- James Petras is Binghamton University, New York Professor
Emeritus of Sociology. Besides his long and distinguished academic career,
he's a noted figure on the left, a well-respected Latin American expert,
and a longtime chronicler of the region' popular struggles. He's also a
prolific author of hundreds of articles and dozens of books, most recently
his new one titled, "Global Depression and Regional Wars" addressing
America, Latin America and the Middle East.
- Part I - Global Depression
- Variety's famous October 30, 1929 headline is again relevant:
"Wall Street Lays an Egg," or as economist Rick Wolff puts it:
"Capitalism hit the fan" following a familiar pattern of boom
and bust cycles punctuated by bubbles that always burst. Petras explains
it this way:
- "All the idols of capitalism over the past three
decades have crashed. The assumptions and presumptions, paradigms and prognosis
of indefinite progress under liberal free market capitalism have been tested
and have failed. We are living the end of an entire epoch (and bearing
witness to) the collapse of the US and world financial system."
- Grim prospects are ahead:
- -- a world depression with one-fourth of the labor force
- -- global trade in free fall;
- -- a proliferation of bankruptcies with General Motors
a metaphor for a decaying system;
- -- free-market capitalism in disrepute; and
- -- "planning, public ownership, nationalization(s
and other) socialist alternatives have become almost respectable"
because most sacred cow "truisms" and solutions have failed.
- Today's global crisis reflects an unsustainable system
- crisis-prone, unstable, anarchic, ungovernable, self-destructive, and
eventually doomed to collapse. Its early death throes may now be audible
- despite intense "psycho-babble" reengineering of facts to portray
the current situation as a "failure of leadership....lack of understanding....willful
ignorance of what markets need, (and) loss of confidence."
- Samuel Boswell explained that "Patriotism is the
last refuge of a scoundrel." Perhaps "psycho-babble" is
its equivalent for "capitalist ideologues, academics, (self-styled)
experts, and financial page editorialists, all of whom use "shoddy
economic arguments" to pump life into a bankrupt ideology - one based
- -- repeated boom and bust cycles;
- -- unsustainable growth to stay viable;
- -- direct foreign investment for the highest rates of
return, producing a race to the bottom the result of some nations benefitting
at the expense of others and all of them eventually losing out;
- -- technological advances for "greater social and
- -- pillaging countries, crushing labor, cutting wages,
and limiting or ending social services;
- -- privatizing "public enterprises, land, resources
and banks;" and
- -- reducing governments to servants of business with
America the hub of the corporate universe.
- Today's crisis is systemic - "embedded in the contradiction
between impoverished labor and concentrated capital" gone wild. "The
current world depression is a product of the 'over-accumulation' process
of the capitalist system in which the crash of the financial system was
the 'detonator' but not the structural determinant: the exploitation of
labor" that sooner or later bites back. The longer capital interests
pillage state resources at their expense, the less tolerant they'll be
for mass unemployment, homes and savings lost, grim futures, and the end
of the American dream. Then, watch out.
- The World Depression: A Class Analysis
- "It is a well-known truism that those who caused
(today's) crisis are also (the) greatest beneficiaries of government largesse."
Rulers create crises. Workers pay for them.
- Since the early 1970s, capitalism went global at the
expense of workers experiencing "a relative and absolute decline in
(their) share of material income" and well-being. As business consolidated
more power, it began "exercis(ing) near absolute control over the
location and movements of capital" as well as the ability to exploit
labor globally in newly industrialized countries like China, the Asian
subcontinent, capitalist Russia, former Soviet republics, and undeveloped
ones in Central America and elsewhere.
- Huge profits came at the expense of growing inequality
from wealth transfers to the rich. A race to the bottom cut wages and benefits,
and lower living standards resulted from "the (permanent) conversion
from high wage/high skill manufacturing jobs to lower-paid service"
- Financialization-caused speculative excesses were fueled
by cheap credit and lax regulations. Bubbles resulted producing inevitable
collapse. First felt "at the bottom of the speculative chain,"
they reached the biggest banks responsible for the crisis and major corporations
as well - "all of which had been deeply engaged in leveraged buyouts
and acquisitions" as well as other unsustainable excesses.
- Depression indicators are everywhere, and the parallels
to the early 1930s are ominous:
- -- business bankruptcies up 64% from a year earlier;
household ones up 33%;
- -- according to the IMF, global banks must write down
$4.1 trillion, two-thirds of which is yet to come; loss estimates will
likely go higher given the state of world economies and enormity of their
toxic asset portfolios -at yearend 2008, around $680 trillion, according
to the Bank for International Settlements (BIS);
- -- worldwide financial assets have already plunged by
over $50 trillion - the equivalent of annual global output;
- -- America's estimated 2009 budget deficit will be about
12.3% of GDP, a recklessly high ratio "that will ultimately ruin public
- -- world financial markets have plunged since peaking
in mid to late 2007, and respected experts say the end of this cycle is
far from over despite expected rallies they call bear traps;
- -- world trade has collapsed causing industrial output
- -- direct foreign investment to "less developed
capitalist countries....were predicted to shrink by 82% and credit flows
by $30 billion USD;" and
- -- America's economy is experiencing its worst decline
since the 1930s with GDP, exports, retail sales, construction activity,
capital goods investment, and other indicators down sharply; the only one
rising is unemployment - according to the Labor Department U-6 measure
(including categories left out of the headlined lower U-3 figure), it's
16.5%; economist John Williams' reverse engineered data has it at nearly
21% and rising, and all other economic indicators much worse than official
- The conclusion is clear - all "signs point to a
deep and prolonged depression," worse still by current economic policies
reflecting "the most drastic curtailment in public spending in American
history," according to Michel Chossudovsky. It's a "War Budget
(affecting) all major federal (programs except): 1. Defense and the Middle
East War(s and whatever new ones are planned); 2. the Wall Street bank
bailout, (and) 3. Interest payments (of around $500 billion annually) on
a staggering (growing) public debt."
- The toll is enormous. "Rising business inventories,
declining investment, (business and household) bankruptcies, foreclosures,
insolvent banks, massive accumulative losses, restricted access to credit,
falling asset values, and a 20% reduction in household wealth (amounting
to trillions of dollars) are the cause and consequence of the depression"
that promises to be deep and protracted.
- Globalization's toxic effects have exacerbated the crisis.
Linked together under WTO rules and finance capital, what affects one nation
affects all, directly or indirectly, to a greater or lesser degree. "At
the same time, regions" were positioned differently so "the effects
on them varied substantially."
- Latin America
- Brazil is faring poorly due to "its high velocity
fall in exports and industrial production (and) All indications are that
negative growth will persist and deepen during the rest of 2009."
President Lula's privatization and globalization policies exacerbated Brazil's
crisis. Everything is down except skyrocketing unemployment as growing
hundreds of thousands lose jobs.
- Growing poverty is also evident, including "5 million
impoverished landless rural workers and the 10 million families living
on a one-dollar-a-day food-basket handout (as well as) tens of millions
of minimum wage workers living on $250 a month."
- As the crisis deepens, new investments have stalled.
Private credit evaporated. Foreign investment plunged, consumer spending
declined, and what's true for Brazil affects other regional economies,
especially in Central America and the Caribbean. Being "highly 'integrated'
with the US and world economy (they're) experiencing the full force"
of its collapse, including rising poverty, crime, and "a potential
for popular social upheavals against the incumbent right and center-left
governments....The depression demonstrates with crystal clarity the pitfalls
of imperial-centered globalization and the stark absence of any remedies
for its collaborators in Latin America."
- It also augurs change with hard times "spurring
the return of the nation-state, as 'de-globalization' accelerates."
It's for Latin America to refocus, declare globalization dead, and democratically
generate wealth and employment broadly, not shift it upward to the usual
- Eastern Europe and the Ex-communist Countries
- These nations experienced hardline shock therapy full
force - a destructive cocktail of deregulation, mass-privatizations, state
enterprise closings, wage cuts and loss of benefits, wealth transfers to
the rich, millions thrown out of work, repressive laws to contain resulting
unrest, unrestricted access for foreign corporations to pillage local economies,
and arranging their need for foreign investment and credit under terms
they negotiate for their own benefit.
- As a result, when Western economies crashed, so did Eastern
European ones, leaving them dependent on the IMF and other international
lending agencies "on onerous terms" favoring capital over people.
The same pattern played out globally, including in America where the Fed
and Treasury direct public wealth to the top, mainly the giant Wall Street
banks that plundered the country and are free to keep doing it, given that
Obama facilitates the process.
- Asia: The End of the Illusions of De-coupling and Autonomous
- "The Great Depression of 2009 (hit) every economy
in Asia," including Japan, China, India, and Tiger countries showing
even the mighty aren't immune, given their dependency on export, financial
and commodity markets. The global crisis left them vulnerable to lost trade
followed by production cuts, bankruptcies, negative growth, mass-unemployment,
and millions thrown overboard into deep poverty. Large public capital injections
haven't been able to turn sick economies around.
- Doing it requires measures not taken - shifting "capital
back from private real estate, stock markets and overseas bond purchases
(like US Treasuries)....to finance universal health care, education and
pensions and the restoration of land to productive use rather than (to)
real estate (and other) speculation." Instead strategies are based
on "the usual capitalist solution" - aiding the privileged at
the expense of all others in a part of the world where many countries have
no safety net and those with them made big cutbacks. The human fallout
is immense, much as in other parts of the world and America.
- The Middle East: Depression and Regional Wars
- Its crisis is rooted in Israel's belligerency and collapse
of commodity prices, namely oil that recently made a modest recovery but
may soon sink again given weak demand.
- Large producers like the Saudis reap huge revenues even
during hard times, then (re-cyle them) into large-scale finance, real estate
and military purchases." US Treasuries also that finance our militarism,
public debt, corporate takeovers, and speculative excesses creating bubbles,
economic crises, and resulting global fallout.
- Regional collapse "began with the frenzied commodity
oil boom between 2004 - 2008 (that fueled) a construction and real estate
boom - and the accumulation of debt and labor importation." Crisis
followed with growing deficits replacing budget and trade surpluses. With
lower oil prices producing less capital, prospects for near-term recovery
remain dim, much like they do worldwide.
- Israeli destabilization exacerbates the problem by "projecting
its power and colonial ambitions throughout the region" - greatly
reinforced by Washington's enormous support.
- An Unprecedented Crisis
- Its depth and severity have taken a toll on rich and
developing countries alike and will for many years to come. As for America,
the depression "takes place in the context of a de-industrialized
economy, unprecedented public debt, multi-trillion dollar foreign debt
and well over $800 billion dollars committed in military expenditures for
several ongoing wars and occupations." These factors exacerbate the
current situation, leaving it vulnerable to hard times ahead.
- No previous crisis resembles it. Solutions adopted are
counterproductive, the result being "the most rapid and widespread
reduction of living standards and mass impoverishment in recent US history"
- perhaps ever, as never before has so much been done for so few at the
expense of throwing so many overboard.
- The Failure to Address the Structural Basis of the Crisis
- As explained above, Obama's economic measures will exacerbate,
not improve (let alone reverse) current conditions. Instead of closing,
nationalizing, or breaking up insolvent banks, he's looting the nation's
Treasury to reward them for the crisis they caused and should be held criminally
responsible. As important, recapitalizing them won't work. They'll need
continued cash infusions, and resources wasted on them aren't available
for real productive use. Thus, the economy will keep weakening, and millions
more Americans will lose jobs, homes, savings and futures. So far, Obama
has done virtually nothing to help them beyond rhetorically saying he cares.
- The General Motors bankruptcy highlights capitalism's
failure. It also augurs war on working Americans, about to be downgraded
to lower pay, fewer benefits, and for growing numbers opportunities only
in the military or unskilled, low-paying service jobs - if they can find
them. Obama's economic agenda is turning America and other developed nations
into Guatamala - so far with no uproar great enough to stop him. In addition,
he's destroying, not creating, jobs because no public investment is allocated
- Instead, he's "channel(ling) billions toward the
privately owned telecommunication, construction, environmental and energy
corporations, where the bulk of the government funds go to salaries and
bonuses for senior management and staff and provide profits to stock holders,
while" mere crumbs go to wage earners.
- Economic regeneration and reversing past failures are
off the table. Rewarding corporate predators takes precedence along with
stepped up imperial adventurism and the enormous sums it costs. Speculative
excesses will continue. Budget deficits and the national debt have soared
to stratospheric and unsustainable levels. Wealth disparities will persist
and increase. Human deprivation will grow. Obama promised change. Instead,
he's "totally committed to saving the capitalist class and the US
empire" at the expense of ignored worker needs.
- His failed agenda is highlighted by:
- -- today's economic structure "which once generated
employment, profits and growth (but) no longer exists;"
- -- so-called "stimulus" benefits to Wall Street
and other favored industries, not people where they'll do the most good;
- -- what's directed to these sectors denies help to households
that comprise 70% of GDP; "the only (way to) increas(e) demand and
stimulat(e) recovery is to restore the purchasing power of working Americans."
- Rebalancing the economy depends on stimulating demand
through "direct state ownership and long-term, large-scale investment
in the production of goods and social services." It also requires
"Dismantling the entire financial speculative 'superstructure' "
responsible for the current crisis and will cause future ones if allowed
to keep operating.
- Real productive investment and growth must replace destructive
financialization - a fraud-laden casino operation generating great wealth
for privileged bankers but few others. Other vital change requires:
- -- retraining FIRE sector and other employees for productive
new jobs; and
- -- dismantling America's military empire; downsizing
the Pentagon; slashing the defense budget, closing hundreds of global bases
abroad and at home, and ending alliances with belligerent foreign powers;
then redirecting those funds for productive use.
- "Reversing domestic decay requires the end of empire
and the construction of a democratic socialist republic." Today's
America is fundamentally flawed, corrupted, unsustainable, and heading
for demise if not reversed in time.
- The Basic Priority of Public Policy: A Better Life for
- Egalitarianism defines it, something missing in America's
roots, so it's high time it got there with little time to waste. Democratic
socialism "is a means to a better material life (as reflected in)
higher living standards, greater political freedom, social equality of
conditions, and internal and external security." Successful socialist
states effectively serve the majority of workers. They use internal resources
for their own needs, not licensed for foreign predators to exploit them
for profit unavailable for domestic use.
- "Capitalism thrives on social inequalities."
Socialism strives for equality, lessening poverty, providing essential
services, and helping the most needy with subsidies and other benefits.
Policies must include:
- -- "massive investment in quality housing, household
appliances, public transport, environmental concerns and infrastructure;"
- -- economic diversification focusing on major investments
in raw material industrialization, "producing quality goods of mass
consumption....and in agriculture" - to efficiently address essential
- -- investment in education, health care, jobs creation,
and other essential areas for public well-being.
- Twenty-first century socialism must achieve "solidarity
at home" with the general welfare as top priority. "Above all,
socialism is about social equality - in income, schools and hospitals....between
(and within) classes" and achieving it by "effectively re-distribut(ing)
wealth and property to all workers, white and black, Indian farmer and
urban worker, men and women, and young and old."
- Bernard Madoff: Wall Street Swindler Strikes Powerful
Blows for Social Justice
- Consummate insider Madoff's clients represented a who's
who of high net worth individuals and institutions, including banks, pension
funds, universities, charities, insurers, other money managers, synagogues,
his Palm Beach Country Club, and prominent figures like Thyssen family
members, Senator Frank Lautenberg, Jeffrey Katzenberg, Liliane Bettencourt
(called the world's wealthiest woman), and many others - over 4000 in all
now poorer for the experience.
- Until collapsing, he reputedly never had a losing year,
a clear sign something was wrong, but as long as the good times lasted,
who cared - including the SEC, advised of his Ponzi scheme but ignored
it. The signals were obvious:
- -- "constant high returns;
- -- unmatched by any other broker;
- -- a lack of third party oversight;
- -- a backroom accounting firm physically incapable of
auditing the multi-billion dollar operation;
- -- a broker-dealer operation directly under his thumb;
- -- an atmosphere of total secrecy.
- Once exposed, it turned out that some of Wall Street's
"biggest exploiters and smartest swindlers were completely 'taken'
by one of their own....There is nothing worse for the ego of a respectable
swindler than to be trumped" by an even bigger one and to have it
go on for so long.
- But consider the positive side, including:
- -- denting America's "Zionist funding of illegal
Israeli colonial settlements in the Occupied Territories;"
- -- less for AIPAC to buy congressional influence;
- -- discrediting other speculative hedge fund operators;
- -- exposing the corrupted SEC that takes care of its
own like all other so-called regulatory agencies - because they're run
by officials from industries they regulate and return to them in high-paying
- -- Madoff having been a former Nasdaq chairman and NASD
vice-chairman shows that stock exchange insiders ignore transgressions
from one of their own because they have similar ones themselves to hide;
- -- less global inequality as mostly rich investors got
- -- clear evidence that capital's golden rule is to produce
more of it, even by fleecing other swindlers as well as close family members
- -- infamous slumlords, sweatshop owners, and predatory
real estate moguls were had;
- -- anti-Semites were hurt - ones "who claim that
there is a 'close-knit Jewish conspiracy to defraud Gentiles;' '
- -- "financial know-it-alls" also; and
- -- 51 major Jewish American organizations as well - receiving
smaller contributions from their less well-healed supporters.
- Madoff and others like him are "product(s) of a
systemic imperative and (capitalism's) economic culture...." But give
him credit. On his own, he "struck a bigger blow against global financial
capital, Wall Street and the US Zionist Lobby/Israel First Agenda than
the entire US and European Left combined over the past half century!"
He "inadvertently rendered an historic service to popular justice
by undermining some of the financial props of a class-ridden injustice
system." Maybe he should receive a medal or at least a commemorative
- The Election of the Greatest Con-Man in Recent History
- On November 4, the nation exhaled. The Bush era ended
and a new Obama one began. Celebratory exuberance followed this "
'historic moment,' a 'turning point' in American history," and why
not. Forgetting past pledges made and broken, voters were mesmerized by
promises of change, taxing the rich, ending the Iraq war and occupation,
and delivering health care for all and other measures. Obama mania swept
the country, but cooler heads saw other signals early on.
- A "transformational presidency" wasn't to be
nor was one planned. Throughout the campaign, "telltale signs of (Obama's)
true orientation surfaced," including promising Zionists "more....than
had ever been conceded by any previous US administration - inter alia,
support for Israel's illegal annexation of greater East Jerusalem."
- Once elected, Obama's transition team and key appointments
included "political dregs who brought on the unending wars of the
past two decades, and the economic policy makers responsible for the financial
crash and the deepening recession afflicting tens of millions of Americans
today and for the foreseeable future." Obama's election indeed marked
a "historic moment in American history: the victory of the greatest
con man and his accomplices and backers in recent history."
- He promised peace but delivered war; trillions to corrupted
bankers, not beneficial social change; millions of lost jobs, not new ones;
handouts across the board to industry favorites, not vital help for the
unemployed, homeless, impoverished, or states facing potential ruin.
- "Obama, on a bigger stage, is the perfect incarnation
of Melville's Confidence Man. He catches your eye while he picks your pocket.
He gives thanks as he packs you off to fight wars in the Middle East...."
He promises everything "while he empties your Social Security funds
to bail out" Wall Street swindlers. "He appoints and praises
the architects of collapsed pyramid schemes to high office while promising
you that better days are ahead."
- He promised change and delivered hell to tens of millions
- the same agenda as George Bush and in some respects worse given the dire
economy, no effort to fix it, expanded militarism, his first coup d'etat
in Honduras, an attempted color revolution against Iran, destabilization
mischief in Xinjiang Uyghur Autonomous Region in China, and recently introduced
outlandish pro-corporate legislation and administration proposals, all
harmful to millions of Americans.
- He's surrounded by "a network of confidence people.
They are a well-organized gang of prominent political operatives, money
raisers, mass media hustlers, real estate moguls and academic pimps....joined
and abetted by the elected officials and hacks of the Democratic Party."
He represents privilege and disdain for working Americans. He's an avowed
militarist, empire builder, and "unabashed Wall Street Firster,"
placing their agenda above all others.
- Behind his smooth rhetoric, his agenda is firm and irreversible
- an "abiding commitment to....military-driven empire building (and
his Wall Street funders) even in the midst of a collapsing domestic economy
and" growing deprivation for millions. How long they'll put up with
it is the question.
- Lessons from the Collapse of Wall Street
- The fallout from today's economic collapse has been devastating.
- -- "The near bankruptcy of Social Security"
as Treasury funds were looted for Wall Street bailouts;
- -- "The insecurity of private pension funds,"
the result of all of them having lost from 23 - 30% or more during the
- -- "The loss of a real economy manufacturing base"
has transformed the country into a low wage and benefit service one, in
many cases requiring few skills and no future; offshoring a "diversified
manufacturing economy is the root cause of the collapse of the US financial
system and the emerging long-term recession;" and
- -- Capital flight "from productive sectors to FIRE
(and a) huge surge of (it) overseas" leaving the economy even more
- Obama's domestic and foreign policies make economic recovery
impossible, but "one thing is increasingly clear: his agenda is unsustainable;
none of this can continue - whether the political and financial elite like
it or not...The world's future is not safe in" the hands of the ruling
oligarchy, and sooner or later an aroused public will assert itself. It's
just a matter of time.
- Latin America: Perspectives for Socialism in a Time of
World Capitalist Recession/Depression
- Economist Jack Rasmus calls the economic crisis an "epic
recession," heading toward a full-blown depression. Petras calls it
a "recession-depression (RD) because the negative growth of capitalism
is a current ongoing process that is still in its opening phase,"
but moving in the same direction. Its unique features include:
- -- nearly all world economies are integrated under a
common system - so-called free-market capitalism controlling production
and world markets; as a result, they all sink or swim together to a greater
or lesser degree;
- -- "The level of integration....is deeper and more
widespread than ever before in history" so that good or bad times
have a global effect;