UCPA | News Analysis
Credit Flow: Federal Reserve Hands Out $28.38 Trillion to World Capital PDF Print E-mail
Written by the Central Committee of the Workers Party in America   
Friday, 03 December 2010 00:00

The capitalist media is calling it a “backdoor” or “shadow” bailout. But it would be more appropriate to call the massive handouts to large banks (in the U.S., Europe and Asia) and major corporations by the Federal Reserve the Mother of All Bribes.

In documents released by the Fed, it was revealed that Washington’s central bank gave out trillions of dollars in short- and long-term loans with interest rates as low as 0.007 percent ($7 for every $1 million lent).

Among the largest single recipients of this historic handout are Citigroup ($1.8 trillion), Morgan Stanley ($2 trillion), Goldman Sachs ($800 billion) and Bear
Stearns ($1 trillion). Alongside these banks, major corporations like General Electric, McDonald’s, Verizon and Toyota gorged themselves at the trough. Moreover, the Fed sent out over $12 trillion to central and major banks in Europe, Asia and Australia.

All told, across the 11 programs created by the Federal Reserve in the wake of the Panic of 2008 and beginning of the Second Great Depression, $28.38 trillion was lent or given out to U.S. and world capitalism.

To put that number in perspective, the entire annual Gross Domestic Product of the U.S. — the sum total of the value of all things produced in this country — is about $14.26 trillion. The Fed programs ran for two years, and the total amount is for that period. This means that the Federal Reserve
lent or gave out all but about $120 billion of the total value of everything this country produced from Oct. 2008 until Oct. 2010.

(And this is on top of the over $8 trillion handed out by the U.S. Treasury as part of the 2008 “Troubled Asset Relief Program” round of bribery and corporate welfare.)

U.S. Senator Bernie Sanders (I-Vt.), whose legislation led to these revelations, was particularly indignant about the trillions sent to banks in other countries. This self-described “Socialist” (actually, Sanders is just a lukewarm social democrat who is quite comfortable among Democrats) incredulously
asked: “Has the Federal Reserve become the central bank of the world?”

The short answer to his question is no.

There are only two reasons why a central bank makes those kinds of “liquidity swaps” with other central banks: a) the lending country is attempting to dominate the others economically, or b) the lending country is being targeted for economic domination.

In the case of the United States, the systemic crisis that began two years ago has greatly agitated the ruling classes of the other Great Power states. Many of their central banks had been suckered into buying the “credit default swaps” and other forms of repackaged debt created by the Fed to spread around all the toxic assets from the housing bubble.

The American ruling classes were put into a very uncomfortable position by the Panic of 2008, with many central banks wanting to cash out that regifted garbage immediately or else face a snowballing economic crisis of their own (like we’ve seen in the last year in Greece, Ireland, Portugal, Italy and Spain).

In order to avoid the greater crisis that would be associated with other countries calling America’s debt, the Fed agreed to trillions of dollars in “liquidity swaps” with the European Central Bank and Swiss National Bank (and later other banks). The end result was to send the flow of the worldwide U.S. money supply into negative numbers (which kept credit in the U.S. and from the U.S. frozen for months) and, at the same time, loosen up European credit by opening up the U.S. domestic market as a means of expanding the circulation of its currency and credit.

When these short-term “swaps” ended, each central bank paid the other back with interest — that is, at the interest rate each central bank set. What does this mean? It means that the central banks in other countries paid the Fed back at 0.25 percent, while the Fed paid back the other central banks at higher rates.

The Wall Street Journal has hailed the release of these documents, going so far as to thank their “favorite Socialist” (Sanders) for making it happen. For the most part, this is because it explains how the pillars of American capitalism survived the onset of the Panic — and why the credit crisis has lasted until now.

This information is also important for working people, because it exposes the extent to which American capitalism will go to save itself, while telling working people to starve on the streets and “sacrifice,” and the result of the disparity between U.S. economic and political-military power in relation to the other Great Power states (and the client states within the Anglo-American imperialist cartel).

Such revelations will aid workers in better understanding our struggle ahead.
 
War Council: NATO Summit Reveals Plans for New Wars of Intervention PDF Print E-mail
Written by Editor In-Chief   
Monday, 22 November 2010 00:00

LISBON, Portugal, Nov. 21 — At the close of the summit of North Atlantic Treaty Organization members yesterday, a new strategic plan was adopted by the alliance that, while papering over other deep differences, commits itself to new wars of intervention.

According to the new plan, the seventh adopted by NATO since its formation and the first one since 1999, the military will play a larger role in the work of the alliance. No longer just for defense, NATO, according to its new strategy, is now to be the world’s police, staging “interventions” around the world similar to what was already done in the former Yugoslavia, and is currently taking place in Afghanistan, the Horn of Africa, etc.

Indeed, among the decisions reached by the alliance was agreement to stay in Afghanistan well after the original July 2011 deadline. That date is now the beginning of a “transition” to a more stable Afghan client state, with NATO (mainly U.S.) troops occupying the country for at least another three years. After the end of 2014, Afghanistan will see combat forces leave, but tens of thousands likely remaining as “advisers,” similar to
the current state of the occupation in Iraq.

The new “strategic concept” commits NATO to intervene militarily for a host of reasons, including “proliferation of ... weapons of mass destruction,” “instability ... by fostering extremism, terrorism and transnational illegal activities,” the attacking or disrupting of “vital communication, transport and
transit routes on which international trade, energy security and prosperity depend,” and “key environmental and resource constraints, including health risks, climate change, water scarcity and increasing energy needs.”

In other words, NATO will invade your country if it thinks you have something one of its member countries wants, or doesn’t want you to have. Whichever reason will fit.

Major disputes over relations between NATO and Russia continue to keep members divided. While Germany, France and other EU states want better relations with Russia, the eastern European states demanded a strong commitment to “collective defense,” meaning that any one of them could
drag humanity into a new (nuclear) world war to satisfy their grudges against Moscow.

With this turn by NATO, working people need to be on guard against attempts by the Atlantic alliance to start new wars of intervention, broaden existing conflicts and plunge the world into a new workld war.
 
Crash and Burn PDF Print E-mail
Written by Henry Miles   
Monday, 22 February 2010 06:06

‘Middle Class’ Loser Ends His Life the Way He Lived It

AUSTIN, Tx., Feb. 21 — Much has been made in the last few days about the suicide bombing of the Austin federal building by Andrew Joseph “Joe” Stack. What hasn’t been made by the pundits, politicians and even some leftists, however, is much sense.
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Obama Opens Attack on 1st Amendment PDF Print E-mail
Written by Editor In-Chief   
Friday, 19 November 2010 00:00

WASHINGTON, D.C., Nov. 18 — After two weeks of languishing in a media-induced coma, more information is coming to light about the post-midterm Obama and his embrace of the corporatist reactionary right wing.

Anyone paying attention already learned about Obama’s plans for dismantling public education and breaking the backs of public school unions. His “Race To The Top” program and support for the mass firing of teachers in “failing” schools, while praising religious and private “charter” schools,
have done nothing to reverse Washington’s systematic strangulation of public school districts. But few expected to see what took place in the U.S. Supreme Court on Nov. 3.

On that day, Obama’s Solicitor General, Neal Kaytal, intervened in a case that involved the use of taxpayer money to provide money for students at exclusive religious schools. Residents of Arizona were suing the state for it allowing taxpayers to divert up to $500 per individual from the state treasury to one of a number of private “student tuition organizations,” who then give scholarships for students to attend private schools, including
religious schools that only admit young people who believe in a particular religious sect.

The suing taxpayers claim that the state-organized and sponsored funding of religious institutions is a violation of both Arizona law and the “establishment clause” of the First Amendment of the Constitution.

In response, Kaytal not only argued that Arizona’s tax scheme was constitutional, but went so far as to argue that the taxpayers had
no “standing” to challenge the law in court.

He argued that, because the taxpayers chose to not divert their owed taxes directly to the state treasury, they could not claim “injury” in court. Many of the justices were visibly disturbed by this argument. Kaytal’s argument, in their view, was that this was an issue without precedent, and therefore case law and previous decisions did not apply.

Specifically, Kaytal argued, rulings like 1968’s Flast v. Cohen, which allowed taxpayers to stop the use of tax money for secular instruction
in religious schools and recognized the standing of the general taxpayer in court, was “a very narrow exception” and did not apply in the current case because Arizona’s scheme had not existed in the late 1960s.

When his former boss, Associate Justice Elena Kagan, mentioned five other cases that referred to Flast as precedent, and asked if he believed the Supreme Court justices, some of whom currently sitting had heard at least one of those cases, and the solicitors general failed to “recognize that fact,” Kaytal said yes.

The constitutional implications of Kaytal’s (and, by extension, Obama’s) argument are clear: stripping taxpayers of their standing in court in cases involving government funding of religious institutions of various types, from schools to “recreational facilities,” would remove a ley legal barrier for demolishing the separation of church and state.

Governments with theocratic officials in charge would be free to set up any number of schemes to funnel public money into their preferred religious sects and entities, and not have to worry about legal accountability.

But the argument itself also seeks to undermine the use of precedent as the basis for law. Kaytal’s argument smacks of the “remedy” created by the Supreme Court in a 5-4 decision installing George W. Bush in the White House — a “remedy” that was to be regarded as a “non-precedent” by the court.

In other words, Kaytal was making a direct appeal to the five corporatist justices to make another “non-precedent” decision It is a clumsy, if not comical, display of groveling for the trust of the corporatist ruling classes.
 
It’s Happening Here PDF Print E-mail
Written by the Central Committee of the Workers Party in America   
Monday, 08 February 2010 06:06

The Tea Party Movement and the Crisis of Capitalist Rule

The close of the first Tea Party Convention last Sunday marks a turning point in developing political crisis facing the exploiting and oppressing classes.

What began a little over a year ago as a disparate collection of rightwing populists and disaffected neoconservatives has been steadily galvanized into a mass movement of shock troopers to defend capitalist rule.

More to the point, in the course of the last year, the Tea Party movement have been politically transformed from a relatively “loyal” conservative populist opposition into a movement of semi-populist Nativist fascism.
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