This collection of articles from the US journal The Nation gives fascinating insights into capitalism's continuing crisis. The Clinton administration and the Federal Reserve Bank together blocked efforts to regulate credit derivatives. They created a debt casino. The Fed, under `maestro' Alan Greenspan, never saw the bubble coming, yet The Nation's Dean Baker warned in August 2004 of a housing bubble, as did William Greider in September 2005, forecasting `dramatic price inflation in real estate'.
Wall Street is no better than a criminal conspiracy against the American people. As Steve Fraser writes, "Wall Street, after all, had been convicted in the court of public opinion of reckless, incompetent, self-interested, even felonious behavior, with consequences so devastating for the rest of the country that government was licensed to make sure it didn't happen again."
But the government has failed to make sure it won't happen again. Its spending cuts will only deepen the slump. The IMF said that balancing the US budget would cut its current account deficit only slightly, but would cut output by more than $300 billion over five years.
The ruling class wants slow or no growth, high unemployment and low inflation, because these bring high profits. Trade unions in the USA are calling this the `job-loss recovery'. Laws protecting capital are mandatory; laws protecting labour are nugatory. Low inflation boosts the prices of financial assets, pumping up the financial bubble.
Faced with static or falling wages, price rises and job cuts, too many workers have chosen not to fight for wages and for jobs but instead to run up debts, dig into their savings and pensions, and remortgage their homes. So they have become dependent on building societies and banks.
Aggressive private firms have taken advantage of this weakness and pushed their dodgy financial products in order to loot the savings, mortgages and pensions of the working class majority. Predatory lending pumps $9 billion a year from the poorest to the richest.
The ideology of de-regulation and freedom for capital is bankrupt. We need controls on capital, the re-regulation of finance, public investment and higher wages.
