America: Duped and Sold a Pack of Lies
(This is a redacted and amplified version of an earlier article.)
The assessment of the so-called Financial Meltdown and the government “bail out” appears to be based upon a constantly shifting premise. So we must continually strive to accurately sum up what is taking place amid the lies and spin. And while the search for the truth seems to be an endless, unrewarding task, we must keep two principles before us. Primarily, we have an obligation to help the broadest number of people understand how a class war is being waged.
Then, secondly, people must take action, rather than relying upon the narrow discretion and interests of some capitalists. People must take to the streets in objection to government collusion with the very richest sector of world society. The people must also fight for their jobs thru plant takeovers, and they must prepare to resist police State intervention. Anything short of this will amount to capitulation on the part of workers, poor people and the illusory middle class.
Look closely at what has happened. Concentration of liquid assets and other forms of wealth (CAPITAL) has intensified over the last twenty years. This trend has been based largely upon a two-pronged strategy by financiers. First, it began with the Savings and Loans scandals which ripped off depositors during the Eighties and Nineties which, at that time, created the greatest banking collapse since the 1929 Great Depression. By 1989, over half of S&Ls had failed, bankrupting the FSLIC fund which was created to insure their deposits. According to Kimberly Amadeo (“Savings and Loans Crisis,” About.com):
Empire Savings in Texas revealed land flips and other criminal activities. Half of the failed S&L’s were from Texas, pushing that state into recession. As bad land investments were auctioned off, real estate prices collapsed, office vacancy rose to 30%, and crude oil prices fell 50%.
Ohio and State S&L failures cost the state-run deposit insurance funds at least $185 million, thus destroying the idea of state-run insurance funds. The FSLIC was bankrupted, to the cost of $20 billion.
Five U.S. Senators, known as the Keating Five, were investigated by the Senate Ethics Committee for improper conduct. They had accepted $1.5 million in campaign contributions from Charles Keating, head of the Lincoln Savings and Loan Association. They had also put pressure on the Federal Home Loan Banking Board, who was investigating possible criminal activities at Lincoln.
Wealth, however, does not disappear. In capitalism, it merely gets transformed into ever more concentrated form. People must remember that the fundamental principle of capitalism is that wealth tends to become concentrated into as few hands as possible. By ripping off depositors, the financiers took what amounted to — in the grand scheme of things, a worker’s life savings do not equal the annual salary of a Fortune 500 CEO — small amounts of money from a vast pool of earners, and transferred that into fewer hands.
The S&L crisis was followed in rapid succession by the Dot Com Shake-out, which leading Harvard economists have termed, “business as usual.” (“Dot.Com Shakeout: Chess or Roulette,” by James Haskett, Working Knowledge: Harvard Business School.) The Dot Com shakeout did not only involve internet businesses. It included a run on the NASDAQ which caused markets to fluctuate wildly, resulting in new regulations for electronic trading. But the more important implications of this period involved massive swindles led by corporate entities like Enron, MCI-WorldCom, Tyco and others.
This trend — based in class warfare focused on looting the investments of workers and the middle class, who had been duped into 401k and KEOGH retirement plans — reached a fever pitch over two terms of the Bush Administration. Fixed entirely by bipartisan collusion with the international finance sector of capitalism, class warfare intensified while the unwitting suckers watched their hard earned money go down the drain and into the pockets of sewer rats generously referred to as the captains of industry and commerce.
This brings us up to the current financial crisis claimed by the banks. Ultimately, we have to assume the so-called Financial Meltdown is not an economic crisis at all. Well, it is for working class people. But not for those rich capitalists who have the government to fall back upon as benefactor and trustee. We must repudiate the idea that there is a crisis for anybody in the finance sector. After all, liquidity has dried up for the great number of people, probably for 90% of the population. Yet that has everything to do with the intensified concentration of capital in fewer hands. You don’t hear me. I said that concentration of capital has become intensified during this latest economic boom, and that liquidity has become locked up by those holding onto all the available money.
Let us do away with the most inaccurate premise first. It important to dispel with all the notions being foisted upon a sleeping giant of society. The economic problems rolling thru the capitalist system have nothing to do with ponzi schemes, dishonesty or government bail outs. While we may accurately wrap up the view that capitalism itself is a huge ponzi scheme, that it is corrupt and the government is in cahoots with the greediest sector of business, that forms the essence of capitalism itself. So unless people want to dispose of capitalism, discussing the con games and bribes that take place only amounts to gossip. Until people get disgusted with being swindled every day, all day long, this view has no value whatsoever.
Then, the so-called bailout has nothing to do with welfare for the bankers. That phrase sums up how the government has answered the appeal of the financial industry, a basic misconception. This is not welfare. It has nothing to do with sustaining the banks because they never needed bailed out. They do not need food stamps, clothing allowances or anything else for the needy. Welfare provides a basic, minimal amount of liquidity for human beings to survive on. However, the banks never suffered genuine survival issues.
While the banks welcome it, they do not genuinely need the liquidity (CASH) that the $750 billion bail out provided. Because if the banks needed that liquidity, they would never have gone all out to buy up more assets and other banks. They should have applied that money to the red areas on their balance sheets, as banks require borrowers for a bridge loan. Even welfare has stipulations, while the money delivered by truckload to the bloodsucking excrement we call the banking system had no conditions that the banks were bound to follow.
So all pretexts for the bailout rang sour. The masses were lied to, and the masses need to severely punish the politicians.
Another false notion is that the financial crisis stems from overextending the credit system. To justify this assumption, one must kno why society needed massive volumes of credit in the first place. Why did society require vast amounts of credit over the last fifteen years?
What made the banks, the highest level of business organization, implement an extremely broad and loose credit system? If there were enuf cash and liquidity to go around, credit would be unnecessary. While providing liquidity is more than a simple question of printing money, the modern cash shortage had no relationship to minting US legal tender. When the banks started extending credit, they had already concentrated vast amounts of money, so they knew cash was drying up because they themselves had manipulated the market and caused the drought.
Now, plenty of cash exists without devaluing the dollar or any other currency. Yes, there is plenty of cash to provide for everybody without causing any crisis if money is not hoarded. But the credit market was created so that the money market’s hoarding of liquidity could rapidly intensify. Boiler room financial corporations, set up by the banks while exempting them from direct contact with consumers, offered credit instantly and extensively. This practice arose since the war being made against working class people demanded a cloak. Wall Street made it appear as if economic democracy had arrived in America. But while the banks presented this illusion, in reality the cash was being dried up to prevent broad access to real money by workers and even the aspiring middle class.
Credit had been extended to almost everyone in society. Nearly everybody was given a credit card. Not just businesses, every type of individual including minors and mentally incompetent people gained access to credit. Meanwhile, convicted felons became financiers in some instances. Eleven thousand cons in Florida alone handled absurdly huge sums of loot and took it out of circulation in the subprime housing market. Yet this was done to benefit the banks, who accredited everyone who became a broker. The finance industry permitted this because they were simultaneously locking up the flow of cash. A flood of fall guys clouds the issues and makes it appear that they are linchpins in a supercharged pyramid scheme. The banks had deliberately created an illiquid society, preparing the conditions for social instability.
This trend began with the Savings and Loans scandals of the Eighties. During that period, former and future presidents became linked to popsicle stands like Whitewater and BCCI, built to fleece large numbers of small investors. They pocketed funds to launder drug money and build political campaign chests, and nobody ever went to prison. When that failed to spark outrage among the population, the banks began strategizing how to create absurdly huge piles of wealth for themselves thru the credit system.
We also have to understand that the financial meltdown is not a crisis for the capitalist class, not for the finance sector, not for the huge industry leaders. Maybe the small capitalists and the national sectors have been hit by the evaporation of liquidity, but definitely not the international sectors of capitalism. Since the S&L scandals of the Eighties the financial sectors have concentrated ever greater amounts of capital in their hands. They have been scooping liquidity off the street, by hoarding cash and other liquid assets to force a credit regime on the American public. Now finance capitalism has smashed credit, blamed the problem on the people, and made cash scarce. Class warfare on everybody, black and white, and in between.
By removing liquid assets from social access, the financiers are deliberately and directly undermining social and economic mobility in US society. Public services, health issues, and a host of other critical issues that effect daily life for Americans and billions of people around the world have become endangered. Inflation, food shortages, civil strife are all connected to this period of Imperialism.
Hence, the credit crisis has nothing to do with the behavior of consumers. No response traceable to consumers has contributed to the collapse of all these financial sectors: revocation of subprime mortgage rates, revocation of mass credit lines, financial mismanagement of the Big Three, ponzi schemes run by Countrywide and other lenders, the entry of felons into the financial brokerage market, tripling gas prices at the pump, and the record-breaking stock market surge and crash. Credit was created by Wall Street bankers simply to suck up the remaining liquidity on the street, amplify debt and create in the workers a false sense of obligation to the banks. Those who go to work everyday create value. The people being throttled and flogged are the ones whose labor created the lucrative lifestyles that the financiers enjoy.
Yet the genuine value of products made by working people regularly gets confiscated and held back from them under the normal capitalist regime. Workers do not see how much value they actually produce, altho it is enuf to sustain tiers of managers and well-compensated owners. Laborers do not just have their wealth confiscated by employers, but most importantly by the finance industry. Endless stacks of dollars get concentrated in the hands of financiers. Then they lend back the value that working people have actually created, at exorbitant rates, without injecting any liquidity into society.
When businesses folded and home seizures became the new economic boom, the banks disingenuously claimed bankruptcy! They claimed to be in trouble. As if. They deserve a very special punishment which only an organized, fighting working class can deliver to them.
So it is just that only a few, less than 1%, have absolute dictatorial control over how that money flows into society. Today we see greater concentration of capital at the very top. The capitalists have concentrated vast amounts of liquidity for their own disposal. They have locked up the means of exchange to dam up its flow thru out society. They are forming the basis for instigating war between the working peoples within the USA. They want to see bloodshed and if you do not understand what is going on, how they have been doing this to our community since they dragged us here, then you are in trouble. The drug wars inside our community are a counterinsurgency campaign they are able to wage because of the scarcity of resources available to black people. We have to develop a REVOLUTIONARY MINDSET, because no analysis without the dialectical logic of scientific socialism will never ever adequately explain to us what is happening.