By the end of December 2008, the United States’ non-farm employment declined sharply and the unemployment rate rose from 6.8 to 7.2 percent, its highest level in 16 years, according to the most recent report by the Bureau of Labor Statistics of the U.S. Department of Labor. Payroll employment fell by 524,000 over the month of December, following the loss of 533,000 during the month of November. During the year 2008, the U.S. lost 2.6 million jobs according to the official report. Figures for unemployment in 2008 make the last year of the Bush administration the worst year for job losses since 1945 and intensify the pressure on President Obama and the Congress to pass a fiscal stimulus package that will raise the federal budget deficit to the incredible height of $1.2 trillion, which shoots the U.S. national debt as high as $10.5 trillion or 75% of the U.S. Gross Domestic Product (GDP).
In December, the number of unemployed persons in the U.S. climbed to 11.1 million. Since the start of the recession in December 2007, the number of unemployed workers has grown by 3.6 million and the unemployment rate has risen by 2.3 percentage points.
Among the total unemployed, 6.5 million were workers who were either long unemployed or had only part-time jobs before the start of the recession. The economic crisis has made the lot of this stratum of the work force worse than it has been in many decades. The number of long-term unemployed, i.e., those jobless for 27 weeks or more, reached 2.6 million in December. As of December 20, the number of Americans who were continuing to draw unemployment benefits went up by 140,000 to 4.5 million for the week. And more U.S. workers are expecting to be fired by mid-January. Argus Research economist Richard Yamarone said for many American workers the prospects for a better 2009 are nowhere in sight, adding that the number of jobless claims was at its highest since December 1982.
The signs of deterioration and deep cracks in the foundation of the U.S. economy can be found all around us, particularly in the financial, retail, and industrial sectors and, of course, the auto industry. Earlier this month, we learned that Citigroup, once the world’s biggest and most prestigious bank, with branches all across the globe, unveiled plans to split into a “good bank”, forging together its commercial, retail, and investment businesses, and a risky bank, with brokerage, retail asset management, hedge fund business, consumer finance, and a sea of toxic assets. Citi also consented to merge its Smith Barney brokerage unit with that of Morgan Stanley. Citi posted a quarterly loss of $8.29 billion, which lowered Citi capital to $24 billion, its lowest level in many years.
In losing capital left and right, Citigroup was not alone. Bank of America (BofA), which received a $25 billion handout from the “peoples” treasury just two months ago, came back stretching its arm for another $20 billion capital injection from the 350 billion dollars in ‘emergency’ funds just released by the Senate. BofA also received protection from possible losses on $118 billion of assets acquired in its takeover of Merrill Lynch, which posted a record $15.31 billion quarterly loss. This was in addition to BofA posting a $1.79 billion loss in the fourth quarter of 2008. It is important to note that real experience and the systemic woes of capitalism, witnessed by U.S. workers, runs counter to the claims of mainstream political economy that the capitalist market is the most rational and efficient method of allocation of resources and capital investment. It is paradoxical to learn that as long as privately owned corporations are engaged in profitable businesses, no one else except the major owners and shareholders are entitled to the lucrative profits and capital accumulation, but as soon as the capitalist class, driven by greed, engages in risky undertakings and market-driven speculation, which invariably results in huge losses, with no hesitation these corporate entities run to the arms of the state begging the government to use the nation’s treasury to bail them out of the hole.
Last month industrial output fell for the first time since 2002. Retail sales plunged 3.1% in December, to an over 60-year low. Jaimie Dimon, the CEO of JP Morgan Chase, said recently, “The worst of the economic situation is not yet behind us. It looks as if it will continue to deteriorate for most of 2009.”
In the second week of January 2009, moribund financial stocks pushed the major market indexes down, with the Dow Jones Industrial Average falling 3.7% to 8,281.22. We may recall that the Dow Jones index was 14,150 in September 2007. On this basis, the stock market has fallen 41.47 percent, which is much less than the financial, housing, and natural resources sectors of the economy, which fell in the 70 to 80 percent range!
To put the icing on the cake, Circuit City, which employs 30,000 workers, announced it will begin liquidating its assets and firing an army of workers, after failing to reach an accord with creditors or finding a buyer. Also on the chopping block are 1100 jobs at AMD, as many as 2400 at Pfizer, and 4000 at Hertz Global Holdings.
In summary, after all the chest-pounding of the criers worshipping the capitalist economy, unemployment, loss or absence of health care, homelessness, lack of proper education for their children, and even hunger await the working class and are part and parcel of the capitalist mode of production and distribution. Isn’t it fair to conclude that as long as the bourgeois politicians from all the ruling parties in Washington get a large part of the spoils, we will not see these government representatives bail out the working class families who are suffering the most from the failures of capitalism?
* Published in Iran's TEHRAN TIMES on Jan. 24.