Ukraine Fraudsters Again – A Message from the LRP

League for the Revolutionary party
April 2014

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Reports on the events in Ukraine in recent months have mentioned three activists whose names some readers may recall: Oleg (Oleh) Vernik and Zakhar Popovych in Ukraine and Ilya Budraitskis in Russia. In the early 2000s, while members of the Committee for a Workers International (CWI), they conspired to assume multiple fake personal identities as representatives of several fictitious socialist groups in Ukraine. Under these disguises they posed as supporters of a number of far-left groups in North America and Europe, from whom they stole funds, time and other resources. Their crimes further corrupted the reputation of a socialist movement already burdened by mistaken association with the heinous crimes of Stalinism.

We reported on this political and financial scam in CWI Group Guilty of Ukraine Fraud (Proletarian Revolution No. 69, Winter 2004), and we posted personal identifying information at Photos of the Perpetrators on this website. A list of many other articles on the affair at the time is at Statements from various sources on the Ukrainian fraud (wwww.bolshevik.org). A summary of the fraud, the CWI’s response and the current activities of these perpetrators was recently posted on the website of the Greek organization Communist Revolutionary Action. See Maidan and Ukranian Story of a Lasting Fraud.

The perpetrators of the fraud have not to our knowledge ever issued any explanation of, or apology for, their political, personal and financial dishonesty. Today Vernyk is chairman of the All-Ukrainian independent trade union “Zakhyst Pratsi” (Labor Defence). See tradeunion.org.ua. Budraitskis belongs to the Socialist Movement of Russia, which is affiliated with the organization long known as the United Secretariat of the Fourth International (USec). See for example his article Ukrainians fighting for a better society.

Popovych belongs to “Left Opposition” in Ukraine whose views are also disseminated by the Usec’s magazine International Viewpoint. See A mass revolt for democracy. He also made a widely reported visit to London where he spoke about the Ukrainian events. See for example Russian and Ukrainian socialists speak out. A video of Popovych speaking at a public meeting at the House of Commons is at Crisis in the Ukraine (House of Commons Meeting) – Videos. By comparing this video with the photos of Popovych in the original articles about the fraud, one can see that today’s activist is the same person as yesterday’s fraudster.

We warn the left in Ukraine and around the world: these people are not to be trusted in their political, organizational and financial adventures.

Cuts to Welfare, Subsidies to Corporations – The hidden welfare state

The Black Triangle Campaign was founded to support the human rights of disabled people and to oppose the Government’s “Work Capability Assessments”, which re-classify sick and disabled people as “fit for work”.

 

The hidden welfare state that the U.K. government dares not speak of

The UK has two welfare states. There is one that is reported and endlessly discussed, and another, which is rarely mentioned. Whilst the first is suffering enormous cuts under the Tory/LD coalition, the other just keeps expanding.

Governments on the left and the right can always justify welfare cuts by pitting, for example, mobility scooters against needle exchanges, or the soft-play area in children’s playgrounds against an old people’s home. Who deserves it most, they say, students or cleaners? Old or young? But when we’re running not one, but two welfare states, that’s a totally fake scenario. The real choice is between playgrounds or gas rigs; between Meals on Wheels or The City of London Currency Speculators’ Maintenance Allowance.

There’s a connection – never mentioned – between, let’s say, Britain’s eight new deep-water gas rigs and its new food banks. The connection is that the $4.5 billion subsidy package being doled out to transnational gas corporations is a very big slice of the welfare pie. And to keep the gas transnationals on the benefits to which they are addicted, hungry humans have to queue for tinned food that is too close to its sell-by date to be kept on the shelves of supermarkets, many of which are themselves massive recipients of corporate welfare.

Not only does the UK pay out unemployment benefits less generous than Romania, Albania and the US, but the wages of the employed have simply not kept pace with productivity over the last 30 yrs. Tory Ideology is all about Handouts to the Wealthy paid for by the Poor.George Osborne has cut £18bn from benefits plus a further £81bn from public services in the name of unavoidable austerity, whilst at the same time providing huge subsidies, tax cuts and removing regulation for the hidden ‘welfare’ system that benefits the private sector.

No goods or services are directly returned to the government in exchange for these expenditures, although of course, politicians will argue that they’re stimulating the economy, helping struggling industries, creating jobs or funding important research but actually this is just a corporate welfare system.

The Cato Institute, for example, estimated that in the US, $93 billion were devoted to corporate welfare in 2002. This was about 5% of the federal budget, and nearly twice the amount spent on social welfare ie. feeding people, housing the homeless, raising children out of poverty etc.

There is no reason to think the situation is different in the UK. However, overall statistics for the UK corporate welfare budget are hard to discover, and the variety of different subsidies are staggering. Needless to say, the Tories focus their attention on fraud and waste in the social welfare budget.

Welfare fraud and waste is never far from the top of the UK’s news agenda – but the real figures often bear almost no resemblance to popular belief. The British public, for example, think around 27% of the welfare budget is lost of fraud, according to TUC research.

The Department for Work and Pensions’ latest data on fraud and error in the benefit system shows a very different reality: fraud exists, but at a far lower level than the public believes – and is outweighed by errors from claimants and officials alike. The DWP estimates £3.5bn has been overpaid due to errors and fraud in the system; 2.1 per cent of the overall benefit expenditure.

The corporate welfare budget arises from four main sources: Paying little or no tax – Tax havens; tax breaks; enjoying huge subsidies and the removal of employment and environmental protection regulations.

Tax Havens
 The UK’s 100 biggest public companies are running more than 8,000 subsidiaries or joint ventures in onshore and offshore tax havens, according to research. The figures, published by the charity Action Aid, show that only two of the companies listed on the UK’s FTSE 100 have no subsidiaries in tax havens – while companies such as Barclays and Tesco own hundreds. http://www.guardian.co.uk. The UK Crown Dependencies and Overseas Territories constitute half of the world’s most frequently used tax havens.

Tax Breaks
Almost one in four of Britain’s biggest listed companies paid no corporation tax in this country last year – and almost half fail to disclose their tax payments to the UK at all, according to research by The Mail on Sunday.  According to the annual reports and accounts of all the companies in the FTSE 100, 47 companies gave no obvious figures for tax paid in Britain.  Of the 53 who did, 12 showed they paid no tax at all and, six actually received a tax credit.Tax Avoidance
 Treasury minister, David Gauke, admitted in reply to a parliamentary written question that only four employees of HMRC are working to capture 124 tax fugitives. The amount of uncollected tax rose again last year. A Labour MP pointed out that the four officials dedicated to the tax fugitives compares with the 450 HMRC staff involved in administering the withdrawal of child benefit from higher-rate taxpayers.

Subsidies
Currently, it is estimated that the government has already provided £43.5bn in various subsidies including the National Infrastructure Plan, the Equity Loan and Help to Buy schemes, the Enterprise Finance Guarantee and the Regional Growth Fund, with nothing to show for it. Far greater sums are in the pipeline, up to £310bn.

Meanwhile supermarkets get an enormous subsidy to help with one of their major overheads, staffing costs. This is because many employees in these large and successful companies are paid only the minimum wage. And because the current minimum wage is not a living wage, nearly everyone on it has to claim tax credits to be able to make ends meet. Those tax credits are funded by the taxpayer. The supermarkets are effectively state subsidised industries.

In addition to the recent unprecedented public support for the financial sector The NEF (New Economics Foundation) identified at least three significant hidden subsidies:

* The ‘Too Big to Fail’ subsidy: The government now provides a public guarantee, effectively insurance against banks going bust. This gives banks a huge commercial advantage over other firms in a market system. It means banks are able to borrow money much more cheaply than if they were not ultimately underwritten by the public. Exchanges with leading auditors in front of the House of Lords Select Committee on Economic Affairs in January 2011 confirm this. A conservative analysis reveals that this hidden subsidy could be worth £30 billion annually. It means that bonuses to senior staff for ‘performance’ and dividends to institutional investors are at least in part a straight transfer from the taxpayer.
* The quantitative easing windfall subsidy: When it was decided that the economy needed more liquidity, the Bank of England pumped money in using the technique called ‘quantitative easing’. To meet various, and sometimes self-imposed, requirements, it did by purchasing government bonds through investment banks. Merely for being passive conduits for this ‘risk free’ arrangement the banks took a cut of every trade. Here nef analysts found that banks enjoyed a significant windfall, but that lack of transparency keeps the likely amount hidden.
* The ‘make the customer pay’ subsidy: Since the baking crisis of 2008, the banks have been increased the gap between what they have to pay to borrow money, and what they charge people to borrow from them. This is the so-called interest rate ‘spread’. This is because they can borow money from the Bank of England at virtually 0%. As it is, the taxpayer is subsidising the banks twice over: once through taxpayer funded public support to the banks, and secondly through paying much higher interest to borrow than the banks do. This hidden subsidy amounts to at least another £2.5 billion each year.

A Message From The Fire Brigades Union (FBU) – Support The Strike!

Support The FBU Strike next week

FBU, 23/09/2013
For two years now our Officials have been in consultation with the  Government under its reform of public sector pension bill, the FBU’s aim is to achieve an occupational pension scheme that fits our occupation that is to say that one that the vast majority of firefighters can reasonable expect to work until retirement. However just before Parliament broke up for its summer recess it announced to the FBU that it was going to draw to a head the consultation and gave us a deadline to agree with their proposals or they would impose a worse scheme upon us. The FBU could not agree with the proposals put forward by CLG as primarily they are unworkable, do not fit the occupation and would lead to mass dismissals of firefighters without a pension or a job but also the FBU do not consider that putting ultimatums to our members is a good way of doing business.

There has been many independent reports completed over the two years, some commissioned by the FBU and some by the Government. This evidence has been used in the consultation and not once has it been disputed or discredited as these reports and evidence is without doubt credible and accurate and the  government ministers can not dispute the findings which broadly support the FBU’s case but more importantly prove that the government proposals are unfair, unaffordable, unsustainable and not designed to fit our occupation. The most notable is an independent report done by Dr Williams, commissioned by the  government, paid for by the government, the author was chosen by the government and the terms and reference was detailed by the government, yet the report their report broadly supports the FBU’s case.

The FBU balloted its members to see if they were willing to take Strike action to defend their Pensions, the Ballot return was excellent 78% “Yes” to support industrial action so our members will be called to walk out the doors at 12:00hrs-16:00hrs on the 25th September, this Wednesday.

Many of our Stations/Workplaces will have a picket but some are considering other activities such as leaving the site and walking into their towns to talk to the public, some are considering marching down to their local MP’s offices and discussing the issues with them. So I guess it would be best if comrades from other trade unions or local supporters and activists want to know what might be happening in their local area please contact the local officials who will be happy to advise.

Syria, the labour movement and the global working class: The VOAG speaks to Gerry Downing of Socialist Fight

Syria, the labour movement and the global working class:  The VOAG speaks to Gerry Downing

Opposition forces battling Bashar al-Assad’s regime in Syria now number around 100,000 fighters, but after more than two years of fighting they are fragmented into as many as 1,000 bands. According to Russia Today, a new study by IHS Jane’s, a defence consultancy, estimates there are around 10,000 foreign jihadists fighting for powerful factions linked to al-Qaeda. Another 30,000 to 35,000 hard-line Islamists who share much of the outlook of the jihadists, but are focused purely on the Syrian war rather than a wider international struggle, and there are at least a further 30,000 islamists belonging to other groups. Only a small minority of the rebels are linked to secular or purely nationalist groups.

The VOAG spoke to Jerry Downing of Socialist Fight and asked: “What is the correct position to take on the Syria question”

GD: “Within the labour movement internationally – that is amongst the various groupings that purport to represent the interests of the working class, stretching from mass reformist bourgeois workers parties to the centrist groups of the far left – there are five basic positions on the war in Syria, with some crossover between categories, i.e. some groups straddle two positions. 1. Arm the rebels and bomb Assad. This is the straightforward Imperialist position which seeks to defend and advance the war plans of Western Imperialism in the Middle East and North Africa. These are the right wing Labour leaders and Social Democracy internationally with their associated right wing trade union leaders, from Miliband in Britain to Françoise Holland in France. 2. Arm the rebels but don’t bomb Assad. This grouping includes many leftists in the Labour Party and Social Democracy internationally, some Communist/Stalinist groups and the SWP/IST, the ISO (US), Workers Power, the RCIT, the LCC, the LIT and many others. 3. Don’t arm the rebels and don’t bomb Assad – the third campist position. This grouping contains the Socialist Party/CWI, Socialist Appeal/IMT, the ICL/IBT/IG(LFI) (the ‘Spart’ family) and the AWL and others. The AWL manages to be both in group 1 and group 3 at the same time because of the obvious implication of the “Assad is the main enemy” position. It depends on who’s writing the article. 4. Uncritical or mildly critical support for Assad against Imperialist attacks and against the rebels. This group includes the majority of the Maoists, Marxist Leninists and bourgeois nationalists internationally, together with some other communist parties and the Workers Revolutionary Party of Britain and its ICFI. It also includes the RCG/FRFI. 5. The Anti Imperialist United Front, for the defeat of the rebels and Imperialism whilst giving no political support to Assad against the Syrian working class. The genuine Trotskyist position as developed by Lenin and Trotsky. Defended by the Liaison Committee for the Fourth International and other groups and individuals internationally”.

VOAG: “for the defeat of the rebels and Imperialism whilst giving no political support to Assad against the Syrian working class” what does this mean in practice?”

GD: “It means that you are for the victory of the Syrian National Army over the rebels and Imperialism and you would work for that politically and in whatever practical way you could. But you would not seek to hide the crimes of Assad against the working class and his and his father’s previous history of collaborating with Zionism and the US against the Palestinians, for instance. You would prepare for his overthrown at a later stage by the organised working class. But right now the main enemy is Imperialism and its allies and proxies in Syria”.

VOAG: “So what is the Anti-Imperialist united Front?”

GD: “It was the name of the tactic developed by the revolutionary Comintern in 1920. It is true that Stalinism has degraded it to a two stage theory of uncritical support for bourgeois nationalists fakers over the years. But the original theses is still applicable and revolutionary. US Imperialism is the enemy of every person on the planet, even the capitalists who back it unequivocally”.

“The great majority of Syrians support Assad because the reactionary character of the rebels is clear and the fate that will befall secular Syria in regards women’s rights, trade unions and workers rights etc if the rebels win. You must be unequivocally for the defeat of Imperialism and its proxies. This is what will both strengthen the working class in Syria and the working class in the Imperialist countries and what we must work for right now. And concession to third campism or seeking to make Assad the equal enemy is reactionary and very wrong.

Of course Assad is an enemy of the Syrian and global working class, but right now he is a secondary enemy and the Anti-Imperialist United Front means a temporary alliance with him today against Imperialism and its proxies, the main and immediately threatening enemy, in order to prepare for his overthrow by the revolutionary working class after the defeat of Imperialism. Such revolutionaries as exist in Syria must have that as their goal, maintaining their political independence in this way”.

VOAG: “Can you elaborate on the Third Campist attitudes?”

GD: “The IBT has a third campist Shachtmanite position on Syria with their slogan: ‘Syrian workers have no side in civil war between Baathists and Islamists’.”

“The Sparts also take a clearly Shachtmanite position, “Neither Damascus nor Washington but the socialist revolution!” It is a “sectarian-communal war they say”. ‘The dire situation in Syria today, and throughout North Africa and the Middle East, emerged from the collapse of Stalinism and Arab nationalism, which opened the way for religious fundamentalism and sectarian/communal conflicts, often exploited by imperialism’ they wrote on their website”.

“All the Spart family propaganda is in the Effilite tradition, as Trotsky lampooned: ‘The only salvation of the workers and peasants of China is to struggle independently against the two armies, against the Chinese army in the same manner as against the Japanese army. These four lines, taken from an Eiffelite document of September 10, 1937, suffice entirely for us to say: we are concerned here with either real traitors or complete imbeciles. But imbecility, raised to this degree, is equal to treason’.”

“The truth of the matter is there is no revolution, there was a brief spring where legitimate protests began against Assad but the Saudi, Qatar and jihadist gunmen intervened within hours. Assad was Imperialism’s ally in the region, until they realised they had better allies in prospect and a chance of seizing control of the whole country so Obama, Cameron and Holland called it a “revolution” more in hope than in strong expectation that they would fool anyone and, to their absolute astonishment, not only their pliant mass media began parroting the lie but some who call themselves far left and even Trotskyists also began parroting the Imperialist lie. You would have thought that only a complete fool would think that the three strongest Imperialist powers in the planet would fund and organise via the CIA a genuine revolution, but up steps Workers, Power, the USFI, the RCIT, the LIT to name but a few, who swallowed it whole and regurgitate this vomit for their gullible members and supporters”.

The VOAG would like to thank Gerry Downing and the Socialist Fight group, British section of the Liaison Committee for the Fourth International. http://socialistfight.com/

The VOAG Is Back

After a year of silence The VOAG is back!

Bringing news and scurrilous stories

from Surrey and Beyond.

Campaigning for a better society.

&

Supporting

Surrey United Anti Capitalists
Save Our Services In Surrey
Socialist Fight Group

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Leon Trotsky On the Sino-Japanese War – An Example of the Anti Imperialist United Front

Leon Trotsky On the Sino-Japanese War – An Example of the Anti Imperialist United Front
(A must read for all members of those groups mired in the confusion over Libya )

Written: September 23, 1937
First Published: Internal Bulletin, Organizing Committee for the Socialist Party Convention (New York), October 1937. 

Dear Comrade Diego Rivera:

During the past few days I have been reading some of the lucubrations of the Oehlerites and the Eiffelites (yes, there is a tendency of that sort!) on the civil war in Spain and on the SinoJapanese War. Lenin called the ideas of these people “infantile disorders.” A sick child arouses sympathy. But twenty years have passed since then. The children have become bearded and even bald. But they have not ceased their childish babblings. On the contrary, they have increased all their faults and all their foolishness tenfold and have added ignominies to them. They follow us step by step. They borrow some of the elements of our analysis. They distort these elements without limit and counterpose them to the rest. They correct us. When we draw a human figure, they add a deformity. When it is a woman, they decorate her with a heavy moustache. When we draw a rooster, they put an egg under it. And they call all this burlesque Marxism and Leninism.

I want to stop to discuss in this letter only the Sino-dapanese War. In my declaration to the bourgeois press, I said that the duty of all the workers’ organizations of China was to participate actively and in the front lines of the present war against Japan, without abandoning, for a single moment, their own program and independent activity. But that is “social patriotism!” the Eiffelites cry. It is capitulation to Chiang Kai-shek! It is the abandonment of the principle of the class struggle! Bolshevism preached revolutionary defeatism in the imperialist war. Now, the war in Spain and the Sino-Japanese War are both imperialist wars. “Our position on the war in China is the same. The only salvation of the workers and peasants of China is to struggle independently against the two armies, against the Chinese army in the same manner as against the Japanese army.” These four lines, taken from an Eiffelite document of September 10, 1937, suffice entirely for us to say: we are concerned here with either real traitors or complete imbeciles. But imbecility, raised to this degree, is equal to treason.

We do not and never have put all wars on the same plane. Marx and Engels supported the revolutionary struggle of the Irish against Great Britain, of the Poles against the tsar, even though in these two nationalist wars the leaders were, for the most part, members of the bourgeoisie and even at times of the feudal aristocracy . . . at all events, Catholic reactionaries. When Abdel-Krim rose up against France, the democrats and Social Democrats spoke with hate of the struggle of a “savage tyrant” against the “democracy.” The party of Leon Blum supported this point of view. But we, Marxists and Bolsheviks, considered the struggle of the Riffians against imperialist domination as a progressive war.l77 Lenin wrote hundreds of pages demonstrating the primary necessity of distinguishing between imperialist nations and the colonial and semicolonial nations which comprise the great majority of humanity. To speak of “revolutionary defeatism” in general, without distinguishing between exploiter and exploited countries, is to make a miserable caricature of Bolshevism and to put that caricature at the service of the imperialists.

In the Far East we have a classic example. China is a semicolonial country which Japan is transforming, under our very eyes, into a colonial country. Japan’s struggle is imperialist and reactionary. China’s struggle is emancipatory and progressive.

But Chiang Kai-shek? We need have no illusions about Chiang Kai-shek, his party, or the whole ruling class of China, just as Marx and Engels had no illusions about the ruling classes of Ireland and Poland. Chiang Kai-shek is the executioner of the Chinese workers and peasants. But today he is forced, despite himself, to struggle against Japan for the remainder of the independence of China. Tomorrow he may again betray. It is possible. It is probable. It is even inevitable. But today he is struggling. Only cowards, scoundrels, or complete imbeciles can refuse to participate in that struggle.

Let us use the example of a strike to clarify the question. We do not support all strikes. If, for example, a strike is called for the exclusion of Negro, Chinese, or Japanese workers from a factory, we are opposed to that strike. But if a strike aims at bettering— insofar as it can—the conditions of the workers, we are the first to participate in it, whatever the leadership. In the vast majority of strikes, the leaders are reformists, traitors by profession, agents of capital. They oppose every strike. But from time to time the pressure of the masses or of the objective situation forces them into the path of struggle.

Let us imagine, for an instant, a worker saying to himself: “I do not want to participate in the strike because the leaders are agents of capital.” This doctrine of this ultraleft imbecile would serve to brand him by his real name: a strikebreaker. The case of the Sino-Japanese War, is from this point of view, entirely analogous. If Japan is an imperialist country and if China is the victim of imperialism, we favor China. Japanese patriotism is the hideous mask of worldwide robbery. Chinese patriotism is legitimate and progressive. To place the two on the same plane and to speak of “social patriotism” can be done only by those who have read nothing of Lenin, who have understood nothing of the attitude of the Bolsheviks during the imperialist war, and who can but compromise and prostitute the teachings of Marxism. The Eiffelites have heard that the social patriots accuse the internationalists of being the agents of the enemy and they tell us: “You are doing the same thing.” In a war between two imperialist countries, it is a question neither of democracy nor of national independence, but of the oppression of backward nonimperialist peoples. In such a war the two countries find themselves on the same historical plane. The revolutionaries in both armies are defeatists. But Japan and China are not on the same historical plane. The victory of Japan will signify the enslavement of China, the end of her economic and social development, and the terrible strengthening of Japanese imperialism. The victory of China will signify, on the contrary, the social revolution in Japan and the free development, that is to say unhindered by external oppression, of the class struggle in China.

But can Chiang Kai-shek assure the victory? I do not believe so. It is he, however, who began the war and who today directs it. To be able to replace him it is necessary to gain decisive influence among the proletariat and in the army, and to do this it is necessary not to remain suspended in the air but to place oneself in the midst of the struggle. We must win influence and prestige in the military struggle against the foreign invasion and in the political struggle against the weaknesses, the deficiencies, and the internal betrayal. At a certain point, which we cannot fix in advance, this political opposition can and must be transformed into armed conflict, since the civil war, like war generally, is nothing more than the continuation of the political struggle. It is necessary, however, to know when and how to transform political opposition into armed insurrection.

During the Chinese revolution of 1925-27 we attacked the policies of the Comintern. Why? It is necessary to understand well the reasons. The Eiffelites claim that we have changed our attitude on the Chinese question. That is because the poor fellows have understood nothing of our attitude in 1925-27. We never denied that it was the duty of the Communist Party to participate in the war of the bourgeoisie and petty bourgeoisie of the South against the generals of the North, agents of foreign imperialism. We never denied the necessity of a military bloc between the CP and the Kuomintang. On the contrary, we were the first to propose it. We demanded, however, that the CP maintain its entire political and organizational independence, that is, that during the civil war against the internal agents of imperialism, as in the national war against foreign imperialism, the working class, while remaining in the front lines of the military struggle, prepare the political overthrow of the bourgeoisie. We hold the same policies in the present war. We have not changed our attitude one iota. The Oehlerites and the Eiffelites, on the other hand, have not understood a single bit of our policies, neither those of 1925-27, nor those of today.

In my declaration to the bourgeois press at the beginning of the recent conflict between Tokyo and Nanking, I stressed above all the necessity of the active participation of revolutionary workers in the war against the imperialist oppressors. Why did I do it? Because first of all it is correct from the Marxist point of view; because, secondly, it was necessary from the point of view of the welfare of our friends in China. Tomorrow the GPU, which is in alliance with the Kuomintang (as with Negrin in Spain), will represent our Chinese friends as being “defeatists” and agents of Japan. The best of them, with Chten Tu-hsiu at the head, can be nationally and internationally compromised and killed. It was necessary to stress, energetically, that the Fourth International was on the side of China as against Japan. And I added at the same time: without abandoning either their program or their independence.

The Eiffelite imbeciles try to jest about this “reservation.” “The Trotskyists,” they say, “want to serve Chiang Kai-shek in action and the proletariat in words.” To participate actively and consciously in the war does not mean “to serve Chiang Kai-shek” but to serve the independence of a colonial country in spite of Chiang Kai-shek. And the words directed against the Kuomintang are the means of educating the masses for the overthrow of Chiang Kai-shek. In participating in the military struggle under the orders of Chiang Kai-shek, since unfortunately it is he who has the command in the war for independence—to prepare politically the overthrow of Chiang Kai-shek . . . that is the only revolutionary policy. The Eiffelites counterpose the policy of “class struggle” to this “nationalist and social patriotic” policy. Lenin fought this abstract and sterile opposition all his life. To him, the interests of the world proletariat dictated the duty of aiding oppressed peoples in their national and patriotic struggle against imperialism. Those who have not yet understood that, almost a quarter of a century after the World War and twenty years after the October revolution, must be pitilessly rejected as the worst enemies on the inside by the revolutionary vanguard. This is exactly the case with Eiffel and his kind!
L. Trotsky

Three Short Essays On The Crises

Three Short Essays On The Crises

The Voag was checking out the news today and came across these three articles, which we figured were worth reposting. 

These essays have been republished without permission. 

Bond Markets Have The United States In Their Sights

Gerry Gold, 20 April 2011
Assessing the significance of credit rating agency Standard & Poor’s historic decision to downgrade the debt outlook for the USA is complex. But significant it definitely is. S&P and Moody’s, which between them control 80% of the rating market, act as intelligence gatherers and forecasters on behalf of capitalist investors. They examine relevant aspects of an institutional issuer of debt – usually a corporate entity or a state body – and assess the risk to an investor of placing their money with that institution.

The higher the risk, the more the issuer of debt has to pay to the investor in interest or “yield”, and consequently, the more the corporation has to make from its operations, or in the case of a state, the more it has to extract from its citizens in taxes. So, you might say, the increasing burden being placed on the populations of effectively bankrupt countries like Ireland and Greece is largely on the say-so of these agencies.

Like all these agencies, S&P is a competitive, for-profit operation. In order to keep its customers paying their fees – and that is mostly the corporations whose performance is being assessed – it needs to show that it is getting its assessments right, more than it gets them wrong.

In the run-up to the 2007-8 global crash, S&P was itself mesmerised by the hysterical expansion of fantasy finance in which products derived from the issue of traditional forms of credit and debt based on real value multiplied the amount in circulation many times over. The big players issued monumental quantities of derivatives and they paid the ratings agencies huge fees to provide the market with favourable assessments. Money talks. So the agencies failed to provide any warning about the impossible state of Lehman Brothers which crashed out of existence in 2008.

Governments, on the other hand, don’t pay the agencies to assess the health of their economies, or to assess the risk that they might default on interest payments to the investors who lend them money through the bonds they purchase.

The rating agencies make their assessments as part of the fees paid by corporations who want to know whether the state’s debt is more or less risky. The big, or even only question at stake is: will the government act sufficiently strongly to provide the conditions for the corporations to intensify the extraction of profit from their population?

So when S&P decides to downgrade the outlook for US debt, it is taking into account many factors. These days the judgement is more political than it is economic. The on-going Punch & Judy style shadow-play between Obama and the Republicans over the $4-5 trillion programme of cuts to be visited upon the American people is one aspect of the analysis.

As one economist observed: “The key question is whether the gridlocked US political system can respond in time to avert a bond market revolt.” Some commentators say that S&P’s action is a warning to Obama from the world of finance. If they don’t crack down hard enough, investment money will go elsewhere and interest rates will rise. But they’ll also be assessing the likely contagion effect of the wildfire of revolt spreading outwards from Tahrir Square throughout the Middle East, North Africa and taking in Gabon in Central Africa.

They’ll be weighing up the likely outcome of the political struggle against the regimes that have ensured the supply of cheap oil to fuel growth over the last forty years. They’ll be closely examining the protest movement in Europe for signs that it is moving beyond resistance. And they’ll be studying developments like the People’s Assembly arising from the occupation of the State Capitol in Wisconsin. It’s no wonder S&P has downgraded the US government’s prospects for paying back its loans.
Gerry Gold, 20 April 2011

 

The S&P Debt Warning: Wall Street Extortionists Demand
Savage Cuts

WSWS, 20 April 2011
Five days after the US Senate Permanent Subcommittee on Investigations released a voluminous report detailing the criminal activities of the banks and credit rating firms that precipitated the 2008 Wall Street crash and global recession, one of the named culprits, Standard & Poor’s Credit Ratings Services, issued an ultimatum to the White House and Congress demanding an agreement on savage austerity measures ahead of the 2012 elections.

In lowering its outlook from “stable” to “negative” on the top AAA rating for US Treasury bonds, S&P spoke Monday for the entire financial mafia that is headquartered on Wall Street. The ratings firm declared in a press release that failure to reach an agreement in the coming months to reduce the federal deficit by at least $4 trillion over the next decade “could lead us to lower the rating.”

This amounts to a threat to crash the US and global economy and undermine the status of the dollar as the world reserve currency. The move is part of an internationally orchestrated drive by the major banks and speculators to push through devastating attacks on the living standards of the American working class.

They are applying to the United States the extortionate methods used previously to stoke up speculative attacks on the sovereign debt of a number of European countries, including Greece, Ireland, Portugal and Spain. S&P and its major ratings rivals Moody’s and Fitch have issued strategically timed credit warnings and downgrades to create a crisis atmosphere, which governments have then utilized to override popular opposition and impose mass layoffs and wage cuts and shred social programs.

John Chambers, chairman of the sovereign ratings committee at S&P, virtually admitted as much, according to a report in Tuesday’s Wall Street Journal. The Journal wrote: “If the US reaches a British-style resolution, S&P will restore the US outlook to stable, Mr. Chambers said.”

In May of 2009, S&P lowered Britain’s credit outlook. It reversed the action 17 months later after the newly elected Conservative-Liberal Democrat coalition government announced a program of draconian cuts that will shatter the country’s social safety net.

Readers can make their own judgment as to S&P’s standing to be issuing such ultimatums. The Senate report on the Wall Street crash describes the corrupt process by which S&P routinely slapped AAA ratings on worthless securities marketed by the banks as follows: “Credit rating agencies were paid by Wall Street firms that sought their ratings and profited from the financial products being rated… The ratings agencies weakened their standards as each competed to provide the most favorable rating to win business and greater market share. The result was a race to the bottom.” Senator Carl Levin, the chairman of the subcommittee, described what the investigation uncovered as “a financial snake pit rife with greed, conflicts of interest and wrongdoing.”

By rights, the top S&P executives who presided over this fraud and pocketed multi-million-dollar salaries in the process should be sitting in prison. Instead, still at their posts and having suffered no consequences, they are using the disaster of their own making to gut bedrock social programs such as Medicare, Medicaid and Social Security upon which tens of millions of people depend.

The statement issued by S&P on Monday described both the Republican fiscal year 2012 budget plan and that outlined by President Obama last week as a basis for cutting the federal deficit by $4 trillion. However, the two sides had to come to an agreement before the national election in 2012, the company insisted.

This demand underscores the anti-democratic character of the so-called budget debate. It is an elaborate charade, behind which stands the dictatorship of the banks. The deal to eviscerate what is left of the social reforms of the 20th century has to be sealed before the elections to make sure that the vote in no way becomes a referendum on austerity and the electorate has absolutely no say in the matter.

The mass opposition to the measures being proposed by both parties is well known to Wall Street and its political servants in Washington. On Monday, the same day as the S&P announcement, McClatchy Newspapers published the results of a McClatchy-Marist poll showing that voters by a margin of 2-to-1 support raising taxes on incomes above $250,000, with 64 percent in favor and 33 percent opposed. They oppose cutting Medicare and Medicaid by 80-18 percent.

S&P intervened at the behest of the banks to shift the phony budget debate even further to the right and create the conditions for even deeper cuts than those being currently proposed. Interviewed Monday on Bloomberg Television, David Beers, S&P’s global head of sovereign finance ratings, said the $4 trillion deficit-cutting target was “not enough to ultimately halt the rising trajectory of US debt.” It was, he said, merely “a useful starting point.”

The establishment media immediately signaled that it had gotten the message. The Los Angeles Times editorialized that “Congress and the White House can’t afford to ignore this warning shot.” The Financial Times of London published an editorial that declared, “S&P’s warning shot should galvanise America’s leaders.”

Democratic leaders rushed to reassure Wall Street that they were on board. Speaking at a community college in Virginia Tuesday, Obama said, “I believe that Democrats and Republicans can come together to get this done.”
Steny Hoyer of Maryland, the No. 2 Democrat in the House of Representative, said Monday, “Today’s revised outlook shows the urgent, bipartisan action needed to put our nation on a serious path to reduce deficits.”

Erskine Bowles, a former White House chief of staff for Bill Clinton and co-chair of last year’s bipartisan fiscal commission, was even more emphatic. Speaking to the Financial Times, he said S&P had been “absolutely right” in lowering it outlook on US debt. “If anything, they understate the extent of the problem,” he said.

Only a mass, independent movement of implacable opposition by the working class can defeat this criminal conspiracy. The World Socialist Web Site and the Socialist Equality Party urge workers and young people to reject the entire framework of the so-called budget debate. There must be uncompromising opposition to any cuts in jobs, wages or social programs and services. The working class bears no responsibility for the crisis of the capitalist system.

We propose an alternate policy. As a down payment, to begin to recoup the wealth plundered by the financial elite, we propose a 50 percent tax surcharge on all household wealth over $5 million. This should be supplemented by raising the income tax on households taking in more than $500,000 a year to 90 percent. These measures will not only generate hundreds of billions of dollars for jobs, schools, health care, housing and pensions, they will attack the profligate squandering of resources and contribute mightily to the moral as well as the economic health of society.

These initial steps lead inexorably to the nationalization of the banks and major corporations and their transformation into public utilities under the democratic control of the working population. This is a socialist program. It requires that the working class break politically from the two parties of big business and build a mass movement to fight for a workers’ government.
Barry Grey, 20 April 2011

Portugal: Another Triumph For The Bond Dealers

Paul Feldman, 8 April 2011
As Portugal declares state bankruptcy, after its Socialist Party government failed to get an austerity package through parliament, it’s another triumph for the dictatorship of the money markets and bond dealers. Now, even though Portugal is without a government, the price demanded by Germany and the richer EU countries for an €80 billion bail-out is even deeper cuts in public spending than were first proposed. The upcoming general election is definitely one to lose.

Portugal’s finances collapsed because its budget deficit grew rapidly following the onset of the global recession. But the money markets drove up interest rates until Portugal was borrowing at over 8.5%, adding to the total deficit at a rate which made it impossible to repay.

In the last year, Greece – which still has a ‘socialist’ government and Ireland, which saw the ruling party wiped out at the recent general election, have suffered the same fate. Does the ‘contagion’ stop at Lisbon, or is Madrid next?

Spain’s government – yet another one that claims the rubric ‘socialist’ – is confident it can avoid Portugal’s fate – because it says it’s already making deep cuts in public spending! Youth unemployment is running at over 40% as a consequence. Meanwhile, Spanish bank assets are worth far less than before because of the collapse in property values and refinancing is increasingly expensive and hard to come by.

You can cut – as the Coalition is doing in Britain – to avoid higher borrowing rates but that only deepens the recession. Spending more would leader to higher borrowing rates, which the banks won’t like. Why? Because in the perverse world of capitalist finance, the value of the government bonds, which they hold as assets, depreciates as rates rise.

At the same time, British banks are steadfastly refusing to resume rates of lending last seen before the credit crunch of 2007. That’s because their balance sheets remain toxic and full of bad debt. Even the right-wing press is fed up with the banks.

On Monday, the Independent Commission on Banking set up by the government reports, and no one expects it to suggest any fundamental changes. The Daily Telegraph’s Jeff Randall reported: “The banks have captured our money twice over: as cash in their vaults and investments in their shares. We own all of Northern Rock, most of Royal Bank of Scotland and nearly half of Lloyds Banking Group. We rescued them – and in so doing became their prisoners.

But this is not a new problem. By the outbreak of World War One, the banks and the monopolies had formed an unholy alliance against ordinary working people and elected governments alike. After creating the Federal Reserve – America’s central bank – President Woodrow Wilson declared:

“I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated governments in the civilised world. No longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men”.

In the recent period of corporate-driven globalisation, the tensions and contradictions between the capitalist state and capitalist finance have deepened to the point where governments tread warily. The only way to sort that out is to put an end to the power of the bond dealers, banks and money markets and create a new, socially-driven financial system. It doesn’t need me to tell you that bourgeois governments are not capable of such a revolutionary change.
Paul Feldman, 8 April 2011