Stocks around the world are plummeting. Monday saw the worse single-day drop since the financial collapse of 2008. Tuesday, stocks rallied again, only to have gains wiped out in a fresh panic on Wednesday. Underlying the turmoil is the growing realization that a new global recession is likely.
So here we go again. The markets, in the words of Bob Doll, chief equity strategist at BlackRock, the world's largest money manager, are gripped by a “total fear.” This time around it’s largely based on increasing anxiety over slower growth and mounting government debt levels. The Greek bailout of a couple weeks ago failed to calm markets as the sovereign debt crisis in Europe spread to the larger economies of Italy and Spain, which many economists say are “too big” to be bailed out.
Meanwhile, the bickering between the Democrats and Republicans in the debt ceiling debate unnerved markets, raising new doubts about whether the U.S. government could manage its own debt. On Friday, the private rating agency Standard & Poor’s downgraded U.S. debt from AAA standing, the highest rating, to AA+. Mind you this is one of same agencies that gave junk mortgage-backed securities AAA ratings, adding to the subprime meltdown in 2007-08.
The downgrade is more of an attempt at political blackmail to force the U.S. government to carry out the cuts it has promised in the rotten bipartisan debt deal. It’s not unlike the maneuvering of the intransigent Tea Party Republicans who wouldn’t budge an inch on the debt deal. But let’s make no mistake, nothing Obama proposed or continues to propose would prevent this crisis. From the start, he was prepared to make unprecedented cuts to social programs, including public sector layoffs, which even most pro-capitalist economists agree will only further depress the economy. Republicans have served to provide cover for this anti-working-class agenda.
Government debt around the world has racked up over recent decades from huge tax cuts for the wealthy, corporate welfare and debt-fueled spending. Then, in 2008-09, government balance sheets spiked when trillions of tax dollars were used to bail out the banks. After making terrible gambling bets, Wall Street was essentially handed the keys to the U.S. Treasury. This has meant taxpayers being saddled with responsibility for what used to be Wall Street’s private debt.
Corporate politicians, following the demands of the markets, have answered this skyrocketing debt with massive cuts to public sector jobs and wages, while slashing social programs. But when there’s less money in the pockets of working people tax revenues fall, consumer spending falls, and the debt continues to rise. Contrary to the idiotic blathering of the Republican Party and the right-wing talking heads in the corporate media, cutbacks in times of recession only make the economy and the government debt worse! Greece is the poster child of this failed strategy.
For the last two years of the so-called recovery, socialists have warned that none of the underlying problems of the global economic crisis of capitalism have been solved. The recovery was based on a very fragile foundation, which could crumble as the underlying weaknesses resurfaced.
Ordinary working people have been scratching their heads, in any case. We haven’t seen a recovery! Mass unemployment continues, and wages have stagnated. In fact, 88% of the growth during the recovery has gone to corporate profits, while a measly 1% has gone to wages and salaries. This has been both a “jobless and wageless recovery” (Greenhouse, www.nytimes.com, 6/30/11).
Now even the bosses’ recovery may be over, as the prospect of a double-dip recession is becoming increasingly likely. At best, the capitalists can only hope for anemic growth and utter stagnation; at worst, a full-blown recession. While panicking investors demand state intervention, governments this time around have exhausted most of their usual tricks to – temporarily - stave off a collapse.
Economist Nouriel Roubini has stated that it may be “mission impossible” to fend off another recession. “Until last year,” Roubini explained, “policymakers could always produce a new rabbit from their hat to trigger asset reflation and economic recovery ... But now we have run out of rabbits to pull out of hats,” (www.ft.com, 8/7/11).
Time to Fight Back
It’s time to face up to reality. There is no going back to the good ol’ days. A good economy is not around the corner. The jobs aren’t coming back. The wages aren’t coming back. The social services are not coming back. It’s only going to get worse - unless we to stop taking this lying down and start fighting back.
How dare they try to solve their crisis on our backs! It’s time to say we’re fed up. It’s time to raise hell. It’s time to take a cue from the working and poor masses of Egypt who rose up and brought down a powerful dictator. The message sent around the world was clear: working people are powerful, too. In fact, we’re more powerful.
Only mass social struggle can change the course of events. Enough with the two parties of big business, who are only fighting about how best to attack the working class while making sure they still get re-elected. We need millions in the streets across the U.S. We need to revitalize the labor movement and other social movements, uniting working people with bold, unapologetic demands. Let’s create our own political voice for the workers’ movements by forming a new party that can lead and unite our struggles.
This is not our debt to pay. We say: Tax the super-rich and big business, and make the wealthy elite pay for their own crisis; stop all the layoffs and cuts to social services; we demand a massive jobs program; end the wars and slash military spending; single-payer health care now. And that’s just for starters.
The day-to-day issues that we face, like trying to live paycheck to paycheck or worrying about how to find a new job, cannot be separated from the deepening crisis of capitalism. If this system can’t afford decent jobs, services and a good standard of living for all, we can’t afford this system. We have to link the basic, day-to-day struggle to a more profound movement to transform society fundamentally, replacing the rotten system of capitalism with democratic socialism. Let’s put an end to the dictatorship of the markets and the worship of profit above all else. We need a worker-run economy and society that puts human needs first. Our future is at stake. It’s time to organize and fight for it.