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The Militant this week
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World financial crisis rocks European banks
Highest U.S. monthly job loss in 5 years
Socialist Kennedy gets hearing in Seattle
Minnesota unionists defend fired steward
Mumia Abu-Jamal denied new trial by Supreme Court
Campaign to win readers starts strong
Cuban Five defended revolution against U.S.-backed attacks
Record of Militant Fightning Fund
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A socialist newsweekly published in the interests of working people
Vol. 72/No. 41      October 20, 2008


Socialist Workers 2008 Campaign
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Public meeting in New York
Saturday, November 22

The Crisis has Barely Begun!
... and Workers' Fight to End the Wages System Is Posed (click here for ad)

(lead article)
World financial crisis
rocks European banks
Highest U.S. monthly job loss in 5 years

October 8—Capitalist governments across Europe scrambled to pour billions into shoring up major banks threatened by the spreading credit crunch. Stock prices tumbled from Wall Street to Europe to Asia.

The British government announced October 8 that it’s putting $87.5 billion into eight of the country’s leading banks, including Barclays, HSBC, and Lloyds.

The Fortis bank, a Dutch-Belgian banking and insurance giant once ranked among the world’s top 20 financial institutions, collapsed October 3. The Dutch government seized control of its operations in the Netherlands. In Belgium, government officials got the French bank BNP-Paribas to take over what was left of Fortis.

In Germany, the government put up $68 billion to bail out of Hypo Real Estate Holding, one of the country’s biggest lenders. In Germany, Denmark, Ireland, Greece, Sweden, and Austria officials have expanded guarantees that deposits in consumer bank accounts will be safe. The Dow Jones Industrial Average declined 1,400 points—nearly 13 percent—over the five trading sessions ending October 7. Japan’s Nikkei 225 stock average fell more than 9 percent October 8, the biggest decline in 20 years.

The capitalist rulers around the world hope that handing massive amounts of money to the banks and other financial institutions will unclog the credit freeze gripping U.S. banks and the world financial system. However, confidence that this will stave off a deep international recession is not taking hold.

The U.S. Congress approved a $700 billion bailout package for Wall Street banks October 3.

“The bailout plan is focused on buttressing U.S. financial institutions,” the Washington Post said October 7. “But it was global markets that plunged yesterday, as investors sold off commodities in Brazil, currency in Mexico, bank stocks in Russia and the short-term debt of the state of California.”

Reports released by the U.S. government in early October point to the deepening impact that the capitalist financial crisis is beginning to have on working people.

In September U.S. bosses cut 159,000 jobs, the highest monthly loss in more than five years. This is the ninth consecutive monthly decline, bringing job losses for the year to 760,000.

In spite of the jump in those without jobs, the U.S. Bureau of Labor Statistics (BLS) said the official unemployment rate remained steady at 6.1 percent. The BLS manipulates the statistics by excluding workers it claims are “marginally attached” to the labor force—1.6 million people in September. This includes “discouraged” workers and workers who did not make “specific efforts” to find work in the month prior to the agency’s survey.

Official unemployment figures for Black workers rose to 11.4 percent. Of the 9.5 million workers officially listed as being unemployed, 2 million have been jobless for more than six months. The number of part-time workers also shot up by 337,000, rising to 6.1 million in September, an increase of 1.6 million over the past year.

A report on the so-called underemployment rate, which counts workers categorized as no longer looking for employment as well as part-time workers who want full-time jobs, rose to 11 percent in mid-September.

Average wages for 80 percent of the U.S. workforce rose by only 2.8 percent over the past year, far below price increases, especially for food and fuel. The average hourly workweek has also declined to 33.6 hours.

New orders at U.S. factories slid 4 percent in August, the sharpest drop in nearly two years. Leading the way was a 10.6 percent decline in motor vehicle orders.

General Motors, Ford, and Chrysler are getting a $25 billion bailout in government loan guarantees. Those eligible for the funds are automobile plants that have been in operation for at least 20 years. This is the largest federal bailout of the automotive industry since 1979, when Washington granted $1.5 billion in loans to Chrysler to stave off bankruptcy.

New York governor David Paterson announced October 3 that he is calling another emergency legislative session next month to cut $2 billion from the current state budget. A previous special session in August slashed $427 million from this year’s budget. The New York Times cited Medicaid and education as likely targets.

Invoking Depression-era emergency powers, the Federal Reserve announced October 7 that it will begin to fund U.S. businesses and state and local governments that regularly rely on short-term loans to pay workers and cover day-to-day expenses. The credit freeze has been blocking these companies and governments from getting these loans.

An unnamed federal official told Associated Press that this could amount to an expenditure of around $1.3 trillion between now and the projected termination of the program in April.
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