Socialist Unity

If the left publicly opposes the bail out of the banking system, so that we are actually encouraging the collapse of the economy, the tens of thousands of redundancies that would entail, the poverty and homelessness, then we just prove that we are idiots who should never be listened to.

There are, I think, three main reasons why some on the the left oppose the bailouts.

1) It’s a hoax, the crisis is not real, Naomi Klein is right. It’s disaster capitalism, a mild problem exploited for political gain.

Response: After the collapse of the biggest mortgage players in the US, the biggest insurance company in the world, several major US investments banks, a major German mortgage lender, a Brit bank or two, and Iceland, only the most Black Helicopterish would say this is somehow a manufactured crisis.

2) It helps the rich only.

Response: Bank failures and credit market freeze ups affect everyone. Call me crazy, but I like going to the ATM, withdrawing $100, and having the machine give it to me.

3) A collapse would mean the end of capitalism and thus the birth of a glorious new day for socialism.

Response: This is the unfortunate subtext of why some lefties oppose the bailouts. They want the system to collapse, and are secretly cheering on this “crisis of capitalism.” That millions would suffer during such a collapse with no guarantee they would turn to socialism just shows how deluded and self-serving such lefties are. Inept too. Standing on the sidelines clucking about how Marx (or anarchist theory) predicted this would happen, instead of coming up with answers that will help those worst affected, is worse than useless.

The current crisis is a perfect organizing platform for the left. Everything they’ve been saying is right out in the open. Class. A tiny few grabbing the money. The bulk of the population getting screwed. But to organize on it, they need to leave the leftie enclaves and make themselves useful to those who are getting shafted. That’s how to build a mass movement. First, help them. Then deliver the message. Not the other way around.

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Please vote NO on the bailout package. It seems Wall Streets wants its $700 “or else” our retirement plans get shot in the head. But why rush to put so much control and money into their hands? Why not first consult with the over 200 academic economists, include four Nobel laureates, who signed a petition opposing the bailout as hasty and ill-conceived.

And since Congress is embracing bipartisan action, why not slow down and listen to the concerns of Senator Enzi (R-Wyoming) who lamented that this bill, pressured onto Congress by a hasty administration and crafted in large part by Wall Street itself, has resulted in a “very costly Band-Aid for big banks that will do very little to help” what ails America.

Take into account the criticisms of Senator Shelby (R-Alabama) the senior Republican on the Senate Banking Committee, when he said that Congress has panicked and is “now about to spend $700 billion on something we have not examined closely. Yes, in the end, we will have ‘done something.’ At the same time, however, we will have done nothing to determine whether it will accomplish anything at all.”

Take counsel from the remarkable agreement of Senator Sanders, the Socialist Senator from Vermont, and Senator Sessions, a Republican from Alabama, when they said that it is strange and breathtaking that Congress is about allocate $700 billion, the largest single authorization of expenditure in United States history, to one person – Secretary Paulson, the former CEO of Goldman Sachs, one of the wall street mavens who got us into this trouble in the first place — with very little oversight as to which institution is bailed out, what is purchased, and at what price.

Vote NO, take time, and craft a better bill. Yes, the banks need recapitalization, but there are better ways.

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Today Mon. Sept. 29th 4 pm
San Francisco Federal Reserve
101 Market (at Stearns. Embarcadero BART.)

From Cindy Sheehan’s listserv:

In response to the bipartisan “done deal” of the Wall Street bailout plan, Cindy for Congress is calling for another non-partisan protest in front of the Federal Reserve Bank: 101 Market (corner of Market and Stearns) at 4pm on Monday, September 29th.

This could be sizable. Sue and I will be there.

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More from Sue:

Dear Congressmember

Please vote “no” on the revised bailout package, because it contains toothless safeguards for preventing abuses in the billions of dollars.

First: What good is a law that prohibits the Treasury from buying assets at a cost above what companies actually paid for them? The problem is that those assets are near worthless, and the financial institutions know it — which is why the credit markets have seized up. The CDO’s were “only paper” and therefore fraudulent from the beginning and massively overpriced. If you can’t reach through an agreement and seize the collateral in satisfaction upon a default, then the agreement is not “collateralized” in any meaningful sense. Credit default swaps, which are insurance contracts issued by companies without the necessary capital to back them up, are also by definition fraudulent.

There is no difference, philosophically, between CDOs and credit default swaps and the securities issued in 1919-21 by Charles Ponzi vis-a-vis purported international postal reply coupon arbitrage. There is no difference between these sham paper transactions and tulip bulb mania of 1636-37.

If the Treasury buys these securities for any more than pennies on the dollar, the American people will be cheated.

Second: Supposed restrictions on executive compensation are no more strict than current tax laws. There is no law capping executive compensation. Under Internal Revenue Code section 162(m) no tax deduction is allowed for corporations related to a CEO’s compensation above $1,000,000. But of course there’s a loophole, which is: It doesn’t apply to compensation the employee *actually earned* — by which they mean the payment of commissions, and payment for meeting performance goals preapproved by the BoD and shareholders. Performance goals can be as meager as you want them to be.

Under IRC 280G, no tax deduction is allowed for an “excess parachute payments” in connection with a “change in control” in the ownership of a corporation’s stock. The excess parachute amount is defined as the “excess amount” over a “base amount.” The base amount is the average of compensation for the last five years (however high the amount). There is no “excess golden parachute” unless the payment is equal to or more than 3 times the 5-year average. The law applies to all employees in highest paid 1% of employees of the corporation or, if less, the highest paid 250 employees of the corporation.

I can’t see that there is any difference between the law proposed and those already on the books. Also please consider that a tax penalty on a company that is already doing poorly (and therefore does not really need the deduction) isn’t a meaningful penalty.

Third and most alarming: The SEC will now be able to suspend “mark-to-market” rules? Isn’t this the same as telling companies they can now lie on their financial statements with impunity? Isn’t lack of transparency a main reason that financial companies got us into this mess in the first place? Isn’t this a primary cause of Japan’s “lost decade” – allowing banks to keep worthless securities on their books for years, without marking them down to their actual value? This is a horrible provision that should be opposed with all of your might.

Sincerely,

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