US use more public money trying to save the banks
On 13 September 2012 the US Federal Reserve (Fed) announced its third plan to give more public money to the banks. The plan is called QE3 (quantitative easing three) and it means buying bonds from the banks to stop them going under. The Fed spent $40bn monthly on a massive purchase of mortgage-backed securities (MBS). Quantitative easing comes from direct and indirect taxes and by printing money. It means building a time bomb of inflation. QE3 is open ended spending programme for the banks. So far the Fed has spent £2.3 trillion in quantative easing. In early December 2012 the Fed added $45bn of monthly purchases to QE3 making $85,000bn per month in total. These primary dealers are multinational financial corporations that globally trade US Treasury bonds, and include: BMO Financial Group, BNP Paribas, Barclays, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Merrill Lynch, Morgan Stanley, Nomura and UBS.
This is a continuation of the US government policy that began in November 2008. Billions were injected into multinational corporations until March 2010 and the operation was called QE1. The second round of bailouts, QE2, began in November 2010 and ended in June 2011.
This operation, carried out by capitalist governments to save multinational corporations from bankruptcy, is a moral aberration. With that money, you could banish world hunger, stop the destruction of the environment or give housing to all inhabitants of the planet. But the money is not used to solve the current crisis in the world; these colossal sums are allocated to the pockets of billionaire owners of multinational corporations. To finance them governments implement swingeing cuts and adjustment plans for all workers and peoples of the world. This causes an unprecedented increase in poverty and hunger globally and while the noose tightens, magnates enjoy their fortunes.
The fiscal cliff: “adjustment” the American way
The bailouts have failed to resolve the crisis of the world economy. As the International Workers League (IWL) has said and as the report by the United Nations Trade and Development (UNCTAD) “Situation and Prospects of the World Economy” stated “The world economy is teetering on the brink of a new recession. Anaemic growth is expected in 2012 and 2013”.
So far global economic data is increasingly sombre and it clearly shows a recession in the US, EU, Japan and China, which are also implementing their own bailouts. Among the measures taken by the authorities in US, Europe, and China in 2012 we are witnessing a veritable “sea of bailouts” in response to the possibility that the global economy is sinking into depression. But the bailouts have not avoided this prospect, on the contrary, the collapse of the world economy is reflected everywhere: industry, trade, GDP, sales, wages, etc.
Brutal policy adjustments against the peoples of the world are expressed in the episode of the crisis called the Fiscal Cliff in the US. This is a set of tax increases and spending cuts that automatically enter into force in the US in January 2013. In simple terms it is a fiscal adjustment to raise the ceiling of debt. It is equivalent to four percent of GDP, which was approved in August 2011 when the Congress raised the federal government’s debt ceiling.
The government already had a fiscal problem, and voted the moratorium to ‘stretch’ the date of adjustment, allowing the government to borrow more without declaring a default. Democrats and Republicans moved at full speed to avoid a new political crisis. But nothing good will come to the American people of this negotiation process that will begin adjustments in the US similar to those used in Europe, which will cause recession and unemployment.
The Socialist Voice is fighting to build a political tool for British workers and, as part of the IWL, to unite the struggles of the workers and peoples of the world against the adjustments of capitalist governments.