PRESIDENT George Bush’s Bill for a $700bn package of measures to bail out the Wall Street banks and large financial institutions in the United States was defeated in the House of Representatives, by 228 votes to 205, on Monday. Two thirds of Republicans voted down the Bill alongside 95 Democrats, with more Democrats than Republicans supporting it.
After this, shares on the Dow Jones share index of the New York Stock Exchange plummeted by 778 points, down seven per cent, wiping $1tn off prices.
Share prices also continued to fall in Tokyo, Frankfurt and Paris yesterday after drops of up to five per cent on Monday and the London Stock Exchange did not regain its 5.3 per cent decline.
The huge falls in share prices in every financial centre around the world took place on Monday as five banks had to be ‘rescued’.
Bush went on television yesterday to plead with House Representatives to support his Bill. He said: ‘The consequences will get worse every day if we do not act . . . We face face the choice between action and the real prospect of economic hardship.’ He added: ‘It is not a choice between government action and the operation of the market. It is between action and inaction.’
The leaders of the European Union, German Chancellor Angela Merkel and French President Nicolas Sarkozy, all appealed to the US yesterday to act to save the world financial system.
However, Bush is like the Emperor that had no clothes. He is a lame-duck President who is proposing a package that will make little impact on the financial crisis, where banks are swamped by huge incalculable debts.
As Congress was discussing the $700bn bank bail-out, the Federal Reserve gave $690bn to central banks around the world to prop up their finances and auctioned off $300bn for American banks. It is clear that $700bn is insignificant!
What Prime Minister Gordon Brown and all the other imperialist leaders are hiding is that even the most powerful state and its government cannot control the operation of the capitalist world market. It works according to laws that are independent of the biggest businesses and capitalist states.
In addition, the US is no longer the economic collosus it was in the past. It is the most indebted state on the planet. In recent years, it has had a huge trade deficit, running at $844bn a year at present, and a budget deficit of roughly the same order, 4.8 per cent of GDP.
The essential laws of the capitalist mode of production are asserting themselves with a vengeance. Those banks and governments that have generated billions of dollars of debt are being called to account, to replace these worthless paper deals with value, that is only created by labour during production.
In the background of the debates in Congress is an escalation of the class struggle. What haunts those in the White House and in Congress is the spectre of revolt and revolution by millions of workers and middle class people.
Bush and the supporters of his Bill in Congress fear both the collapse of the banking system and the reaction of millions of Americans to the loss of their jobs, homes and savings as slump follows financial collapse. Their panic measures are an attempt to put off the inevitable.
Right-wing Republicans, who oppose state intervention, are saying: Let the free market rule and bring what it will. Bring it on!
Democrats, who voted against the package, are already feeling the working class breathing down their necks. They know the working class is totally opposed to paying to bail out the super-rich on Wall Street and they will be asking for workers’ votes in November.
The world is being turned upside down for millions in the US. They are not prepared to sacrifice their jobs, homes and living standards to save US imperialism and the speculators of Wall Street.
To close down Wall Street and preserve the living standards of the majority of people in the US, requires a new American Revolution, a socialist revolution.
Workers need a Labor Party to represent their interests against those of the parties of the bankers and corporations, the Democrats and Republicans. Above all, it is time for them to build an American section of the Fourth International, the World Party of Socialist Revolution.