Signs of the Economic Apocalypse, 4-3-06

From Signs of the Times, 4-3-06:

Gold closed at 583.50 dollars an ounce on Friday, up 4.2% from $560.00 for the week. The dollar closed at 0.8252 euros on Friday, down 0.7% from 0.8308 euros at the end of the previous week. That put the euro at 1.2118 dollars, compared to 1.2036 the week before. Gold in euros would be 481.52 an ounce, up 3.5% from 465.27 for the week. Oil closed at 66.35 dollars a barrel on Friday, up 3.2% from $64.27 at the end of the previous week. Oil in euros would be 54.75 euros a barrel, up 2.5% from 53.40 the Friday before. The gold/oil ratio closed at 8.79, up 0.9% from 8.71 for the week. In U.S. stocks, the Dow closed at 11,109.32, down 1.5% from 11,279.97 the Friday before. The NASDAQ closed at 2,339.79 on Friday, up 1.2% 2,312.82 at the close of the week before. In U.S. interest rates, the yield on the ten-year U.S. Treasury note closed at 4.85%, up 19 basis points from 4.66 for the week.

Friday was the last day of the first quarter of 2006, so let’s recap the year so far. Gold went from $519.70 an ounce to $583.50, a rise of 12.3% in three months. Oil went from 61.04 dollars a barrel to $66.35, an increase of 8.7% after having risen 40.5% in 2005. The yield on the ten-year U.S. Treasury note increased 46 basis points from 4.39 to 4.85 so far this year. The Dow Jones Industrial Average is up for the quarter, going from 10,717.50 to 11,109.32, a rise of 3.7%. The NASDAQ rose 6.1%, from 2,205.32 to 2,339.79 in Q1 2006. Sounds like good news for the U.S. stock market, unless you compare stock prices to the price of oil or gold. The dollar fell 2.3% from 0.8440 to 0.8252 euros so far in 2006.

The trends we saw in 2005 continued in the first quarter of 2006: sharp rises in gold and oil, increases in long-term and short-term U.S. interest rates, relative stagnation of stocks, and the dollar and euro trading within a limited range.

Given the complete disaster that the U.S. invasion of Iraq has turned out to be, given the collapse in political support and legitimacy for the neocon project domestically, and given the hatred and resentment engendered against the United States throughout the world by the neocon imperial project, it might be surprising that stocks and the U.S. dollar have not fallen further. U.S. stocks represent the profit-making ability of U.S. corporations, and the early stages, at least, of even disastrous wars offer plenty of opportunities for profit. War in Iraq and fears of a much wider war have driven oil prices up, but that only led to record profits for U.S. oil companies. Here are some examples from Britain of how it’s done:

British companies draw huge profits from occupied Iraq

By Harvey Thompson1 April 2006

According to the findings of a recent joint investigation by Corporate Watch, an independent watchdog, and the Independent, a total of 61 British companies are identified as benefiting from at least £1.1 billion of contracts and investment in occupied Iraq since the US-led invasion.

Corporate Watch believes that the real figure could be as much as five times higher, as many companies have undisclosed business dealings in Iraq and the value of several large contracts is unknown. The investigation was further muddied by the UK government’s refusal to release the names of companies it has directly helped to win contracts in Iraq.

British firms include private security/military services, banks, PR consultancies, urban planning consortiums, oil companies, architects offices and energy advisory bodies.

The report acknowledges that although British corporations still lag behind the huge profits paid to US companies (the latest Halliburton/KBR military contract alone is worth about £2.85 billion), in two areas British firms are playing a central role. The Iraqi insurgency means private security companies (PSCs) or private military companies (PMCs) are in great demand, and it is the one area where British firms are on a par with their US equivalents. Corporate Watch estimates there are between 20,000 and 30,000 security personnel working in Iraq, half of whom are employed by companies run by retired senior British officers and at least two former defence ministers.

The biggest British outfit, Aegis—run by Tim Spicer, the former British army lieutenant colonel who founded the PMC Sandline—has a workforce the size of a military division and may rank as the largest corporate military group ever assembled, according to the report. It has made more than £246 million from a three-year contract with the US Pentagon to coordinate military and security companies across Iraq.

Other private security/military companies have sprung up almost overnight to protect British and American interests. Among the highest grossing UK corporations Iraq is the construction firm Amec, which has made an estimated £500 million from a series of contracts restoring electrical systems and maintaining power generation facilities since 2004. Another PMC, Erinys, has amassed more than £86 million, a substantial portion from the protection of oilfields.

Britain is also playing a critical role in advising on the creation of state institutions and the “business of government.” PA Consulting, which has also received a contract for advising on the UK government’s identity cards scheme, worth around £19 million, is now a key adviser in Iraq.

Loukas Christodoulou of Corporate Watch has been monitoring British business relations with Iraq since the March 2003 invasion. He says in his conclusion to the joint report: “The presence of these consultants in Iraq is arguably a part of the UK government’s policy to push British firms as lead providers of privatisation support. The Department for International Development has positioned itself as a champion of privatisation in developing countries. The central part UK firms are playing in reshaping Iraq’s economy and society lays the ground for a shift towards a corporate-dominated economy. This will have repercussions lasting decades.”

In five years, the £1.1 billion official figure of contracts identified in the report will be dwarfed by what British and the US companies hope to reap from investments. In addition to this, highly lucrative oil contracts have yet to be handed out. The Anglo-Irish company Petrel Resources, an oil and gas exploration company, is seeking licences to run three existing oil wells, for example…

Clearly, then, it would be a mistake to equate the economic health of a country with that of its corporations. The Treasury has been looted for Bush’s reckless wars and other giveaways to the rich. U.S. taxpayers will have to pay for these giveaways with both their taxes and with their pay and benefits. Will the United States public ever wake up enough to demand changes? The U.S. media’s coverage of the labor protests in France asks that very question (from an unsympathetic point of view):

US media reacts to French protests with hatred and fear

By Jerry White

1 April 2006

The US media, not known for following the internal political developments of other countries too closely unless it has a direct impact upon the US, has provided an inordinate amount of ill-tempered commentary on the wave of protests and strikes in France against the introduction of a law that enables employers to fire young workers without cause.

The reaction of the media has been universally hostile, varying from denunciations by the right-wing press of “mob rule” to the more low-key perplexity expressed by the liberal media, which suggests that French are suffering from some type of collective dementia because they believe they have the right to such things as job security.

The headlines of several newspaper commentaries give a flavor of this contempt, from the Wall Street Journal’s, “The Decline of France” (March 21) and “Casseurs” (or “Smashers,” March 29); to the Washington Post’s “French take to the Streets to Preserve their Economic Fantasy” (March 22) and “The French In Denial” (March 28); to the New York Times’ “France’s Misguided Protesters” (March 27).

In one way or another all of the commentaries suggest the protests are illegitimate. They declare that France’s labor laws and social protections are outmoded and must be “reformed” if corporations are to thrive and create jobs. They suggest that “everyone” agrees with this, everyone, that is, except the millions of workers and young people marching on the streets of France. Echoing the infamous comments of British Prime Minister Tony Blair at the time of the invasion of Iraq, the US media suggests that the strength of a democracy is measured by the ability of political leaders to defy the will of the people and do “what’s right.”

As always, the Wall Street Journal leads the pack of reactionary voices. Having spared no provocative insult against Jacques Chirac and Dominique de Villepin for refusing to line up behind the US invasion of Iraq, the Journal now declares the French president and prime minister the champions of democracy. The French government is facing down “Jihadist” students, who, the newspaper claims, are resorting to violence to defend their “religion of job security.” Writer Nidra Poller declares, “Democracies run on elections and legislation; mobs rule by fire and the sword,” suggesting that state repression is needed to crush the protests and uphold “democracy.”

Like the Wall Street Journal, the premise of liberal newspapers such as the Washington Post and the New York Times is that France’s high unemployment rate is due to the unfair burden placed on employers by the social protections fought for by the working class and put in place after World War II. If corporations are given the unrestricted right to fire workers and exploit them like American workers, the story goes, this will entice companies to create new jobs.

While “those of you brainwashed by Anglo-American market capitalism” see the need for this type of “market flexibility” to increase employment, Post writer Steven Pearlstein declares cynically, “viewed through the dark prism of the French imagination, these aren’t real jobs—they’re ‘garbage jobs’ and ‘slave contracts’ meant to undermine the birthright of all Frenchmen to be shielded from all economic risk. Give in on this, and who knows what could go next? The 35-hour workweek? The six weeks of paid vacation? State-mandated profit sharing? Retirement at age 60?”

Oh, what horrors!

Posing as a defender of the unemployed, Pearlstein claims that the reason immigrant youth and many university students cannot find jobs is because a “shrinking pool of older, middle-class workers” enjoy the “full panoply of worker protections” and are “sucking the innovation and vitality from the economy.” Expressing dismay over the fact that young people are demanding the same rights their parents achieved, Pearlstein complains, “rather than supporting the reforms that might generate more jobs and more income, the outsiders have bought into the nostalgic fantasy of a France that once was, but can never be again, making common cause with the very ‘insiders’ whose selfishness and pigheaded socialism have left them out in the cold.”

Indeed it is the continuing influence of socialism and egalitarian ideals in France—in spite of the betrayals of Stalinism and social democracy—that most outrages Pearlstein and his cohorts in the media. The Post reporter disparagingly notes the results of a recent poll by the University of Maryland on international policy attitudes showing that only 36 percent of French respondents felt that “the free enterprise system and free market economy” is the best system. This was the lowest percentage of any of the 22 countries polled and compared with 59 percent in Italy, 65 percent in Germany, 66 percent in Britain and 71 percent in the United States.

Complaining that France sported “only” 14 billionaires, as compared to 24 in similarly sized Britain, Pearlstein concludes his column: “Indeed, when you ask French university students who is the Bill Gates of France, they look at you blankly. It’s not simply that they can’t name one. The bigger problem is that they can’t imagine why it matters, or why that has anything to do with why they can’t find a good job.”

Nowhere does Pearlstein explain how the hoarding of vast fortunes by the super-rich and the gaping levels of social inequality have improved the lot of American workers. Instead, he, along with the other well-heeled pundits in the corporate-controlled news media take as given that US employers should wield dictatorial powers in the workplace and retain the unquestioned “right” to destroy thousands of jobs and slash wages and benefits. After all, Dr. Pangloss, this is the best of all possible worlds.

Pearlstein’s fellow columnist at the Post, Robert J. Samuelson, argues that the protests in France point a “larger predicament” for Europe. “Hardly anyone wants to surrender the benefits and protections of today’s generous welfare state, but the fierce attachment to these costly and self-defeating programs prevents Europe from preparing for a future that, though it may be deplored, is inevitable.”

Samuelson then lets the cat out of the bag, acknowledging that the media’s take on the French protests is bound up with political situation in the US and concerns over how American workers will respond to the unprecedented attacks now on the agenda of corporate America and both of its political parties. “The dilemma of advanced democracies,” he says, “including the United States, is that they’ve made more promises than they can keep. Their political commitments outstrip the economy’s capacity to deliver...To disavow past promises incites public furor; not to disavow them worsens the country’s future problems.”

This anxiety over possible “public furor” in the US was spelled out even more clearly in a USA Today editorial, entitled, “Before you scoff at the French, consider the U.S. connection.” It begins by warning that the French protests demonstrate the “lengths that people will go to preserve guarantees and benefits” despite “harming their own long-term prospects and those of their children.”

While the US should consider itself “fortunate” that it does not “endow its workers with the right not to be fired,” the editorial says, “one can see counterproductive sentiments similar to those of the French protesters in the workers at companies such as General Motors. They demand preservation of generous pensions and lifetime health coverage from employers that might be driven out of business...

“On a larger scale, it’s possible to see the French in the intractability of the Medicare and Social Security debates,” the editorial continues. Claiming that longer life spans, the coming retirement of baby boomers and exploding health costs, were pushing the government and economy toward a “fiscal abyss,” the newspaper complains that “those who receive these benefits, or are about to, have shown scant interest in reforms needed to avert a looming crisis...”

The editorial concludes: “The USA rarely has the strikes and street protests that France is almost as famous for as its cheeses. But it does suffer from some of the same unwillingness to consider the future.”

Thus, the media’s sudden interest in France reveals itself to be a concern that working class resistance could spread to the US itself, where the reactionary agenda of free market policies was initiated in the first place, before it spread to Britain and the rest of the world. With unrelenting attacks on workers by GM, Delphi, Northwest Airlines and other US corporations, as well as plans by the Bush administration to slash “entitlement” programs to pay for further tax cuts to the rich and the burgeoning costs of America’s worldwide military adventures, there is no doubt that at least some establishment figures who are not too blind to see are considering the possibility that if mass opposition could explode in France, it could happen here too.

The arguments that society simply cannot afford to provide for the basic needs of working people are becoming increasingly threadbare, not only for French workers but for their American counterparts as well. Despite their efforts to reassure themselves about popular support for the profit system, the reality is that there are growing numbers of workers and youth in America who realize that the real problem is that society cannot afford to allow a tiny minority of the population to monopolize the wealth created by working people. Despite the insistent claims over the years about the death of the class struggle and the working class, the explosive events in France, as they so often have done throughout history, are a sign of what is coming throughout the world, and within the US itself.

If the ruling class in the United States really is afraid of its own people, then they may have to inflate the dollar even more to keep the U.S. public from mass bankruptcy. According to this scenario, the types of controls that have been working so well on the U.S. public are dependent for their efficacy on the general prosperity of the public. If, on the other hand, they are not afraid of the public, if they feel they have the situation well under control, then they may believe that their prospects of maintaining control will be even better under economic collapse. If that is the case, and I think it is, then we are in trouble.

Ron Jacobs, writing in Counterpunch about the differences between French and U.S. public opinion, identifies one of the best forms of control imposed on the U.S. public: the idea that no one can do anything to prevent corporate autocracy:

Where Capital is Not God
France Shows the Way

March 31, 2006

By Ron Jacobs

Back in the 1990s, when I was part of a union organizing effort at the University of Vermont, one of the assumptions expressed by the school's administration was the inevitability of the university's continuing corporatization. This assumption was also shared by many of the workers that we were attempting to organize. Furthermore, the assumption was not one specific to the university. Indeed, it was actually usually expressed as part of a larger reality that assumed that the world was going to continue down a path that would result in the ultimate supremacy of the world's largest corporations and banks running everything. Most of these businesses were naturally US- owned, even if they had their offices overseas.

Now, the aspect of this whole series of assumptions that irked me the most wasn't that the corporations (and, locally, the university's administration and trustees) told us that this was a good thing. Nor was it that they acted like this scenario was a natural thing, because, according to the laws of capitalist accumulation, it was. No, what irked me the most (and still irks me) is the attempt to portray this form of monopoly capitalism and corporate takeover of every part of our lives as something over which no one has any control. This portrayal is so complete that most workers, especially in the US (where capitalism reigns supreme) honestly believe that there is nothing they can do but submit. When your company tells you that they are gutting your pension plan, you submit. When your medical premiums increase three hundred percent, you submit. When your pay is reduced in the name of making a concession, you submit. It's as if these attacks on your livelihood are not mere attempts by the owners and their executives to maintain their profit levels, but are instead edicts from heaven that no one dare not obey.

This consciousness exists not only in our work lives. It is also omnipresent in our government, where we elect men and women who gut the minimal economic protections that existed for the least among us so that we can provide tax cuts for the wealthiest people in the world. In addition, we ignore the obvious attempts to legalize every form of graft and corruption while we excuse those politicians who happen to be busted committing crimes of corruption that have yet to be legalized. It's as if we as a people have given up our lives to some omnipotent god and that god not only controls our social beings, he controls our entire selves. The false consciousness of capitalism has so thoroughly taken over our minds that we no longer have anything even approaching souls. Anybody that dares to point this out is immediately branded as someone who is, at best, not a team player and, at worst, an anarchist or a criminal. Or maybe even (god forbid) a terrorist!

Corporations, set up by conscious design as psychopaths are the perfect tool for the pathocracy. They keep people occupied, make them atomized and hopeless, all the while funnelling wealth to the pathocrats. Jacobs continues,

France Shows the Way

In a recent Newsweek column economist Robert Samuelson mocked the protests by French workers and youth against the proposed youth employment law known as the CPE or (what the protesters prefer to call) the Kleenex law. Samuelson, who seems to accept the aforementioned supremacy of the neoliberal marketplace (and its inevitable victory over all), wrote: "the student protesters in France think that if they march long enough...they can make the future go away. No such luck." He continued, enumerating the various global capitalist arguments against the so-called welfare state and its economic inviability in today's modern world. According to this mindset. the decision by many governments to dismantle their systems of national health care, public education, subsidized housing, and old age security is not a matter of choice, but one of necessity. If such cuts are not made, say the cuts' proponents, there will be no future.

Of course, this is simply not true. What this mindset's adherents really mean is that maintaining the current systems of health, education and general welfare for the general population would require bucking the system of international capitalist accumulation and profiteering. It would mean that all of that money being made by so very few corporations and banks would have to be put back into the various national economies from which it has been taken. The entire international economic system of the past sixty years would have to be re-examined and redesigned. In short, new choices would have to be made. Choices that put people, not profit first. Choices that would provide decent work for all of those wishing to work. This is what the French youth and workers are telling their government and the corporations that it kowtows to. This is what the last decade of protests against the WTO and the rest of the international economic system have been about. Poverty and war are not inevitable. Indeed, they are part of the reason why people leave their countries in the southern hemisphere to work in the northern one. On the other side of that coin, they are also underneath the reason nativist elements want to send immigrants back to their home countries and lock down the borders. The economics of neo-imperialism force the logic of the dollar on them all., causing the breakup of families and the growth of unreasonable fears. Fears that serve the interests of the financial masters behind it all. While immigration is certainly part of the natural evolution of human history, the economics of global capital have certainly forced many to leave the places they prefer to live. A system thtat pur people first would either leave those people alone or create good jobs where they live, not where capital goes.

The protests against the job law, the WTO and IMF, and totalitarian immigration laws are the results of conscious choices made by a relatively small number of the earth's inhabitants. The protests in France are a wake up call to all of us. It's time we started making our own choices. Because they are bound by their need for profit, the masters of capital have proven that they are incapable of doing so. A French student in Paris stated the situation quite clearly: "You can't treat people like slaves. Giving all the power to the bosses is going too far." (Reuters 3/28/06)