Wednesday, November 14, 2012

Today's links

1--What is the “fiscal cliff”?, WSWS

The term “fiscal cliff,” first used by Federal Reserve Chairman Ben Bernanke last February, refers to the simultaneous expiration of tax cuts and imposition of spending cuts on January 1, 2013.

The American media has seized on the term “fiscal cliff” and promoted it, in part, to suggest that measures which would otherwise be enormously popular—ending the Bush tax cuts for the wealthy or cutting military spending—are threatening, even dangerous.

The main purpose of the media propaganda about the impending “cliff” is to create a sense of financial emergency and override popular opposition to measures the Obama administration and congressional Democrats and Republicans will put forward to avert it, including sweeping cuts in Medicare, Medicaid and Social Security

2--The way forward in the struggle against austerity in Europe, WSWS

Finance capital pits workers against one another in a fratricidal struggle for jobs, fueling a downward spiral in living standards to levels in Eastern Europe and Asia. The test case and model for all of Europe is Greece, where Special Economic Zones to profit from ultra-low wages are in the offing.

Such policies can be stopped only by a united international offensive of the working class to take state power, expropriate the banks, and subordinate the European and world economy to rational planning in the interests of the masses. Working people cannot fight for this by simply mounting another protest action. As in previous mobilizations, the ruling classes will work with the union bureaucracy to wait out the one-day strike and then proceed with their offensive against the workers.

The working class faces the necessity of a revolutionary struggle for socialism. This implies in Europe the building of a mass movement for the overthrow of the EU and its constituent governments and the creation of workers’ governments within a United Socialist States of Europe.

Such a struggle cannot be mounted through, but only against, the pro-capitalist trade unions that are aiding and abetting the attacks in each country

3--When People Save, Government Must Spend, wonkwire

Today, the US private sector is saving a staggering 8 per cent of gross domestic product – at zero interest rates, when households and businesses would ordinarily be borrowing and spending money… This is the result of the bursting of debt-financed housing bubbles, which left the private sector with huge debt overhangs – notably the underwater mortgages – giving it no choice but to pay down debt or increase savings, even at zero interest rates.”

“The challenge now is to maintain fiscal stimuli until private sector deleveraging is completed. Any premature attempt to withdraw that stimulus will result in a deflationary implosion – as in the US in 1937, Japan in 1997, and Spain and the UK most recently… Average citizens find it hard to understand why the government should not balance its budget when households and businesses must all do so. It is risky for politicians to explain but, until they make it clear that the economy will implode if everybody is saving and nobody is borrowing, public support for the necessary fiscal stimulus is likely to weaken, as seen during the past four years of the Obama administration.”

4--Richard Koo: How the US can avoid the same mistakes as Japan, international economy

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