Day: December 8, 2008

But Is It A “Team Of Rivals”?

From an article written by Tom Eley.  I had tried to write a response to the idea of a “team of rivals”, but I could never find the right words to what I was seeing in Obama’s picks for his cabinet.  Now thanks to Eley I do not need to give myself a headache.

In recent weeks, numerous media accounts have referred to President-elect Barack Obama’s cabinet selections as a “team of rivals.” The reference is to a book of the same name by the historian Doris Kearns Goodwin on Abraham Lincoln’s choices for key cabinet posts after his victory in the 1860 election, when he confronted the secession crisis and then the Civil War.

The media comparisons between Lincoln’s and Obama’s cabinets are specious, betraying a combination of historical ignorance and political shallowness. The false analogy serves two political functions. First, it implicitly imparts to Obama a progressive and democratic aura which is, in fact, belied by his cabinet selections, all of whom are advocates of militarism abroad and austerity at home. Second, the analogy distorts and demeans the historically progressive character of Lincoln and his government, which embodied a profoundly democratic and ultimately revolutionary agenda, centered on the struggle against slavery and the preservation of the union.

The use of the term “team of rivals” in relation to the Obama cabinet rests on the president-elect’s selection for secretary of state of his chief opponent for the Democratic presidential nomination, Hillary Clinton, and his retention from the Bush administration of Robert Gates for defense secretary. Obama won the nomination over Clinton, who was the early favorite, by appealing to broad opposition to the war in Iraq among Democratic voters and the population at large, incessantly reminding voters that “she got it wrong” in her support for the invasion and presenting himself as the candidate who would bring a rapid end to the war. He then won the general election based on a powerful voter repudiation of the Bush administration’s militaristic foreign policy and its pro-corporate and anti-democratic domestic agenda.

This is not only not analogous to Lincoln’s approach, it is the opposite. Lincoln’s key cabinet picks, while they had been rivals for the Republican Party nomination of 1860, in no way represented a retreat from the central principals of his campaign and the aspirations of his voters: preserving the union and preventing the expansion of slavery. These appointments included William Seward as secretary of state, Salmon Chase as treasury secretary, and Edward Bates as attorney general.

Lincoln rose to prominence in the young Republican Party by giving political voice to mass popular sentiment against the expansion of slavery to the new states and territories of the West. Largely because of his genius for clearly presenting the critical political issues related to slavery, he bested more prominent politicians such as Seward (senator from New York) and Chase (governor of Ohio) in the contest for the 1860 Republican presidential nomination. But despite numerous political and personal differences, Seward, Chase and all of Lincoln’s other cabinet selections shared the central aim of the Republican Party—preserving the union and defeating the rebellion of the Southern slave owners.

In securing the 1860 Republican nomination, Lincoln beat out his main rivals, Seward, Chase and Bates. Then, after winning the general election, he invited them to assume key cabinet posts. He did so not simply because he was a shrewd politician, but because he wished to unite the various sections of the Republican Party behind the aspirations of genuinely democratic forces in the country and create the best possible conditions for crushing the Southern planters’ rebellion.

Please stop using the analogy…it simply is not true.

Taleban Spreading

The Taleban has a permanent presence in nearly 75% of Afghanistan, a new report by an international think-tank says.

The International Council on Security and Development says the insurgents can now infiltrate Kabul at will, although the government rejects the findings.

The International Council on Security and Development says the insurgent group has moved well beyond its southern heartland and is at the gates of Kabul.

But the conclusion that the Taleban now has a presence in nearly three-quarters of the country is being challenged by the government and foreign diplomats, who say the analysis is flawed.

The report comes as renewed efforts are being made to try to instigate peace talks with elements of the Taleban, our correspondent says.

A meeting is being planned in Dubai in the coming days involving 40 or so Afghans, representing both the insurgents and the government.

However, many are cautioning that this is just a first tentative step and expectations remain low.

Meanwhile, a US military spokesman has said that Taleban leader Mullah Omar’s first public statement for almost a year suggests he is concerned about rising US troop numbers.

Should Automakers Get Their Cash?

Sorry to say, that I feel they should not and for several reasons.

First they are asking the workers to give up even more than they have in the past….in other words they are trying to blame the workers for the failure of the industry and so far the UAW is going along with it.  Why? You may ask.  The UAW is not working in the best interest of the workers and neither is the Congress.

The concern of the UAW is not the defense of its members’ jobs and living standards, but the continued existence of the union apparatus and the lucrative salaries and perks it provides for the union bureaucracy. Gettelfinger is well aware that the collapse of GM would spell the end of the UAW. That is why the union is willing to do whatever is necessary to keep the companies afloat, including imposing poverty wages and conditions on its members.

The Senate hearing made clear that the government, the corporations and the UAW bureaucracy are using the threat of mass unemployment to blackmail autoworkers into accepting the destruction of all the gains won over generations of struggle. This reactionary operation will be the beginning of a new offensive against the working class as a whole.

Is there an answer?  You bet your butt there is!

This entire framework of the so-called “bailout” must be rejected. The only way to defend the interests of autoworkers and the working class as a whole is through the nationalization of the auto industry and its transformation into a public utility democratically controlled by working people. This must be part of a social reorganization of the entire economy, including the banking system, to guarantee jobs and decent living standards for all.

Credit: A Disaster In Waiting

There is an even larger crisis looming on the horizon.  You think the credit situation is bad now…..just remember it can always get worse.

“Credit” is the exchange of goods received in the present for goods paid back in the future. A person is said to have “credit” if he is able to receive goods today and can pay back later, plus interest. (A “credit” entry in bookkeeping has a different (and opposite!) meaning from that used in economics. You indicate a bookkeeping credit when you sell goods and receive cash.) Banks extend credit to borrowers, which means they enable borrowers to get goods at present and repay in the future. But in real effect, the banks being only intermediaries, the ultimate credit is extended by the depositors of the banks.

Money is a type of credit, since with the buyer obtains goods in the present and the seller does not get immediate goods but tickets for goods he will get in the future. Money is essentially transferable credit.

Banking is normally done with “fractional reserves.” Reserves are stocks of money. They are fractional because only a fraction of deposits is kept by a bank, the rest being loaned out. Banks can therefore expand the money supply beyond the base of cash. You put $100 in the bank, and if the reserve ratio is 10%, the bank only keeps $10 in its vault, and loans out the other $90. It figures that it is unlikely for all depositors to come in and demand all their money at once. Central banks typically set reserve requirements for a country’s banks.

This $90 loaned out gets deposited in some bank. That bank in turn keeps $9 and loans out the other $81. This goes on and on until out of the original $100, we now have $1000 of deposits created from all that lending if none of the extra money is held as cash. This is not a problem so long as 1) depositors are informed of the policy (hence it is not fraud), 2) they money loaned is eventually repaid; 3) there is little or no inflation of the cash base.

Unfortunately, conditions #2 and #3 have not been the case. Central banks have expanded the monetary base, which the banks then expand many times more through loans. Also, during recessions, many borrowers cannot repay their loans. Then many banks fail, since depositors are not able to get their cash back. The solution is not to eliminate fractional reserves (though some banks may do this and advertise themselves as extra-safe) but to eliminate conditions (2) and (3) by switching from coercive central banking to free banking (to be explained in a later post).

Now the beast is exposed.  The assumption that the money borrowed will be repaid is the problem.  Debt is NOT being repaid and the banks do not have the funds to meet demands from depositors.  The subprime problem broke a tenet of banking–lend to responsible borrowers.  The easy credit in the card market also breaks this tenet.  The lenders working from a position of greed have brought the markets to the point of breaking and yet the government is rewarding them for their ill advised actions.

A special thanks to Dr. Fred E. Foldvary for his ideas and writings that are part of this post.

Yes, Irene that is the name of that tune.

Is Recycling Going To Survive?

Faced with a dramatic slump in the recycling market, the director of the Kanawha County Solid Waste Authority has cut 20 of his 24 employees’ work week to four days from five, shuttered six of the authority’s drop-off stations and is urging residents to hoard their recyclables after informing municipalities with curbside recycling programs that the center will accept only paper until further notice.

”The market is just not there anymore,” Steenstra said.

Just months after riding an incredible high, the recycling market has tanked almost in lockstep with the global economic meltdown. As consumer demand for autos, appliances and new homes dropped, so did the steel and pulp mills’ demand for scrap, paper and other recyclables

Cardboard that sold for about $135 a ton in September is now going for $35 a ton. Plastic bottles have fallen from 25 cents to 2 cents a pound. Aluminum cans dropped nearly half to about 40 cents a pound, and scrap metal tumbled from $525 a gross ton to about $100.

It’s getting more difficult to find buyers in some markets, Steenstra said.

While few across the country appear to be taking such drastic measures as Steenstra, the recycling market has gotten so bad that haulers in Oregon and Nevada who were once paid for recyclables are now getting nothing or in some cases are having to pay to unload their wares.

Last year, Americans generated about 254 million tons of trash, according to the U.S. Environmental Protection Agency. They recycled about 150 million tons of material — roughly 80 million of that in iron and steel — supporting an industry that employs about 85,000 with $70 billion in sales, said Bob Garino, director of commodities at the Institute of Scrap Recycling Industries Inc., a Washington, D.C.-based trade association that represents more than 1,600 companies worldwide.

Most recyclables are shipped to Asian countries that use the material to make products that are shipped backed to the United States to be sold.

But the market shift is now jeopardizing hundreds of millions of dollars worth of long-term contracts for scrap metal as some companies that signed when prices were high are trying to cancel or postpone deliveries to take advantage of the cheaper spot market, Garino said.

Maybe the US should try to recycle their own waste….just a thought.

A Workers Revolt?

Invoking Main Street resentment of Wall Street’s federal bailout, some 200 workers entered their third day of occupying a shuttered Chicago window and door factory on Sunday, demanding that Bank of America agree to pay them severance plus vacation pay.

Workers belonging to the United Electrical, Radio and Machine Workers union began their peaceful occupation of the plant on Friday after family-owned Republic Windows & Doors said it was closing after Bank of America canceled its line of credit.

The workers said Republic Windows & Doors gave them only three days notice of Friday’s closing instead of the 60 days required by law, and owes them roughly $3,500 per worker including unused vacation pay.

A union spokeswoman said Bank of America is not letting the company pay the workers.

“We’re just shocked that Bank of America, after receiving $25 billion in bailout money, not only do they refuse to extend credit to companies but, to add insult to injury, they don’t allow these companies to fulfill their legal obligations to their workers,” union spokeswoman Leah Fried said.