The Ruthless Truth blog

by Barry Grey

Global Research, March 12, 2010

World Socialist Web Site – 2010-03-11

A rash of new layoff announcements and government reports on job losses give the lie to the claims of the Obama administration and the media that the employment situation is “stabilizing.” Last Friday, the administration hailed the Labor Department’s report that US payrolls shrank by “only” 36,000 jobs in February and the official jobless rate remained at 9.7 percent as proof that its policies are working and the economy is recovering.

In fact, the so-called “recovery” is limited to the big banks and major corporations, which are profiting from trillions of dollars in taxpayer bailouts, virtually unlimited and cheap credit, and the use of mass unemployment to drive down wages and increase the exploitation of the working class. An unprecedented assault on the living standards of the vast majority of the American people is being carried out under the direction of the Obama administration, creating a social crisis without parallel since the Great Depression.

On Tuesday, the Labor Department reported that the official unemployment rate in January rose in 30 states. Sixteen states had jobless rates higher than the national average of 9.7 percent, including Michigan (14.3 percent), Nevada (13 percent), Rhode Island (12.7 percent), South Carolina (12.6 percent) and California (12.5 percent).

Unemployment in California, Florida, Georgia, North Carolina, South Carolina and Washington DC rose to the highest levels since records began in 1976.

A separate Labor Department report showed that mass layoffs (50 or more positions) increased nationally in January to 1,761, leading to at least 182,261 workers losing their jobs.

On Tuesday, Chevron, the second largest US oil company, announced it will cut 2,000 jobs, or more than 3 percent of its workforce. This follows a reduction of 2,000 jobs in 2009.

Exelixis, a company in South San Francisco, said it will lay off 270 workers—40 percent of its work force.

The Minnesota Department of Human Services announced a cut of 200 full-time mental health jobs.

These are only the latest in an ongoing wave of layoffs hitting every sector of the economy. Alongside job-cutting by private corporations, hospitals and state and local governments are shedding jobs at an accelerating pace in response to gaping budget deficits.

The American Medical News web site reported 13 mass layoffs at hospitals in January affecting 995 workers. Mass hospital layoffs announced in February included over 300 workers at St. Vincent’s Hospital in Manhattan, 268 full-time jobs at Forrest Park Hospital in St. Louis, and some 900 jobs at Jackson Medical System in Miami.

This week, the CEO of the Jackson system in Miami announced plans to close two hospitals and eliminate another 4,500 jobs—37 percent of the system’s workforce.

The overall workforce at US airlines shrank 3.2 percent in January compared to a year earlier, the US Department of Transportation announced Wednesday.

Across the US, in big cities, small towns and rural areas, schools are being closed and teachers laid off, college tuition is being raised and courses cancelled, bus routes—including school buses—are being eliminated, libraries are being closed, parks, swimming pools and other recreational and cultural facilities are being mothballed.

Utility shutoffs, with the inevitable consequence of deadly house fires, home foreclosures, hunger and poverty are rising.

The Obama administration and the Democratic-controlled Congress are doing nothing to provide serious relief for the unemployed or create new jobs to employ the jobless. They refuse to bail out cash-starved states and cities, having bailed out the banks to the tune of trillions of dollars, instead demanding that local governments carry out unprecedented attacks on basic social services.

The real attitude of Obama toward the working class was demonstrated in his public support for the mass firing of teachers in Rhode Island, after they resisted demands for longer work hours with no increase in pay. This goes hand in hand with a health care overhaul entirely focused on cutting Medicare and rationing health care for ordinary Americans, and the setting up of a bipartisan commission to prepare major and permanent cuts in entitlement programs—Medicare, Medicaid and Social Security—on which tens of millions of working people depend.

The administration and both parties reject out of hand any measures opposed by the banks and corporations—such as a public works program—to provide jobs for the unemployed. The so-called “jobs” bills working their way through Congress are nothing more than tax windfalls for business.

The assault on every aspect of life of working people is being carried out in the interests of a bankrupt system—capitalism—a system that subordinates social needs to the personal enrichment of a wealthy elite. In the US and around the world the corporate-financial elite is imposing brutal austerity measures to make the working class pay for the crisis of the profit system.

The trade unions function as adjuncts of the ruling class, devoting all their efforts to the suppression of popular opposition in return for a share in the spoils from the exploitation of the workers.

Anger and resistance are growing, not only in the US, but internationally. Over the past several weeks, strikes and mass protests have broken out across Europe in opposition to government austerity measures, dictated by the banks.

On March 4, tens of thousands of students and workers demonstrated in the US in opposition to education cuts. This was an initial expression of popular opposition that will grow in the coming months. If this opposition is not to be diverted and led into a blind alley, however, it requires a new perspective and program.

The basic needs of working people and youth are incompatible with the policies of the Obama administration and both political parties, and the capitalist system which they defend. The entire working class must be mobilized as an independent political force against Obama and the two-party system to reorganize society in accordance with social needs, not private profit.

On April 17 and 18, the Socialist Equality Party, its youth movement, the International Students for Social Equality, and the World Socialist Web Siteare holding an emergency conference on the social crisis and war. This conference will discuss a new socialist strategy to unify the working class against war and the assault on jobs and social programs.

We urge all workers and young people looking for a way to fight back to attend the conference. For more information and to register, click here.

Barry Grey is a frequent contributor to Global Research. Global Research Articles by Barry Grey

http://www.globalresearch.ca/index.php?context=va&aid=18081

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by Tom Eley

Global Research, February 14, 2010

Wold Socialist Web Site – 2010-02-13

New studies reveal that the social divide between rich and poor in the US has grown much starker in the current economic crisis, and that even before it hit the country was the most unequal of the advanced economies, with great wealth and extreme poverty having become virtually hereditary conditions.

President Barack Obama has done nothing to reverse decades of wage stagnation, mounting poverty, and attacks on the social welfare system. On the contrary, following George W. Bush, he has seized on the crisis to redistribute wealth to a tiny financial elite through the ongoing bailout of the finance industry.

This demonstrates a fundamental political reality: no reform that benefits the broad masses can come from a government and two-party system so openly in the clutches of Wall Street. The financial aristocracy’s grip over all the levers of state power must be broken by the working class, independently mobilized behind a socialist program.

The impoverishment of the working masses amidst the current economic crisis is documented by a recent report from Northeastern University analyzing unemployment in 2009, based on income data for the previous year.

Unemployment in the fourth quarter of 2009 for those in the bottom 10 percent of household earnings was at the Depression level of 31 percent. A broader measure of unemployment, the labor market underutilization rate—which combines unemployment, underemployment, and those who have fallen out of the workforce because they have ceased actively searching for work—was over 50 percent among the bottom decile of earners, for the second decile, 37.6 percent, and for the third and fourth lowest income deciles, 17.1 percent and 15 percent, respectively. For the top 10 percent of earners, the underutilization rate was 6.1 percent.

The data is indicative of “a true Great Depression,” according to the report, yet “there was no labor market recession for America’s affluent.”

The sharp polarization that reveals itself in fabulous wealth for a handful, on the one hand, and unemployment, wage cuts, homelessness and hunger for broad layers of working people on the other, marks an intensification of longer-term trends.

According to the Economic Policy Institute (EPI), “While many middle-income families have lost jobs, homes, and retirement savings during the latest recession, their economic woes date back much further.” In the 30 years before 2008—the onset of the current crisis—nearly 35 percent of total income growth in the US was cornered by the top one-tenth of 1 percent of income earners. The bottom 90 percent shared only 15.9 percent of income growth in the same period.

According to the United Nation’s Gini coefficient, which measures the national distribution of family income, the US had the highest level of inequality of the highly industrialized countries, based on the data available in 2008. It was ranked as slightly more unequal than Sri Lanka, and on a par with Ghana and Turkmenistan. In the Central Intelligence Agency World Fact Book’s Gini ranking for 2008, the US fell just behind Cameroon.

The apologists for US capitalism have long claimed that, though inequality may be great, America is a land where anyone can go “from rags to riches” by “pulling themselves up by their boot straps.”

Not so, according to a new report from the Organisation for Economic Co-operation and Development (OECD), which concludes that in the US “mobility in earnings, wages and education across generations” is at or near the lowest of the advanced economies. The US joined Italy and Britain as the countries where a worker’s father’s earnings are most determinant of his or her own wages. Moreover, in the US the role of parents’ educational level on the educational achievement of their children was more pronounced than any other country, the report reveals.

The vast polarization of wealth in the US will only intensify. According to the Obama administration’s rosy economic estimates, unemployment will not return to its pre-crash levels before the end of the decade. More realistic observers, however, acknowledge that mass unemployment will be a fixture of US life, and higher-paying jobs destroyed in the recession will never return. Combined with declining home values, skyrocketing health care and higher education costs, chronically high unemployment will result in steadily rising poverty.

But for the CEOs and bankers perched at the pinnacle of US society, the economic crisis has proven an out-and-out bonanza, a recent New York Times report reveals. John G. Stumpf, the head of the bank Wells Fargo, took home $18.7 million in 2009. Jamie Dimon of JPMorgan was number two in banker pay with $17.6 million in compensation. Lloyd Blankfein, whose Goldman Sachs has reaped windfall profits in the financial collapse, was awarded “only” $10 million.

These big name bankers are only the tip of the iceberg. “There are probably thousands of people that are in the Millionaire Club—or even the Ten Millionaire Club—that have gotten no heat,” Wall Street compensation expert Alan Johnson told the Times.

Obama defends these obscene pay packages. “I, like most of the American people, don’t begrudge people success or wealth,” he said of the eight-figure rewards for the same financial executives whose firms have benefited from trillions in taxpayer support. “That is part of the free-market system.”

In fact “most of the American people” not only begrudge these ill-gotten gains. They wonder why they have yet to see news footage of bankers and traders arrested and hauled from their plush offices. Now working class anger is becoming increasingly trained on the political system, which, as a year’s experience with the Obama administration has taught, does the bidding of Wall Street regardless of which party controls the White House and Congress.

The antidote to the plundering of society that has gone unchecked for decades is the nationalization of the banks and their transformation into public institutions, democratically controlled by working people. The ill-gotten gains of the lords of finance must be expropriated and used to put in place a program of full employment, free universal health care, free higher education, and infrastructure development.

The fight for this program requires the mobilization of the working class in the US and internationally, independent of the Democrats and Republicans and all the political formations that defend the existing capitalist set-up.

Tom Eley is a frequent contributor to Global Research. Global Research Articles by Tom Eley

http://www.globalresearch.ca/index.php?context=va&aid=17621

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Revised figures show 8.7 million jobs lost since December 2007

by Andre Damon

Global Research, February 6, 2010

World Socialist Web Site

The official US unemployment rate fell to 9.7 percent in January, despite 20,000 jobs lost, according to monthly figures for December released Friday by the Labor Department.

The number of jobs, which the labor department called “essentially unchanged,” was affected by a number of contingent events, including the hiring of 9,000 temporary workers by the federal government to help with the 2010 census and the “inventory bounce” that took place in December.

The number of jobs lost comes on top of a sharply lower starting point than previously reported. On the basis of revised figures, the Labor Department now shows that a staggering 8.4 million jobs have been wiped out since December 2007, by far the worst downturn since the Great Depression.

The number of jobs lost in 2009 alone was revised upwards by about 600,000, including an increase in 11 out of 12 months. In particular, December’s figures were revised upward to show that the economy lost 150,000 jobs that month, instead of the 85,000 initially reported.

The unemployment rate, which is calculated on the basis of a separate survey, fell from 10 percent in December. One factor behind the discord between the jobs and unemployment numbers comes from the fact that the unemployment rate is very heavily adjusted for the fall-off in economic activity that usually happens in January. If one disregards this “seasonal adjustment,” there were 16.1 million unemployed people in January, up from 14.7 million in December. The non-seasonally adjusted unemployment rate actually rose sharply from 9.7 percent in December to 10.6 percent in January.

The improvement in the headline unemployment rate was nevertheless seized on by the media and Democratic Party to proclaim imminent recovery. “What a difference a year makes,” exclaimed Representative Carolyn Maloney, a Democrat from New York. “Today’s employment report … provides fresh evidence that the labor market has stabilized and our nation has turned a corner.”

Many economic commentators were decidedly less upbeat. When asked in a Bloomberg.com interview if investors will respond positively to claims of economic recovery, Anthony Crescenzi, a senior strategist at bond firm Pimco, replied simply: “No.” He said that such triumphalism is intended for political purposes, but Crescenzi’s peers did not “put a lot of weight” on claims of imminent recovery.

Crescenzi added, “We’ve seen Washington in high gear recently trying to paint a different picture of the economy,” but “the market understands that the underlying forces on the economy are still quite weak.”

Ethan Harris of Bank of America and Merrill Lynch, told Bloomberg.com, “The drop in the unemployment rate here is a bit of a fluke,” and that “this is a very choppy and somewhat disappointing report.”

The contradiction in the latest figures has also raised doubts about the impartiality of the official data. “The message is, you can’t believe what they tell you,” Joshua Shapiro, chief United States economist at MFR Inc, told theNew York Times. “Everyone goes crazy over today’s number, but history has been rewritten. Things are not comparable from month to month.”

In the longer term, the fall in the unemployment rate is related to workers dropping out of the labor force because they have given up looking for work. Since May of last year, the labor force has shrunk by about 1.8 million, amounting to over 1 percent of the previously working population.

In January, there were 2.5 million “marginally attached” workers, who would like to work but had not looked for a job in the previous four weeks. The number of such workers had grown by 409,000 from a year before. This figure is not seasonally adjusted.

Discouraged workers—a group within marginally attached workers—surged over 100,000 in January to 1.1 million, up from 734,000 a year earlier. These workers said that they stopped looking for work primarily because no jobs were available, instead of other reasons, like wanting to attend college.

The number of such workers topped one million for the first time in January, and last month’s increase was the sharpest since the start of the recession.

Young people were among the worst off, with the official unemployment rate for teenagers holding at 26.4 percent.

Long term unemployment also increased, with the number of people unemployed for over 27 weeks setting a new record, hitting 6.3 million, up from 6.1 million in December.

Retail trade posted an increase of 42,000 jobs, while manufacturing increased by 11,000. But this was outweighed by the elimination of 75,000 construction jobs. The government sector also showed a net loss of 8,000 jobs, as losses from state budget cuts outweigh temporary hiring for the census. Some 40,000 were eliminated in state and local government.

The loss of 20,000 jobs includes the growth of temporary jobs, about 52,000 of which were created in January. Since September 2009, 247,000 new temporary positions have been created, while the overall number of jobs has declined by 242,000.

Whatever jobs are created are not “going to be the type of high-paying jobs we like to see, it’s not going to full-time jobs; it’ll be part-time and contract labor,” said Ellen Zentner, senior US macro economist at the Bank of Tokyo.

Even as job losses mount, more work is being squeezed out of the workers who remain employed. Another recent report showed that, in the fourth quarter of last year, companies increased productivity, or the amount of work they can squeeze from each worker without paying more, by around 6 percent.

Andre Damon is a frequent contributor to Global Research. Global Research Articles by Andre Damon

http://www.globalresearch.ca/index.php?context=va&aid=17450

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James West
Seeking Alpha
Mon, 01 Feb 2010 18:18 EST

It took the onset of World War II to lift the world out of the Great Depression that began in 1929.
Ignore the historical hyperbole that claim Roosevelt’s "New Deal" had anything to do with it. It was war, plain and simple, that galvanized the U.S. manufacturing complex into debt-driven growth, and ended the period of stagnation following the economic contraction from 1929 to 34.
Bernanke’s theory is that the depression would have been averted had the Federal Reserve acted decisively and boosted liquidity – a theory he is now testing. At that time, the Fed was limited to how much liquidity it could inject by the fact that the available money supply had to be connected (at least partially) to the available gold on hand in U.S. reserves.
But scholars (to use the term loosely) agree – the advent of war was the end of the depression. War has since been recognized as good economic policy, and many U.S. administrations have embraced it as fundamental foreign policy.
I recently had a conversation with a senior Chinese government official who assured me that the Chinese observed the regime change machinations of the Bush administration with interest. He suggested that the precedents set by the United States in Iraq, Afghanistan, Panama, Colombia, Saudi Arabia, and myriad other coups overt and covert have thoroughly established the expectation among democratic citizens that forcible regime change of irresponsible governments is an acceptable tool in the democratic arsenal.
That the United States deploys this tool indiscriminately does not pass un-noticed. To the Chinese strategic thinkers, it acts to condone future regime change strategies lurking within the long range plans of expansion-minded countries whose resources may be reaching critical shortages due to excessive population.
Notice that virtually no criticism was leveled by China against Bush’s contrived Weapons of Mass Destruction fallacy, and no interference with the subsequent attack on Saddam Hussein’s fiefdom was seen.
An interesting tidbit in the news over the last 24 hours demonstrates just how easily the pre-text for war can be manufactured.
Five Chinese vessels maneuvered dangerously close to a U. S. Navy ship in the South China Sea on Sunday, closing within eight metres of the unarmed surveillance ship, the Pentagon said.
"This was a reckless, dangerous maneuver that was unprofessional" and violated international law, said Defence Department spokesman Bryan Whitman. The United States protested to Chinese authorities in Beijing and to the defense attaché in Washington over the incident, which occurred in the South China Sea, about 120 kilometers south of Hainan Island.
A Republican lawmaker called the standoff a critical "early test" for President Barack Obama just weeks before he meets Chinese President Hu Jintao in April.
Far from a provocative act of war, the unwillingness of both China and the U.S. to admit any sort of wrong-doing over the incident demonstrates the battle of wills that lurks just under the surface of U.S. – China relations.
According to the Pentagon, the targeting of the Impeccable came at the end of several days in which Chinese naval vessels had been stepping up their harassment in international waters.
The Pentagon insisted the Impeccable was engaged in "routine" and legal operations in international waters.
"The Chinese navy pursues peace and safeguards the security of the country," navy deputy chief of staff Major General Zhang Deshun told China Daily. On most levels, war between two of the planet’s superpowers is unthinkable. Since both are armed to the teeth with the most sophisticated of weaponry, it is difficult to envision a traditional war, where one side sends troops over to physically subdue the other side.
And any idea of a nuclear exchange is clearly self-defeating for obvious reasons. Chemical warfare ditto. Biological? Not in this century.
The third world war, which is, in fact, underway, is being fought economically, as evidenced by Timothy Geithner’s first verbal blunder as Treasury Secretary, where he accused the Chinese of "currency manipulation", referring to the suppression of the rise of the Yuan against the U.S. Dollar.
Considering U.S. suppression of gold over three decades to create the illusion of a strong U.S. dollar, this is a clear case of the pot calling the kettle black. But that is an entirely different set of cats to skin.
The bottom line is the Chinese, who are the largest foreign holders of United States Treasury Bills, have been underwriting U.S. economic growth for decades, and now hold billions in foreign reserves of a currency being diluted into fractions of its former worth. This monetary hyper-inflation has, in theory, the net effect of devaluing the U.S. dollar denominated foreign reserve holdings in tandem of China and every other holder of Treasurys.
It’s like two cowboys each holding a gun with trigger cocked at the other guy’s head, both of them yelling at the other guy to "drop the gun". The likelihood of a civilized resolution to such a scenario is just about as unthinkable as a nuclear world war.
China deliberately uses manipulation to maintain an undervalued currency. The need to create jobs for the sake of "social stability" has led them to adopt "export led growth strategies" based on an undervalued currency.
This equates to subsidizing its exports and foreign direct investment, and is essentially a tax on China’s imports.
The United States, on the other hand, actively manipulates the value of the United States dollar through the illegal and destructive manipulation of gold and precious metals futures markets, where there is such an accumulation of short interest, that it is inconceivable to think that those contracts will ever be covered by real gold. This amounts to an artificial premium on the United States dollar relative to other currencies, and acts ultimately as a tax on imports.
So the two largest economies are employing similar tactics to achieve identical goals. Both are failing, and the consequence is a global financial system in which confidence has been destroyed, currencies are impossible to value, and the only thing of real value (precious metals and other commodities) are twisting in the wind waiting for somebody to win the third world war.

http://www.sott.net/articles/show/202279-World-War-III-U-S-vs-China-

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The morning after Barack Obama’s first State of the Union speech, Gerald Celente says that the speech was just political theater and that nothing has changed. And, as Ben Bernanke comes up for a reconfirmation vote, Celente says that the system needs to cleanse itself and stop propping up failure

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