- The ongoing collapse of the stock market
and the loss of hundreds of billions of dollars managed by Wall Street
investment banks illustrate the pitfalls and danger of free market capitalism
facing the entire working population of the United States.
- 1. The near bankruptcy
of Social Security The attempt by the White House and leading Republican
and Democrat congresspersons as recently as 3 years ago to 'privatize'
Social Security essentially turning over the management and investment
of trillions of dollars in Social Security funds to Wall Street with
the argument that private investors would earn more, would have led to
the bankruptcy of the entire Social Security fund.
- Privatization would have allowed the major private investment
banks to speculate and leverage even riskier financial instruments with
the disastrous results we are witnessing today. While private pension
funds go belly up Social Security continues. It is the private pensions,
which have gone bankrupt not the publicly managed Social Security
fund, contrary to the experts and critics of Social Security. Clearly
the current private debacle argues for public control and management of
- 2. All the major private pension funds for public
and private employees, including TIAA CREF, CALPERS and labor union pensions
have lost anywhere between 23% to 30% since January and show negative growth
over the past 5 years. Clearly linking pension funds to the stock market
has severely reduced the living standards of retirees, forcing many to
remain in the labor force into their seventies and beyond or to sink into
poverty. Pensions linked to publicly funded productive activity would
avoid the losses and risks embedded in investing in the stock market.
- 3. The bipartisan strategic decisions to convert
the US into a 'service' economy as opposed to an advanced and diversified
manufacturing economy is the root cause of the collapse of the US financial
system and the emerging long-term recession. From the 1960s onward, the
political elite adopted policies that promoted finance, real estate and
insurance, the so-called FIRE sectors which raised rents, redirected subsidies,
provided tax concessions and subsidies, and destroyed and displaced industry.
The re-conversion of the FIRE economy back to a balanced manufacturing
economy and welfare state, essential for reversing the collapse of the
US economy, will require a major political upheaval.
- 4. The massive flight of capital from productive
sectors to FIRE was accompanied by the huge surge of capital overseas,
making the domestic economy over dependent on 'services', particularly
volatile and risky 'financial services' and highly indebted consumers.
The conversion of the US from a diversified economy to a 'FIRE' monoculture
increased the probability of a general collapse if and when the financial/real
estate market went under. Recovery and sustained growth can only occur
with the return of a diversified economy, the retention of capital from
overseas flight and large-scale, long-term public investment and incentives
for the productive and social service sectors.
- 5. The pursuit of military-driven empire building
at the expense of joint ventures and reciprocal trade agreements with countries
with expanding markets, strategic energy sources and large populations
and markets, created enormous budget and trade deficits and alienated potential
sources of markets and strategic commodities. Trillion dollar military
expenditures in pursuit of prolonged, costly colonial wars (without end),
diverted funds from the application of technological advances and high-end
manufacturing, which would have lowered costs and increased market competition.
Equally important, by shifting from market-driven domestic expansion to
overseas military-driven conquest, the entire axis of economic power shifted
from industrial to financial capital. Finance capital essential to funding
government budget deficits incurred through military expenditures, grew
in influence Wall Street replaced the steel-belt as the axes of power
- 6. The ascendancy of militarism and financial capital
facilitated the increase of influence of a virulent power configuration
promoting the regional hegemonic interests of a colonial-militarist state
specifically, a previously marginal political lobby the pro-Israel-Zionist
power configuration (ZPC). The military-driven empire builders saw in
the ZPC a strategic ally in pursuit of their global conquests; the ZPC
saw an open door to high office and multiple opportunities to promote Israel's
expansionist agenda through their influence in Congressional Committees,
electoral campaigns and direct White House appointments.
- The ZPC surge to the top echelon of power was aided and
abetted by the increase of financial support they received by members in
strategic positions in the most lucrative financial institutions. The
ZPC was an economic beneficiary of the speculative bubble: it was
the massive infusion of financial contributions that allowed the ZPC to
vastly expand the number of full-time functionaries, influence peddlers
and electoral contributors that magnified their power especially
in promoting US Middle East wars, lopsided free trade agreements (in favor
of Israel) and unquestioned backing of Israeli aggression against
Lebanon, Syria and Palestine. Economic recovery is contingent on ending
budget busting military imperialism. That will not happen unless there
is a wholesale replacement of the political elite nurtured on the
metaphysics of military-based global power.
- No economic recovery is possible now or in the foreseeable
future as long as the US Congress and executives provide trillion dollar
bailouts to Wall Street's insolvent speculators, bankroll 700 billion dollar
budgets of ever expanding war spending and while Zionist power brokers
dictate US Mideast policies.
- The lessons of the past tell us a great deal about what
paths we should and shouldn't take.
- Social Security still exists precisely because the US
public rebelled and defeated its proposed handover to Wall Street and it
remained a publicly run program. The financial system collapsed because
the US economy 'specialized' in a single crop finance at the
expanse of a diversified productive economy. The political system is totally
discredited because it is run by a failed political elite which blatantly
represents and acts on behalf of a few thousand financial oligarchs; a
couple hundred militarist oligarchs and a few dozen zealous Zionist organizations.
- The 'power elite' is only as powerful as it is able to
manipulate, intimidate and beguile three hundred million plus US citizens
into thinking that they are indispensable to their lives. The overwhelming
popular rejection of the privatization of social security and the
Wall Street bailout suggests that the ruling oligarchy is not invincible.