- Albert Einstein
According to the reports that are spreading through the media in the first few weeks of 2008, the U.S. economy is in downfall, and is heading towards recession.
For instance, mortgage giant Countrywide Financial reported a $ 1.2 billion loss in October, and K.B. Home, the fifth largest U.S. Homebuilder, has made a quarterly loss of $ 773 million. (BBC News, 8 January 2008).
The U.S. investment bank Bear Stearns had written down $ 1.9 bn Last year … leading to its first loss. (BBC News, 9 January 2008).
Citigroup, the largest bank of America – and of course the largest corporation of the whole world – is expected to cut up 32,000 jobs to stem rising losses (The Times, 8 January 2008). Citigroup announced $ 18 bn loss in last six months, the first ever loss in its 196 years history. (ABC News, 15 January 2008).
Leading investment bank, Merrill Lynch could see as much as $ 15 bn in losses, for the first time in its 94 years history. (New York Times, 11 January 2008).
The same trend is taking place in other western industrialized countries, for example, Britain’s economy has been hit hard by the world wide credit crunch that was sparked by the collapse of the U. S. sub-prime mortgage market. (The Associated Press, 7 January 2008).
So, what is sub-prime mortgage?
In the imperialist stage of capitalism, the role of finance capital (industrial capital + bank capital) is far more crucial than the role of commodity production. While China’s booming economy is mainly based on commodity production, the U.S. economy mostly relies on speculation, hedge funds and business of usury. As a result, in this wild industry the amount of finance capital has exceeded the amount of U.S. GDP. The amount of U.S. GDP according to the World Bank assessment in 2006 was, $ 13.2 trillion, and the amount of finance capital is the total sum of the U.S. banks cash which is tens of trillions of dollars – the reason behind the dollars down fall – here lays the decay of imperialism as a system!
This enormous amount of finance capital which has already destroyed the so-called third world countries’ economies through the acts of World Bank, IMF and other international lenders – as did in the 1990s in Argentina – is doing its nasty job in the domestic market too.
Finance capital acts by lending different kinds of loans and mortgages with constant increasing interest rates, overcharges, mis-sellings and fines. By doing this, each year hundreds of billions of dollars goes from the pockets of poor to accumulate in the pouches of minority rich. To do something about this accumulated money, banks under the slogan of “Borrowing now paying later” have offered credits and mortgages with high interest rates even to those with poor credit records and unpredictable incomes, to buy homes and other properties. These are called high risk credit loans and sub-prime mortgages. And when the borrowers can not pay back their debts, credit card crunch and sub-primes crisis hit the economy.
Why can’t the borrowers pay back?
Because they have no jobs at all or have lost it due to the automation of industries, exportation of jobs to low-wage countries, elimination of jobs through mergers, stagnation of businesses because of increasing oil price, lay-offs by money-industry crash and of course privatization. …A domino effect sickens all aspects of the economy. And the infusion of cash by governments or foreign investors has nothing to do with these problems. This is the flaw of capitalism which finally leads to the demise of this cruel and corrupt system. If the recent crisis slides to a full blown recession, the majority of the people will lose their homes, their jobs, their healthcares, their education insurances, their security insurances, and finally their livelihood and possibly their lives.
On the other hand, the big international monetary monopolies temporarily empowered by the tax cuts, governmental subsides and cash infusion of oil-rich countries, devour smaller ones and become even bigger and wilder. As the Bank of America, the third largest bank of U.S. (and the world), said it would buy Countrywide Financial in a $ 4 bn deal. Some of this handsome amount will be compensated, for this bank, by tax deduction in a few years. Of course this tax deduction is in the expense of the American taxpayers’ money (from a report by Fortune on CNNMoney.com, 11 January, 2008).
The big international monetary monopolies which control all branches of the government by the power of their money, by lobbying and by bribes, domestically push the government toward oppressive behavior, resort on high surveillance, militarism and crack down, to silence any dissent. And internationally they rely on creating tensions and wars especially in oil-rich areas for the purpose of selling very profitable means of carnage and destruction. By depleting the monetary reserves of those rich countries, and by manipulating their shares in the stock markets, complete the submission and colonization of those countries.
These cycles of events certainly are leading to the globalization of all out human misery and the planets destruction, unless the people realize their rights and their abilities to change the system for good.
The least they can do is to learn lessons from the events happening in Argentina. According to a BBC report on the 9th of January 2008, “some of the factories which were bankrupted and were closed 6 years ago are now opening and are in the process of production; managed by the workers for the workers.” With the help of their progressive government the economy is booming and the rays of hope are shining over the working people of this potentially rich country!