By the time the stock market closed on Jan. 26, 11 large U.S. corporations had announced a total of 60,000 new layoffs in just that one day.

Caterpillar, the largest manufacturer of construction and mining equipment in the world, announced 20,000 layoffs, or 18 percent of its global work force.

Home Depot, the largest home equipment dealer in the U.S., announced 7,000 layoffs and the closing of 34 of its high-end EXPO Design Centers.

Sprint Nextel will lay off 8,000, or 13 percent of its workforce.

The giant drug company Pfizer is projecting 8,300 layoffs after its $68-billion purchase of another huge pharmaceutical, Wyeth.

Toward the end of the day Texas Instruments announced another 3,400 layoffs, 12 percent of its workforce, and there was a belated announcement that IBM had sent out pink slips to another 2,800 workers.

Caterpillar, which had sales of $12.92 billion last quarter and is a bellwether for the economy because of its global reach and its crucial role in construction worldwide, predicted that 2009 would be its worst year since the end of World War II.

Altogether, large U.S. companies publicly announced more than 170,000 layoffs (see accompanying chart) in the first four weeks of this year, but hundreds of thousands more are expected to be added when the government releases its monthly statistics early in February.

As workers lose their incomes, the defaulting on mortgage payments, credit cards, auto loans and student loans keeps rising. As the defaults rise, the bad debts on the books of the banks go up. The deepening crisis of the workers aggravates the financial crisis of the bankers.

Gov’t rushes to save banks

The capitalist government in Washington has not been trying to solve the banks’ problem of insolvency by rushing to the aid of the millions of workers who are defaulting on their debts and losing their homes and jobs. Instead, it has put limited aid to the workers on the slow track while it rushes to find ways to bolster the banks.

Citigroup and Bank of America had merely to apply to the government, filling out a perfunctory request form, and they immediately received $45 billion each in installments, with guarantees of $300 billion and $100 billion, respectively, to cover bad debts. Other banks have received similar handouts, adding up to hundreds of billions of dollars in direct infusions of capital and in bad debt guarantees.

As fast as the Obama administration draws up plans for its stimulus package, the deterioration of the economic situation outpaces these modest plans to deal with it.

So far $700 billion has been officially appropriated for the financial crisis. But, according to an article in the Washington Post of Jan. 24, “with the economy deteriorating rapidly, financial companies are incurring trillions of dollars in losses on failing mortgage loans and other assets, forcing the federal government to consider substantially expanding its response to the crisis. ... Leading economists and lawmakers calculate that hundreds of billions more could be required.” There is talk of raising the official bank bailout fund to $1 trillion—in cash.

As for the foreclosure crisis, the administration has officially pledged $50 billion to help homeowners avoid foreclosures. But Goldman Sachs estimates there is more than $1 trillion outstanding in bad mortgage debt. At a private luncheon on Jan. 22, economists were talking about needing $250 billion for the foreclosure rescue program.

“Foreclosures have skyrocketed,” according to the Post, “with an estimated 8 million families expected to lose their homes over the next four years.”

Losing 500,000 jobs per month

Mark Sandy of Moody’s Economy.com told the Post: “Conditions are eroding far more rapidly than anyone anticipated. ... The job market is now consistently losing 500,000-plus jobs per month, something you couldn’t have envisioned eight to 12 weeks ago. Losses in the banking system over the last week or two have been much larger than people had been expecting. We’re coming to the realization that these things are self-reinforcing and the problems aren’t developing in a linear way. They’re getting worse very rapidly.”

The bourgeois “experts” cannot fathom their own system. They are utterly taken aback when capitalism behaves the way it has been behaving since the first real global collapse in 1825.

The capitalist system goes through a cycle of expansion that leads to a glut of goods, stocks, land deals and so on that always ends up in a crash. As each capitalist or capitalist grouping fights for market share of commodities, gambles on speculative gains in the stock market, the bond market, the real estate market, etc., things always end up in a catastrophe, which the bosses then push off onto the workers.

As capitalism has decayed under imperialism, has become more financial, more parasitic, more speculative, the tendency increases for the crashes to be more devastating.

Only the tunnel vision of capitalists driven by profit lust could keep them and their experts from seeing the inevitable end of this anarchic system of production and finance:

• No capitalist knows if the commodities produced can be sold.

• No one knows if the stock they buy will go up or down.

• No one knows when the upward cycle of speculative buying and selling of land or houses will reverse itself and come crashing down with a vengeance.

Furthermore, it was clear to all who wished to see that selling junk mortgage bonds around the world to institutions, municipalities and states alike, while calling them AAA, highest-rated, could only result eventually in a global crisis.

The financiers who stand at the pinnacle of capitalist society, the bankers who control the financial resources of society and therefore dictate the fate of hundreds of millions of workers all around the world, have used those resources in a mad race after profits—by any speculative, fraudulent means necessary. And they have brought the system to ruin.

Now the capitalist government must step in with trillions taken from the workers and the middle class and bail out the banks, because that is the only way they can conceive of under present circumstances to bail out the capitalist profit system.

Government intervention shows above all, however, that bankers are completely unnecessary to the functioning of society. Their only role is to get rich by financing exploitation and debt.

What capitalist ‘nationalization’ means

Right now “nationalization” of the banks is being discussed. It is a measure of the feeling of powerlessness to control their own capitalist system that economists, politicians and advisers are even contemplating the very thought of nationalization of the banks. In the days before this crisis, no one in the establishment would have dared to introduce this idea, even into the most private conversation. The word “nationalization” was not in the vocabulary of U.S. bourgeois society.

But this crisis has forced sections of the ruling class to think the unthinkable.

Nationalization under the capitalist class, that is, the takeover and running of a bank or an industrial corporation or an industry, has historically been used for the purposes of rescuing the capitalist bank or enterprise from complete ruin. The goal has been to take it over temporarily, put the enterprise back on its feet until it becomes profitable again, and then sell it back to the bosses.

In other words, it has been used to strengthen the system of exploitation when some aspect of the system has become weakened.

The nationalization of the major enterprises of British industry after World War II is a classic example. It was carried out by successive Labor governments with understandable popular support from the workers and was presented as a socialist measure. But it left the capitalist ruling class intact. Once the economy had completely recovered, Prime Minister Margaret Thatcher began to give back to private capitalists what was profitable.

Time for a people’s fightback

In the meantime, workers are losing their homes and livelihoods. They are being battered from pillar to post on a daily basis by the inhuman wave of layoffs and foreclosures. The capitalist government in Washington and the financial authorities at the Treasury Department and the Federal Reserve Board have already given the banks over a trillion dollars and are now rushing to give them more on an emergency basis.

What is the real emergency, which needs immediate attention? It is that tens of millions of workers and their families are rapidly being driven to the wall by the economic crisis. Social tensions are increasing. Racist killings and beatings are increasing, especially by the police. Arrests of the poor are rising as more workers are driven to commit crimes of survival. The scapegoating of immigrant workers is growing under the impact of the crisis.

The workers and the oppressed are not just losing paper wealth. They do not have millions of dollars stashed away in personal wealth to be tapped for a rainy day. They are losing the means to sustain living.

The only way out of this crisis for the working class is to organize a massive fightback.

A movement is taking shape to launch peoples’ assemblies and community-labor alliances whose aim is to broaden the struggle by uniting the various movements into a common front.

This is an essential first step for the workers and oppressed to put their needs on the agenda, ahead of the Wall Street billionaires.

Labels: Caterpillar, home depot, layoffs, low wage capitalism, sprint, texas instruments

The record wave of layoffs that seemed to peak in December is continuing into 2009.

At the same time, hundreds of billions of dollars in aid are flowing from Washington to the banks and corporations, not to the unemployed. Reviving corporate profits has taken precedence over providing desperately needed jobs or calling for an immediate end to foreclosures and evictions.

Circuit City announced it is laying off 34,000 workers by the end of March—the largest mass firing since the current crisis began. This second-largest electronic retailer in the U.S. is closing 557 stores.

Just in the first two weeks of this year a series of other layoffs has been announced.

Motorola, which laid off 3,000 workers last October, has announced another 4,000 jobs will be cut. Hertz announced 4,000 jobs will go worldwide. ConocoPhillips will lay off 1,350, Pfizer 2,400, WellPoint 1,500, Saks 1,000 and Neiman Marcus 375. Advanced Micro Devices (AMD), Blue Cross/Blue Shield and other large companies are also scheduled to announce new rounds of layoffs.

These are only the most publicized firings.

The official unemployment rate, which was 7.2 percent at the end of 2008, is expected to shoot up rapidly in the coming months as the bosses continue the onslaught without mercy.

However, there is a less publicized but also official figure called “total” unemployment—and it has reached 13.4 percent. The first thing to remember about this figure is that it amounts to 20 million workers. It includes people who couldn’t get anything but part-time work when they need to work full time, plus the millions who have stopped looking altogether, termed “discouraged” workers.

At the present rate, millions more will lose their jobs in the coming months. Last year 2.6 million lost their jobs—a huge number but still deceptively low when trying to project what will happen this year because, of the 2.6 million, 2 million lost their jobs just in the last four months of 2008.

There is no question that an emergency jobs program, which would involve the immediate direct hiring of millions of workers at living wages, with benefits, and a freeze on layoffs, is urgently needed to stave off the growing crisis of the working class and the oppressed people.

However, instead of reaching out directly to assist the workers who are suffering from the capitalist crisis, Washington and Wall Street are reaching out to bolster the capitalist system and aid the capitalists who caused the crisis in the first place.

Why ‘stimulus’ can’t work

Wall Street told the incoming Obama administration to get hold of the $350 billion fund Congress passed to bail out the banks and use it to clean up their bad loans. In addition, the Democrats have submitted an $825 billion “stimulus” package.

There are many progressive features to the package, such as increases in Pell grants, reduction of payroll taxes for workers, rural assistance, additional food stamp aid and unemployment insurance. But these features, including the declared goal of creating 3 million jobs in the next two years, are utterly inadequate to meet the massive crisis that is unfolding at a rapid rate.

The package calls for $550 billion in direct spending over two years. Some 90 percent of this spending will go through private capitalists. The bill sets up contract procedures and deadlines that range from one year to more than two years for fulfillment. It has no mandatory hiring or wage requirements, save a nebulous “prevailing wage” stipulation. There is no requirement to stabilize employment by requiring that workers be retained for any period of time, nor any funds to provide such stability.

The 20 million workers already considered unemployed or underemployed—and this December figure is sure to rise in the new year—will have to wait for the stimulus package to go into effect. When it does, they will then have to compete for an estimated 1.5 million jobs to be created this year while the government bureaucracies at the local, state and federal levels negotiate contracts with competing capitalist interests and their lobbyists seeking to get a piece of the pie.

None of these bosses has the goal of providing good jobs at living wages with benefits. To them, the goal is to revive and maximize profits.

The entire process is corrupt, agonizingly slow, and totally uncertain as far as the workers are concerned. Furthermore, whatever hiring these bosses do could be cancelled out within a year or less by the drying up of funds or shrinking of the market.

The working class and the communities have no other recourse but to begin organizing on a mass basis to demand jobs now—at living wages.

Need for a direct jobs program

Millions are already unemployed. Millions more face layoffs unless an immediate, direct jobs program is put in place. It can be done. During the Great Depression of the 1930s, government jobs were put in place within two weeks after job programs were set up.

It won’t happen automatically. “Jobs or income” must become a mass demand, backed up by mobilizations, jobs marches and organizing the unemployed, in unity with the employed, who also need the security of jobs or income.

Regarding the bank bailout fund, $20 billion in cash and $100 billion in government-absorbed losses have been promised to Bank of America, which had already received $25 billion earlier. Citicorp is expected to announce $10 billion in new losses, which the government will absorb. Citigroup has already received $45 billion in bailout money and the government has given it a guaranteed backup of $300 billion to cover problematic loans.

The $350 billion bailout doesn’t include these huge new backup commitments. Its goal is to make the banks solvent by dealing with hundreds of billions—the investment bank Goldman Sachs says it’s more like $1 trillion—of remaining bad loans.

The fact is that these bad loans on the books of the banks are for the most part a mirror image of the suffering of the masses. Why are the loans of Citicorp, Bank of America and other banks going bad? Because of credit card defaults, auto loan defaults, student loan defaults, mortgage loan defaults and every other kind of unpayable debt. As people lose their jobs, have their wages and salaries cut, lose their health care, etc., they sink deeper and deeper into debt.

The bankers and the rich investors behind them are losing paper wealth, but their “balance sheet” problems arise from the direct material suffering of the masses. The working class and the middle class are unable to pay their bills, are losing their homes, their cars, their electricity and gas, their health coverage and every other means of survival.

Banks don’t lend when markets are glutted

The handout to the banks is being justified as an attempt to get them to start lending to companies and consumers, which will then get the economy rolling again. But this is a complete fiction. The problem of lending arises not from arbitrary stubbornness by the bankers. It arises from the lack of opportunity of the banks and the corporations to make profit once a crisis of capitalist overproduction hits, with its rising inventories and falling sales leading to falling production. After all, the bankers are in business to make profit.

The term “overproduction” has nothing to do with whether people need goods. It is when more commodities have been produced than can be marketed—i.e., sold at a profit.

The crude facts of capitalist overproduction are obvious. The U.S. auto industry has gone from producing 16 million cars annually to 13.2 million last year, and is expected to drop to 12 million or less this year. Steel production, which is a barometer of the economy, dropped from 2 million tons in November to 1 million tons in December. In recent decades, hundreds of thousands of steel workers were laid off as the industry consolidated and shrunk itself. Now, overproduction has hit again. It is estimated that 20,000 steel workers will be laid off in the coming period.

The overproduction of housing and the consequent crisis in the construction industry and all its ancillary industries is getting worse with each foreclosure.

Giant technology companies like Motorola, Nortel, AMD and Intel are suffering losses due to overproduction and hence executing layoffs. Under those conditions, the banks see no profit in lending, no matter how much money the government hands them.

In fact, they are using their bailout money not for lending but to strengthen themselves financially. According to a New York Times survey of two dozen banks, “The overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future.”

At a recent conference at the Palm Beach Ritz-Carlton, “Bankers mingled with investment analysts at an ocean-front luxury hotel, where the agenda featured evening cocktails by the pool and a golf outing at a nearby country club.” They were there to discuss the bailout funds. Referring to the government’s Troubled Asset Relief Program, conference organizer John C. Hope III, chairperson of the Whitney National Bank of New Orleans, said, “We see TARP as an insurance policy.” Hope figures that, “No matter how bad it gets, we’re going to be one of the remaining banks.” (New York Times, Jan. 18)

So much for lending, job creation and recovery.

The “crisis” of the bankers and bosses is calmly discussed at luxury watering holes, while the workers are suffering the greatest attack in three generations.

The only way to get a real working-class recovery program is to organize to shake up the entire capitalist system until the bosses are forced to provide jobs and/or a livable income.

Goldstein is author of the recently published book, “Low-Wage Capitalism: Colossus with Feet of Clay,” which can be ordered through www.lowwagecapitalism.com.

Labels: Circuit City, jobs, layoffs, low wage capitalism, motorola, unemployment