damon

28 March 2015

US corporations announced thousands of layoffs this week amid a series of plant closures, mergers and consolidations and signs of declining economic growth.

On Wednesday, US Steel announced 2,080 layoffs at its Granite City Works in Illinois. The Pittsburgh-based steelmaker plans to lay off over 4,500 employees nationwide, including over 1,800 workers in Alabama. Job cuts are also planned in Minnesota and Texas.

The same day, steelmaker Worthington Industries of Columbus, Ohio announced plans to lay off 555 employees nationwide. Of these, 310 are to lose their jobs as a result of the closure of a plant in Florence, South Carolina.

On Thursday, Ohio-based Republic Steel announced 200 layoffs at its Lorain, Ohio plant.

The steel companies said the layoffs were a response to a fall in demand stemming from the drop in oil prices and appreciation of the dollar, which have led to a reduction in international orders.

Also on Wednesday, HJ Heinz announced plans to buy Kraft Foods Group in a $36.6 billion deal that, according to one analyst, could lead to 5,000 job cuts, affecting nearly one quarter of Kraft’s North American work force.

The fate of tens of thousands of RadioShack workers and their families hung in the balance Friday as lenders and hedge funds wrangled at auction over the remains of the bankrupt consumer electronics chain, which presently employs 27,000 people at more than 4,000 locations nationwide.

Salus Capital Partners said Friday that it had outbid its nearest competitor, hedge fund Standard General, offering $271 million in cash as part of a plan that would completely dismantle the company, laying off all employees and selling off inventory and fixtures. Standard General had offered $16 million in a plan that would have kept 1,740 stores open, saving 7,500 jobs, but still laying off nearly 20,000 workers.

Office supply retailer Staples, which announced plans to merge with Office Depot in February, filed documents with the Securities and Exchange Commission showing that it intends to pay CEO Roland Smith $46.78 million for 16 months of work if the deal goes through. The merger would entail the closure of up to 1,000 stores and the potential layoff of tens of thousands of workers.

The plant closures and layoffs came as figures from the Commerce Department confirmed that the US economy slowed significantly in the fourth quarter of last year. The economy grew at an annual rate of 2.2 percent in the final three months of 2014, down from an initial estimate of 2.6 percent released in January.

The fourth quarter marked a significant slowdown compared with the second quarter, in which the economy grew at a 5 percent rate, and the third quarter, which had a growth rate of 4.6 percent. Analysts had expected the economy to grow at a 2.4 percent annual rate in the final quarter of last year.

Business investment on equipment in the fourth quarter was revised downward to show a 0.6 percent increase, down from a previously reported 0.9 percent. Reuters reported that the slowdown in investment likely reflected “the impact of the strong dollar and lower crude oil prices, which have caused a drop in drilling and exploration activity.”

Government spending contracted at a rate of 1.9 percent, led by cuts to federal spending.

Even the anemic pace of economic growth in the last quarter of 2014 was significantly higher than what is expected in the first quarter of this year, which ends next week. Economists from JPMorgan Chase, Macroeconomic Advisers and Goldman Sachs recently cut their estimates for first-quarter economic growth, all of them forecasting a rate of 1.4 percent to 1.5 percent. The Federal Reserve Bank of Atlanta is predicting even worse results, with a first-quarter GDP growth rate of just 0.2 percent.

A number of recently released economic figures underscore this gloomy outlook. The Commerce Department said Wednesday that orders for durable goods fell by 1.4 percent in February compared with a month earlier. The report also showed that non-defense capital goods orders fell for the sixth straight week.

The University of Michigan’s survey of consumer sentiment fell to 93.0 in March, down from 95.4 in February. Richard Curtin, chief economist at the University of Michigan’s Surveys of Consumers, told the Wall Street Journalthat, “most of the recent variation was among lower-income households, whose budgets are more sensitive to higher utility costs and disruptions in work hours.”

The significant appreciation of the dollar, which hit 0.95 euros earlier this month, up from 0.75 euros a year ago, has had a negative impact on the US trade balance and US corporate earnings.

Corporate profits fell 1.4 percent in the previous quarter, according to figures released by the Commerce Department on Friday. For the whole of 2014, corporate profits were down by 0.8 percent, the first annual fall in US corporate profits since 2008.

US corporations have responded to the appreciation of the dollar and falling profits with the demand that the Federal Reserve delay its plans to begin raising interest rates this year. Last week, Fed Chairwoman Janet Yellen hinted that the US central bank might begin raising rates later than it had previously indicated, and the Fed issued interest rate projections for 2015 and beyond showing a slower pace of rate hikes than previously predicted once the increases begin.

Yellen reinforced this message in remarks at the Federal Reserve Bank of San Francisco on Friday, declaring that she expected the “level of the federal funds rate to be normalized only gradually” and warning of raising rates “too quickly.”

The continued influx of cash from the Federal Reserve has led the Dow Jones Industrial Average to nearly triple over the course of the past six years, while allowing Wall Street bonuses to hit the highest levels since 2008. Average CEO pay in the US is higher than ever.

The response of the corporate-financial aristocracy to the renewed slowdown in the US economy will no doubt be an intensification of the policies that have characterized official economic policy since the 2008 crash: virtually unlimited amounts of cash for the financial markets coupled with a relentless offensive against the jobs, wages and living standards of working people.

 

http://www.wsws.org/en/articles/2015/03/28/econ-m28.html

US House passes sweeping new bipartisan assault on Medicare

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By Kate Randall
27 March 2015

In a 392-37 vote, the US House on Thursday approved a bill that makes sweeping changes to the Medicare program that provides health insurance to more than 54 million seniors and the disabled. The Medicare Access and CHIP Reauthorization Act must be approved by the US Senate and signed into law by President Obama, who indicated his support for the measure earlier this week.

The bipartisan bill, drafted by Republican House Speaker John Boehner and Democratic Leader Nancy Pelosi, ties future payments to doctors for Medicare services to “quality of care,” shifting away from traditional fee-for-service payments. And for the first time, the universal Medicare program will institute means testing for higher-income seniors, requiring higher premiums for these individuals to access benefits.

The bill constitutes a historic attack on the Medicare program. Boehner called it the “first real entitlement reform in nearly two decades”—a reference to the assault on welfare launched under the Clinton administration in 1996. “Today is about a problem much bigger than any doc-fix or deadline. It’s about solving our spending problem,” he said.

Pelosi echoed Boehner’s comments, declaring that it had been a “privilege” to work with the House leader, and that she hoped the agreement “will be a model of things to come.”

The coming together of the Republican and Democratic Party leadership behind the overhaul exposes the unanimity within the ruling class on the need for sharp cuts in “entitlement” programs—Medicare, Medicaid and Social Security.

It provides a permanent “fix” to a 1997 law that tied doctors’ Medicare fees to overall economic growth. As overall health care costs have risen sharply, that formula threatened deep reimbursement cuts to doctors, cuts that Congress has blocked with patchwork measures 17 times since 2002.

The House bill will do away with the scheduled payment cut, set to kick in April 1, and replace it with a 0.5 percent yearly raise in payments through 2019. After this, a new payment system based on “quality of care” will be implemented.

Such language has been adopted by Medicare in other frameworks, and is generally measured by readmission rates and similar statistics. In other words, doctors who see more of their patients readmitted will receive cuts in reimbursement. However, readmission is closely correlated with poverty and other social factors, thus cutting spending on health care in lower-income and working class areas.

By disconnecting reimbursements from services provided, doctors will also be incentivized to ration care and cut back on testing—the overarching aim of all the health care “reform” proposals backed by both Democrats and Republicans. The change will result in reduced services for Medicare patients overall and deep spending cuts by the government.

This shift has long been promoted in the private insurance sector. It is also a key goal of the Obama administration, which earlier this year set a goal to tie the vast majority of Medicare payments to programs promoting cost-cutting.

The second main feature of the bill would institute means testing for Medicare recipients, requiring higher-income seniors to pay more toward Medicare premiums for insurance and prescription drug coverage. Initial estimates are that this change would result in Medicare savings of around $30 billion over the next decade.

Congressional Republicans and Democrats alike are well aware that this fundamental change opens the floodgates for transforming a program that for the last half-century has provided health care insurance to those over the age of 65, regardless of income, into a poverty program available to only those poorest segments of society. This is seen as a first step in it being starved of funds and ultimately dismantled.

Boehner, salivating at these prospects, commented, “We know we’ve got more serious entitlement reform that’s needed. It shouldn’t take another two decades to do it.” He indicated that the Republicans would continue to push for funding cuts to other federal benefit programs.

Some Congressional Republicans balked at the overall cost of the measure, which the Congressional Budget Office estimates at $214 billion over the next decade. This would be paid for through $141 billion in new spending, with the balance divided between higher monthly premiums for higher-income Medicare recipients and payments by nursing homes and other health care providers.

Boehner and the Republicans see the implementation of means testing—and the subsequent savings for government—as a starting point for future overhauls to Medicare and other federal programs. This particularly applies to Social Security, the universal retirement program enacted in 1935 in the wake of the Great Depression.

Both Medicare and Social Security are not “gifts” by the government, but benefits based on the funds workers pay into these programs for their entire working lives through deductions from their paychecks.

As window dressing, the bill also provides two more years of funding to the Children’s Health Insurance Program (CHIP), which serves 8 million low-income children, as well as to the nation’s 1,200 community health centers. While Pelosi and the White House had pushed for four-year extensions for both of these programs, the majority of Congressional Democrats willingly compromised on this issue in order to push through the changes to Medicare.

The bill also includes abortion funding restrictions at community health centers, incorporating components of the so-called Hyde Amendment, which forbids federal funding of abortion except in the cases of rape, incest, or the endangered life of the mother.

Leaders of the House “pro-choice” caucus assured skeptical Senate Democrats that the bill’s language provides no additional abortion restrictions beyond those that already apply. In fact, the Obama administration acceded to these reactionary and unconstitutional restrictions in language in the Affordable Care Act (ACA).

Speaking Wednesday on the occasion of the fifth anniversary of his signing into law of what is popularly known as Obamacare, the president indicated his support for the new bipartisan Medicare bill. “I’ve got my pen ready to sign a good bipartisan bill,” he said.

The coinciding of the ACA’s anniversary and the current bipartisan bill is noteworthy. From the start, Obama’s health care overhaul has been aimed at a fundamental restructuring of the health care system, aimed at lowering costs for the government and corporations while slashing health care services for the vast majority of Americans.

Taking its cue from Obamacare, the change in Medicare represented by Pelosi and Boehner’s bill will set an example that can rapidly be extended throughout the health care system. Despite many Congressional Republicans’ vocal opposition to the ACA and vows to see it repealed, they are in agreement with its aim of rationing care and funneling more money to the health care industry.

Although the bill faces some opposition in the Senate, it is expected to pass, either before Congress leaves for spring recess today or on its return in two weeks. If it does not pass before the recess, Congress will likely pass a temporary fix to the Medicare payments to doctors.

 

http://www.wsws.org/en/articles/2015/03/27/medi-m27.html

The California drought: Water-rationing plan leaves corporate interests untouched

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26 March 2015

The unprecedented drought gripping California has deepened for the fourth consecutive year, having already set new records for the lowest annual precipitation levels on record. 2014 brought the highest calendar-year temperature for the state, while this February was the hottest on record and this January the driest.

A recent study conducted by Daniel Griffin and Kevin J. Anchukaitis found that the current episode “is the most severe drought in the last 1200 years, with single year (2014) and accumulated moisture deficits worse than any previous continuous span of dry years.”

Last Thursday, California Governor Jerry Brown announced a new bill, which he claims will provide $1 billion in drought-related spending, mostly on flood protection. The bill merely expedites funds already approved by California voters, and will do nothing to resolve the state’s dire water crisis.

Last Tuesday, the California State Water Resources Control Board intensified emergency legislation targeting residential “water wasters,” initially implemented last summer. The law imposes a $500 fine for offenses including excessive lawn watering.

Both measures leave untouched the giant agribusinesses and oil corporations that account for a majority of the state’s water usage and dominate the political system.

On Sunday, Chuck Todd, host of NBC’s Meet the Press, asked Governor Brown whether “considering how much water…is used for fracking [hydraulic fracturing]…isn’t that alone enough reason to prohibit fracking or temporarily stop it?”

Brown sought to deflect the question, responding: “No, not at all. First of all, fracking in California has been going on for more than 50 years. It uses a fraction of the water of fracking on the East Coast for gas, particularly.”

Throughout his entire political career, dating back to the 1970s, Brown has been entirely beholden to Big Oil, while posturing as a defender of the environment. He has accepted at least $2 million in campaign contributions from oil corporations since 2006, including Chevron, Occidental Petroleum, Southern California Edison, Valero Energy, Tesoro Corp, Conoco Phillips and Aera Energy (owned jointly by Shell and ExxonMobil). Most of these companies donated the maximum amount possible to Brown’s reelection campaign last November.

Earlier this year, the San Francisco Chronicle reported that, for years, state regulators knowingly allowed oil companies, mostly in the impoverished Central Valley, to pump their wastewater into groundwater aquifers that contained drinkable water.

Every year, the oil industry in California produces roughly 130 billion gallons of wastewater, as the state is the third-largest oil producer in the US. Kern County, home to most of California’s oil and hydraulic fracturing (fracking) wells, has the worst air quality of any county in the US, along with some of the highest rates of cancer and respiratory illness.

Climate change, a byproduct of the oil corporations’ unrelenting drive to accumulate profit, has played the most significant role in determining the length and severity of the ongoing drought, as well as the likelihood for future droughts.

On March 12, the leading bourgeois press outlet in the state, the Los Angeles Times, prominently featured an op-ed penned by NASA’s senior water scientist, Jay Famiglietti, titled “California has about one year of water left. Will you ration now?”

Famiglietti begins the op-ed by stating that “Right now the state has only about one year of water supply left in its reservoirs, and our strategic backup supply, groundwater, is rapidly disappearing.” He proposes a water rationing scheme across “all of the state’s water sectors, from domestic and municipal through agricultural and industrial.”

Despite the calls by experts to place restrictions on business, last Tuesday the State Water Resources Control Board furthered emergency drought regulations that target solely consumers, leaving agribusiness untouched. Local water districts must restrict lawn watering to twice weekly, among other tepid reductions in consumers’ water usage.

The state will now place local water agencies under intense scrutiny, ensuring that they levy $500 daily fines against “water wasters” that were first enacted last summer. Over the past year, few fines were doled out locally, with one notable exception being Santa Cruz, which issued over $1.6 million in penalties against individual consumers. The cities of San Ramon and Dublin, both east of Oakland, issued $40,000 in combined fines.

Instead of adopting any sort of progressive policy to implement well-known, rational planning methods that would ensure the viability of California’s water supply for future generations, the existing political setup seeks to reduce the highly complex issue to merely punishing individual consumers.

The drought has already devastated thousands of working-class families, as an estimated 17,100 agricultural laborers lost their jobs during last year’s growing season alone, with that number expected to rise significantly this year. The brunt of these job losses occurred in the agricultural heart of the state, the Central Valley, a stretch of land roughly 450 miles long, from Bakersfield in the south to Redding in the north, and between the Sierra Nevada to the east and the Coast Ranges to the west.

Between the spring of 2013 and the spring of 2014, water levels in groundwater basins throughout the Central Valley fell by 50 feet or more, amid a race to drill ever-deeper and more expensive groundwater pumps. In one of the Central Valley’s most productive agricultural regions, Tulare County, 874 well permits were issued in the first six months of 2014 alone, 44 more than the county issued in all of 2013.

In the process, hundreds of private wells across Tulare County dried up, leaving thousands of East Porterville’s working-class residents without water. The state’s only response to this dire crisis has been to provide limited amounts of bottled water to inhabitants, with no plans implemented to develop water infrastructure for residents.

A package of three bills signed last September by Brown will implement the first-ever groundwater regulations in the state, but will have no effect until 2040, and even then will not require businesses to report how much water they pump individually. Barring an end to the drought, which scientists have noted could become a decades-long “megadrought,” all remaining groundwater will have long disappeared by that time.

The legislation passed last Tuesday does nothing to curb groundwater usage by the agricultural giants, the only ones capable of shelling out upwards of $400,000 to drill the 2,000-foot (600-meter) pumps required to extract dwindling groundwater reserves.

Agriculture accounts for roughly 80 percent of California’s total water usage, while the remainder is used by urban industry and household consumers, with outdoor landscaping accounting for roughly half of total urban usage. Thus, at most the recent regulations will cause a 5 percent reduction in the state’s total water usage.

California produces over 99 percent of all almonds, pistachios, olives, walnuts, rice, plums, dates, figs, raisins, artichokes, kiwis, peaches and pomegranates grown in the US, and is also the leading producer of dozens of other food commodities. In recent decades, international demand has led to a large transition toward growing orchard and vineyard crops.

During the drought, many farmers have fallowed even more of their traditional vegetable crops, diverting water toward almond trees and other orchards, which take longer to mature and are thus a larger capital investment. California currently grows roughly 80 percent of the world’s almond supply, in addition to 43 percent of all pistachios and 28 percent of all walnuts, and these cash crops are indispensable to maintaining profitability.

The “almond empire” is centered in the San Joaquin Valley, home to the largest almond-growing monopoly in the world, Paramount Farming. Paramount’s owners, Stewart and Lynda Resnick, are closely connected to Governor Brown, as well as Democratic Senator Dianne Feinstein and other state politicians, and have influenced water policy in the state for decades.

This couple is the modern-day reincarnation of the most corrupt aspects of former Los Angeles Mayor Frederick Eaton and his associate Joseph Lippincott, immortalized in the character of Noah Cross, played by John Huston in the 1974 Roman Polanski classic Chinatown. In addition to Paramount Farming, their holding company also owns Paramount Citrus and Paramount Farms, the world’s largest growers of citrus and pistachios.

Financial interests, including New York-based retirement and investment fund TIAA-CREF and Hancock Agricultural Investment Group, a subsidiary of the insurance and financial services giant Manulife Financial, have recently joined the bumper crop frenzy, becoming some of the largest nut growers in California.

Despite the proven efficiency of drip irrigation for orchard and vineyard crops, 20.3 percent of all vineyard and 13.4 percent of all almond and pistachio crops in the state continue to be grown using flood irrigation methods. Thus, almond trees alone presently account for 10 percent of California’s total annual water usage, more than the combined domestic usage of the state’s 38.8 million inhabitants.

There are immense efficiencies to be gained through the statewide adoption of crop-specific irrigation methods and other efficiency improvements. Yet any such rational reorganization is blocked by the interests of the US financial oligarchy, which, controlling the entire political system, will not abide any impingement on its profits.

 

http://www.wsws.org/en/articles/2015/03/26/cali-m26.html

Juncker’s call for an EU army is an affront to democracy

By Joseph Lacey On March 24, 2015

Post image for Juncker’s call for an EU army is an affront to democracyThere is nothing constructive about the creeping manner in which EU integration proceeds. Juncker’s recent comments are an affront to democratic process.

Screaming from The Guardian’s front page recently was a headline about comments from European Commission President, Jean-Claude Junker, concerning the need for a European army. The Guardian was not just trying to sell papers by leading with this story — its editors clearly realize that these seemingly armchair remarks made to a German Sunday newspaper (Welt am Sonntag) should not be taken lightly.

Taking Junker seriously

Why is that? Largely forgotten now, but one of the many hot issues surrounding ratification of the Lisbon Treaty in 2007-’08 was the fact that its Preamble and Article 42 explicitly provides for the creation of a “common defense” at the member states’ will.

The prospect of a European army was already a strong possibility in post-war Europe, and would have likely become a reality had the French Parliament not narrowly rejected the proposal in 1954.

The Lisbon Treaty made the idea of a European military very much active once again. Junker, meanwhile, has signaled his intention to make advances on it both through his comments and the publication of his ten point 2014-’19 agendalast October.

Another reason to take these comments seriously is that Commission President is by no means a nominal position. Just as with any prominent leadership role, its incumbents are concerned about legacy and the legacy of a Commission President is measured by just how much integration he or she manages to achieve when in office.

Jacques Delors stands out as the shining ideal — his charismatic integration activism being seen as indispensable in putting together the Single European Act in 1986 (helping to complete the single market) and the 1992 Maastricht Treaty (setting out a rigorous plan for monetary union).

Part of Junker’s desired legacy is undoubtedly deeper military integration.

Integration by stealth

Remarkably, as is characteristic of European integration history, these Treaty-based feats of international coordination followed a methodology of “integration by stealth” against the background of a “permissive consensus”. In other words, national and European elites were generally happy to commit Europeans to a supranational project without much by way of public debates and the citizens of most member states were largely content to let these elites be at their work.

Only in three countries holding referendums on Treaty ratification – Denmark and Ireland (Single European Act); Denmark, France, Ireland (Maastricht Treaty) – was there an engaged public debate on these Treaties that have shaped Europe’s collective future.

Since that time, the EU has become a somewhat more visible and contested actor. The politicisation that came with the failure of the Constitutional Treaty in 2004 and the controversial ratification of the Lisbon Treaty thereafter, along with the prominent role of European institutions during the Euro-crisis, has finally made clear to the popular imagination just how powerful and important the EU has become.

Despite this politicisation, through which many citizens appear no longer willing to grant the integration trajectory a permissive consensus, the methodology of integration by stealth does not seem to have been adjusted.

For some time the EU has had a Common Security and Defence policy, which received a shot in the arm by the Lisbon Treaty, not only by including provisions for the formation of a European army as above but also by creating an External Action Service and High Representative for Foreign affairs (also a member of the Commission).

As the Euro-crisis unfolded, consuming all EU-related media attention, these newly established actors have been quietly paving the way for deeper integration in defence and security.

A European army would differ from existing international military cooperation (e.g. NATO) in that it will form an integrated singular military force, not just coordination between national armies. This move would empower the Commission, the closest thing the EU has to an executive arm, responsible as it is for initiating legislation and coordinating policy areas among the many hands through which legislation passes and is implemented.

Democratic deficit

Whatever the merits and demerits of a European army, its very real prospect raises serious concerns for democracy and the future of Europe. The idea of a European military has not been debated by nor found support among the peoples of Europe. This is an especially black mark on the supposedly improved democratic credentials of the Commission.

Junker’s appointment to his present position in 2014 was the first time the office of Commission President was directly linked to the outcome of elections to the European Parliament. He was the nominated electoral candidate of the European People’s Party, which won the largest share of seats in the most recent elections.

Boldly, Junker claimed a mandate from the European people, despite the fact that most people had not even heard of him. In the European People’s Party electoral manifesto consisting of four pages we find some short paragraphs which, at a stretch, could be interpreted as gesturing towards a European army.

Vague language about an EU that “tackles the big issues together” and boosting Europe’s “Foreign, Security and Defense capabilities” is the most we get. That such a policy platform provides a mandate for anything specific, let alone the pursuit of such a massive integration step as a common military force, is unconvincing to say the least.

The fact that deeper integration is still very much at the forefront of elite EU minds indicates just how far out of touch (or unconcerned with) they are with popular attitudes that have developed in the last couple of years.

How the Eurozone debt crisis was managed, undermining national democratic and economic sovereignty in Greece, Italy and Ireland (among others), has provoked a number of resentments that should be enough to put any prospects of deeper integration on hold until the issues motivating this bad blood are resolved.

These resentments can be summed up as a) dissatisfaction with the technocratic nature of European democracy; b) the clear emergence of Germany as the real decision-maker in Europe; and c) the mutual resentment of debtor and creditor states towards one another, both feeling unsatisfied with what each expects of the other.

Legitimate questions arise from this situation. If Europeans do not have the solidarity to cope with crises arising from current levels of integration, on what basis can we say that integration on such a sensitive area as defense would fare much better?

Would a European military not just become an extension of the German will, at least in times of crisis, much like the European Central Bank and even the Commission itself appears to have become during the ongoing Euro crisis?

The disintegration of Europe

Ironically, Junker’s words about military integration run the risk of having disintegrative effects. Such talk only helps to fuel the rhetoric of political parties that may be seen as belonging to the darker side of democratic life. The right-wing populist United Kingdom Independence Party (UKIP), for example, have had a field day with Junker’s comments.

For a citizenry like we find in the UK — already sensitive to the loss of sovereignty necessitated by European integration and edging towards the exit door as its Prime Minister David Cameron tries to negotiate a less integrated Europe before a proposed “in/out” referendum in 2017 — the idea of a European military is a non-starter.

Standing against UK membership of the EU, UKIP have been able to consistently use the EU’s lack of democratic legitimacy as a narrative construction in pursuing an illiberal policy platform. As the narrative goes, “the unelected technocrats of Europe are opening the door to criminals and unwanted migrants from within and beyond the EU. And the only way of taking back our borders is to take back our democracy. This means Brexit.”

To this narrative add the idea of a prospective European military and the sympathies of any UK citizen even remotely responsive to UKIP rhetoric will surely deepen in this direction.

Abolishing the permissive consensus

There is nothing constructive about Junker’s comments and the silent manner in which European integration proceeds, in the area of defence and security and beyond, is an affront to any conception of good democratic practice.

The only legitimate way forward for the EU is its democratization. And it is this that should be the European peoples’ non-negotiable condition for the prospect of any further integration projects.

The permissive consensus, which has surely been damaged in recent times, has not been destroyed. What remains of it is not serving Europeans well and must be eliminated entirely.

It is not the outcome of a genuine international democratic debate that should concerns us for the moment — for/against a European army, for/against the Trans-Atlantic Trade and Investment Partnership, and so on — but guaranteeing that such a debate is had in the first place.

As it stands, Europeans will not have a choice about these or many other subjects.

Joseph Lacey is a PhD researcher at the European University Institute.

 

http://roarmag.org/2015/03/juncker-european-army-democracy/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+roarmag+%28ROAR+Magazine%29

Another financial crisis coming?

Growing warnings of another financial disaster

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25 March 2015

Global financial markets are on the road to another crash, with consequences even more serious than the collapse of September 2008. There have been a series of dire warnings from within the ruling class itself that present monetary policies have created massive financial bubbles with devastating consequences.

In an interview with the Financial Times, James Bullard, the head of the Reserve Bank of St Louis, and a non-voting member of the Federal Open Market Committee, said the Fed had to start normalizing interest rate policy as soon as possible. Continuing the present near-zero rate would feed into an asset price bubble which would “blow up out of control.”

Bullard and others are pointing to what has now become an obvious fact, that the combined effects of quantitative easing (i.e., printing money) and interest rate cuts by central banks are powering a feeding frenzy in global equity and bond markets.

Last week, an analysis of the S&P 500 Index from the Office of Financial Research, attached to the US Treasury Department, concluded that the US stock market had entered a situation comparable to patterns seen in 1929, 2000 and 2007. That is, a major downturn, if not a crash, was looming. Entitling his report “Quicksilver Markets”, the author noted: “Quicksilver markets can turn from tranquil to turbulent in short order.”

There are growing fears of a “liquidity crunch” if all the major investors and speculators, which operate on basically similar financial models, try to make an exit at the same time, only to find that there are no buyers.

According to a report in the Financial Times on Tuesday, some fund managers have warned “not since the collapse of Lehman Brothers in September 2008 and the freezing of money markets in August 2007 has there been such widespread concern over the structure of fixed income [i.e., bond] markets.” It said that prices of bonds had risen appreciably as investors had “gorged” on the cheap money provided by the low-interest rate regime of central banks and warned that there could be a “liquidity crunch” if they “collectively run for the exits.”

The same situation has developed in corporate and government bond markets, which have surged ahead on cheap money, making commonplace the previously extremely rare phenomenon of negative yields. (The price of the bond moves in the opposite direction to the yield.)

Negative yields mean that investors are in effect paying governments for the privilege of lending them money. The phenomenon is the result of a situation in which, despite the fact that bondholders would make a loss if they held the high-priced bond to maturity, they can still make a capital gain because the outflow of central bank finance will push bond prices still higher. They can simply sell the bond to another investor, who is himself operating under the assumption that he can do the same.

In effect, corporate and bond markets have been turned into a giant Ponzi scheme where profits can continue to be made so long as money continues to pour in. In other words, the modus operandi of what started as a criminal venture in the US during the 1920s has now become the central operating principle of the global multi-trillion dollar financial markets.

The official justification for this system advanced by its promoters is that these measures are necessary to stimulate economic growth. Such claims are refuted by facts and figures. The world economy as a whole is characterized by growing deflationary trends coupled with stagnant or low growth rates.

Yesterday it was announced that in Britain consumer prices for February had failed to show a rise for the first time in 55 years, a sure indicator of economic contraction. At the same time, a key indicator of manufacturing activity in China fell to an 11-month low. Decreases occurred in the key areas of new orders, export orders, employment and output prices.

The day before in Europe, projections prepared by the European Central Bank found that its quantitative easing program, aimed at pumping more than €1 trillion into financial markets over the next 18 months, would do virtually nothing to boost employment. The jobless rate will continue to remain at above 10 percent even after the program has been completed.

The main effect of the QE measures has been to boost European stock markets, which so far this year have risen at a faster rate than in the US, even as European economic output still remains below where it was in 2007, with investment in the real economy down by more than 25 percent on pre-crisis levels.

While the corporate and financial aristocracy continues to enrich itself, the conditions for the working class are subject to an unending austerity drive. The dictates of the financial oligarchy with respect to Greece are the consummate expression of what is a global program: the forcible impoverishment and starvation of ever-wider sections of the population.

In the aftermath of the devastation of the Great Depression of the 1930s, the political representatives of the ruling classes—desperately fearful of socialist revolution—claimed that they could regulate the worst effects of the profit system through so-called Keynesian measures based on government spending to simulate growth and secure a return to “normalcy.”

For a very short period, in historical terms, these policies seemed to bring success. However, they rested on the strength of US capitalism and the boost that its more productive methods provided for the global economy as a whole.

The situation today has been completely transformed. The US economy is no longer the center of economic expansion but is the headquarters of global parasitism. The central position in the world economy is no longer occupied by corporations such as Ford and General Motors, but by Goldman Sachs, JPMorgan Chase and their equally parasitic counterparts internationally, which are not engaged in the creation of new wealth but in its appropriation, often through outright criminal methods.

The utter bankruptcy of the entire profit system is exemplified by the policy debate now taking place in ruling financial and economic circles. It is between those who maintain that the cheap money policies of the central banks must be continued lest a disaster result, and those who insist the taps have to be turned off, and the system purged, if necessary through bankruptcies and financial collapses, in order to try to prevent an even bigger catastrophe.

The various defenders of the profit system, in the media, academic circles and in pseudo-left organisations such as Syriza in Greece, maintain that the perspective of a planned world socialist economy is not possible and therefore the only alternative is to try to “save capitalism from itself”.

In fact, the perspective of international socialism is the only viable and realistic answer to the historic crisis of capitalism.

Nick Beams

 

http://www.wsws.org/en/articles/2015/03/25/pers-m25.html

Behind the tensions between Obama and Netanyahu

netanyahu2_copy

24 March 2015

One week after the Israeli election victory of Prime Minister Benjamin Netanyahu’s right-wing Likud Party, tensions between Washington and Tel Aviv remain at a level unseen in decades.

President Barack Obama on Sunday gave a videotaped interview to theHuffington Post in which he recounted a mealymouthed rebuke that he said he had delivered to Netanyahu over his 11th-hour appeals to the most reactionary and racist sections of the Israeli electorate to win the seats needed to secure his reelection.

On the eve of the vote, the Israeli prime minister issued a clear statement that as long as he remained in office, there would be no Palestinian state. Netanyahu declared that giving up Israeli-occupied territories would amount to “simply yielding territory for radical Islamic terrorist attacks against Israel.” Asked whether that meant there would be no Palestinian state as long as he remained Israel’s premier, he replied, “Indeed.”

On election day itself, in an openly racist appeal for right-wing Zionists to vote for Likud, Netanyahu warned: “The right-wing government is in danger. Arab voters are heading to the polling stations in droves. Left-wing NGOs are bringing them in buses.”

In his interview, Obama said he had told the Israeli prime minister in a telephone conversation the day before: “…we continue to believe that a two-state solution is the only way for the long-term security of Israel, if it wants to stay both a Jewish state and democratic. And I indicated to him that given his statements prior to the election, it is going to be hard to find a path where people are seriously believing that negotiations are possible.”

The US president’s problem is that in his desperate bid for a fourth term in office, Netanyahu clearly proclaimed the real policies of his government and the entire ruling Zionist establishment in Israel, exposing the so-called “peace process” brokered by Washington as a cynical fraud.

For over two decades, since the signing of the Oslo Accords in 1993, Washington, Tel Aviv and the Palestinian Authority (PA) in the West Bank town of Ramallah have all promoted the notion that a “two-state solution” could be achieved at the negotiating table. During this period, the Israeli regime has steadily created new “facts on the ground,” doubling the number of Zionist settlers in the occupied West Bank to over 300,000, while leaving 2.7 million Palestinians trapped in bits of discontiguous territory divided one from the other by Israeli settlements, checkpoints, military outposts, walls and security roads.

Another 1.7 million are imprisoned within the Gaza Strip, blockaded by both Israel and Egypt and subjected to continuous military assaults such as the criminal Israeli siege of last summer that claimed the lives of over 2,300 men, women and children.

These predations have underscored the reactionary, antidemocratic character of any so-called Palestinian “state” that might emerge under the aegis of US imperialism, the Zionist ruling elite and the Palestinian bourgeoisie, should that ever come to pass. It would be an impoverished, discontinuous, demilitarized entity, essentially a prison for the Palestinian masses.

Under these conditions, the pretense that the so-called “peace talks” provided a way out for the Palestinian people was not merely a fiction, but an obscenity. Yet the pretense served a useful purpose for all those involved.

For Israel, it provided a mask for the predatory policies it pursued in effectively annexing ever-greater portions of the territories it seized in the 1967 war. For the Palestinian Authority, it served as a rationale for the Palestine Liberation Organization’s transformation into a client regime of US imperialism and an auxiliary police force for the Israeli occupation, securing in the bargain foreign aid and loans that flowed into the pockets of the corrupt leadership around PA President Mahmoud Abbas.

For Washington, the “peace process” allowed it to posture as a neutral party attempting to secure a just settlement for both Israel and the Palestinians, a lie seen as essential to its attempt to secure the collaboration of Arab states in US imperialism’s unending wars of aggression in the region.

Everyone—most of all the Palestinians—knew that the process was a fraud, but those directly involved were not supposed to say so publicly. In his explicit rejection of a Palestinian state, Netanyahu has cut across US interests in the region.

This comes on top of his March 3 anti-Iranian tirade to the US Congress, which was organized in league with the Republican Party leadership in an attempt to sabotage any negotiated agreement on Tehran’s nuclear program. The Israeli regime remains intent on using the spurious claims of a nuclear threat from Iran to draw the US into a war for regime change in order to further Israel’s own strategy of exercising unassailable dominance over the countries of the region.

This runs counter to the current policy pursued by the Obama administration, which aims at reaching at least a temporary accommodation with Tehran as Washington prepares for new military confrontations around the globe.

While Obama vowed that, his disagreements with Netanyahu notwithstanding, “our military and intelligence cooperation to keep the Israeli people safe continues,” the recent clashes underscore the crises gripping both US imperialism and its obstreperous Zionist client state. Both seek a way out of their respective crises by military means, but their immediate timetables and agendas are significantly at odds.

For both the Palestinian and Israeli working class, the reelection of Netanyahu on a platform of unconcealed Zionist aggression and reaction only underscores the absence of any way forward based on the program of nationalism.

For Jewish workers in Israel, Zionism is a trap, subordinating their interests to those of a narrow oligarchy of capitalist billionaires and multimillionaires, while the ruling establishment seeks to divert the immense tensions generated by poverty, rising prices, austerity cutbacks and record inequality into ever more dangerous military provocations against the Palestinian people, the surrounding Arab countries and beyond.

For Palestinians, the protracted fraud of the “peace process” has laid bare the dead end of Palestinian nationalism and all of its variants, from Fatah to Hamas, all of which articulate the interests not of the working masses, but of rival sections of the Arab bourgeoisie.

Nowhere is the necessity for the international unity of the working class posed more sharply than in the Middle East. There is no way out of the present impasse and the threat of ever bloodier catastrophes outside of Arab and Jewish workers uniting against imperialism and its Zionist and Arab bourgeois agents.

Bill Van Auken

 

http://www.wsws.org/en/articles/2015/03/24/pers-m24.html

Poor fetishes, poor critiques: gentrification as violence

By Gloria Dawson On March 23, 2015

Post image for Poor fetishes, poor critiques: gentrification as violenceHating on hipsters is not the answer to gentrification. If we want to reclaim our cities, we should organize for genuinely affordable housing in common.
Recently, ROAR published an article entitled The Poor Fetish. The piece argues that in cities like London, bored and alienated middle-class people working in ‘bullshit jobs’ are driving gentrification because they pursue and participate in the commodification of ‘working-class’ and minority cultural pursuits and spaces. While I agree that this process of commodification exists, I want to counter some of the ways in which the author uses general observations about class and culture to draw incorrect conclusions about the social and cultural exclusions and enclosures that occur in major cities today.As someone who researches and organizes around the displacement and immiseration of those of us on low incomes, I think that at least a basic understanding of the political economy of cities is essential for the effort of formulating an appropriate answer to gentrification and displacement.

Hating on hipsters

The article, like several others that have been doing the rounds recently, follows some of the common themes of what I call the ‘hating on hipsters’ critique of gentrification, according to which it’s the consumption patterns of individuals that are ultimately to blame for the displacement of working class communities. I don’t have any substantial dispute with the claim that people often practice a form of cultural tourism (while at the same time trying to keep other cultures at arm’s length) or that for most people in the cities of the Global North work is emotionally demanding, demeaning and pointless. However, a critique of forms of consumption and affective labor doesn’t get us very far in correctly and powerfully understanding the violence of gentrification.

It is true that people who are not poor get off on poverty chic and it is also true that that this appropriation can be hurtful if you happen to be poor (and I mean poor in many senses, rather than just having little money). It is also true that people make money from that desire for a certain kind of consumption; this is a form of commodification. But we should avoid the assumption that we profess to despise: that there is somehow an ‘authentic’ culture which can only be produced and consumed by the poor, people of color, and the underclass. The logical extension of some of these arguments can be fairly damaging.

For example, alongside some persistent, intersectional and effective organizing around social and private rents in Berlin (another hotspot for both cultural appropriation and gentrification), there have been attacks on middle-class students and foreign workers in the name of ‘anti-gentrification’. These incomers represent a ‘hipster’ dweller resented by those who see themselves as ‘indigenous’ and authentic to the area, and rightly or wrongly see their claim to that area under threat. Here we see that even in the multicultural cities of the Eurozone, culture-based analyses of gentrification can lead to xenophobia.

In another example, a recent US blog on gentrification in West Coast cities recommended its middle-class, incomer reader to combat gentrification in their neighborhood by shunning culturally appropriative spaces like chic lo-fi coffee bars and instead stick to ‘mom and pop’ shops that had existed in the neighborhood before they moved in.

The problem is that a consumption-based analysis of gentrification leads people to attempt to preserve the ‘authentic’ nature of a particular area. If only all of us had lived long enough to understand that in no meaningful way are cities everlike they were before. As this excellent piece on aesthetics and gentrification puts it, “the failure to challenge the formal identity between aestheticisation and commodification makes any attempt by first-wave gentrifiers to somehow ‘stay true’ (on an aesthetic level) to the spirit of the areas they are gentrifying seem ludicrous, if not… downright offensive.”

The urban middle class: privileged or precarious?

My main issue, however, is with the author’s claim  that “with intimate knowledge of how the other half live comes an ugly truth: that middle-class privilege is in many ways premised on working class exploitation. That the rising house prices and cheap mortgages from which they have benefited create a rental market shot with misery.”

Here, the author equates ‘middle-class’ with ‘property-owning’. Yet many fully middle-class professionals on higher than median wages can only ever dream of buying property, especially in London and the South-East. On the other hand, many older working-class people own their own homes. Indeed, the ‘right to buy’ council housing has been a specific policy driven by the ideology that cities must be ‘regenerated’ — in other words, placed in the hands of private (individual and business) ownership — in order to promote and expand the ‘home-owner’ class.

The class analysis of the article thereby manages to exclude practically everyone I know. The author claims that “never will they [the middle-class consumer] face the grinding monotony of mindless work, the inability to pay bills or feed their children, nor the feeling of guilt and hopelessness that comes from being at the bottom of a system that blames the individual but offers no legitimate means by which they can escape.” With the growing precarization of even previously stable forms of ‘middle-class’ labor (medicine, law,  teaching, especially in higher education), few of us are really immune from these anxieties and risks. Yet according to this piece, the middle-classes never suffer wage repression, retaliatory eviction, redundancy, battles with the JobCentre, and so on.

Secondly, even if this class delineation were correct, the power over property ownership in cities like London does not primarily lie in the hands of middle or higher-income workers, but in the hands of private developers, large-scale landlords, and government itself. Gentrification, as Rachel Brahinsky puts it, is “capitalism playing out in the landscape. It is essentially our economy’s urban form.” It is a process involving time, land and rent, and it cannot occur without a planning and governmental framework to support it. The root of gentrification is the ability of landlords to command higher and higher rents after a ‘rent gap’ has been established in an area that has experienced less investment than other areas (or, in London, just that it’s not as expensive as everywhere else).

It’s capitalism, stupid!

Gentrification is therefore complex and cyclical, and undoubtedly the presence of coffee shops allows landlords to charge more to (housing and business) tenants. It also concurrently involves wholesale privatization of public spaces, especially retail. But if poverty and culture are sometimes commodified, buildings and land always are. The Poor Fetish article identifies gentrification as “different kinds of shops opening up,” but apart from its odd presentation of the significance of property ownership, it doesn’t actually talk about housing. Espresso Bars are symptoms of gentrification far more than they are the underlying causes.

The problem, of course, is that the causes of gentrification are hard to spot — by the time the coffee shop has opened, or the big art gallery, or the enormous utopian hoarding has gone up, a lot of its processes have already taken root in the area. Contracts have been signed. Money has moved. Investment funding has been leveraged. Visible and objectionable as they may be, cultural appropriation or ‘fetishisation’ is not what’s violently displacing low and middle-income people in the capital; it’s capitalism, stupid!

In my work on traditional retail markets and city center regeneration, I see how the consumption and culture-based analysis of gentrification I am critiquing here quickly becomes an argument about changing consumption preferences. This argument is then repeatedly used as a reason to privatize, reduce and displace small businesses, despite them being popular and profitable. In other words, local government and the private sector use the very arguments made by ‘hating on hipster’ critics to entrench socio-economic divisions and displace low-income businesses and consumers.

Yet even as a critique of retail gentrification, the piece fails, because it pins consumption patterns on the preferences of individuals and cultural groups, and not on the way in which regeneration and commercial rents are largely controlled by state and private actors. Indeed gentrification (in its guise as ‘regeneration’, which usually involves retail, business, leisure, other amenities and housing destruction and redevelopment) is often at its most vicious and comprehensive when conducted by these actors in the name of ‘regeneration’ and ‘renewal’.

The Elephant and Castle regeneration scheme in South-East London, a partnership between a large local authority and a large international property developer, is perhaps the most outstanding example of this in London at the moment. Have a look at wonderfully comprehensive web archives like HeygateWas Home or Ward’s Corner Community Coalition and tell me whether you still think it’s the art students shopping at small businesses and markets and entrepreneurs opening up coffee shops who are the problem here.

Reclaiming our cities as commons

Perhaps the most unhelpful aspect of articles like this one (and they are, as I have indicated, all too frequent) is that they give no indication that this situation can be changed. In the ‘hating on hipsters’ vision of gentrification, the middle classes are bound to live boring lives and their escape from these boring lives is fundamentally doomed. The working class, meanwhile, can only look on in horror as their authentic culture is destroyed. No one has any agency. Indeed the article itself, like the system it identifies, serves mainly to blame the individual while offering no legitimate means by which they can escape.

For few years now I have been working on, organizing around and thinking about how we can reclaim and rebuild cities that are, for want of a better phrase, held in common; and I see a great deal of inspiring action and a very effective push-back against these gentrification phenomena, especially in London. Thanks largely to committed, cross-tenure, networked organizing, condemned social housing is being re-occupied, tenants are staying in their homes, community-led regeneration plans are receiving planning permission, and some local authorities (mainly due to the pressure from below and their appallingly long housing lists) are actually building social rented housing.

Networks of organization around the principles of the right to the city are forming, recognizing that we are all people who live, work and purchase things and experiences. There is not always a simple class struggle in this process, but there are alliances and commonalities around the principles of displacement, community and the public housing system which bring together huge numbers of people who are realizing what they share. Those who stand in the way of these commons are now being named: large private developers, politicians and unelected council officers, and complex multi-actor mechanisms known as Private Finance Initiatives (PFI).

The answer to gentrification is not agonizing over where you sip your coffee, snort your coke (if you must) or choose your cauliflower. If we actually want to build a city for everyone, we should support and participate in those organizing efforts against displacement, against privatization, for housing held in common and at rents everyone can afford. Those of us writing about the misery-inducing phenomena produced by capitalism have a constant responsibility to understand and explain these issues in terms that allow us the possibility to destroy, re-form and transcend them.

Gloria Dawson is a writer and researcher, focusing on housing (particularly precarious and temporary housing) regeneration and social movements. Originally from London, she now lives in Leeds, UK. She blogs attrespassingassemblies.tumblr.com.

 

http://roarmag.org/2015/03/gentrification-critique-structural-violence/

 

BLOGGER COMMENT:

The gentrification problems, the terrors of displacement and cultural annihilation, are directly attributable to the forces of “free markets.” libertarian excess, or what we currently call “capitalism.” Hard to define the system these days — oligarchy? — but the forces of capital in the hands of a few — venture capitalists, real estate investors, and, in San Francisco at least, the tech corporations — have created an imbalanced social structure that begs for redress.Personally, I don’t blame individuals, tech workers, wealthy “hipsters” and the like, for creating the problems. The anger should be directed at big, voracious corporations like Google, Apple, and FaceBook as well as the overvalued “unicorn” corps.

On a more existential level, however, I think much of the negative class conflict in SF arises from the arrogance and elitist attitudes of many of the tech workers towards those who have less than they, or who are not members of the tech class.