2020 stock market crash
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- Capitalists preach “the market” for the working class – stand on your own two feet, don’t rely on the government – but themselves sponge off the public big time. Just look at the billions in subsidies and tax concessions the fossil fuel companies, huge enterprises for the most part, extract from state and federal governments in Australia. The vehicle manufacturers raked in hundreds of millions a year from the Australian government for decades until deciding it wasn’t enough and went overseas. This is why big companies and industry groups hire armies of former politicians to lobby on their behalf in the offices of premiers and prime ministers – there’s money in government coffers and they want it. And while the capitalists talk about “the market” setting wages for workers, in reality, they don’t really allow the market to do the job. They use the whole apparatus of state repression, the industrial tribunals, the police, the courts to suppress workers’ rights to organise to pursue their demands. But when a crisis hits all the bullshit about the market is thrown to the winds. And that is just what we are seeing now. Faced with the collapse of the capitalist economy, for the second time in a dozen years, with massive bankruptcies on the table and the stock market plunging by more than 30 percent and more to come, fervent advocates of the free market are now embracing government intervention to save their skins.
- The Australian Chamber of Commerce and Industry is urging the federal government to provide wage subsidies to workers, equivalent in value to Newstart to all businesses experiencing a sharp downturn. It is also asking the government to provide concessional loans of up to half a million dollars, with 80 percent of the debt guaranteed by government, as well as wage subsidies to cover sick leave entitlements. Nothing but corporate welfare of a kind that they have long decried when applied to workers themselves. In the short term, working class households will get some benefits from this cash splash. In Australia welfare beneficiaries will be getting $750 in their bank accounts. in In the United States it is likely that Americans will receiving close to $1,000. But this is just short term relief to get the economy moving. The long term benefits will go to the capitalist class in the form of tax cuts and other financial concessions. The current crisis demonstrates not only that all the ideological nonsense about the virtues of the free market is quickly thrown overboard when capitalist interests are threatened, but also that the idea that governments are essentially powerless in the face of the markets is rubbish. Governments are not helpless victims who cannot do anything in the face of “economic reality”. In the normal course of events, when we demand things like better welfare, health care or education, governments tell us that it isn’t possible.
- It’s not that governments have suddenly discovered a big pot of gold in the basement of the central banks. They say that they are taking these measures to both protect public health and to save the economy. But it’s obvious which takes priority. The new measures constitute the largest bailout bonanza in world history, carried out through state-administered transfers of public wealth and current and future debt to billionaires and big business: socialisation of losses, privatisation of profits. The outcome will be to further transfer, consolidate and concentrate wealth, just as has occurred since the GFC. While there is discussion about small handouts, nothing serious is being proposed to halt the mass layoffs now gathering steam.
- In pretty much every spending package, subsidies to business, government loans and tax concessions account for two-thirds or more of the funds outlaid. Things that directly benefit workers – the big majority of the population – account for only one-third of the money.
- It turns out that these things, too, can be done. So, in an economic emergency, few of the usual rules apply. Governments can marshal the resources and can threaten the narrow interests of private businesses. Hardcore libertarians despise these measures as rampant socialism. From their perspective, they’re right: the very existence of such programs is condemnation of the free market capitalist model that they promote. But they are best seen only as another approach to the management of the capitalist economy. The fact that governments across the OECD are now prepared to spend trillions of dollar to save the financial system from collapse only confirms that the world economy cannot be left safely in the hands of “the market”. And, the situation clearly confirms that when the capitalist class and governments deem it necessary to save their system, lots of measures they once denounced as “unaffordable”, not permitted by the condition of “the economy”, are actually affordable and permitted. Governments can act when required. The ideological justifications of yesterday are revealed as threadbare. But nor are government interventions of this nature geared towards the interests of the working class, only the interests of the bosses.
- The dynamics of the economic and financial crisis will strengthen the tendencies toward recession, aggravating the effects of the health crisis. This relationship means that the duration and depth will be dependent on the combination of both crises. The drops in the stock market are bursting a bubble that helped maintain weak economic growth (particularly in the U.S.), without having resolved any of the structural problems that burst forth with the 2008 crisis (low productivity, low investment). Companies today are more indebted than in 2008, so a series of bankruptcies (in airlines, shale oil companies in the U.S., tourism, etc.) could hit the banks. Unlike 2008, the banks appear to be in a better position, but this all depends on the depth of the recession. There are other significant differences compared to the last recession: instead of coordination between the governments of the main powers that was seen in 2009 (when they were obviously terrified by the depth of the crisis), today confrontations are prevailing due to geopolitical tensions and ruthless competition not only between the United States and China, but also between the U.S. and Germany (with strong economic ties to China), and even between the United Kingdom and the European Union. For all these reasons, we call on working people and youth to take the struggle for measures against the crisis into our own hands.
- Trotskyist Fraction – Fourth International, Coronavirus and the Healthcare Crisis: Our Lives Are Worth More than Their Profits! (March 14, 2020), Left Voice.
- The chief fearmonger of the Trump Administration is without a doubt Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases at the National Institutes of Health. Fauci is all over the media, serving up outright falsehoods to stir up even more panic. He testified to Congress that the death rate for the coronavirus is ten times that of the seasonal flu, a claim without any scientific basis. On Face the Nation, Fauci did his best to further damage an already tanking economy by stating, “Right now, personally, myself, I wouldn’t go to a restaurant.” He has pushed for closing the entire country down for 14 days. Over what? A virus that has thus far killed just over 5,000 worldwide and less than 100 in the United States? By contrast, tuberculosis, an old disease not much discussed these days, killed nearly 1.6 million people in 2017. Where’s the panic over this? If anything, what people like Fauci and the other fearmongers are demanding will likely make the disease worse. The martial law they dream about will leave people hunkered down inside their homes instead of going outdoors or to the beach where the sunshine and fresh air would help boost immunity. The panic produced by these fearmongers is likely helping spread the disease, as massive crowds rush into Walmart and Costco for that last roll of toilet paper. […] People should ask themselves whether this coronavirus “pandemic” could be a big hoax, with the actual danger of the disease massively exaggerated by those who seek to profit – financially or politically – from the ensuing panic. That is not to say the disease is harmless. Without question people will die from coronavirus. Those in vulnerable categories should take precautions to limit their risk of exposure. But we have seen this movie before. Government over-hypes a threat as an excuse to grab more of our freedoms. When the “threat” is over, however, they never give us our freedoms back.
- With nearly one-third of all Americans on government-enforced lockdown and the National Guard pouring into the streets, it's a good time to take stock of the coronavirus scare and the real nature of the threat. What is our most important investment as the markets crash?
- Ron Paul, What's Coronavirus' Greatest Threat? What's The Most Important Investment? Liberty Report (March 23, 2020)
- Let’s be clear: what’s happening right now is the economic and financial equivalent of 9/11 and the Financial Crash rolled into one. And what’s fast coming down the track could make even the Great Depression look like a stroll through the park. A total and complete shutdown of vast sections of the economy, indefinitely, with mass unemployment possibly around the corner.
- Mehdi Hasan in How to Save the U.S. Economy, with Alexandria Ocasio-Cortez and Stephanie Kelton, The Intercept, (March 23, 2020)
- As the coronavirus epidemic stretches on, working people are facing an economic collapse, the likes of which have not been seen since the Great Depression. Organizing to fight for an immediate ban on all layoffs has to be an essential part of any program to protect the working class and to make the capitalist’s pay for their crisis.
- Working people are facing what could be the biggest unemployment crisis since the Great Depression. As states and cities across the country continue to shut down schools, libraries, restaurants, bars, and other non-essential services in order to stop the spread of the coronavirus, hundreds of thousands of workers have already lost their jobs, and millions more will soon follow. While restaurant, theatre, hotel and hospitality workers have been some of the first to see massive layoffs, huge losses in travel, retail, and oil drilling and extraction industries are also expected, as more and more people are quarantined. [...] Such job losses would mean dire poverty for huge sections of the working class.
- Unfortunately, despite calls from progressives like Sanders and AOC, the U.S. government has so far done little to address the problem of layoffs and unemployment; and even limited proposals, such as universal paid sick leave and emergency cash payments, have been met with obstruction by Republicans and Democrats. While such government measures are important and necessary, they are clearly not enough. Confronting this crisis ultimately means confronting capitalism, and that means directly resisting these layoffs, since layoffs are always the first weapon used against working people in moments of economic crisis. Big businesses and corporations that have benefited from years of economic growth (not to mention the massive surplus value of workers’ labor) owe employees and their families a huge debt and it’s time to pay up. In order to make this happen, working people must organize for and demand: 1. An immediate ban on all layoffs. 2. Full wages for all employees, whether they are working during the crisis or not. And 3. A redistribution of working hours among currently unemployed workers (including undocumented and precarious workers) so that no one is denied the essential right to employment. Any company that cannot or will not comply with these demands should be nationalized under workers’ control or expropriated directly by the workers themselves. Wherever possible the capital of these companies should also be immediately put to the service of solving the current economic and health crisis and providing for the full needs of the working class. Sitting by and allowing companies to layoff workers, on the other hand, expecting that the crisis can be solved with an expansion of the existing safety net, or direct cash payments, would be a huge mistake and would only weaken the power of the working class and ultimately strengthen the power of capital.
- While capitalists and their paid politicians will scoff at these demands, claiming they are economically infeasible or impossible, this is because they only understand the language of profit and cannot imagine a world run for the benefit of all. Nonetheless, the fact remains that capital has significant resources that could and must be made available to all working people. Most major corporations such as Amazon, Walmart, Disney, Delta, GM, etc., have enough reserves and more than enough credit to continue to pay their employees the full amount of their wages for the length of the health crisis. Therefore, in the case of private corporations, working people must demand that the federal government make any future market aid contingent upon a wholesale indefinite ban on all layoffs, with full wages and continued benefits for all employees, whether they are working or not. States must likewise make all operating licenses for private companies and corporations contingent upon the same demand. Industries that refuse, particularly health, transportation, and manufacturing industries should immediately be subject to nationalization under workers’ control.
- Of course, working people ultimately cannot rely upon the federal government or the state governments (whose purpose is to maintain the hegemony of the markets and the rule of capital) to fix this crisis in any equitable way. Only the working class has the power to make this happen through mass strikes and work actions. In order to act swiftly in the case of any layoffs, lockouts, or shutdowns, working people ultimately must organize themselves at their workplaces and in the streets, whether they are in a union or not, and be prepared to use their collective power to demand that all necessary resources be employed for the well being of the whole class with full compensation and benefits, that full back pay be provided to all workers upon returning to work, and that everyone has access to well compensated employment.
- This is unlike almost any other shock that we have seen in how quickly everything has ground to a halt, not just in the stock market but in everyday lives. And I truly do not believe that there is an action we can consider right now that is too small. I certainly have not seen any proposal that I would say is too large for us to be considering right now...We have to examine why there wasn’t political appetite to do more in 2008. And the reason for that was because there was a package that was entirely designed to favor corporations, to bail out Wall Street that was more concerned with stock prices than wages and the health of Wall Street than the actual healthcare system. And that’s why there wasn’t political appetite to do more because we passed out billions of dollars and then the CEOs came in flying in on their private jets, asking for more... Now is a very different time. If we focus our package on immediate bailouts for everyday people, making sure that we’re issuing things like mortgage and rent and student loan debt moratoriums, making sure that we’re getting cash into people’s hands, ensuring the fact that if they have to go to the hospital, coronavirus related or not because as we know this can trigger a series of other health issues, that you will be financially okay. And that is the number one thing that we need to do right now.
- Alexandria Ocasio-Cortez in How to Save the U.S. Economy, with Alexandria Ocasio-Cortez and Stephanie Kelton, The Intercept, (March 23, 2020)
- We need to be introducing stabilizers to working families. And Katie Porter is absolutely right on the point of tax credits. You know, I think sometimes with all due respect to my colleagues, we get into this, you know, there’s a lot of like this 90s wonkery going on where if we do a backdoor tax credit, oh, that’s a clever way of helping people. But it doesn’t address the core issue, which is that people are experiencing a shock right now. We need to get checks into people’s hands. If you’re concerned about it being means-based, tax it on the other end. Get everyone a check right now. And then if you want to make sure that the millionaire’s don’t get 1,000 bucks, do an extra, you know, tax them on the other end of that and make sure that they can’t wriggle out of that.
- Alexandria Ocasio-Cortez in How to Save the U.S. Economy, with Alexandria Ocasio-Cortez and Stephanie Kelton, The Intercept, (March 23, 2020)
- Congress passed a $2 trillion stimulus package for which the American taxpayer will be held entirely responsible. Even worse, the new legislation contains a $500 billion allocation (another corporate giveaway) that the Federal Reserve will use as a capital base for borrowing $4.5 trillion. That massive sum of money will be used to buy toxic bonds in the corporate bond market. Just as Mortgage-Backed Securities (MBS) were used to fleece millions of investors out of their hard-earned savings in the run-up to the 2008 Financial Crisis, so too, “toxic” corporate bonds were the weapon of choice that was used to pilfer trillions of dollars from investors in the run-up to today’s crisis. (Same scam, different instrument) The virus was merely the proximate cause that tipped the sector into meltdown. The problem had been festering for years and everyone in the financial community (Including the Fed, the BIS and the IMF) knew that it was only a matter of time before the market would blow sky-high. Which it did.