Friday, October 14, 2011

Too failed to fail

No 'recovery' for workersas wages fall, jobs stagnate
(front page)
 
BY BRIAN WILLIAMS  
As far as working people are concerned—who face protracted high unemployment, declining wages, and rising debt—the so-called economic recovery they've been told they're living through is anything but that. Declining capitalist production, trade, and employment are at the root of today's worldwide economic depression. Bosses, along with other sections of the capitalist class and their governments, are responding by pressing ever harder to make workers foot the bill.

During the officially recognized recession from December 2007 to June 2009 median household income declined by 3.2 percent. From the time the recession ended through June 2011, it fell 6.7 percent, according to a study by two former Census Bureau officials reported in the New York Times. The overall decline is the largest in decades.

Over the past several years the employment and wage gap between men and women has narrowed. This is not because of gains being made by women, however, but because of a relatively faster decline in jobs and wages for men, as the bosses seek to profit off the lower price they can pay for the labor of women. Median earnings for men fell by 6 percent from 2007 to 2010, according to the American Human Development Project, while women's income declined 0.9 percent.

Nearly 26 million workers in the U.S. are without full-time jobs, according to Labor Department statistics. In addition to 14 million listed as officially unemployed, another 9.3 million—an increase of nearly 450,000 from the previous month—have been forced into part-time hours, and another 2.5 million aren't counted because the government says they're not looking for work.

The official unemployment rate has hovered at or above 9 percent for over the past two years. But real unemployment is much higher—almost 23 percent if you figure it the way the government used to before 1994 when the Clinton administration rejiggered employment statistics.

About half the 103,000 new jobs the government claims were created in September include 45,000 striking Verizon workers returning to work.

Those unemployed long-term have been rising to record levels. The average length of time a person was unemployed jumped from 16.6 weeks in December 2007 when the recession began to 40.5 weeks this past September, the longest in more than 60 years, according to government figures.

Capitalist rulers are trimming their expenses to ensure uninterrupted payments to bondholders. State and local governments cut 90,000 jobs in the past quarter, reported CNN. Despite increased enrollment, "278,000 teachers and other public school employees have lost their jobs since the recession began in December 2007," noted an October 8 New York Times editorial.

The rising debt crisis of the government and financial institutions is marked by declining production. "The global manufacturing sector is in its worst shape since the summer of 2009, as slowing economic growth and the deepening eurozone crisis takes their toll on the world's factories," reported the Financial Times.

Capitalists are holding back from spending while sitting on large cash reserves because investments in plants and equipment do not bring sufficient return. U.S. businesses have raised cash reserves to 6 percent of their total assets, the highest level since at least 1952, while their spending on new equipment is the lowest since the late 1950s, Doug Cliggott, from Credit Suisse told the Times.

This declining investment in production is part of a decades-long trend that has gone hand in hand with the expansion of ever more complicated and risky speculation in stocks, derivatives, mortgage-backed securities, and other forms of fictitious capital as the propertied rulers invest in whatever brings the highest return.

Meanwhile, about one in five homeowners nationwide owe mortgages greater than what their homes are currently worth. This is true of nearly half of all homes in Arizona. In that state Fannie Mae and Freddie Mac, the now government-controlled financial agencies that fund more than 70 percent of home mortgages, have declined to forgive even small amounts of mortgage debt in a program in which federal funds would cover half the losses.

The two mortgage giants are among the highly leveraged and increasingly concentrated financial institutions deemed "too big to fail," whom the government has moved to prop up by absorbing billions of dollars in losses.

As John Hussman, an economic analyst and investment fund manager, wrote in early October: "To say that Bank of America can't be allowed to 'fail' is really simply to say that Bank of America's bondholders can't be allowed to experience a loss."

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