Socialist Alternative

Bank Bailouts, Unemployment, Foreclosures — Outrage at Wall St. Sweeps the U.S.

Published on

“My administration is the only thing between you and the pitchforks,” President Obama said to a group of 13 major bank CEOs in early April.

Obama was referring to the explosion of popular outrage in the aftermath of the $18 billion in bonuses paid to bailed-out Wall Street bankers and the AIG bonuses scandal. These scandals are increasingly exposing the rotten nature of the capitalist system.

Millions of workers and young people are enraged by trillions of dollars in bailouts for Wall Street when ordinary people are losing their jobs at the rate of 600,000 per month, millions are facing foreclosures, and average household net wealth shrunk by 9% in 2008.

Speaking about the changes in public opinion, Quinnipiac University researcher Peter Brown said, “the American people are mad as hell. They think the folks who got the country into the financial mess are both stupid and crooked and want the government to burn them at the stake.”

Anger and Populism
The financial system’s meltdown, followed by the worst economic collapse since the Depression, has led to a major shaking-up of consciousness in society. Starting with the massive rejection of Republican policies and Obama’s election in 2008, there is now a rising anger among workers against big business and the super rich.

While this has a broadly populist character, it is underlined by a growing class bitterness and polarization.

The idea that the free market is the best way to run society has been undermined among a large section of the population who are blaming the barons of Wall Street for the crisis. Clearly concerned about the anger that has enveloped society, Martin Seiff writes: “Do the leaders of Wall Street want to set off an anti-capitalist political tidal wave across the United States that will sweep them away forever?” (UPI, 3/16/09).

This radicalization now extends to sections of the population who saw themselves as “middle class” or “professional” as they are thrown out of work or see their careers go down the drain. We have entered a period when everything that appeared solid now “melts into air.”

Unless there is a massive fightback, millions of workers and their families will face serious degradation of their living standards. Young people will see no future under this system.

The economic crisis will push large numbers of workers and young people to search for an explanation, for clear ideas and an alternative to the failed system of capitalism. However, this will not happen in a straight line.

Given the low level of organization and the weakness of the labor and socialist left, the main expression of the growing class anger in society will most likely take the form of confused populism – left and right.

Using the Fox Network and talk radio, right-wing populism attempts to divert the anger that exists among workers and the middle class into racist, sexist, and anti-immigrant hysteria. In the short term, it will be difficult for right wing populism to get a wider echo because of their alignment with the discredited Republican Party, but if the left fails to build a serious challenge against capitalism, they will return with a vengeance.

Increasingly, those who support Obama will be forced to mobilize to try to push for policies that defend the interests of working people. This will also lead workers to debate what are the real policies of Obama and the Democratic party.

Surveys consistently show over 60% approval for Obama’s handling of the economy. This is partly the result of Obama’s federal budget proposal, which includes spending increases for the poor, the unemployed, education, and the environment.

Reversing the neo-liberal trends of the past 30 years, Obama is now pushing to raise taxes on the top 5% of taxpayers to pay for increased healthcare spending. While inadequate, the $787 billion stimulus bill will create some jobs and provide some relief to the unemployed.

In the face of growing anger from below, Obama has increased his populist rhetoric and enjoys a massive reservoir of good will. But at the same time, Obama has continued with the policy of propping up financial companies with public dollars, including AIG who got $30 billion at the beginning of March. Also included in Obama’s $3.6 trillion budget is $250 billion for future bailouts.

After being guaranteed over $12 trillion since the onset of the crisis, the banks continue to be overwhelmed in toxic bad debts, and they are not lending. Criticizing Obama’s new plan, Paul Krugman wrote: “Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush Administration policy – specifically, the ‘cash for trash’ plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson” (NY Times, 3/23/09).

Continued corporate bailouts are like shoveling public money straight into a black hole. Only nationalization of the banks can begin to unclog the system.

Economic Crisis
While Wall Street and the mass media try to pretend the worst is over, the economic news for working people has continued to be ghastly. Retail, auto, and construction material sales have continued to decline. Foreclosures may reach an estimated two million in 2009 – a 400,000 increase over 2008.

Industrial production showed the biggest quarterly drop since World War II – a 20% drop in the first quarter of 2009. Looming on the horizon is an expected slump in commercial real estate, where vacancy rates have reached 15%, and an explosion in credit card delinquencies.

Real unemployment, officially at 8.9%, is now estimated at over 15%. Warning that there are still huge problems in the U.S. economy, former Labor Secretary Robert Reich warned we are not even at the “end of the beginning” as far as the crisis is concerned.

Obama’s and Geithner’s massive bailout of the banks is in sharp contrast with their refusal to defend and guarantee jobs and conditions in the auto industry. Obama’s newest proposal uses the threat of bankruptcy to force autoworkers to accept further cuts in wages and healthcare.

City and state governments are cutting back across the country. Wall Street and Corporate America will intensify their demands that working people pay for their system’s crisis.

Coming Struggles
Obama’s main priority in this crisis is to help save the capitalist system from collapse. While millions of ordinary Americans have hopes Obama will be able to reverse the economic pain, Wall Street is counting on Obama to help restore their system’s profitability.

To find a way forward, we must recognize that Wall Street and Corporate America are organized and have access to the politicians of both parties and the Obama Administration. The Democrats pretend to be the party of ordinary working people, the party of progressives, all the while catering to the interests of Wall Street and the nation’s corporate interests.

Now with Arlen Specter switching his party affiliation, the Democrats will have a filibuster-proof 60-seat majority in the Senate and an already solid majority in the house. They will have no more excuses and will be forced to reveal whose interests they serve.

Starting with their own experience, workers will draw the conclusion that we can’t rely on the Democrats. The only way working people will be able to avoid paying for this system’s crisis is by independently organizing ourselves and fighting back through our unions and other organizations.

As illusions in Obama fade amidst continuing attacks on working people, an unprecedented opportunity for an anti-corporate alternative to the Democrats will open up in the coming years. Ultimately, we will need our own political party to unify the struggles of working people in a broad political fight against both parties of big business.

Even a small mass party of workers and young people, organizing a fight-back in the workplaces and communities as well as the ballot box, would be a huge step forward in the movement to ensure a decent life for all.

Poll Shows Growing Support for Socialism in U.S.

According to a Rasmussen poll released in April, 37% of Americans under age 30 prefer capitalism, 33% prefer socialism, and 30% are undecided. Among all Americans, just 53% prefer capitalism, 20% prefer socialism, and 27% are undecided.

It is significant that a growing number of people say they “prefer socialism” over capitalism. This is largely the by-product of the constant attacks of the Republicans that Obama’s Keynesian policies are “socialist.”

In this strange fashion, the “S” word that for decades was taboo is now making its way back into the mainstream.

Naturally, there is enormous confusion about what socialism really means. Some see it as an increase in spending policies and a return to the welfare state, with more regulation of capitalism.

Others see it as a radical alternative but are not clear what it means. But the fact that a sizeable number of people now see socialism as a progressive idea is a very positive development, the first steps toward a challenge against capitalism.

Latest articles


Who’s Going To Save The World?

Joe Biden and Donald Trump are neck and neck in a race no one asked them to run. Groceries are 30% more expensive than...

Will Voting For The “Lesser Evil” Stop Trump?

It’s hard to believe that it’s almost been four years since the 2020 election – but it’s even harder to believe how little has...

Baltimore Bridge Collapse Kills 6, Shipping Industry to Blame

On March 26, the Dali, a container ship leased by shipping giant Maersk headed for Sri Lanka, lost all power while still in the...

Border Deal Shows The Crisis Facing Both Democrats & Republicans

Congress has been in a gridlock for most of February over the border deal that almost was, highlighting just how incapable the bosses’ two...