What is driving the stock market panic?

Barry Grey

Banks, hedge funds and governments all over the world are entering a new week of trading with fear and trepidation. The US markets are closed Monday for the Martin Luther King Jr. holiday, but one can be certain that the Federal Reserve, the major Wall Street banks and the Obama administration will continue to be involved in intensive behind-the-scenes discussions with their international counterparts following the most disastrous two-week start of a new year in history.

Friday’s panic sell-off on stock markets from China and Europe to the US, with the Dow giving up 391 points and crashing through the 16,000 point barrier, capped off two weeks that erased $5.7 trillion from global share values.

The current sell-off, which has officially thrown stocks in the US and Europe into correction territory (more than 10 percent below recent highs) and the Chinese exchanges into bear market mode (down by more than 20 percent), has been fueled by mounting signs of stagnation and slump in the real economy. These include a sharp slowdown in China, plummeting prices for oil and other industrial commodities and new signs of economic deceleration in the US.

The mood spreading within financial circles was summed up by the Royal Bank of Scotland’s credit team, which sent a note advising clients that 2016 could be a “cataclysmic year” and urging them to “sell everything except high quality bonds.”

Warning that “in a crowded hall, exit doors are small,” the note predicted that major stock markets could fall by 20 percent and oil could drop from its current already depressed level of $29 a barrel to $16. “China has set off a major correction and it is going to snowball,” the note added.

The mood of foreboding is compounded by the intersection of economic turmoil with intensifying geopolitical conflicts and escalating wars, alongside political crises and mounting social tensions in country after country. The fact that the financial eruptions are playing out against the backdrop of a presidential election in the US that is already revealing a profound crisis of the American two-party system heightens the general sense of apprehension.

Whatever the short-term turn in the markets, the turbulence that has marked the new year reflects profound and deepening contradictions within the world capitalist system. After more than seven years of bailouts and trillions in virtually free cash for the banks and financial markets, compliments of central banks and governments in the US, Europe and Asia, the real economy has not only not recovered from the Wall Street crash of 2008, it is rapidly deteriorating.

The working class has been hammered with mass layoffs, wage cuts and austerity, while the rich and the super-rich have gorged themselves with profits derived from parasitic and socially destructive financial activities such as stock buybacks and mergers and acquisitions.

Wal-Mart’s announcement Friday that it is shutting 269 stores and slashing 16,000 jobs, including 154 stores and 10,000 jobs in the US, exposes the real state of economic and social conditions in America behind the official talk of economic “recovery”—epitomized just three days before in President Obama’s delusional State of the Union depiction of the US economy. “Anyone claiming that America’s economy is in decline is peddling fiction,” the president boasted.

The closure of these stores—coming on the heels of multi-store closure announcements by Macy’s and Sears-Kmart—means severe hardship for communities where Wal-Mart is the main employer and retail outlet. US industry is in a recession, as is freight transport. Some 40,000 coal mining jobs have been wiped out and coal production has fallen by 15 percent since 2008.

Now, record high levels of debt, in the form of emerging market corporate bonds, energy junk bonds and speculative bets on currencies and commodities, are threatening to implode along with inflated stock values. The underlying and deepening crisis in the real economy—starved of investment in the productive forces and the social infrastructure—is undermining the massive edifice of financial assets that has been built up on the basis of speculation, debt and outright swindling.

The decision of the Federal Reserve to begin raising interest rates, despite its intention to do so gradually and incrementally, intensifies the debt crisis and sends new shock waves through global currency markets, already roiled by a 35 percent rise in the dollar since 2011.

Even more fundamentally, profit rates are being squeezed. Last Monday, Alcoa reported a $500 million net loss in the fourth quarter of 2015. The earnings of Standard & Poor’s 500 companies are estimated to have fallen 4.7 percent during the quarter, the second straight quarterly decline. S&P 500 firms are expected to show zero profit growth for all of 2015.

The focus of attention is on the slowdown and crisis in China because the world’s second largest economy and major cheap-labor manufacturing platform has played such an oversized role in propping up world capitalism, especially since the 2008 crash. But the problems in China are an expression of a global crisis whose real center is the United States.

The rise of China as a global economic force is bound up with the precipitous decline of American capitalism, which is at the heart of the world capitalist crisis. The transformation of the Maoist-ruled country into a bastion of cheap labor and super-exploitation for the transnational corporations is the obverse of the decay of American industry and the increasingly predominant role of financial speculation in the US economy.

For decades, Wall Street has fueled one speculative bubble after another—the “Asian tigers,” the dot.com frenzy, the subprime mortgage scam—each of which has collapsed and given way to the next financial bubble. Meanwhile, the social infrastructure of the country has been left to rot and the working class driven ever deeper into economic insecurity and poverty.

The most significant underlying factor behind the threatened collapse of the current financial house of cards is the growth of working class resistance. The Chinese regime, corrupt to its bones, is fearful of the social and political implications of carrying through the scorched earth privatizing and job-slashing policies demanded by international capital and favored by the present ruling clique.

The massive Chinese working class is already stirring. Last year, the number of strikes and labor protests more than doubled compared to the previous year, and December saw a record high total of such struggles.

In the US, the ruling class is acutely aware of the growth of working class resistance, reflected in the mass opposition of autoworkers to the contracts rammed through by the United Auto Workers at the end of 2015, and this month by the sickouts organized by Detroit teachers independently of and in opposition to the teachers union. The growth of working class militancy and anti-capitalist sentiment, and the erosion of the grip of the right-wing corporatist unions, fills the corporate-financial elite and its political mouthpieces with dread.

It also impels them to prepare new and even more brutal attacks on workers’ social conditions and democratic rights. This must be answered by the development of the movement of the working class as a political struggle for the abolition of capitalism and establishment of socialism.

Major companies announce job cuts across Europe

Kumaran Ira

Amid growing global economic gloom, including a slowdown in China and falling oil and commodity prices, major companies throughout Europe are announcing mass layoffs and job cuts.

Last Wednesday, US multinational General Electric (GE) announced plans to cut 6,500 jobs in Europe over the next two years, including 1,700 jobs in Germany, 570 in the UK, 765 in France and 1,300 in Switzerland. According to comments from the head of GE’s power division last September, this is part of a plan to squeeze out $3 billion in cost savings over five years.

GE acquired French engineering company Alstom in a €9.7 billion deal in 2014, promising to create jobs. GE France spokesman Laurent Wormser said job cuts in France will hit mainly administrative jobs in the Paris area, in human resources, public relations and the legal department.

After reaching an agreement with the trade unions, French nuclear group Areva announced plans for 6,000 job cuts worldwide, including in Germany, the United States and 2,700 in France. The “competitiveness plan” deal would net Areva €1 billion in savings by 2017.

British Airways is eliminating 5,800 jobs under a plan to cut its debts, on top of 7,600 job cuts already announced earlier. These will largely hit major British airports, including 6,600 jobs cut at Heathrow airport and 3,000 at Gatwick.

France’s largely state-owned electricity firm EDF is cutting 4,000 jobs, or 6 percent of its workforce, through attrition over the next three years―twice the number announced previously. On a €72.8 billion turnover in 2014, EDF amassed a €3.7 net profit. This comes after last month's announcement of more job cuts in the French state sector, with French state-owned rail operator SNCF announcement of 1,400 job cuts in France as part of a plan to shed 10,000 jobs by 2020.

Air France plans to cuts 2,900 jobs between 2016 and 2017, including 1,000 jobs this year, despite making a significant operating profit over the last year. “Air France’s recovery is continuing and the current buoyant economic situation allows us to offer a return to growth as from 2017,” Air France CEO Frederic Gagey boasted.

Tata Steel will cut 1,050 jobs in Britain, hitting plants in Port Talbot, Llanwern, Trostre, Hartlepool and Corby, after announcing hundreds of job cuts last year as steel prices plunged. Ceramics group Royal Doulton will cut up to 1,000 jobs, mostly in Britain, amid the closure of its Baddeley Green factory.

While amassing huge profits from speculation and European Union (EU) bailouts, European banks have announced over 30,000 job cuts for 2016, after Europe’s top 30 banks shed over 80,000 jobs from 2008 to 2014. According to the Financial Times, two of Europe’s biggest banks, Barclays and BNP Paribas, plan to unveil job cuts to slash 10 to 20 percent of their investment banking costs.

The assault on the European working class comes amid escalating signs that the world economy is nearing another major collapse like the one triggered by the 2008 Wall Street crash. Since the New Year, stock markets worldwide have seen massive sell-offs amid plunging prospects of economic growth in China and collapsing prices for oil and basic commodities.

As a result of a slowdown in global trade, notably in China, Germany’s export-driven economy is highly vulnerable, while Southern European economies, undermined by EU austerity bailouts, remain plagued by mass unemployment and weak consumer demand.

In a January 17 article in the South China Morning Post, New View Economics CEO David Brown warned, “If Germany’s export powerhouse begins to falter, the rest of the euro zone will suffer as internal demand starts to trend lower. With up to 50 percent of euro zone exports traded internally within the single market, the consequences for growth and employment could be severe. Another quick recession should not be ruled out.”

Larry Fink, CEO of Blackrock, the world’s biggest private investment fund, told US financial channel CNBC that the crisis was set to worsen. “I actually believe there’s not enough blood in the streets,” he said, adding, “you’re going to start seeing more layoffs in the middle part of the first quarter, definitely the second quarter.”

The renewed economic collapse underscores the bankruptcy of capitalism. After the 2008 crisis, the European ruling class imposed harsh austerity policies, while plunging trillions of euros into bank bailouts, claiming this was necessary to prevent a complete collapse. Unenployment and social inequality skyrocketed as industries and living standards were undermined, while the super-rich saw a massive rise in their wealth.

Now, however, the economic devastation and financial criminality unleashed by the ruling class are provoking another global economic breakdown, with far-reaching consequences―not least of which is rising social opposition in the working class.

The financial press is nervously reporting social protest in China, which saw 2,774 worker protests last year, including 400 in December alone―a monthly record. Geoffrey Crothall of Hong Kong’s China Labour Bulletin told Bloomberg, “The increase in strikes and protests began last August around the time of the yuan devaluation and subsequent stock market crash and continued to build during the final quarter of the year, as the economy has showed little sign of improvement.”

Above all, the European ruling class is increasingly concerned about social protest at home. In one widely reported incident in October, after Air France announced thousands of jobs cuts, workers stormed an Air France works council meeting and assaulted two executives, ripping their shirts, amid widespread sympathy from workers across France and internationally. Air France took the unusual decision to sack and mount legal action against several of the workers.

These escalating class tensions are driving preparations in the European ruling class to try to use the military to crush strikes and social protests. In 2014, a study by the European Union’s Institute for Security Studies called for using military force to put down strikes, stating, “Within the framework of the joint foreign and security policy, the responsibilities of the police and armed forces are increasingly being merged, and the capacities to tackle social protest built up.”

Identifying “conflict between unequal socioeconomic classes in global society” as the main threat to EU “security,” it warned, “the percentage of the population who were poor and frustrated would continue to be very high, the tensions between this world and the world of the rich would continue to increase, with corresponding consequences. … we will have to protect ourselves more strongly.”

Less than two years later, these issues have taken an acute form. Draconian security policies are being imposed across Europe on the pretext of the “war on terror,” a far-right regime is emerging in Poland and France’s Socialist Party (PS) government has imposed a three-month state of emergency after the November 13 terror attacks in Paris.

This state of emergency bans demonstrations and the PS has cracked down on ecological protests that proceeded in defiance of this ban. It is also preparing a constitutional amendment to extend the state of emergency indefinitely, allowing police to detain and search anyone they view as a potential threat to public order.

The ruling class will seek to turn this climate of law-and-order hysteria against workers’ struggles. Last week, in an unprecedented act of political intimidation, French courts condemned eight former Goodyear tire workers to prison for briefly detaining executives during a strike, setting a precedent for broader crackdowns on social opposition against layoffs and austerity.

Iran Stands Top With Over 1084 Executions In 2015

Rahim Hamid

Iran records the highest ratio of executions worldwide relative to population

The photograph “Firing Squad in Iran” by Jahangir Razmi of Ettela’at

The position of Iranian officials regarding Saudi Arabia's execution of 47 prisoners, as well as Iran’s instigation via its Basiji forces of assault on the Saudi consulate and embassy, has raised many questions as to the real position of the Iranian government regarding executions. Particularly because ever since Hassan Rouhani’s assumption of the Iranian presidency under the banner of reforms and justice, Iran has registered a record number of extrajudicial executions.

As a matter of fact, Iran took advantage of its return to talks over its nuclear program in order to execute 1084 people in 2015, which turned out to be a record number of executions for Iran, higher than in 15 previous years. The Iranian president plays a major role in approving executions via his representatives in all the provinces of Iran. The Iranian judiciary system is the primary responsible institution regarding executions while Rouhani has never even condemned the executions in Iran which have been increasing during his presidency at an alarming rate.

Human rights organizations had hoped to include human rights issues, as well as the curbing of very high execution rates within the agenda of the (5+1) nuclear talks with Iran, but their efforts did not reach fruition. Ahmad Shaheed, the UN Special Rapporteur on the Situation of Human Rights in the Islamic Republic of Iran, in his recent report stated that situation concerning human rights in Iran has not witnessed tangible changes during the Rouhani presidency, while Iran refuses to ratify the human rights special charter.

In a related event the human rights organisations published a statement by the Sunni clerics of Iran warning of Iranian vengeful intentions to execute 27 Iranian Sunni activists mostly Kurds. The statement also warned of the recurrent prison executions and massacres within Iranian regime prisons against Iranian Sunnis.

The statement also called on all responsible for the affairs of Sunni Muslims in Iran to intervene in order to deter these executions. The statement also called on all Iranian Sunnis to take to the streets in protest of the executions and in support of the prisoners. Prior to these events the Iranian revolutionary court had sentenced seven Ahwazi activists to death while Human Rights Watch had demanded that Iran revoke its death sentences issued against 33 Sunnis mid-2014.

This while Iran's execution of Rihanna Jabari who was accused of killing an Iranian intelligence officer who was trying to rape her, was internationally condemned in 2014.In Ahwaz southwest region, Iran also executed Hadi Rashedi and Hashem Shabani due to their setting up of the “Hiwar” Ahwazi cultural organization. Also executed was Gholamreza Khosravi Savadjani for supporting Mujahidin Khalq.

Amnesty International had also warned in a statement issued last July of the increase of executions during the first six months of the year 2015 after the number of executions reached around 700 while Iranian official figures had only showed 246 a few months prior to the statement.

The current Iranian Minister of Justice Mostafa Pourmohammadi was party to and remains a defender of many of Iran’s executions between August and September 1988. Iranian human rights organizations state that authorities had executed five thousand political activists by firing squad, mostly members of Mujahidin Khalq and Kurds in 1988.

The list of those executed by Iran also included civil society activists and left-wing political party members. The current Iranian justice minister was a member of the 3 man executions committee in 1988. Iranian human rights organization say that precise numbers of those executed are unattainable due to Iranian governmental pressures on the families of the executed individuals, in addition to the fact that all those killed by Iranian Special Forces or during demonstrations are not accounted for in official Iranian records. Iranian human rights organizations records over a 5 year period show execution rates rising in Iran.

In 2014, Iranian human rights organizations records show, that Iran carried out in excess of 753 executions, while in the year 2013 Iran carried out 678 executions and 580 in the year 2012 and 684 in the year 2011. To this effect the Boroumand human rights institution which deals with Iranian human rights issues surveyed 18,068 executions in Iran from the inception of the revolutionary court to this day.

Rights activists say that execution sentences in Iran are based on forced confessions and have no judicial value.A European Union court had previously refused the rebuttal of Iran in the case against the president of the Iranian television and radio agency Mohammad Sarafraz as well as the President of Press TV Hamid Reza Emadi. Sarafraz and Emadi had a role to play in the airing of forced confessions made by Ahwazi Arab and Kurd political prisoners who were subsequently executed in suspicious circumstances.

The regime in Iran has long systematically targeted ethnic and religious minorities, especially those who have struggled for their own self-determination against this regime. This constitutes ethnic minorities such as Kurds and Baluch and AhwaziArabs who also appear to be Sunni Muslims. These minorities are frequently denied the right to express their cultural and ethnic identities and suffer large scale institutional discrimination and oppression at all levels of Iranian society.

Ever since the victory of the Iranian revolution over the Pahlavi regime executions have become the main source of repressive power for the rulers of Tehran. The special revolutionary court set up in 1979 by order of Khomeini appointed Shiite clerical judges to pass judgment without any reference to legal and judiciary procedures.

These bias revolutionary courts pass judgment on everything from executions to slander to corruption. The first Wali Faqih, which is a Persian Shiite religious office, used these revolutionary courts to execute all his rivals and political opponents. They were served with sentences with religious connotations such as “corruption on earth”, as well as, threatening national and international security and other such sentences.

Such ad hoc arbitrary judicial practice continued until 1994, when it was formalized. In the year 1994 a law was passed officially recognizing these revolutionary courts. With the passing of the law officially creating the revolutionary courts and inducting them into the Iranian state apparatus a list of their specialty was declared.

The 1994 law stipulates that the revolutionary courts specialize in crimes against national security and the crime of “corruption in land” and the crime of “slander against Khomeini” and the crime of “slander against Khamenei” the crime of “plotting against the regime” the crimes of militant activity, terrorism, and destruction of public institutions, espionage, drug trafficking, and economic corruption. In the year 1980 the newspaper entitled “Ettelaat” exposed the atrocity of executions the Iranian regime had carried out against its opposition.

And soon after the photo was published showing the Iranian execution squad, the photograph captured international attention winning the Pulitzer Prize for the best photograph in 1980. The photographer’s identity however was not disclosed till after 26 years had elapsed. In the interview with the Wall Street Journal who exposed the photographer’s identity Jahangir Razmi the man who claimed to have taken the photo in Iranian Kurdistan said he had taken the photo while he was an adjunct to the Iranian Shia clerical Judge Sadeq Khalkhali.

New research reveals effects of the Agricultural Revolution on human evolution.

Philip Guelpa

Humans are “artificial apes,” as one modern anthropologist put it, highlighting the role of technology in the development of human society. From the earliest beginnings of humanity, technological innovation and biological evolution have been dialectically linked in an intricate web of reciprocal determination. Selective pressures triggered by the development of tools and other aspects of culture have prompted biological changes, not only in obvious features such as the hand and the brain, but in many other human physical characteristics. At the same time, biological changes, such as the elaboration of brain architecture (permitting increasingly sophisticated abstract thought) and increased manual dexterity (e.g., the fully opposable thumb and other changes in wrist and hand bones) have facilitated and promoted cultural innovation. Several recently published scientific articles elucidate this complex process.

The development of agriculture (the domestication of select plants and animals) was the most profound cultural innovation that humans have accomplished since the initial development of tools. Evidence of domestication begins to appear in the archeological record following the end of the last Ice Age (the end of the Pleistocene, roughly 10,000-12,000 years ago), though the process may have begun earlier, at least in some areas.

Stages in the domestication of maize (corn), wild precursor at top, fully domesticated on bottom.

During the great majority of human existence, even if we only count the span of modern humans (dating back 200,000 years at most), people lived off naturally occurring resources, by hunting animals and gathering plant foods. This economic system is generally known as hunting and gathering or foraging. The independent development of agriculture more or less simultaneously (compared to the time frame of human existence) in a number of regions of the world, was a truly revolutionary change, and strongly suggests that some global process was at work. While much remains to be learned about the mechanisms that accomplished this change, the consequences were many and varied.

The most significant among these was the ability to produce a surplus of food beyond the immediate needs of daily subsistence. Some hunter-gatherer groups, such as those harvesting large annual fish runs on the northwest coast of North America, could amass and store food surpluses, but the quantities were limited by the natural abundance, timing, and geographic location of the resource, which could not be manipulated. By contrast, plant and animal husbandry, the care and controlled breeding of selected species, led to genetic changes that allowed greater yields and increased the geographic ranges across which the domesticated species could be grown, among other changes, thus greatly expanding the potential food resources available to humans.

These developments produced a revolution in human life. Most notably, the increase in abundance and reliability of food allowed human groups increased sedentism. Communities that had hitherto been relatively small in size and forced to make seasonal moves across the landscape to follow the shifting availability of naturally occurring resources could now stay in one place for long periods and grow in population size. In turn, this permitted the elaboration of the division of labor. Specialization further promoted technological innovation. And, while some limited social stratification existed among certain hunter-gatherers (like the native peoples of the northwest coast referenced above), the development of agriculture greatly amplified such tendencies and, ultimately, led to the formation of full-fledged class divisions.

These changes also had consequences for human biology. Alterations in diet leading to nutritional deficiencies, increases in tooth decay, and other problems; shifts in the patterns of labor; increased exposure to diseases (due to living in larger settlements); and the effects of living in new climates, among others, resulted in evolutionary changes, in reaction to, but also in some ways enhancing human’s ability to live under the new conditions brought about by agriculture.

Several studies published over the past year highlight increases in the understanding of this complex process.

Research published in the Proceedings of the National Academy of Sciences(Timothy M. Ryan and Colin N. Shaw, “Gracility of the modern Homo sapiens skeleton is the result of decreased biomechanical loading,” PNAS vol. 112 no. 2, 13 Jan 2015) examined the relative massiveness (gracility vs. robusticity) of the human skeleton before and after the advent of agriculture and contrasted these with a variety of living primates. The study compared bone density in the hip joints of specimens from 31 extant primate taxa with human remains from four separate archaeological populations including both hunter-gatherers and sedentary agriculturalists. All the human populations whose remains were examined were from Native American sites in eastern North America.

The study showed that hunter-gatherers, living about 7,000 years ago, had bone strength (the ability to withstand breakage) proportionally similar to that seen in the sample of modern primates. By contrast, agriculturalists, living 6,000 years later, had significantly lighter and weaker bones, more susceptible to breakage. Their bone mass was 20 percent less than that of their predecessors. These findings suggest that the decreased skeletal robusticity in recent humans is not the result of bipedality (walking on two limbs rather than four, which occurred millions of years ago), but rather has to do with the development of agriculture.

Early centers of domestication (of various plants and animals) and routes of dispersal.

The researchers reviewed data to examine whether changes in diet, like reduced calcium intake, between hunter-gatherers and agriculturalists may be the primary reason for differences in bone density. They conclude, however, that it is principally changes in the pattern of physical activity, from highly mobile foragers to relatively sedentary agriculturalists that explain these differences.

These findings do not imply that farmers work less than foragers. Indeed, anthropological research has shown that at least some foragers have more free time than agriculturalists. One distinction may be the necessity for frequent movement from one settlement to another by the former. This is supported by the results of another study, published in the same issue ofPNAS (Habiba Chirchir, et al., “Recent origin of low trabecular bone density in modern humans,” PNAS vol. 112 no. 2, 13 Jan 2015), which demonstrates that changes in bone density were more marked in the lower limbs than in the upper. It reviewed hominin fossils from a number of extinct species, stretching back to Australopithecus africanus , demonstrating that high bone densities were maintained throughout the span of human evolution until the development of agriculture. This raises the question of whether changes in anatomy aside from bone density may be identifiable as resulting from activities characteristic of an agricultural existence.

The results are important in understanding the evolutionary context of such diseases as osteoporosis and geriatric bone loss in contemporary populations.

Another study, this one published in the journal Nature (Iain Mathieson et al., “Genome-wide patterns of selection in 230 ancient Eurasians,” Nature, 16152, 23 November 2015), uses ancient DNA to trace the arrival of the first farmers from the Near East into Europe and examine a number of genetic changes experienced by the immigrants. The adaptations include changes in height, digestion, the immune system, and skin color.

DNA recovered from samples of ancient human bone provides a new source of data, supplementing archaeological artifacts, anatomical studies of human skeletons, and studies of DNA from contemporary human populations, to examine the introduction of agriculture into Europe. In particular, ancient DNA provides a more direct view of the evolutionary changes that humans underwent as they and their recently developed agricultural technology adapted to a new environment.

Modern humans moved into Europe from the Near East sometime between 40,000 and 50,000 years ago, absorbing and/or displacing the existing Neanderthal inhabitants. Both populations had hunting and gathering economies. Then, about 8,500 years ago, new immigrants, also from the Near East, began spreading into Europe. This time, however, they brought with them a revolutionary new economic system—agriculture. Another wave of agriculturalists moved into Europe from the Russian steppes, about 2,300 years ago.

The study reported in Nature compared ancient DNA from Europe, Turkey, and Russia with that from modern populations.

Foragers, who rely on naturally occurring foods, tend to have a varied diet in order to cover their nutritional needs. Agriculturalists, on the other hand, focus on a relatively narrow range of plant and/or animal species, perhaps supplemented by some wild food resources. This more limited diet may not meet all dietary requirements or may predominantly rely on foods that, while conducive to domestication, may not be easily digested. Dairy products and wheat are examples.

The consumption of milk and milk products is not natural for adult mammals. The capacity to digest lactose, a milk sugar, exists in infant mammals, but is usually lost once they are weaned. The domestication of a number of larger mammals, including sheep, goats, and cattle, presented the possibility of using their milk as a food source, converting grass, an abundant resource, but indigestible to humans, into a new food source. However, since hunter-gathers do not typically consume milk, the widespread lactose-intolerance in adult humans was a major problem for early farmers who sought to employ this food source.

One of the results of the Nature study indicates that a gene that allows lactose digestion to continue into adulthood appears to have taken thousands of years to become widespread in European populations, despite its apparent selective advantage, only beginning to appear about 4,000 years ago. This raises the question of whether technological adaptations, such as the production of aged cheese, which has less lactose, may have allowed for the use of milk products in earlier times.

Another gene was identified that enhances the ability to absorb and important amino acid, ergothioneine, which exists in low amounts in wheat and other domesticated grains. The spread of such a gene would represent a distinct advantage for diets that focused on grains as a food source. However, the effects of genes are often complex, and sometimes have unexpected consequences. This same gene appears to raise the risk of digestive disorders, such as irritable bowel syndrome. Evolutionary adaptations often represent a dynamic balance between positive and negative effects.

The researchers also found evidence regarding an evolutionary change in skin color. The predominance of lightly colored skin among Europeans appears to be a relatively recent phenomenon, possibly related to the need to produce more Vitamin D, which can occur in a reaction caused by sunlight absorbed in the skin. Lighter colored skin is thought to facilitate this process.

The study concludes that modern Europeans have significant genetic differences with early Neolithic populations of the region, despite having a largely common ancestry. The authors propose that these differences reflect evolutionary adaptations to the adoption of an agricultural lifestyle in a new environment as well as successive waves of immigration.

These findings are valuable in that they reinforce our understanding that human physical evolution is a complex and dynamic process of dialectical interaction with the natural and cultural environment. In a very real sense, the development of agriculture involved not only the domestication of a range of plants and animals by humans, but, as part of that process, the transformation of the humans themselves.

Wave of selling hits US markets

Nick Beams

US stocks markets tumbled Wednesday as oil prices continued to fall and voices in the finance industry, together with economic commentators, warned of the potential for a major crisis.

The sell-off was across the board, the Dow falling by 365 points, 2.21 percent, the S&P 500 by 2.50 percent and the Nasdaq down by 3.4 percent. The day opened with an uptick but large-volume selling soon set in, the prevailing sentiment being that it was necessary to get out without waiting to see what would happen during the rest of the day.

Commentators said the sell-off was not just about oil, which has been touching levels as low as $30 per barrel, but the fall in prices for all industrial raw materials induced by the slowdown in China.

The sharp downturn has come in the wake of a series of assessments by banking officials that the conditions for a new financial crisis are fast developing.

On Tuesday economists at the Royal Bank of Scotland issued an assessment that said investors faced a “cataclysmic year” in which stocks could fall by 20 percent and oil could go as low as $16 per barrel.

In a note to clients, the RBS said: “Sell everything except high quality bonds. This is about return of capital, not return on capital. In a crowded hall, exit doors are small.” It warned that the present situation recalled 2008 when the collapse of Lehman Brothers set off a global crisis. This time the trigger could be China.

The bank’s credit chief Andrew Roberts said China had set off a “major correction and it is going to snowball” with equities and credit becoming “very dangerous.” He warned that the London market was particularly vulnerable to a negative shock because of the large number of commodity companies in the UK. The prices of all industrial raw materials, not just oil, are moving sharply down, reaching lows not seen since the immediate aftermath of the financial crisis.

“All those people who are long [buyers of] oil and mining companies thinking that the dividends are safe are going to discover than they’re not at all safe,” Roberts said.

RBS’s prediction of a sharply lower oil price was matched by Morgan Stanley which said it could go to $20 per barrel. Standard Charter forecast an even bigger fall, to $10. “Given that no fundamental relationship is driving the oil market toward any equilibrium, prices are being moved almost entirely by financial flows caused by fluctuations in other asset prices, including the US dollar and equity markets. We think prices could fall as low as $10 per barrel.”

The Standard Chartered analysis points to the development of a vicious circle: a falling oil price sends down equity markets and then financial flow-on effects from the decline in stock prices lead to a further drop in the price of oil.

Following the RBS call to “sell everything,” the Guardian sought responses from a series of economists. While none went as far as the RBS, there was a distinct lack of confidence in their replies.

Erik Britton, director of Fathom Consulting, did not dispute that China would have a “hard landing.” He said it was headed for just 2 percent growth in gross domestic product, markedly less than the official government prediction of 6.5 percent for this year.

Jonathan Porter, the director of the National Institute for Economic and Social Research, said he was “worried” by current events “but not yet panicked.”

“But if the current concerns turn into a systematic meltdown on financial markets, then all bets are off,” he added.

Chris Williamson, the chief economist at the financial data provider Markit, said the worry was that the RBS warning could become a self-fulfilling prophecy and if a financial market rout led to a new recession, “policymakers are seriously lacking in tools to fight the new downturn.”

The RBS assessment was echoed by comments on Wednesday from Albert Edwards, strategist at the Societe Generale bank, who has long held the belief that equity markets are considerably over-valued. He said the West was about to be hit by a wave of deflation from emerging market economies and central banks were not aware of what was about to hit them.

He told an investment conference in London that developments in the global economy would “push the US back into recession. The financial crisis will reawaken. It will be every bit as bad as in 2008–09 and it will turn very ugly indeed.”

The US economy was in much worse shape than the Fed realised, with the US corporate sector being “crushed” by the appreciation in the value of the dollar. “We have seen massive credit expansion in the US. This is not for real economic activity; it is borrowing to finance share buybacks,” he said.

In an assessment of the significance of the fall in the markets, which in the US have experienced their worst new year opening in history, an article in the Financial Times on Monday pointed to longer-term trends. In the wake of the financial crisis, “aggressive easing” by the Fed and other central banks, coupled with a “mammoth spending binge” by China, had suppressed market volatility for an extended period and created a tide that lifted global assets prices.

“Now that liquidity is draining away and the bill for China’s spending—in the shape of overcapacity in some industries and high levels of indebtedness—is coming due,” the article noted.

“The worrying signal from the current turmoil is that the investor herd truly has become fearful and thinks the financial system is broken. Namely, that quantitative easing has merely papered over the cracks of global economic imbalances, borrowed hefty investment gains from the future and left taxpayers and company bondholders with a massive rise in outstanding debt.”

International Monetary Fund managing director Christine Lagarde also pointed to longer-term trends in a speech delivered in Paris on Tuesday. She said emerging market economies were facing a “new reality” in which their growth rates would be significantly slowed.

“Growth rates are down, and cyclical and structural forces have undermined the traditional growth paradigm,” she said.

That paradigm was based on boosting exports and attracting capital inflows. On current forecasts, she said emerging economies would move towards advanced economy incomes at less than two-thirds the pace predicted by the IMF a decade ago. “This is cause for concern,” she said.

The World Bank last week warned that these economies faced difficulties in 2016 after growing last year at their slowest pace since the financial crisis of 2008.

Lagarde said the shift by the Fed towards ending its easy monetary policies, together with the continuation of these policies by other central banks, had the potential to trigger exchange rate ructions.

“This volatility could be induced not only by the divergence in monetary policies in major advanced economies, but also by uncertainty about their overall prospects and policy action.”

In an indication of the deepening recessionary trends in the global economy, she noted that oil and metal prices were down by two-thirds from their peak and were likely “to stay low for a sustained period,” placing several developing economies “under severe stress.”

That stress is already in evidence with major economic contractions in Brazil and Russia, but it is not confined there. The economic outlook for two developed commodity-exporting countries, Australia and Canada, is also worsening.

Former US treasury secretary Lawrence Summers added his voice to those warning about the state of the global economy in a comment published in the Financial Times on Monday. He said that while markets do sometimes send out false alarms, economic and financial authorities should take notice because “the conventional wisdom never recognises gathering storms.”

“Because of China’s scale, its potential volatility and the limited room for conventional monetary manoeuvres, the global risk to domestic economic performance in the US, Europe and many emerging markets is as great as at any time I can remember,” he wrote.

It is impossible to predict exactly how the present turmoil will play out. But two certainties have been established.

Firstly, that the 2008 financial crisis was only the beginning of a breakdown of the global capitalist economy, for which the ruling elites have no economic solution. In fact, their actions have only created further wealth for the ultra-rich, increasing social inequality, while setting up the conditions for another financial meltdown.

And finally, that the renewed turbulence is going to produce even deeper attacks on the working class which, on top on those already being implemented, will bring an upsurge in social and political struggles.

New Zealand’s healthcare crisis

Tom Peters

A number of recent reports illustrate the growing crisis resulting from chronic underfunding of New Zealand’s public health system.

The National Party government repeatedly claims that it has made no cuts to health spending since the 2008 financial crisis. The reality is that public hospitals and other medical services throughout the country have been subject to severe austerity measures. Along with cuts to welfare and education, the underfunding of the health system is designed to transfer the burden of the economic crisis onto the backs of the working class, particularly the most vulnerable and in need of care.

Successive health budgets, while technically providing more money, have failed to fund the system to cope with population growth, ageing and inflation. Last year’s budget, according to the doctors’ union, the Association of Salaried Medical Specialists, had a shortfall of $260 million in operational funds and the figure for previous years is similar.

On January 7, the Press interviewed elderly people in the Canterbury region who have been denied operations such as knee and hip surgery. Jean Hodges, 77, who lives in constant pain due to arthritis and had asked for a knee replacement, said: “I got a letter to say I’m not even going to be assessed let alone treated. How urgent have you got to be, do you have to be crawling around on the floor?” Her husband Ted added: “The worst part is if you’ve got the money you can have it done tomorrow” in the private system.

Canterbury District Health Board chief executive David Meates told the newspaper that funding was a “constraint.” Following the 2010 and 2011 earthquakes that struck the region around the city of Christchurch, “Overwhelming demand for mental health has taken away any ability for us to increase spending on electives [surgeries] above what is required to meet the [government’s] health target,” he said.

Research published in November 2014 in the New Zealand Medical Journalfound that one in three people in need of surgery were not even placed on hospital waiting lists. Figures released in August 2015 showed 140,000 people had been denied a surgery assessment since 2010. Phil Bagshaw, who runs the Canterbury Charity Hospital, told Fairfax Media the number of assessments had increased by an average of 3.8 percent per year, but there needed to be a 6–8 percent increase to keep up with population growth, “let alone to make any impact on the backdated need that we’ve got.”

Children are also suffering due to a lack of services, combined with high levels of illnesses linked to poverty. Asthma and Respiratory Foundation medical director Kyle Perrin told Radio NZ on January 7 that the government’s failure to reduce rates of respiratory disease was “an absolute scandal,” particularly among Maori and Pacific Island children who are disproportionately affected.

Dr Innes Asher from Starship Children’s Hospital highlighted the link between poverty and hospitalisations for diseases such as asthma, bronchiolitis and bronchiectasis. She called for more “basic resources to the families, around income resources, housing adequacy, and access to healthcare,” adding that also “educational achievement needs to be improved in all these populations ... we should be quite ashamed that we have such marked disparities.”

Price rises mandated by the government have reduced access to essential medicines. A University of Otago study, published in December, involving 17,000 people found that 10 percent were at times unable to afford needed prescription drugs. Some poor patients were skipping meals and cutting their doses.

Every District Health Board is under government pressure to reduce spending. Doctors, nurses and other staff are increasingly overworked and have seen a drop in their standard of living. According to the Association of Salaried Medical Specialists, public health workers’ wages have not kept pace with inflation over the past five years: pay increased 6.4 percent while prices have gone up 9.4 percent. Last year, health workers had a 0.5 percent pay increase.

In November, over 3,000 Auckland health workers took part in several two-hour work stoppages to protest under-staffing and a proposed new roster. The region’s three District Health Boards are seeking to cut costs by imposing time-and-a-half weekend rates for new employees. Currently workers are paid double time for weekend work after midday Saturday.

The opposition Labour Party’s health spokesperson Annette King has criticised the government for what she says is a shortfall of $1.7 billion in health spending over the past five years. At the party’s conference in November, King declared that over the past 80 years “five Labour governments sought to build a public health system based on affordability, and accessibility for all New Zealanders. Five National governments have sought to corporatise, privatise, and dismantle it.”

In reality both parties are responsible for the present crisis. From 1981 to 1991, according to researcher Jane Kelsey’s book The New Zealand Experiment, waiting lists for surgery lengthened by 61 percent, while “[f]unding from public health sources as a proportion of total health spending [fell] from 88 percent in 1980 to 81.7 percent in 1991.” This period included the 1984–1990 Labour government of David Lange, which introduced patient fees for prescription medicines in 1985.

During the 1990s the National-led government further restructured the health system along business lines, with tight caps on spending. The 1999–2008 Labour government retained essentially the same system. According to a 2010 Statistics New Zealand report, Measuring government sector productivity in New Zealand: a feasibility study, the publicly-funded share of health care had dropped to 77 percent.

The Labour Party, notwithstanding King’s hypocritical and false statements, essentially agrees with the current government’s austerity agenda. Labour has repeatedly called for slashing the levies charged to workers and businesses to run the state-owned Accident Compensation Corporation, which supports people with debilitating injuries. In her November speech, King made no pledge to increase overall health funding and attacked the government for failing to reduce the “cost to ... the tax-payer.” She declared that Labour “will commit to addressing cost pressures in health”—i.e., further reduce spending.

“Paris-style” terror attacks in Jakarta

Thomas Gaist

At least five men attacked targets near downtown Jakarta’s Sarinah Mall on Thursday, setting off explosives near a Starbucks cafe and a Burger King restaurant, and firing handguns and rifles at police and bystanders amid some of the Indonesian capital’s elite hotels and business offices.

Despite media comparisons to the attacks in Paris last November, only seven people died in the attacks, five of them the gunmen themselves, and only two among their targets. The circumstances of the attack and the reasons for its apparent failure remain murky.

The attackers reportedly also threw grenades at a police checkpoint. Later Thursday, a series of explosions struck additional targets in Jakarta, including the Turkish and Pakistani embassies. The Indonesian military began moving units into the city center almost immediately in response to the incident.

According to spokesmen for Islamic State in Iraq and Syria (ISIS) and reports in Western media, the attack was planned and coordinated from Islamic State’s self-proclaimed capital at Raqqa, Syria, under the leadership of an Indonesian national and former Internet cafe owner, Bahrun Naim, who traveled to Syria to join the Islamist forces last year.

Naim allegedly directed a team of ISIS fighters that included foreign militants, including at least two ethnic Uighurs from China’s western province of Xinjiang.

Thursday saw an outpouring of warnings by Western media and governments, claiming that the attacks represent a qualitative escalation of terrorist activities in Southeast Asia. ISIS is seeking to make Indonesia the “Asian beachhead” for a new caliphate, Reuters editorialized in the middle of its report Thursday. Australian Attorney-General George Brandis similarly told media during a recent visit to Jakarta that ISIS is determined to secure an Indonesian “distant caliphate.”

Australia’s foreign minister Julie Bishop proclaimed that Canberra would extend “any support that Indonesia may need to respond to these attacks.”

In its In-Depth report Thursday night, titled “Terror returns to region as Islamists hit Jakarta,” The Australian proclaimed that the assault has “raised fears of a revived Islamic terrorism campaign in the world’s most populous Muslim nation, sponsored by Middle East-based terror outfit Islamic State.” Australian leaders responded immediately to the incident with offers of enhanced counterterrorism assistance.

The attacks are the latest in a series of high-profile terror attacks attributed to the ISIS network and its affiliates, including attacks in California, France, and Pakistan, each of which has been immediately seized upon to justify a further intensification of the interconnected agenda of war, police repression and dictatorship being pursued by every bourgeois ruling class worldwide.

In the name of preventing further “Paris-style” attacks, all of the major powers are moving to normalize the continuous occupation of their major urban centers by military and militarized-police detachments.

Singapore has announced stepped up security operations in response to the attacks, including joint intelligence operations coordinated with Jakarta, according to the Strai ts Times .

“Two months since Paris, and two days after Istanbul, now there is an attack in Jakarta. This menace is just going to grow,” said Singapore’s interior minister K. Shanmugam.

Indonesian police spokesman General Anton Charily also said the attacks were modeled on those in Paris, and claimed that ISIS-affiliated forces are surging in Indonesia and neighboring countries. Jakarta mobilized more than 100,000 security forces last month in response to an alleged “credible threat” of a terror attack that never materialized.

German security forces are preparing for “multiple, time-staggered” attacks against soft targets, modeled on the Paris attacks, according to a secret German government report leaked Thursday.

The US government, which did so much to arm, train and mobilize the extremist groups out of which ISIS emerged, has also signaled its determination to deepen its military and covert operations in Indonesia in the wake of the attacks. An official statement from the US National Security Council declared Thursday: “The United States is strongly committed to our strategic partnership with Indonesia and will stand by the Government of Indonesia as it works to bring those responsible for this barbaric terrorist attack to justice…”

US Secretary of State John Kerry also condemned the attack, telling media that the US and Indonesia “stand united in our efforts to eliminate those who choose terror.”

In a telling irony, Kerry delivered his remarks during a joint appearance with Saudi Foreign Minister Adel al-Jubeir, whose government has played a central role in US efforts to mobilize jihadist forces on behalf of its wars for regime change in Libya and Syria.

Despite the media presentation of the Jakarta killings as representing a sudden outbreak of terrorism in the region, groups with links to US and Saudi-backed terror networks have carried out attacks across Southeast Asia for more than a decade, providing a useful cat’s paw on behalf of Washington’s drive to dominate the Asia-Pacific.

The Islamist militia Jemaah Islamiyah (JI), which calls for a pan-Asian Islamic State and is linked into the broader Al Qaeda financial network, itself a splitoff from covert networks run by US, Saudi and Pakistani intelligence, has repeatedly carried out attacks, including the 2002 Bali bombings and 2009 Jakarta terror attacks against a number of luxury hotels.

Like those attacks, the latest atrocity in Jakarta will be seized on to promote the US agenda of militarism and security crackdowns throughout the region.

From the official beginning of the Bush administration’s “Global War on Terror,” Southeast Asia was considered a crucial war front by the American political and military elites.

A 2001 RAND Corporation study, “The Role of Southeast Asia in US Strategy Toward China,” called for the US to increase its “military engagements with Southeast Asian states” and develop a “more robust and diversified network of access arrangements,” along with “strengthened military ties with the Philippines, Singapore, Thailand, Malaysia, Indonesia and Vietnam.”

The expanding US regional power network should focus on “both deterring and preparing for a possible Chinese challenge,” RAND wrote.

With ever greater recklessness, the US ruling class is seeking to project power onto crucial pressure points around Eurasia.

Washington is increasingly compelled to revive the “hub and spoke” system of alliances between Washington and the regional powers that, after World War II, served as “the primary vehicle for the US and allied governments to prosecute counterinsurgency campaigns against communist guerrilla forces,”Asia Matters for America noted in its 2014 study, “An Emergent US Security Strategy in Southeast Asia.”

Southeast Asia is already witnessing “the emergence of an incipient coalition in support of US security strategy,” Asia Matters wrote.

Rather than the supposedly novel threat of terrorism in the region, the real lesson of Thursday’s bloodletting is that Indonesia, which straddles the main transit route between the Indian and Pacific Oceans at the Straights of Malacca, will be a central target of this agenda.

Cuts lead to staffing crisis in UK education

Tom Pearce

Teaching recruitment is at “crisis” level as a new term begins across the UK.

A YouGov survey suggested that more than half of teachers (53 percent) are considering giving up their careers in the next two years. The main reasons given were “volume of workload” (61 percent) and “seeking a better work/life balance” (57 percent). Some 50,000 teachers quit in 2015 alone--more than those who joined the profession.

The crisis has resulted in head teachers struggling to recruit for certain posts. As a consequence, schools are spending ever more money on “finders fees” to recruitment agencies, significantly damaging school budgets. The National Association of Head Teachers said a survey of members shows some schools are having to pay £10,000 to fill a single vacancy.

The Labour Party has weighed in with its own study. Shadow Education Secretary Lucy Powell said, “Half of all schools had unfilled positions at the start of 2015 academic year and are being forced to turn to unqualified staff, temporary supply teachers, non-specialists and larger class sizes to try to plug the gaps.”

Labour’s criticism of the Conservative government for this situation masks its own record of attacking education, including support for pension changes and pay restructuring that have added to the pressures teachers are under by expecting them to deliver teaching with larger classes and less money for resources.

The Association of School & College Leaders (ASCL), the Association of Teachers and Lecturers (ATL), the National Association of Head Teachers (NAHT ), the National Union of Teachers (NUT), Undeb Cenedlaethol Athrawon Cymru (UCAC) and Voice have submitted a joint document to the School Teachers’ Review Body (STRB). It warns that the recruitment crisis has been caused by the government undermining teaching standards due to a reduction in funding in real terms and the continued erosion of teachers’ pay. The joint statement opposes the government plan to continue to limit teachers’ annual pay increases to an average of 1 percent for a further four years, on top of five years of imposed pay restraint.

The statement deals with the crisis of teacher recruitment, cuts to school budgets and the pay of teachers. But its empty rhetoric is framed in opposition to teachers waging any struggle against these attacks. Deborah Lawson is the general secretary of Voice, formerly the Professional Association of Teachers, which boasts its belief in “the power of negotiation to protect the interests of our members--who never resort to industrial action.” She declared, “Many years ago, strike action was, perhaps, the only way to get your voice heard, but we have a different society now. We are far more sophisticated and complex and, actually, I don’t think there is room for strikes anymore, they harm too many people.”

This theme is continued by the ATL. During talks of a “super-union” created through a merger with the NUT in 2015, Peter Pendle, the ATL’s deputy general secretary said, “With one teachers’ union, we’d be so powerful we would rarely need to strike.”

Other solutions to the crisis are peddled by Russell Hobby, general secretary of the National Association of Head Teachers (NAHT), who said in the Guardian in May 2015, “We are going to be in tight financial straits, so let’s get schools together in groups. If we don’t do something, the politicians will close schools and join them together. Let’s find our own way to build federations or trusts that you choose voluntarily because others share your values and vision… If someone is short of a maths teacher, then one of you will give them a good maths teacher.”

This solution goes hand in hand with government policy. Teachers in Hobby’s view are to be treated as commodities that can be shipped from one school to another without a care for working conditions or the quality of education received by students.

A contributing factor to teacher unrest which the unions are intent on suppressing is performance related pay (PRP), which has made the impact of the pay freeze even worse. The NUT has surveyed its members to ascertain how PRP is being implemented in schools. It found that one in five eligible teachers did not progress, with 44 percent stating that the pay policy is unfair. Of those teachers who did not progress, 91 percent said they were never told they were not meeting the standards needed to obtain a pay increase. The useless advice from the NUT is to appeal. The teachers’ unions oversaw the implementation of the PRP system without a whimper. At the time it was brought in the NUT declared that it was unfair and it was committed to supporting its members in ensuring fixed scales.

Kevin Courtney, deputy general secretary of the NUT and a leading figure in the Socialist Teachers Alliance, backed by the Socialist Workers Party (SWP), said in January 2015, “The NUT will be seeking further information from employers on rates of progression and patterns among particular groups. We are calling on the government to declare a moratorium on this PRP system while all concerns are properly and thoroughly addressed.”

A year has passed, with no change to this damaging policy, only further empty rhetoric.

The last token strike action taken by the teaching unions, in March 2014, protested about PRP, pensions and excessive workload. Since then the unions have failed to defend workers and have stood by as all these changes have been implemented by the Conservative government with the support of the Labour Party.

The National Foundation for Educational Research (NFER) has studied the trends in teacher recruitment. Significantly, teachers are not leaving for higher-paying jobs, at least not in the short term. Data indicates that on average when teachers move they experience a 10 percent fall in wages.

Its proposed solution “to reduce the need for more teachers would be to allow class sizes to rise.” Fleshing out its reactionary proposal, the NFER asserts:

“Research suggests there is a weak relationship between class size and attainment, at least for small changes in class size. Slightly larger class sizes may not be detrimental for pupils and would almost certainly be cost effective. Such a move would be politically difficult, but not impossible if the public understanding of the issue was raised. There would be practical challenges given classroom size constraints, but as new classrooms are having to be built to meet rising pupil numbers, some schools could begin to make this shift. This approach would need to be accompanied by careful monitoring of the impact on teachers.”

This exposes the harsh reality of what is being planned for the teaching profession.