Michael Hudson on the Bailout

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Financial War against Iceland

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Michael Hudson on Icelandic Economy

Polish economy tumbles as global investors take flight

First published on http://www.wsws.org By Marius Heuser in March 2009

The international economic crisis is having a devastating impact on eastern European countries. Poland and the Czech Republic, whose economies until recently had been considered stable, are both being hit by mounting unemployment. Although the economic upturn over the last decade was achieved mainly at the expense of the working class, the government is moving to impose the cost of the current economic crisis completely onto the shoulders of the population.

As in the whole of Eastern Europe, one of Poland's most significant problems is the virtual halting of investment and credit flows—the basis for the economic growth of the recent period—from Western countries. In 2008 Poland was receiving credit amounting to 140 billion zloty ($38 billion). According to some estimates credit will not exceed 40 billion zloty ($11 billion) in 2009. This catastrophe is primarily a consequence of the financial crisis, but it also stems from a particularly Polish "sub-prime crisis".

In recent years, rising real estate prices fuelled a boom in the property market and induced more and more householders to obtain credit by taking out mortgages on their homes. Working people used this to offset their worsening social conditions, while western European banks and their branches in Poland made huge profits from the sale of debt. Western companies, controlling the bulk of Polish retailing, were also able to cash in on increased spending power, resulting from the wide availability of credit.

The Polish mortgage bubble burst with the onset of the international financial crisis. Real estate values have fallen dramatically. Numerous building programmes have been abandoned and experts expect real estate prices to drop by as much as another 20 percent. Countless workers will lose their homes even as they remain in debt for the rest of their lives.

Particularly hard-hit will be those private citizens or firms that have borrowed money in foreign currencies. This applies to 25 percent of all current debt in Poland. Most of the mortgages, 60 percent, were contracted in Swiss francs. Due to the extremely weak zloty, loan repayment rates increased by 12 percent in just a few weeks.

Numerous Western banks, first and foremost in Austria, have already had to write off billions of euros. Hardly any institute is now prepared to extend credit to Poland, even on extremely favourable terms for the lender.

In recent months the government has attempted to counter the credit crisis by significantly reducing interest rates. But this has only worsened the situation and contributed to sharp losses in the value of the zloty, which has fallen from 3.6 to 4.7 zloty to the euro since last October—the same rate reached five years ago.

Lack of credit and investment, together with the falling demand for commodities in the Eurozone, has led to a severe weakening of economic performance. In January, industrial output declined 14.9 percent. Production in the automobile industry fell 34 percent, compared to the previous year.

The official unemployment rate has risen from 9.5 to 10.5 percent. The government forecasts a further increase to at least 12.5 percent by the end of this year. This figure is a gross underestimation, since it is expected that some 100,000 of the 2 million Poles working abroad will be returning home to seek jobs, on account of the economic crisis.

In February the government corrected its growth forecast for 2009 from 3.7 to 1.7 percent. In 2007 it had been 6.5 percent. In the past 12 months, the Polish stock index WIG20 lost more than half its value, falling to 1,365 points.

The rapidity and extent of the collapse is bound up with the social and economic relations that emerged as capitalism was restored to Poland over the last two decades. Closely cooperating with European Union (EU) institutions, a narrow social layer of former Stalinist functionaries and nouveau riche carved up the Polish economy in the name of rationalisation and squandered state property in the course of the privatisation of formally state-owned enterprises. Deprived of any real economic foundations, Poland was left wholly dependent on foreign credit and investment. The country's trade deficit ran to €9.6 billion in 2007.

In the last 20 years, Poland's ruling elite has striven to attract the greatest possible number of investors to the county. It competed relentlessly against its European neighbours to secure the most attractive conditions for investment—corporate taxes were abolished, labour laws dismantled, wages cut, social and democratic rights curtailed. All this led to flagrant social inequality, with misery and poverty on the one hand and utterly perverse levels of personal fortunes on the other. According to a study by the Organisation for Economic Cooperation and Development, every fourth child in Poland lived in poverty in 2007.

The extent of the current flight of foreign capital from Poland reveals the character of the country's economic growth in recent years. It was based almost exclusively on direct investment from abroad and exploited principally by investors who failed to develop the Polish economy in any substantial way.

The government is incapable of combating the crisis. Prime Minister Donald Tusk, of the ultra free market Citizens Platform (PO), is hoping to stabilize the floundering zloty by securing Poland's speedy entry into the European currency union. He has announced that official negotiations with the European Central Bank will take place this month and hopes to be able to introduce the euro into Poland in 2012. However, a precondition for entering is that the value of the zloty does not fluctuate by more than 15 percent in the two years prior to the proposed entry into the currency union. At the same time, the Eurozone itself is currently proving to be far from stable.

After the government managed to partially stabilize the zloty by purchasing euros from European structural stimulus funds, the Polish central bank immediately reduced the key interest rate again last Wednesday, this time from 25 basis points to 4.0 percent, thereby risking further collapse of the zloty. The intention was to kick-start the flow of credit.

In line with its customary practice, the PO government's chief response was to intensify its efforts to offer Poland as the most attractive and lucrative destination for direct foreign investment and to achieve this by doing away with social rights, slashing wages and reducing business taxes.

In January, the government passed a bill authorising a €25 billion bailout package for the banks. Some €10 billion of this was to serve as security on loans made among the banks. The measure also included a reduction in taxation on business energy consumption and import costs. In order to avoid putting Poland's entry into the euro currency union at risk, the government announced the package without applying for loans, but rather by resolving to pay for it through budgetary cuts. In view of dwindling treasury resources, this constitutes a massive assault on what remains of the country's welfare system.

At the beginning of last month, the cabinet decided to cut 19.7 billion zloty (about €4.2 billion), which came in large measure from education and social security. The government also moved to liberalise labour laws, clearing the way for the introduction of short-time work and to carry out the privatisation of remaining state-owned enterprises. In a time of crisis, this only means selling them off at prices far below their true value.

These measures will exacerbate rather than solve the fundamental problems of Polish capitalism and lead to massive confrontations between the government and the working class. The government is working closely with the trade unions to prepare for these confrontations. The president and the prime minister, together with employee delegates and trade unionists, met at a so-called "social round-table" on February 25 to discuss the most cunning ways in which the working class was to be saddled with the burden of the crisis.

The trade union bureaucrats are just as corrupt and reactionary as the government. Instead of uniting Europe's workers in this time of crisis, they stir up chauvinism and nationalism. According to the Gazeta newspaper, Jan Guz, leader of Poland's second biggest trade union association (OPZZ), has called for a ban on the employment of non-EU workers in Poland. He said that, in difficult economic times, it was time for White Russians and Ukrainians to leave Poland.

The trade unions are resorting to such chauvinist appeals in an increasingly desperate effort to prevent a struggle by workers against the government and big business. On February 5, 3,000 steel workers from the Stalowa Wola mill in south Poland protested against the destruction of their jobs. Driven to despair, they hurled stones at the police, set fire to tyres and broke through barriers. Thirty years after the explosive struggles of the working class that gave rise to Solidarity—a mass movement, which was ultimately betrayed by its pro-capitalist leadership—a social storm is once again brewing in Poland.

IMF Emergency Loans Programmes in the Global Crisis

Poland’s decision to become the second country after Mexico to seek a standby credit line at the International Monetary Fund (IMF) is an insurance policy that should stabilise the zloty on the path towards the euro, officials said on Wednesday.

On Tuesday, Poland said it would apply to the IMF for $20.5 billion in a flexible credit line, part of a facility created by the IMF in March to give well-run emerging-market economies access to money they can either tap immediately or keep as a guarantee in case conditions worsen.

Following are details of the main emergency loan programmes initiated by the IMF.

* POLAND: The announcement that Poland would apply for $20.5 billion in a flexible credit line from the IMF helped the Polish zloty which jumped 2.1 percent against the euro.

Economists said the new credit line did not carry the black mark associated with IMF assistance in earlier crises and should help Poland in the long run.

OTHER RECENT IMF PACKAGES: (includes amount and month of approval

* ARMENIA: $540 million, 28-month stand-by loan - March 9: enabling Armenia to draw about $240 million immediately.

* BELARUS: $2.46 billion - January: Belarus has already received the first $788 million tranche and the rest is to be released over the next 14 months.

* EL SALVADOR: $800 million - January: IMF said the country did not face immediate needs and would not draw on the funds.

* GEORGIA: $750 million standby loan - Sept. 2008. IMF said on March 24 it would disburse a $186.6 million loan tranche to Georgia under a three-year programme.

* HUNGARY: The IMF, the EU and World Bank agreed a $25.1 billion economic rescue package last November in the biggest loan for an emerging market economy since the crisis began.

* ICELAND: $2.1 billion - Nov. 2008. The IMF deal was complemented by more than $3 billion in loans from Nordic countries, Russia and Poland as well as close to $5 billion or more by Britain, the Netherlands and Germany, making the whole package worth about $10 billion.

* KENYA: Requested in March an IMF loan of up to $100 million to cushion its currency and help counter a food crisis.

* LATVIA: Latvia agreed to a 7.5 billion euro rescue package in December last year, which included an IMF share of 1.68 billion euro. The package also included financing from the EU, Nordic countries, the Czech Republic, Poland, Estonia and the World Bank.

* MALAWI: $77.1 million - Dec. 2008. To help Malawi reduce the impact of high fuel and fertiliser costs.

* MEXICO: Mexico requested a $47 billion credit line from the IMF on April 1, becoming the first major Latin American country to seek an IMF cushion against the economic crisis.

n Mexico has no plans to use the credit line for now, but would tap a $30 billion swap line with the U.S. Federal Reserve.

* MONGOLIA: $229.2 million loan package - April: To support the country’s economic stabilisation program.

* PAKISTAN: Pakistan received on April 2 a second tranche worth $848 million of an IMF loan. The IMF approved a $7.6 billion loan in Nov. 2008 to avert a balance of payments crisis and to prevent the government from defaulting on its debt obligations. It got a first tranche of $3.1 billion that month.

* ROMANIA: Romania secured a 20 billion euro aid package from the IMF and the European Union on March 25. The aid package includes 12.9 billion euros of IMF money and 5 billion euros from the EU as well as funds from the World Bank and the European Bank for Reconstruction and Development.

* SERBIA: The IMF is due to approve in May, a 3.0 billion euro 27-month loan programme to replace a $520 million stand-by loan agreed in January.

* SEYCHELLES: $26 million - Nov. 2008.

* SRI LANKA: Sri Lanka is seeking a stand-by arrangement of around $1.9 billion.

* TURKEY: Turkey and the IMF have agreed in principle on the conditions of a new loan deal worth up to $45 billion to help the country weather the global crisis, newpapers reported on April 10.

* UKRAINE: $16.4 billion - Nov. 2008: The IMF has suspended release of a second tranche, worth about $1.84 billion, in a dispute over the size of the budget deficit and implementation of reforms. An IMF mission has been holding talks in Kiev for the past week to eliminate differences and restore the flow of credits. Ukraine had already received the first $4.5 billion tranche.

* ZAMBIA: The IMF said on March 4 that Zambia could receive an additional $100 million to $150 million in balance of payments help as the country struggles with the effects of falling copper prices and the global credit crisis. reuters

"What Was the Point of the G-20 Meeting?"by Immanuel Wallerstein

Almost everyone took the meeting of the G-20 in London on April 2 too seriously. Pundits and critics have been analyzing it as if it had been designed to accomplish some change in policies by the states which participated. The fact is that everyone who went knew in advance that nothing of any significance would change as a result of the meeting, and that the few minor changes that were adopted could easily have been arranged without the meeting.

The point of the meeting - for the United States, for France and Germany, for China - was to show their internal publics that they were "doing something" about the calamitous world economic situation when in fact they were doing nothing that would in any significant way save the sinking ship.

The meeting was perhaps most important for President Obama. He went to demonstrate three things: that he was personally popular around the world; that he would present himself in a radically different diplomatic style from that of George W. Bush; that the two together would make a difference.

Obama certainly demonstrated the first two. He was acclaimed by the crowds everywhere - in London, Paris, and Strasbourg, in Germany, Prague, and Turkey, as well as by U.S. soldiers in Iraq. So was Michelle Obama. And he certainly employed a different diplomatic style. His interlocutors all said he took them seriously, listened to them attentively, admitted U.S. past errors and limitations, and seemed open to compromise solutions of diplomatic disputes - nothing of which they might have accused George W. Bush.

But did this make any difference in achieving U.S. diplomatic objectives? It is hard to see in what way. The debate between, on the one hand, the U.S. approach to reigniting the world-economy (more "stimulus"), an approach supported by Great Britain and Japan and, on the other hand, the Franco-German approach (more international "regulation" of financial institutions) was in no way resolved. Whatever the merits of the two arguments, both sides stuck to their guns, and the communiqué simply papered over the differences.

It is true that the G-20 agreed to put together a package of 1.1 trillion dollars to be given to the International Monetary Fund (IMF) to issue so-called Special Drawing Rights (SDRs) as part of a "global plan for recovery on an unprecedented scale." But as many commentators have pointed out, the scale of the effort is far less than is implied. First of all, part of this is not new money. Secondly, this is financing and not necessarily spending. Thirdly, 60% of the SDRs will go to the United States, Europe, and China, who do not need them. And fourthly, 1.1 trillion isn't all that much, when placed beside the 5 trillion already being provided in the fiscal stimulus plans around the globe.

Everyone came out against protectionism, and proposed to do things about it. But there were no enforceable measures adopted. In addition, there are three different kinds of protectionism in question. The first is protecting one's own industries, something which virtually all G-20 members are already doing and most probably will continue to do. The second is regulating hedge funds and rating agencies. The Chinese cheer this on, while the United States and western Europe are hesitant. The third is regulating tax havens. The Europeans are pushing for this, the Chinese are very cool on the idea, and the United States is somewhere in-between. Nothing changed at London.

The French and the Germans seemed to use the London meeting more to demonstrate that the geopolitical commitments they refused to make for Bush they would continue to refuse to make for Obama. The German newspaper, Der Spiegel, was harsh in its judgment. It said the cause of the financial disaster is that George W. Bush had been a "poppy farmer" who had "flooded the entire world [with cheap dollars],...creating sham growth and causing a speculative bubble...." Worse still, "the change in government in Washington has not brought a return to self-restraint and solidity. On the contrary, it has led to further abandon." Its conclusion: "German Chancellor Angela Merkel is right. The West may very well be giving itself a fatal overdose."

In the geopolitical arena, the Franco-German approach to Afghanistan is unchanged - verbal support for U.S. objectives but no more troops. Would they receive prisoners released from Guantanamo? Germany continues to say absolutely not. France magnanimously agreed to receive one - yes, one.

Obama gave a major speech in Prague outlining a call for nuclear disarmament - presumably a big change from the Bush position. The French conservative newspaper, Le Figaro, reports that the diplomatic cell in Sarkozy's inner circle took a very "abrasive" view of the speech. Just public relations, they said, masking the fact that the negotiations of the United States with Russia on this question were getting nowhere. Furthermore, France was not about to take moral lectures from the Americans. So much for Obama's new diplomatic style appeasing the West Europeans.

Elsewhere, it didn't seem to work too much better with the East-Central Europeans, where the outgoing conservative Prime Minister Mirek Topolanek of the Czech Republic denounced Obama's stimulus proposals as "a way to hell." Obama's speech to the Turkish parliament did get him great applause from all factions (except the proto-fascist right) for its concrete and modulated approach to Turkish questions. But observers noted that the language on Middle Eastern questions was both traditional and vague.

What China seemed to want from the G-20 meeting was for it to occur. China wanted to be included in the inner circle of the world's decision-makers. Holding a G-20 meeting displayed this new reality. When the G-20 decided to meet again, it thereby confirmed China's place. Will the G-8 ever meet again? That said, China showed its reserve about the actual decisions in many ways. It offered a derisory amount to the new IMF package. After all, it got no guarantees that there would be a real reform of IMF governance, which might accord an appropriate role to China.

What we can say in summary is that the principal actors strutted on the world scene. Did they ever intend to do something that was more than that? Probably not. The world economic downturn continues to wend its way, as though the G-20 meeting never occurred.

by Immanuel Wallerstein

[Copyright by Immanuel Wallerstein, distributed by Agence Global. For rights and permissions, including translations and posting to non-commercial sites, and contact: rights@agenceglobal.com, 1.336.686.9002 or 1.336.286.6606. Permission is granted to download, forward electronically, or e-mail to others, provided the essay remains intact and the copyright note is displayed. To contact author, write: immanuel.wallerstein@yale.edu.

Congress of BAYAN USA speech by Prof Jose Maria Sison on international situation

Chairperson, ILPS International Coordinating Committee
Beloved compatriots and friends,

We, the International Coordinating Committee and the entirety of the International League of Peoples’ Struggle (ILPS), convey militant greetings of anti-imperialist solidarity to ILPS member-organization BAYAN-USA, to its leadership, its member-organizations and all the delegates to its Third Congress.

We congratulate all of you for your accumulated and current political and organizational accomplishments in the service of the Filipino communities in the USA and the entire Filipino people who are struggling for national liberation and democracy against US imperialism and the exploiting classes of big compradors and landlords in the Philippines.

We take this opportunity to express best wishes to the Filipino women who are participating in this congress and are all set to hold tomorrow the founding assembly of Gabriela-USA. This consolidation of women’s organizations is a further strengthening of the BAYAN-USA and the national democratic movement of Filipinos in the US.

My assignment is to present to you the international situation. Within the time allotted, I can give you some salient points. We can further discuss these in the open forum.

Global Financial and Economic Crisis

As the reality shows, the dogma of the “free market” is a big lie of monopoly capitalism. The US-instigated policy of “neoliberal globalization” has unravelled. It has not at all solved the problem of the chronic tendency of monopoly capitalism to stagnate and go into recurrent and ever worsening cycles of boom and bust. It has led to the worst financial and economic crisis since the Great Depression.

Even if called a recession by some, the current crisis has already reached the depth, duration and direction of a depression, far beyond the definition of a recession as a fall of the GDP in two consecutive quarters. The financial markets have drastically fallen and continue to plunge further despite the trillions of dollars already poured out as bailout for the giant investment and commercial banks and other financial institutions since 2007. The real economy has deteriorated rapidly as a consequence of the financial collapse.

The crisis of overproduction and that of capital overaccumulation in the hands of the monopoly bourgeoisie, especially the finance oligarchy, are wreaking havoc on the lives of the people. In the tens of millions, the people in the US who belong to the working class and middle class have lost their jobs due to plant closures and retrenchment; their homes due to the mortgage meltdown and mass layoffs; their pension funds and savings due to the series of bubbles and investment scams; and their social benefits which have in the first place been reduced and rendered inadequate over the decades.

The current grave crisis has been three decades in the making and cannot be solved in the short or medium term. It will run for a much longer period of time. It comes from the accumulation and extreme aggravation of the fundamental problems characteristic of monopoly capitalism in a series of worsening crises since the adoption of the policy of “neoliberal globalization”.

The US monopoly bourgeoisie has adopted this policy on the notion that the phenomenon of stagflation of the 1970s was due to rising wage levels and government social spending and not due to such problems as the inherent tendency of monopoly capitalism to overproduce and stagnate; the economic recovery of war-ravaged Europe and Japan; US market concessions to anti-communist allies; and the demand pull inflation generated by heavy spending on military production, overseas deployment of US military forces and wars of aggression in Korea and Indochina.

The US policymakers have negated the New Deal of Roosevelt, Keynesianism and even the Samuelson notion of mixing state intervention and free enterprise. They have upheld the notion that inflation is prevented and economic growth is promoted by pushing down wage levels, cutting back on government social spending and letting the monopoly bourgeoisie accumulate more capital and make bigger profits. The job of the federal authorities is supposedly to simply manipulate the interest rates and the money supply and leave the market to “self-regulation”.

The policy of “neoliberal globalization” involves trade and investment liberalization; privatization of public assets; deregulation of financial markets and lifting of social safeguards regarding the exploitation of the workers, women, children and the environment; and the denationalization of the underdeveloped economies. In any case of serious crisis, the job of federal authorities is supposedly to simply helicopter the money and to pour it on the problem. There is supposed to be no problem that cannot be solved by adjusting the interest rate and expanding the money supply and credit.

But ultimately there is a limit to debt financing . Beyond that limit is the grave financial crisis that has burst out in the US and spread to the rest of the world like a plague. The debts of the US government, the financial and nonfinancial corporations and the households have reached unsustainable or unrepayable levels and are causing the financial and economic system to implode.

The US national debt has become overly large and unsustainable because of the mounting interest payments for the US securities in the hands of foreign creditors; because of the ever growing trade deficits arising from the outsourcing of consumer manufactures in cheap labor countries and the scheme to press down wage levels within the US; and because of the budgetary deficits arising from the growth of the parasitic bureaucracy and military expenditures for weapons development and production, global deployment of US military forces and the wars of aggression in the Balkans, Iraq and Afghanistan.

The giant financial and nonfinancial corporations have connived in piling up US corporate debt to the most unbearable levels. They have been responsible for the financialization of the US economy and the overaccumulation of finance capital in the hands of a few. They engage in the unbridled creation of money, credit and derivatives, the wanton issuance of corporate bonds, the overvaluation of the assets of the monopoly bourgeoisie, the making of financial bubbles and manipulation of the stock and housing markets to rob the working class and middle class of their savings.
In addition to being subjected to the massive replacement of regular jobs with part time jobs and the lowering of wage and income levels, the US households have been victimized by various forms of debt financing.

They are bound to loans for housing, cars, student tuition and consumption in general through the credit card. The worst scam ever inflicted systematically on the majority of US households is in connection with the housing bubble. They were inveigled to go into mortgage contracts at teaser rates and then into high consumption upon the temporary rise of housing values from 2002 to 2005. This scam has been far more devastating to US households than the high tech bubble of 1995 to 2000 when 40 per cent of them bought into the stock market. At the moment, the US households have savings close to zero and the pension funds in 401-K have been ravaged.

Depending on practically the same bureaucrats who are agents of Wall Street, the Bush regime and the current Obama regime have moved on the same track of bailing out first of all the giant banks with public money supposedly to deal with the bad loans and thaw out the credit freeze. The banks have used the money only to pump their assets but have not resumed lending in any big way mainly because the producer firms of any size are not borrowing to produce more in a situation of glut relative to dwindled demand. The Big 3 in car production have received public money as bailout. But they have proceeded anyway to lay off workers and reduce production after requiring the unions to accept lower wages and less benefits.

The Obama regime has hyped as bailout for the working class trifling amounts in relation to the actual needs and in comparison to the trillions of dollars already delivered to the big banks and other financial institutions since 2007. Such bailout is sham because it comes too late and too little and is actually for the benefit of the private corporations. There are no adequate and effective relief measures for the millions of people who have lost their jobs, homes, savings and social benefits.

There is actually no program of job creation despite much touting about projects in infrastructure, green energy, expanded health care and other social services to be undertaken within the budgetary frame of various departments of government, supposedly to stimulate demand and production. The limited funds for the projects are slated to be funnelled to and filtered by the profit-making and labor cost-cutting private corporations. There is yet nothing like the emergency jobs program of the Work Projects Administration of the 1930s which, by the way, could not really overcome the Great Depression.

The persistent neoliberal bias of the US monopoly bourgeoisie, especially the financial oligarchy and the Democratic and Republican duopoly, prevents economic recovery in the US within a few years’ time. There is no comprehensive plan to revive production and re-employ the millions of workers who have been laid off. As the US economy slides further into the Greater Depression, the world capitalist system follows. Nevertheless, there would be further adverse consequences for other countries were the US to revive its manufacturing capacity for export and cut down its imports from China, Japan, Europe and others in order to overcome its huge trade deficit and foreign debt.

Sharpening of Major Contradictions in the World

Within the US, the monopoly bourgeoisie has successfully carried out a fierce class struggle to exploit and oppress the working class, together with the rest of the people. It has babbled about being against state intervention in the economy. But in fact it has used the state to impose the policy of “neoliberal globalization” on the economy and society and to press down wage levels and cut back on social spending.
It has used legislation, court decisions and the law-enforcement agencies to attack the trade union and democratic rights of the working class. It has also used the mass media, schools and other persuasive means to discredit, undermine and weaken the working class movement. It has exploited and oppressed the working class in bringing about the current grave financial and economic crisis. Now, it is raising the level of exploitation and oppression as it invokes the crisis to take more and more public money and blocks the public sector from adopting and implementing a comprehensive economic plan to revive production and generate stable jobs.

The contradiction between the US monopoly bourgeoisie and the working class is sharpening as the crisis deepens and worsens. Subjected to rapidly rising levels of unemployment, homelessness and various forms of social deprivation, the working class is impelled to fight back, assert its democratic rights, reject the inhuman system of capitalism and aim for socialism.

Social discontent is already sweeping the US. It is bound to burst out in the form of concerted mass actions to demand jobs and real solutions to the crisis and to protest the outpouring of public money for the bailout of the monopoly banks and firms and for continuing the US wars of aggression and various forms of military intervention. The monopoly bourgeoisie is bound to repress the mass movement and to try deceiving the people about the roots of the crisis with the slogans of chauvinism, racism, anti-terrorism and warmongering. But this time conditions are favorable not only for advancing the progressive mass movement but also for building the party that aims for socialism.

In the other imperialist countries, engulfed by the crisis that has spread from its US epicenter, the contradiction between the monopoly bourgeoisie and the working class has sharpened even more dramatically than in the US. The ruling parties and coalitions that have closely followed the US-instigated policy of “neoliberal globalization” are now the target of widespread mass actions, including nationwide workers’ strikes and protest actions by the people in general. The rising sentiment of the people has turned favorable to parties that denounce monopoly capitalism and call for socialism. Karl Marx is gaining popularity.

The US is thoroughly discredited as the instigator of a failed global economic policy, as an extremely overborrowing country, as a purveyor of financial toxins and as an imperialist superpower that is militarily arrogant and aggressive but running short of financial resources. The IMF has also become ineffective as a US tool because it is practically bankrupt and has to beg for funds from several sources other than the US. The conspicuous financial and economic weakening of the US hegemon has emboldened other imperialist powers like Russia, France and Germany, to openly criticize its longstanding dominance and to demand multilateral relations on an equal footing in matters of the economy, finance, trade and security.

Among the imperialist powers, the trend of multipolarization is visibly growing. Contradictions are in fact sharpening and generating a struggle for a redivision of the world. Several other imperialist powers resent the propensity of the US to engage in overborrowing, to have a stranglehold over sources of fossil fuel and other strategic materials, markets and fields of investments and to monopolize the spoils of so-called free trade and wars of aggression.

To try solving the financial and economic crisis in their respective countries, the imperialist powers are inclined to pursue the strategy of using temporary jobs and relief measures to stimulate demand, absorb the existing inventory of goods and ultimately to revive and expand national production that generates stable jobs. The trend is thus set for the intensification of inter-imperialist economic competition and political rivalry. It is too difficult or even impossible for the US to wrest back its unquestioned economic and political dominance as either in the period of 1945 to 1975 or the more recent period of “neoliberal globalization”.

Hearing the slogan of Buy America in connection with the US plan to overcome the current crisis, Europe and Japan as well as China, the biggest supplier of cheap consumer manufactures to the US, are worried about the drastic reduction of US imports and have expressed fears about the danger of protectionism. China the top “newly-emergent market” has been hit hard by the bankruptcy and closure of the export-oriented sweatshops and private construction projects. Social unrest there is growing due to the deteriorating economic situation and rampant bureaucratic corruption.

Aside from the drastic fall in demand for its exports, China has expressed its worry about the US in further bloating the bubble in US treasury bonds and ultimately devaluing the US currency and the US treasury bonds in order to promote US exports and cut down the US foreign debt. At the same time, China has reduced its imports faster than its exports have fallen, thus still showing a trade surplus. On the other hand, the US is worried about China’s economic and diplomatic activities that veer away from the US policy in East Asia, Central Asia, Middle East and Africa. In the Asia-Pacific region, the Philippines is very much involved in or affected by the policies and activities of the US, China, Japan, North and South Korea, ASEAN and Australia.

The peoples and nations oppressed by foreign monopoly capitalism and the local reactionaries in the underdeveloped and retrogressive countries of Asia, Africa, Latin America and Eastern Europe suffer most from the economic and social devastation wrought by the current financial and economic crisis. The overwhelming majority of them are dependent on raw material exports. Only a few of them export some consumer semi-manufactures and some basic industrial products.

The demand for all these exports have abruptly fallen. At the same time, the unprecedented global credit crunch makes it difficult for the underdeveloped countries to cover their chronic accounts deficits, import necessities and service their accumulated foreign debt. The imperialist countries are repatriating or barring migrant workers and thus reducing the remittances of such workers to their underdeveloped countries.

The economies of the underdeveloped countries are far more depressed than ever before.

The rate of unemployment is rapidly rising. Incomes of the toiling masses of workers and peasants and the middle social strata are falling. The prices of basic commodities are rising. Social services are deteriorating or dwindling for the working people. The imperialists and the local exploiting classes have become ever more oppressive and exploitative.

In most of the underdeveloped countries, the local rulers have become even more servile to the imperialists and exceeded previous levels of corruption and brutality, as in the case of the US-directed Arroyo regime. In certain countries, however, the patriotic and progressive forces and the broad masses of the people motivate and enable the governments to stand for national independence and general welfare against imperialism and the worst reactionaries.

The broad masses of the people suffer from the terrible crisis and the escalating levels of oppression and exploitation. They are waging various forms of struggle for national liberation and democracy against the imperialists and the local exploiting classes. Protest mass actions demanding national and social liberation are sweeping entire countries and continents. The people are waging the fiercest forms of resistance against aggression and occupation, as in Iraq, Afghanistan and Palestine. Armed national liberation movements are growing in strength and advancing in an ever increasing number of countries. The Maoist parties are exemplary in leading people’s wars and winning victories.

US imperialism is already anticipating the upsurge of people’s resistance on a global scale. Speaking before the US Senate select committee on intelligence last month, the director of national intelligence retired Adm. Dennis Blair warned that the deepening economic crisis posed the greatest danger to the stability and security of the world capitalist system and that it could trigger a return to the “violent extremism” of the 1920s and 1930s. Wall Street has brought about the crisis that is pushing state terrorism and imperialist war as well as inciting the people of the world to wage revolution.

Conclusion: The Filipino People’s Struggle in Global Context

I hope that my brief presentation can help you comprehend not only the international situation as such but also the struggle of the Filipino people for national liberation and democracy in the context of the international situation. The Filipino people in their homeland as well as the Filipino communities in the US and other foreign countries are severely affected by the current financial and economic crisis.
We in the ICC of the ILPS call on BAYAN USA to intensify its efforts in arousing, organizing and mobilizing the Filipinos in the US in order to uphold, defend and promote their rights and interests and to support the struggle of the people in the motherland for national liberation and democracy.

We urge you to contribute to the common struggle of the people of the world against imperialism and reaction and advance international solidarity, mutual support and cooperation in fighting for a new and better world of greater freedom, democracy, social justice, all-round development and peace.

Mabuhay ang BAYAN-USA!
Isulong ang pakikibaka para sa pambansang kalayaan at demokrasya!
Ibagsak ang imperialismong US at rehimeng Arroyo!
Mabuhay ang lahat ng kababayan sa US!
Mabuhay ang sambayanang Pilipino!

Weak exports hit China's growth

China's exports have been declining as world demand slows
Annual growth in China's gross domestic product (GDP) slowed in the first quarter of 2009 to 6.1%, the National Bureau of Statistics has announced.

This is the weakest growth since quarterly records began in 1992, but some analysts see signs of a recovery.

Growth was 6.8% in the last quarter of 2008, but the first quarter GDP figure dropped as exports fell 17% in March.

China's government has said it is determined to achieve annual growth of 8%, and to expand its domestic demand.

"There's little the Chinese government can do to help key markets for Chinese products in the US and Europe recover," said the BBC's Chris Hogg in Shanghai.

"That's why it's focussing on trying to stimulate domestic demand."

There has been a recognition among Chinese state officials that too sharp an economic slowdown could lead to growing unemployment and may fuel social unrest.

China offers funds to boost Asean

Chinese, Asean and other leaders had to be airlifted out of Thailand
China has unveiled plans to establish a $10bn (£6.8bn) investment fund for south-east Asian countries.

It has also offered credit of $15bn to the Association of South-East Asian Nations, or Asean.

Chinese Prime Minister Wen Jiabao had planned to announce the fund at the cancelled Asean summit this weekend.

Asean was set up in 1967 in part to counter influence from communist China but has since become a vehicle for close ties.

The collapse of the Asean summit, scheduled in Pattaya, Thailand, this weekend, delayed the conclusion of a key investment agreement between China and the economic bloc.

That deal is intended to create the world's largest free trade area, covering nearly two-billion people.

Source: BBC NEWS

Oil falls as demand set to slow

Oil falls as demand set to slow

The price of oil is well below last year's peak levels. The price of oil has fallen sharply after the International Energy Agency predicted that the global recession would cut demand for crude this year.

The IEA said on Friday that world oil demand would fall by 2.4 million barrels a day to 83.4 million barrels.

US light crude fell by $3.26 to $48.98 a barrel. London Brent oil was down by $3.02 at $51.04.

Since hitting a record high of more than $147 a barrel in July last year, oil prices have slumped.

'Demand destruction'

The Paris-based IEA said its forecast of lower oil demand was influenced by "a growing consensus that economic and oil demand recovery will be deferred to 2010".

It also noted that developed countries' oil inventories had risen in February to 61.6 days of forward cover, the highest since 1993.

Victor Shum, an analyst in Singapore with the Pervin & Gertz consultancy, said the IEA's lower forecast represented "very serious demand destruction".

"The macroeconomics don't look good at all for this year," he added.

The price of oil dropped below $40 a barrel at the end of 2008 before recovering slightly, but remains nearly $100 below peak levels.

Source :BBC NEWS