Published on Worker’s Action, by Mark Vorpahl, Sept. 20, 2012.
If foxes are put in charge of rebuilding a chicken coop, it is a given that the chicken’s new quarters will be less than secure. In terms of rebuilding the economy, with the predatory interests of Wall Street dictating the “solutions” proposed by both the Republicans and Democrats, it is a given that their plans will leave workers vulnerable so that big business’s profit-driven appetite can gorge itself … //
… QE is not a new invention by Bernanke. It has been used before with dubious results. For instance, Japan tried it to deal with their economic stagnation in 2001. In an article by Financial Times writer John Richards titled “Quantitative easing: Lessons from Japan,” Richards wrote:
The process ignited a bond bubble whose eventual collapse destabilized financial markets, even threatening Japan’s hard-earned economic recovery.
He later said:
The costs were the shutting down of the money market, although it revived fairly quickly when QE ended, and a dangerous bond-bubble, whose popping threatened the recovery and destabilized the financial system.
QE has also been tried in England and in the U.S. in 2009 as well. The positive results in terms of strengthening the nations’ overall economy are debatable even among these measures’ supporters. One outcome is certain: the Federal Reserve’s QE will greatly contribute to the already historic level of inequality that exists in the U.S. and distort the economic and political systems in favor of the ultra-wealthy.
This is because QE drives up the prices of financial assets, and the top 5 percent own 60 percent of the U.S.’s individually held assets. Also, with QE’s focus on mortgage banks it will mean low rate loans will be available to those who are better off, while doing absolutely nothing for those who cannot afford to buy houses.
It is no wonder why stocks soared after Bernanke’s announcement and Donald Trump was moved to say: “People like me will benefit from this.” In the words of Rolling Stone economic writer Matt Taibbi, QE is a hidden government subsidy for the banks.
The climbing stock market will help Obama’s re-election campaign because of the illusion of growing economic health. However, these results will not “trickle down.”
This is not because of any mistake on the part of the policy makers. Both the Republican and Democratic parties are in competition to demonstrate their ability to deliver the goods to their Wall Street funders who are guided by the view that the rich aren’t rich enough, even if that means everyone else will be poorer. High unemployment and low wages are the new normal desired by these deep-pocketed sorts because that helps their profits. The corporate party’s politicians are working hand in hand with them so that they can realize their goals.
This pernicious marriage between the political and economic elites could not be better demonstrated than by how the Federal Reserve will be buying financial instruments in Bernanke’s QE plan. Matt Taibbi writes:
QE is designed to buy Treasuries and other assets, but the Fed does not simply go out and buy Treasuries itself; it does it through its primary dealers, who include of course banks like Goldman Sachs. The Fed announces when it’s going to be doing this buying and in what quantity, which allows the banks to buy this stuff at lower prices ahead of time and then sell it to the Fed at inflated cost.
If such steps were taken between stock companies on Wall Street, it would amount to insider trading. Since it is the government making the arrangements with the banks, it is called a bold action to strengthen the economy.
QE is bad news for workers. Rather than taxing big business to build a federal jobs program that will increase employment, put more money into the real economy, and raise the vast majorities’ living standards, the politicians are again giving the banks a bail out with another name.
Both union and unorganized workers need to unite around our shared interests in opposition to the architects of QE and those it is designed to benefit. A mass independent social movement is required to rebuild the economy and keep the foxes out.
Finance: Follow the money, on The African Report, by Patrick Smith, September 13, 2012;
Outsourcing Abuse: How Farm Workers Are Being Cheated Out of Their Hard-Earned Money – This kind of wage theft can be found in the fields of nearly every handpicked crop in the United States, organic or conventional – on AlterNet (first on The American Prospect and on Food & Environment Reporting Network), by Tracie McMillan Abu, September 14, 2012.