Economics & Fourth World War


The Global Economic Crisis and the Fourth World War

Shawn Hattingh’s ZSpace Page 

For the last three decades a vicious war, the Fourth World War, has been waged on the people of the world by the global political and corporate elite[i]. They have unleashed a whole array of economic weapons, from trade liberalisation to privatisation to financial liberalisation, to enrich themselves at the expense of the vast majority of people. As part of this onslaught, welfare systems have been attacked, workers rights have been undermined, and environmental legislation has been savaged. The aim of all of these measures was to spread capitalism into every aspect of people’s lives. Everything, including culture, social relations, the environment, water and even air were turned into commodities to be bought and sold. While the richest 400 people on Earth used this system to amass vast amounts of money (more money than the poorest 3 billion people combined), over 18 million people died every year for the last 20 years because of poverty[ii]. When people protested that all of this inequality and deprivation were unfair – and demanded that people should be provided with quality education, quality healthcare, food, and clean water; they were told by the elite not to be ridiculous. In fact, people were simply told that no-one had the money to provide such ‘luxuries’ as food, quality healthcare and quality education. Yet, when some of the largest companies got into trouble in the last 20 years, states have rushed to bail them out. For instance, when the savings & loan debacle erupted during the Bush Snr years, the US government spent at least $ 200 billion in public money bailing out some of the corporations involved[iii]. At very the same time, Bush Snr and then Clinton were working hard to attack the poor through cutting welfare. Such is the world we have come to live in. It is a world where profits have been privatised for the rich, while losses and misery have been socialized for the poor – a world of the Fourth World War. 
It is the elite that have caused the crisis
Of course, the policies that have been pushed by the global elite also created the space for the current financial crisis to occur. Financial liberalisation was implemented by states across the world to assist corporations to find new ways of making money. By the 1970s, profits in the manufacturing sector were declining, the economy was stagnating, and the elite wanted more profitable ways to make money that didn’t require hiring much ‘troublesome’ labour[iv]. Corporations of every kind used financial liberalisation to limit their investments in manufacturing and begin speculating on anything and everything[v]. They gambled on the fluctuations in stock, bond and currency values. Many started speculating on exotic investment devices such as futures, forwards, options, and swaps. Banks and corporations also ran up trillions in debt and then resold this debt onto investors, supposedly to reduce risk through a process known as securitisation. By 2007 up to 40% of all loans were being generated through securitization[vi]. Indeed, debt drove the whole system – without it there would not have been the explosion in the financial sector. Manufacturing companies also restructured and, in a sense, became investment and financial institutions in their own right. Blind greed, arrogance and short sightedness drove this system and a handful of people made trillions, until the brittle stack of cards holding it up began to collapse over the last two years[vii].
When things began to unravel, corporations and the media tried to shift the blame for the collapse onto the poor who had been lured into taking sub-prime loans. Over the years, the poor have been forced into becoming more indebted – including through being induced by the rich into sub-prime loans – because, in real terms, wages have not risen since the late 1960s. The result has been that that the poor have become even poorer than 40 years ago. Corporations, however, made massive profits out of these loans, and literally milked the poor for all they were worth. It was, therefore, not the poor that caused the current crisis. It was rather the rich, their money making schemes, the policies they pushed for, and the capitalist system itself – which is based on exploitation and inequality – that were the root causes of the crisis.
It has also been no accident that since the 1960s, and the adoption of neo-liberalism and financialisation, the frequency and depth of crises has intensified[viii]. The political and corporate elite have created a profoundly unstable system, which they have grown rich from; while the poor suffered.
The global financial crisis won’t end the Fourth World War
The global financial crisis, however, does not mean that the war against the poor will end. On the contrary, the elites’ war against the poor is intensifying. During the last days of the Bush Jr regime, the US state basically handed over hundreds of billions of dollars in public money to bail out the corporations that had burnt their fingers due to speculation. In last year October alone, politicians from the UK and the US made $ 1.7 trillion available to save the wealth of their corporate chums – who happen to be some of the richest and greediest people on Earth. So far, the US government has bought or guaranteed up to $12 billion of the bad loans and junk financial assets of corporations. The US Treasury has even swapped government bonds for the junk that companies were holding[ix]. Added to this, since September last year, the US, the UK, Germany and Japan have been regularly pumping hundreds of billions of dollars into stock and money markets to keep private companies afloat. Trillions of dollars of public money has simply been given over to the rich for them to use as they see fit, with absolutely no public involvement. The giant banks that were the main beneficiaries of these bailouts have used this money to expand their power, partially through buying up smaller banks that were not heavily involved in speculating on toxic ‘assets’[x]. All of these bailouts have increased the public debt of the countries involved. For instance, the US’s debt spiralled from $ 9.6 trillion in late 2007 to over $ 10.7 trillion at present[xi].
Almost all of the governments across the world have followed similar policies to the US, in terms of using public money to bailout companies, and trying to take measures to resuscitate the lending system. For example, in Latvia the government has been using public money to try and save the banks[xii]. In Greece, plans were hatched to cut the education budget, while the government gave billions to keep corporations afloat[xiii]. In South Africa, which has the biggest housing price bubble anywhere on Earth[xiv], the ANC government has also indicated that it would be willing to spend public money in order to bailout multinationals operating in the country – who also happened to be the main beneficiaries of apartheid[xv].
This use of public money to bailout the rich shows no sign of abating under the new Obama regime. When Obama recently announced his ‘stabilisation’ and ‘stimulus’ plans, it was clear from the start that it would be the rich and corporations that would benefit. Obama has proposed to build on the work of Bush Jnr by establishing an institution to buy the toxic assets that major banks are holding – such as bad loans, derivative guarantees and swaps[xvi]. This, in effect amounts to another massive no-strings attached bailout for the banks.
Even the Obama regime’s much vaunted $ 50 billion mortgage renegotiation programme will benefit the banks rather than the poor. According to the propaganda that is spewed out by the mainstream media, the programme is supposedly aimed at assisting people, who can’t afford their high repayments, to renegotiate mortgages with the banks. However, the real beneficiaries are the banks that made the loans in the first place. The way the programme is actually going to work is that homeowners, who are in deep trouble, will be allowed to renegotiate their repayments down to 38% of their income. The US government would then step in and cover the shortfall – using borrowed public money. The banks would then, in turn, receive full payment on the loans they made, meaning that they are the real winners because they won’t have to take any losses whatsoever. The overall result will be that poor families will still be stuck with debt, while the banks will be receiving the bulk of the relief. In effect, $ 50 billion in public money will be given to huge banks, such as Citibank[xvii].   
Part of Obama’s plans have also involved providing tax breaks to the rich. Coupled to this, he has announced that tax incentives would also be given to people wishing to purchase cars and properties. Of course, the only people buying cars and properties in the current climate are mainly the rich and upper middle class. Another aspect of Obama and Geithner’s plans also included using as much as $ 1 trillion to bulk up the Term Asset-backed Securities Loan Facility (TALF). One of the main aims of TALF has been to provide funds to corporations that were involved in the securitisation of credit card loans, student loans and auto loans. In effect, this is keeping these corporations afloat. Naturally, from the perspective of the political and corporate elite, the ultimate goal of this assistance is aimed at reviving the securitisation markets so that the lending and debt creating system can start up again[xviii]. Of course, while all this is going on, the poor are expected to diligently pay their debts, which they have been forced to take out because of years declining wages.
Through these measures, Obama and his team are continuing the process of socialising the losses that the banks and corporations have made; while allowing them to do whatever they wish with public money and the profits they have accumulated in the past. On top of this, Obama’s plans to revive the flow of credit, through TALF and tax breaks, are simply callous. The creation of debt, and the loans system, has been one of the mechanisms that have been most effective in transferring wealth from the poor to the rich. This has taken place through, amongst other things, interest payments[xix].  Promoting the revival of the credit markets, and the creation of further indebtedness for the poor, as a solution to the crisis is insidious considering that massive, and forced, indebtedness was one of contributing causes of the crisis in the first place.
The political and corporate elite are hoping that once people start accumulating debt again, a new financial bubble will be created. This, they hope, will pull the banks and corporations out of the current crisis. The problem with these hopes, however, is that most of the major banks, including Citibank, JP Morgan and the Bank of America, are bankrupt[xx]. Coupled to this, stocks, bonds, houses and other financial assets are still over inflated. The poor, the middle class and most corporations are still heavily indebted with no hopes of escaping this situation in the near future. Under these conditions, it is going to be almost impossible to create another bubble to pull corporations out of the present crisis. Considering that manufacturing and the service sectors have been in a severe slump since the 1970s, the crisis that capitalism is experiencing looks unlikely to be resolved through the current economic paradigm[xxi]. In fact, investments in manufacturing and the service sectors have been drying up since the 1970s. The only really profitable section of the economy was the financial sector, and that money making avenue now appears to have imploded.
The elite are using the crisis to further attack the poor
Despite the fact that the political and corporate eli

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