Vol. 80/No. 17 May 2, 2016
(front page)
New decline looms within worldwide capitalist crisis
But many workers know, from their own experience and others around them, that the reality isn’t so rosy. Real unemployment is way higher than the government’s showcase figure of 5 percent, and real wages remain at their 1970 level while production per worker has more than doubled.
And a look at what’s happening in production and trade shows that another downturn is looming, within the worldwide capitalist crisis that has been smoldering for nearly a decade.
U.S. industrial production continues to contract, dropping for six of the last seven months, according to the Federal Reserve Bank. New orders for manufactured goods declined 1.7 percent in March, while companies’ use of their industrial capacity dropped to 74.8 percent, the lowest level in five and a half years.
In the United Kingdom industrial output had its “sharpest fall in four years” in February, the Spectator reported. Manufacturing production dropped 1.8 percent, its ninth consecutive monthly decline.
Declining production from China to Brazil, combined with the plummeting of commodity prices, has slowed trade to the lowest level since 2009. The Baltic Dry Index, a measure of global trade in raw commodities, including coal, iron ore and grain, dropped to its lowest level on record in February.
Last year the value of goods that crossed international borders fell 13.8 percent in dollar terms. U.S. exports fell 6.3 percent. Particularly devastating was the collapse in exports from Africa and Middle East by 41.4 percent, a result of plummeting of oil prices.
Slumping trade with China is slowing industrial production in Germany, the dominant capitalist power in Europe. Nine of Germany’s 10 biggest exports to China fell last year, according to the German Federal Statistical Office, including automobiles by 29 percent.
With average industrial profit rates declining — part of the normal workings of the capitalist market — for several decades the great majority of bosses have shied away from investing in expanding productive capacity and hiring workers. In fact, since the 1980s, less than 10 cents of each borrowed dollar is invested in production, reported Bloomberg News. Instead, the propertied rulers plough their money into stocks, bonds and other forms of commercial paper in search of higher returns, building up bubbles of corporate debts to unforeseen heights, nearly $30 trillion.
Coal and oil company bankruptcies
A growing number of companies, particularly in the mining industry, are using bankruptcy to target workers’ jobs, wages, pensions and union contracts, while the wealthy bondholders insist they get their interest payments first.Peabody Energy Corp., the largest U.S. coal mining company, filed for bankruptcy April 13, following similar moves by Arch Coal Inc., Alpha Natural Resources Inc., Patriot Coal Corp. and Walter Energy Inc. Since September 2014, 185,000 miners’ jobs have been eliminated, according to the Department of Labor. Miners in Appalachia and Wyoming have been particularly hard hit.
On April 15 Goodrich Petroleum Corp. declared bankruptcy, just as 51 other North American oil and gas companies have done since the beginning of 2015. The Wall Street Journal notes that one-third of all U.S. oil producers could end up in bankruptcy. Worldwide, a quarter of a million oil workers have been laid off, as oil prices dropped 70 percent from $100 a barrel nearly two years ago.
The three biggest U.S. auto companies reported record sales of 17.5 million vehicles last year. But the figures can be deceiving. “Automakers have been goosing sales,” wrote Bloomberg News, “pushing leases that count as ‘sales,’ and dumping their sedans onto rental car companies and other bulk buyers.”
Auto sales are increasingly being fueled by subprime loans, which are being packaged and sold as securities — as were subprime housing loans that collapsed in 2007, helping trigger a steep recession. The average new subprime auto loan is for six years at 10 percent interest. In February nearly 5 percent of these loans were past due by 60 days or more, the highest level since 2009.
At the same time, as many as 1 million workers will be cutoff from receiving food stamps over the coming months. Citing lower official jobless rates, 22 state governments are once again implementing a 20-year-old federal rule that says adults without children or disabilities must have a job to get food stamps. If you’re out of work, you can only get food assistance for three months over any three-year period. The average time a worker spends unemployed is almost 30 weeks. Many people began hitting the three-month limit April 1.
Related articles:
Labor actions rise in China as bosses slash jobs, wages
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