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The Housing Bubble, Bailout, Good Jobs and Goodfellas
Monday, 27 October 2008 19:08
by Sherwood Ross

The rush to bail out Wall Street is tragic. It’s as if the sun wouldn’t rise tomorrow unless Congress acted immediately. Every two-bit con artist uses the spiel, “If you don’t buy now, it’ll be too late. Going! Going! G-o-n-e!” Yet Congress rushed in like greenhorns off the boat. No hearings. No in-depth deliberations. And versus unanimous public fury. Calls to Sen. Barbara Boxer's office Sept. 25th ran 917 to one against the swindle.

In his Chamber of Commerce speech Friday morning(Oct. 17), President Bush talked about “making it easier for Americans to borrow money,” as if consumers aren’t drowning in a Red Sea of debt. Borrowing ain’t the problem. It’s that homeowners can’t earn money - that’s underlying the rising tide of mortgage defaults.

The U.S. economy is bleeding good jobs: multinationals are automating jobs and relocating them offshore while the replacement gigs laid off workers find pay about 20% less than their old work. In this year’s third quarter, median weekly earnings for 107.2 million full-time wage and salary workers was $720, BLS said. Last month, 159,000 more jobs slid down the tubes as unemployment breeched 6%. Paul Krugma writes in The New York Times that "the Philadelphia Fed's manufacturing index is falling at the fastest pace in almost 20 years."

Yet executives have been rewarding themselves handsomely. Pay at large U.S. firms averaged nearly $11 million in 2006, according to AFL-CIO data. The workers’ advocate says CEO’s of big outfits are paying themselves 364 times as much a year as their average employee. And the Bush regime has made it ever tougher for unions to organize. Only 15.4 million unionized workers remain. Their pay is $863 compared with $663 for non-union working stiffs. So by keeping unions from organizing, the Wal-Marts of America and their narrow-view allies are jamming the propellers that drive the economy.

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“While the suppression of workers’ rights to organize may appear to have little direct relationship to the collapsing housing bubble that is the cause of this recession, on closer examination they are closely linked,” writes Dean Baker, Co-Director of the Center for Economic and Policy Research.

“The suppression of unions,” Baker writes, “has been a major factor preventing workers from getting their share of productivity growth…Employers have been willing to use a wide variety of tactics, both legal and illegal, to prevent workers from organizing” and “the government has tolerated these abuses, with lax enforcement of the already weak laws…”

One tactic is to fire employees that try to organize their colleagues for higher wages. The Center for Economic and Policy Research says that, in clear violation of the law, one of every five union organizers gets a pink slip. As union ranks dwindle, good-paying jobs disappear and paychecks shrink.

At the same time, reactionary judges are allowing firms like IBM to rejigger the rules to compute the pensions promised their staffs. Some retirees are now staggering into the sunset after a lifetime of dedicated work with 50% less in their pockets than they expected and to which they are entitled.

In this manufactured crisis, Congress takes its customary stand: it talks the free enterprise talk and walks the corporate welfare walk. As historian Howard Zinn writes in the October 27th “The Nation,” Congress bailed out the aircraft industry after World War II; next came the oil depletion allowances for Big Oil and then the Chrysler bailout. He points to a Cato Institute report that in 2006 “needy corporations like Boeing, Xerox, Motorola, Dow Chemical and General Electric received $92 billion in corporate welfare.”

Zinn says it would be far better for Congress to give the $700 billion “directly to the people who need it. Let the government declare a moratorium on foreclosures and help homeowners pay off their mortgages. Create a federal jobs program to guarantee work to people who want and need jobs.”

A-men! This public is anxious to see its infrastructure repaired; to see better schools and highways and mass transit; to see every person that seeks to go to college or get vocational training get a chance to learn a profession or a skill; to see a vast expansion in our community college system. It needs to rebuild its rotting urban cores and to create non-toxic energy sources and potable water supplies; to build the affordable rental housing needed by hard-working folks living in slums. And Krugman calls for the Feds to "provide extended benefits to the unemployed...emergency aid to state and local governments...and buy up mortgages (but not at face value, as John McCain has proposed) and restructure the terms to help famililes stay in their homes."

The Bush regime has operated for eight years like the gangster mob that gets its hands on a legitimate business. Right away it hollows out all the assets. It swipes everything that ain’t nailed down. It creates a criminal war to loot the oil wealth of Iraq and to enrich its oil industry buddies, wreaking havoc there and sucking nearly a trillion dollars out of taxpayers’ wallets for armaments and rising gas prices. It arranges for no-bid contracts for its military-industrial goodfellas like Halliburton. Time for a change. #

(Sherwood Ross is a Miami-based writer who has worked as a business reporter for wire services and publicist for entrepreneurial companies. Reach him at sherwoodr1@yahoo.com).
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