Spanish Constitutional Court rules country’s second lockdown was illegal

Alice Summers

Last week, Spain’s Constitutional Court (CC) ruled that the second state of alarm imposed in Spain from October 2020 to May this year was unconstitutional. The challenge to the state of alarm was brought by the far-right Vox party.

The CC judges ruled by six votes to four that the second state of alarm, which extended a measure first implemented in March last year, represented an unjustifiable undermining of the functions of parliament, and handed undue powers to autonomous regional governments.

Vox’s legal case is intended as a signal that the Spanish ruling elite will tolerate no further necessary health restrictions, no matter how serious the evolution of the pandemic may be. It is a juridical expression of the homicidal policies of mass infection pursued by capitalist governments across Europe and the world, whatever their nominal political coloration.

The ruling, drafted by right-wing judge Antonio Narváez, declared that the state of alarm deprived the Spanish Congress of its decision-making powers and oversight by allowing regional authorities to adopt pre-approved coronavirus measures in their own territories, without the direct say-so of the national parliament and government.

“The extension [of the state of alarm] was authorised when the measures restricting rights included in the [Government’s] request were not going to be applied directly by the Government, but would be subject to decisions made by the presidents of the Autonomous Communities,” the ruling states. Therefore, “authorisation was given without [the Government] knowing what measures were going to be implemented to combat the pandemic.”

This is the Constitutional Court’s third ruling in favour of Vox. It issued a July judgement that the first state of alarm in Spain (imposed from March to June 2020) was unconstitutional, as the restrictions implemented under this measure allegedly exceeded its legal remit. In October, it also ruled that a temporary suspension of Spain’s Congress in the early days of the pandemic in spring 2020 violated the rights of congresspeople.

The ruling Socialist Party (PSOE) and the “left-populist” Podemos parties have bowed to the Court’s reactionary decision, making a few merely rhetorical statements of opposition. “The Government respects, the Government complies with, but the government does not share the decision of the Constitutional Court,” PSOE Justice Minister Pilar Llop declared. The Executive “respectfully disagrees” with the ruling, she continued.

This is only the latest in a series of craven capitulations by the PSOE-Podemos government to Vox, which increasingly calls the shots within the ruling elite. The supposedly “left” government has adopted Vox’s policies on issues ranging from its demands to end all coronavirus restrictions to its brutal agitation against impoverished migrants fleeing to Spain. Its response to the Constitutional Court judgement illustrates its indifference to the dangers posed by COVID-19 and the far right.

The Court ruling comes as the PSOE-Podemos government continues to play down the impact of the pandemic, instead trying to force the Spanish population to “live with the virus.” Last week, Fernando Simón, director of the Centre for the Coordination of Health Alerts and Emergencies (CCAES), and one of the government’s key advisors during the pandemic, continued dismissing the “small increase” in COVID-19 cases across the country as unimportant.

Attempting to conceal his demands for the abandonment of mitigation measures behind calls for caution, Simón told a press conference in Santander, “we must be prudent, we must take it step by step. We can continue relaxing measures, probably much quicker than what we had thought a few months ago, but we must evaluate the impact of each relaxation we make [emphasis added].”

Simón predicted that it would soon be possible to impose far less restrictive measures. The infection rates “make us think that it is the appropriate time to establish possible new measures which will allow us to return to a much more normal life compared to what we had previously.”

Now that most older people in Spain are vaccinated, Simón continued, “we can accept a certain number of cases in younger people, where there is a much smaller health impact.”

Last Tuesday, at a conference organized by the UGT trade union, Simón again insisted, without any opposition from the union bureaucrats in front of him, that young people are not seriously affected by the virus. Justifying why under-12-year-olds don’t need to be vaccinates, he said that “serious doubts” exists if they need to be vaccinated because children “are affected very little by the virus,” saying that secondary effects may be worse.

This criminal statement goes beyond mere complacency but speaks to the active policy pursued by the ruling class of trying to reach immunity by mass infection of children and youth.

Simón’s statements epitomize the drive of the entire Spanish ruling establishment to “normalise” COVID-19 and relax health restrictions that are critical to limiting the spread of the virus. He has attacked lockdowns imposed at the beginning of the pandemic as an overreaction, comparing them to “shooting a fly with a bazooka.”

Almost a year ago, last November, as infections reached their highest numbers since the spring, Simón appeared in a press conference for the Ministry of Health to insist that no lockdown would be implemented, even though it could save tens of thousands of lives.

“What we have right now in Spain is not a [stay-at-home] lock-down, and this will probably not be necessary,” he stated. “If we carry out a real and full confinement and nobody leaves their house for any reason, within around 15 days we would have this under control, perhaps within a month. But this is impossible. There are people who need to work, to buy things, who need to leave… Total confinement is impossible.”

Since then, at least 52,000 more people have died of COVID-19, bringing Spain’s total fatalities to nearly 88,000 by official counts, and over 100,000 according to excess death calculations. This massive death toll is the responsibility of the PSOE-Podemos government’s criminal refusal to pursue a scientific strategy of eliminating the coronavirus.

Daily COVID-19 infections in Spain currently number around 2,000, while approximately 30 people die of the virus each day. Infections are rising again, however, as incidence rates and hospital and Intensive Care Unit (ICUs) admissions slowly begin to climb, as well.

The incidence rate has grown from its low point of 40 per 100,000 people in mid-October to just under 50 this week. A rate of 50 per 100,000 is the threshold after which the government considers Spain to be at “medium risk” from the virus. The number of new weekly hospitalisations due to the virus is slowly growing again, reaching 703 last week.

Meanwhile, the so-called “Delta Plus” sublineage of the Delta variant of the virus, AY.4.2 —first detected in the UK several months ago—has also begun to spread in Spain. Four confirmed cases of “Delta Plus” have been detected in the Madrid region, with a further 35 possible cases under observation across the country, as of last week. The AY.4.2 sublineage is estimated to be 10 to 15 percent more transmissible than the original Delta strain.

Argentine judge indicts Spanish Franco-era minister on murder charges

Santiago Guillen & Alejandro López

Argentine judge María Servini de Cubría has indicted Rodolfo Martín Villa, 87, a former minister in Spain’s 1939-1978 fascist Francoite regime, on four counts of homicide. The judge ordered Villa, who lives in Madrid, to be detained. So far, the Socialist Party (PSOE)-Podemos government has refused to honor the warrant.

Servini, sitting in Buenos Aires, based her probe on the principle of universal jurisdiction, which allows an investigator to prosecute individuals who are not its citizens or on its territory, but have committed serious crimes, including crimes against humanity, war crimes, genocide and torture.

This is the second attempt to prosecute Franco-era criminals since Baltasar Garzón opened an investigation in 2008 of Francisco Franco’s military coup of July 17, 1936, and the disappearances of 114,266 people. Garzón ultimately indicted Franco, 44 former generals and ministers, and 10 members of the Falange party. Over this investigation, Garzón was debarred from the Spanish courts in 2012.

Garzón was accused of perverting justice and breaking the 1977 Amnesty Law passed during the Transition from fascism to parliamentary democracy after Franco’s death in 1975 and supported by the Stalinist Spanish Communist Party (PCE). It aimed to prevent any reckoning with fascist crimes committed during the Spanish Civil War (1936-1939), Franco’s rule (1939-1975) and the post-Franco interim regime that lasted until 1978. Since then, not a single Francoite has been brought to justice for crimes that include an estimated 300,000 political opponents murdered, 500,000 imprisoned and 500,000 forced into exile.

Hundreds of Spaniards have tried to get around the Amnesty Law by turning to Argentine courts.

The case began in April 2010 after Argentine resident Darío Rivas, son of an elected mayor of a Galician town in northwest Spain who was kidnapped and executed under Franco, turned to international law under which crimes against humanity have no jurisdictional boundaries. The trial now includes 120 individual plaintiffs and 62 human rights organisations.

Servini indicted Villa with a lengthy 968-page detention order, as part of her investigation over crimes against humanity committed by the Franco regime.

Three of the homicides occurred in 1976 during the so-called Vitoria Massacre, when Spanish police fired live ammunition and tear gas at an assembly of 4,000 striking workers taking place in the church in the Basque city of Vitoria. Five workers died, and hundreds were injured.

The other homicide took place in Pamplona during the San Fermín festivities in 1978, when the police fired on a protest by youth demanding freedom for political prisoners. In the protests after the police intervention, 150 were injured, including 11 by gunshot, and 23-year-old Germán Rodríguez, a member of the Revolutionary Communist League, was killed when he was shot in the forehead.

Since 1962, Martín Villa had held different positions in the fascist institutions that operated during the Franco regime. In 1975, he was appointed Minister of Trade Union Relations in the first government after Franco’s death, a role he held at the time of the Vitoria massacre. In June 1976, he was appointed Interior Minister. He was thus in control of police in 1978 during the Pamplona events.

Villa became known as “the baton of the Transition,” due to his repeated resort to violent police crackdowns on protests. In 1977 alone, the police violently dispersed 788 demonstrations in Spain, that is, 76 percent of all protests. To block future investigations, under his tenure Villa also oversaw the destruction of tens of thousands of documents and files on police repression under Franco.

Afterwards, Villa enjoyed a lucrative career. In 1997, he was appointed president of ENDESA, Spain’s main electricity company, which he helped privatise. In 2013, he became a member of the Royal Academy of Moral and Political Sciences. In 2006, he was appointed chairman of Sogecable, a Spanish pay-TV provider. Villa is a also member of the advisory committee of FRIDE, a Madrid-based pro-EU think tank.

The case of Martín Villa is not an exception. The vast majority of Franco’s political, police and military commanders continued to hold top positions in the post-Franco order, both in the public and private sector, abetted and aided by successive Socialist Party (PSOE) governments after the Transition.

Servini’s indictment of Martín Villa is a political exposure of the Transition. The man promoted by the Spanish ruling class as helping effect the reconciliation between Spaniards after the Civil War and open a new era of peace and capitalist democracy under the aegis of the European Union (EU) and NATO, is exposed as a ruthless, unrepentant henchman of the Francoite regime.

In the indictment, the judge writes: “The entire repressive structure set up by the Franco regime continued to function under the direction now of the new political leadership in charge of the Transition process,” adding that this structure’s members were assured “impunity.” This allowed security forces to repress “demonstrations, meetings, etc., in the way they did, with the systematic use of firearms and without caring about killing or continuing to kill.”

Similarly, it adds that “Rodolfo Martín Villa knew and promoted the public order policy of that government that he was part of, and that it was the same one implemented during the Franco government.”

Martín Villa has reacted to his indictment by telling conservative Spanish newspaper ABC, “I am calm. I will appeal.”

Villa’s reaction is unsurprising. He enjoys near-unanimous support in Spain’s post-Franco political establishment. All living former prime ministers since the Franco era—Felipe González (PSOE), José María Aznar (PP), Mariano Rajoy (PP) and José Luis Rodríguez Zapatero (PSOE)—wrote letters to Servini last September defending Villa’s track record. Joining them were former leaders of the union bureaucracy, Cándido Méndez and Nicolás Redondo for the UGT and Antonio Gutiérrez and José María Fidalgo for CCOO, as well as the current EU High Representative for foreign policy and former PSOE minister Josep Borrell, among others.

Speaking to Servini in September 2020, Martín Villa cited Spanish Stalinist leader Santiago Carrillo, the general secretary of the PCE during the 1970s, who died in 2012, to exonerate him in the Pamplona events. Soon after the Pamplona events, Carrillo cynically declared that “in all his life he had not seen an action so transparent, so clean, and with so much immediate decision-making capacity.”

The fact that the PSOE and the union bureaucracy are coming to the defence of a Francoite criminal like Villa shows that only a political movement within the working class can bring the torturers to justice and to unveil the full extent of Franco’s crimes. This will not come from appeals to the Argentine judiciary, nor from parties like Podemos and the trade unions. They are direct heirs of those who defended the reactionary 1977 Law of Amnesty and are oriented to the PSOE, the main party of bourgeois rule since Franco’s death.

Over the past two years, the PSOE-Podemos government has not lifted a finger to facilitate these trials or investigations of fascist crimes. This makes a mockery of Podemos’ cynical tweet stating: “Martín Villa’s indictment for the crimes of the Franco regime is a great step against impunity, but it is a shame that Argentine justice is doing what should have been done long ago in Spain.”

Peru’s Castillo wins confidence vote after ordering army into the streets

Bill Van Auken

President Pedro Castillo’s government survived a confidence vote in the Peruvian Congress Thursday after carrying out wholesale changes to his cabinet and making ever-more direct appeals to Peru’s ruling elite and its right-wing representatives.

The ascension of Castillo, a former rural teachers union leader, to the presidency in July was hailed by the pseudo-left as a major victory for the Peruvian masses and even a revival of the so-called “Pink Tide”—the coming to power of left-nationalist and populist bourgeois governments in a number of South American countries during the commodities boom of the early 2000s.

Since taking office amid a torrent of populist demagogy, Castillo’s government has lurched convulsively to the right.

Just two days before the Congressional vote of confidence, Castillo issued an executive order deploying Peruvian Army troops on the streets of the capital, Lima, and in the neighboring port city of Callao, which together have 11 million inhabitants, a third of Peru’s population.

While carried out under the pretext of assisting the Peruvian police in combatting rising crime, the military deployment came in the context of a rising tide of social protest and class struggle, which has been driven by deepening poverty and social inequality under conditions of the uncontrolled spread of COVID-19. With over 200,000 recorded COVID deaths, Peru has the highest per capita fatality rate in the world.

There have also been a number of strikes by impoverished peasant communities against the seizure of land and destruction of the environment by major transnational mining companies. After a road blockade forced the closure of the country’s largest copper mine Antamina—co-owned by Glencore and BHP Billiton—and rattled financial markets, the government sent a group of ministers to negotiate a truce based on promises of “dialogue.”

At another mining protest in Ayacucho, the Peruvian National Police was dispatched, using rubber bullets, tear gas and clubs to disperse community members. Meanwhile bus, truck and other transport drivers have threatened a strike on November 8 against rising fuel prices.

In another bow to the Peruvian right, Castillo sacked yet another of his cabinet members on the very eve of the confidence vote. Interior Minister Luis Barranzuela, whose removal was demanded by a number of right-wing legislators as a condition for a vote in the government’s favor, was relieved of his post on the grounds of charges that he hosted a Halloween party on October 31, after the government issued a directive telling the population not to hold such gatherings. Barranzuela claimed, implausibly, that he had convened an official meeting.

Barranzuela was identified with Perú Libre, which nominated Castillo for president, even though he had joined it only in 2020. He had served as the attorney for Vladimir Cerrón, the leader of Perú Libre and a former regional governor of Junín, who was sentenced to prison on corruption charges.

Cerrón and Perú Libre combine populist demagogy and pseudo-Marxist rhetoric with regionalist politics and appeals to resentments toward the domination of Lima. Its corruption is of a piece with all of the bourgeois parties in Peru, which has seen four of its living ex-presidents sentenced to prison and a fifth commit suicide rather than surrender to the police.

On the morning of the congressional vote, Castillo swore in Barranzuela’s replacement, Avelino Guillén, a senior prosecutor with a 40-year career in the Peruvian government. He carried out the investigation and indictment of former Peruvian dictator Alberto Fujimori for his role in the Barrios Altos and La Cantuta massacres carried out by the Colina military death squad in 1991 and 1992. Fujimori is now serving a 25-year sentence in connection with these crimes.

While Guillén’s appointment was positively received by the bulk of the Congress, it won no support from the extreme right-wing Fuerza Popular, which is led by Fujimori’s daughter Keiko Fujimori, who narrowly lost the presidential election to Castillo.

This was only the latest in a long series of cabinet changes. They began less than a month into Castillo’s presidency when his foreign minister, Hector Bejar, 85, was hounded from office by the right-wing media, which dredged up an incontrovertible statement he had made earlier that the military had carried out acts of terror against the civilian population under Fujimori. The Peruvian Navy denounced the statement as an “affront,” and Castillo’s then-prime minister Guido Bellido, issued a statement praising the armed forces for “the efforts they made in the fight against terrorism and for national pacification.”

Bellido was himself relieved of his position after making demagogic threats to nationalize the Camisea gas company, which is jointly owned by Hunt Oil in the US and Argentina’s Pluspetrol. Castillo himself indulged in similar rhetoric.

However, his finance minister, Pedro Francke quickly “clarified” these statements, declaring that they meant ensuring that the company operated in “the service of Peruvians” and, “in no way does it mean taking state control over a private activity.”

This echoed pledges made by Castillo and Francke during their trip to the United States in September, when they assured private investors, the US government, the IMF and the World Bank of their commitment to defending the profit interests of transnational investors and Peruvian capital.

Taking Bellido’s place was Mirtha Vasquez, a so-called moderate leftist and attorney who had proved herself as a safe pair of hands, taking the position of interim president of Congress in the 2020 crisis sparked by the parliamentary coup that toppled President Martín Vizcarra.

Other ministers sacked to appease the Peruvian right included Labor Minister Iber Maraví, who was charged by the right-wing press with association with the Maoist guerrilla movement Sendero Luminoso, a charge he denied and for which there exists no evidence.

Among others removed was the minister of mining Iván Merino, who despite working to assure the mining corporations that they were in no danger of nationalizations was replaced by Eduardo González, a former general manager of a technology company.

One position where there was no change is that of chairman of the Central Reserve Bank of Peru. Castillo has kept in place the right-wing economist Julio Velarde, who has held the position since 2006. A champion of transnational and Peruvian capitalist interests, upon being sworn in for a new term on Tuesday, Velarde warned that Peru’s mining protests were “affecting the perception of the country in terms of future investments,” and echoed calls by the mining companies for the government to “re-establish order.”

The right-wing trajectory of the Castillo government has split Perú Libre. In the confidence vote, the government won 68 votes, four more than the necessary majority of 64, against 56 against. The congressional delegation of Perú Libre split down the middle, with 19 voting in favor of the government and 16 voting against.

Among those voting against was ex-chief minister Guido Bellido, who stated that Castillo was not a socialist or on the left, but just a “basic trade unionist.”

The pseudo-left, including Jacobin magazine, which is affiliated with the Democratic Socialists of America (DSA), have assiduously promoted illusions in Castillo and the prospect of a bourgeois government headed by a union leader carrying out a socialist transformation of Peru. This reactionary perspective serves to subordinate the Peruvian working class to the capitalist state and pave the way to bloody defeats.

Castillo’s calling the army into the streets of Lima follows only by weeks the invocation of a “state of exception” and the deployment of the military across Ecuador, also in the name of fighting crime. That the supposedly “left” union leader and the right-wing banker and ex-Coca Cola executive, Ecuadorian President Guillermo Lasso, arrive at the same decision to call out the troops is a measure of the disintegration of any basis for democratic forms of rule in a Latin America riven by intense class divisions and social inequality that have been sharply intensified by the COVID-19 pandemic.

Steep rise in coronavirus cases in Germany portends a second deadly winter of the pandemic

Marianne Arens

Daily COVID-19 infection numbers are rising explosively in Germany. On November 4, the Robert Koch Institute (RKI) reported 33,949 new cases, the highest daily increase since the pandemic began twenty months ago. Nearly a quarter of a million people (247,800) currently have coronavirus in Germany, and more than 96,000 have died since March 2020.

The seven-day incidence rate of 154.9 cases per 100,000 population has doubled in two and a half weeks, since October 19 (75.1). The seven-day incidence rate is steadily rising, particularly among children and adolescents sitting in crowded schools without vaccine protection. Among 5–9-year-old children, the national average is 194 and among 10–14-year-olds it is 237. In nine districts, incidences in the 10–19-year-old age group have even exceeded 500. These are all figures that do not reflect reality exactly, with a lack of testing meaning that a significant number of cases are unreported.

All graphs show the fourth wave as a steep exponential curve that already exceeds the zenith of the third wave. Despite vaccinations, levels are higher than this time last year. There can be no doubt: a massive spike in deaths looms in the winter. 'We are worse off compared to last year,' explained Frankfurt virologist Sandra Ciesek with great concern.

More than a thousand people (1,075) have died from COVID-19 in the last ten days, when an average of nearly 20,000 people have been newly infected each day.

The situation in hospitals and intensive care units is currently as bad or worse than a year ago. As of November 3, 2021, there were 2,226 COVID-19 cases in intensive care; 90 had been added since the previous day. A year ago, there were also about 2,000 ICU patients with coronavirus, that number tripled in a few weeks. Deaths then shot up in a short time, from 10,500 at the beginning of November 2020 to five times that number, 56,000 at the end of January 2021.

The ominous trend confirms the central finding of the October 24 webinar, 'How to End the Pandemic,' hosted by the World Socialist Web Site and the International Workers Alliance of Rank-and-File Committees with leading scientists from multiple countries. As they demonstrated, 'living with the virus' cannot be an option. The coronavirus pandemic, which has brought death and suffering to hundreds of millions worldwide, must be eliminated through a globally-coordinated elimination strategy.

An important finding is that with the emergence of new strains of the virus, vaccination alone is not enough to push the curve back down. To end the pandemic, all non-essential workplaces must be closed and measures such as testing, tracing, and isolating all cases must be undertaken systematically. At the same time, it is necessary to compensate working people for lost wages and provide social support to families.

Clearly, this requires not only medical steps, but also political and social steps. For this, it is necessary to mobilize the working class globally. Capitalist politicians have long since proven they are neither willing nor able to implement such a programme.

The new “traffic light” federal coalition of the Social Democratic Party (SPD), Liberal Democrats (FDP) and Greens, for example, wants to tighten up the herd immunity policy even more. It has just announced that it will phase out the 'national epidemic emergency' on November 24. Already, free tests have been abolished, and even mandatory mask-wearing has been lifted in schools in several states. This is despite the fact that the highly contagious Delta variant now accounts for 99 percent of infections. Undoubtedly, this policy will lead to many more thousands of coronavirus deaths. With their eyes wide open, politicians are walking into a social catastrophe.

There are already mass coronavirus outbreaks and waves of deaths in more and more nursing homes. This week, at a nursing home in Norderstedt, Schleswig-Holstein, north of Hamburg, 68 elderly residents and 22 staff members fell ill with COVID-19. Six residents have died so far.

Similarly, a coronavirus outbreak at a retirement home in Schorfheide, Brandenburg, has led to the deaths of 14 residents; 44 residents and 15 staff members at the facility have contracted COVID-19. In Munich, Haus St. Josef has also just reported an outbreak: there, 39 residents and eleven staff members have tested positive for coronavirus.

However, the outbreak has long since spread beyond the older generation, and hospitals and intensive care units are increasingly seeing younger patients as well. Contrary to propaganda, children and adolescents are also acutely threatened.

A new document from the RKI points this out. Even asymptomatic children can contract the serious secondary disease MIS-C (multisystem inflammatory syndrome in children) in the course of a COVID-19 infection, which can lead to death, the document shows. The RKI warns, 'With increasing SARS-CoV-2 spreading among children, there could be a high number of infections in children and adolescents during the winter. The more children are infected, the higher the number of severe outcomes the disease would then have.'

The RKI also points to the consequences of Long COVID, which have not yet been fully explored. In its letter this week, the institute, supported by a 'large cohort study,' cautions 'that not only adults but also children and adolescents are affected by long-term consequences after SARS-CoV-2 infection.'

The outgoing government politicians have deliberately brought about this atrocious situation, and the protagonists of a new 'traffic light' coalition are preparing to enforce the 'profits before lives' policy even more ruthlessly than before.

In mid-October, it became known through broadcaster ARD’s political magazine, programme Kontraste, that millions of vaccine doses, which the German government promised to donate to poorer countries as part of its Covax initiative, were about to be destroyed. The reason: the private manufacturers of the vaccines, which can make the difference between the life and death of millions of people, pharmaceutical companies Moderna and Biontech/Pfizer, had demanded excessive compensation payments for doing so, because they would then be able to sell fewer vaccines to poor countries.

The compensation payments they are demanding are to be added to the contractually agreed purchase price, which will be paid from tax revenues. As a result, instead of 100 million doses of vaccine, as originally promised, the German government has so far actually delivered only 19 million doses.

Another truly macabre example, involving the Fresenius healthcare group, illustrates the prevailing capitalist logic particularly vividly. It concerns the business with dialysis patients who regularly have to use medical equipment in hospital for blood purification. A subsidiary of this corporation called Fresenius Medical Care (FMC) manufactures such dialysis machines. Because more and more dialysis patients are dying of coronavirus, FMC now plans to lay off 5,000 of its 125,000 employees worldwide.

FMC CEO Rice Powell, who made the announcement on November 2 when presenting the company's quarterly financial statements, calculated that about 11,500 more dialysis patients than expected had died worldwide in the 12 months to September 30, 2021. Cynically, he spoke of a 'much stronger COVID-19 effect on our business than we had forecast at the beginning of the year.'

To drive profits back up, Fresenius is now responding with mass layoffs. The plans were very well received on the stock market, and the DAX-listed shares of FMC and Fresenius posted high gains. While intensive care units are overflowing and the death toll is rising, the champagne corks are popping again on the stock markets.

Inflation sets off gyrations in global bond markets

Nick Beams

It has been a turbulent week for bond markets. The inherent fragilities of the global financial system are being exposed by the rise of inflation, the continuing and deepening COVID-19 pandemic and a resurgence of working-class struggles.

The week began with the Reserve Bank of Australia (RBA) being forced to abandon its targeting of the yield on an April 2024 bond at 0.1 percent. This was because of a sell-off that saw the yield rise to 0.8 percent, meaning the central bank would have had to buy up all the available bonds in order to maintain its objective.

Faced with a rush for the exits, which sent the bond price down and its yield up, the RBA decided to scrap the policy it had put in place in response to the financial crisis that accompanied the start of the pandemic in March 2020.

The RBA decision attracted world-wide attention because it pointed to developments in global markets. Investors, who had acted on assurances by central banks that inflation is “transitory,” were hit with losses, sometimes significant, because short-term bond prices fell in response to fears price rises were becoming entrenched.

Attention then shifted on Wednesday to the US Federal Reserve. As expected, it announced the tapering of its asset purchases by $15 billion per month until next June when they will cease altogether.

Financial markets, which had priced in tapering, responded positively to the Fed’s decision—with Wall Street continuing its surge to new record highs. This was largely because of Fed chair Jerome Powell’s insistence that the central bank’s base interest rate of virtually zero was not going to be lifted in the immediate future.

Powell did not sound any alarms as one of his central objectives is to ensure the stability and continued rise of the stock market. But his remarks indicated that the Fed, like other central banks, is being buffeted by forces it does not fully comprehend much less know how to control.

For example, Powell said that while economic activity had expanded at the rate of 6.5 percent in the first half of the year, in the third quarter “real GDP growth slowed notably from this rapid pace.” This was because the Delta variant had held back the recovery and activity had been restricted by supply constraints and bottlenecks in the motor vehicle industry.

However, he had no answer to meet this problem, noting that “our tools cannot ease our supply constraints” before offering a profession of faith.

“Like most forecasters, we continue to believe that our dynamic economy will adjust to the supply and demand imbalances, and that as it does, inflation will decline to levels much closer to our 2 percent longer-run goal,” he said.

But as to how long it might take for inflation to come down from its present headline rate of 5 percent Powell had no idea. It is “very difficult to predict the persistence of supply constraints or their effects on inflation,” he said.

While there was broad support for the Fed’s latest decision, there are concerns it is responding too slowly to the rise in prices and it may have to make a rapid adjustment.

Paul Jackson, head of asset research allocation at Invesco, told the Financial Times: “If the Fed ends up behind the curve, then they could end up raising rates very quickly and in big amounts.”

Such a move would have a major impact on Wall Street because its rise to record highs has been built on a mountain of debt that has only been sustained by ultra-low interest rates.

On Thursday the Bank of England (BoE) was in the spotlight as its Monetary Policy Committee (MPC) handed down its latest decisions.

Bank of England, Threadneedle Street, London, England [Credit: Flickr, Hongchou's Photography]

In the period leading up to the MPC meeting, financial markets in Britain and around the world had largely priced in that there would be an increase in the central bank base interest rate from its present record low of 0.1 percent. As a result, the BoE would be the first major central bank to lift rates since the start of the pandemic.

This assessment was based on remarks by its governor Andrew Bailey last month that the central bank “will have to act” if inflation proved to be stubbornly high.

UK inflation has shown no sign of slowing with predictions that it will rise from its present level of 3.1 percent to as much as 5 percent in coming months. So it appeared all but certain the base rate would be lifted.

It was not to be. The BoE’s MPC voted seven to two to maintain its present rate.

This set off a series of swings in UK and global markets in the opposite direction to that earlier in the week.

The yield on one-year government bonds almost halved within hours, falling by 0.22 percentage points in the biggest move since 2009 in the wake of the global financial crisis.

These falls were reflected in other markets with yields on the US two-year Treasury bonds falling. The yield on German one-year government bonds, already in negative territory, dropped by 0.08 percentage points, the largest one-day fall since the crisis of March 2020.

While these bond market movements are small in absolute terms, they can have major effects because they impact on large amounts of money—hundreds of billions of dollars—that surge through financial markets every day. This takes place as investors make bets, often involving complex operations, on which way interest rates and other variables, such as currencies, will move.

At his press conference following the decision, Bailey pushed back against assertions by journalists that he had sent a message to markets, insisting “none of us” said rates would go up in November.

“It was a very close call,” he said. “We are in a situation where the calls are close, they’re quite hard.”

He was also questioned on an assertion in his prepared remarks that “monetary policy can do little to affect inflation in the near term.”

The present inflation, he said, was not being caused by excess demand in the economy pushing up against supply as in the past. Rather it was the result of a “supply side shock” and monetary policy could not increase the supply of computer chips or gas.

Asked why central banks did not see this shock resulting from the pandemic, he provided no answer.

It recalled the famous “Queen’s question” in 2008 when the British monarch asked a group of learned economists why none of them had seen the financial crisis coming.

Bailey warned that if monetary policy was used in the wrong context to try to combat inflation this could make things worse for households.

However, his real concern, like that of his counterparts, is not the millions of workers struggling to make ends meet as the prices of necessities escalates. His worry is the stability of financial markets where a rise in rates could precipitate a collapse in the debt-based house of cards.

The overriding concern as regards inflation is its effect on the development of class struggle. This was made clear at the conclusion of his prepared remarks when he said the “short-term evolution of the labour market will be crucial in determining the scale and pace of the response” by the BoE to inflation.

If inflation becomes what central banks term “anchored,” that is if workers begin to press for higher wages, then the BoE will move to lift rates, inducing a contraction in the economy, to suppress those demands.

There is a broader conclusion to be drawn from a viewing of the press conference. The BoE governor, together with other central bank chiefs, find themselves in an entirely new situation. They have no real idea about the trend of global growth, the direction of inflation, when and how global supply chains will operate, and what is developing in the labour market.

For the past three decades and more, they have been able to operate under conditions where inflation has been kept at low levels. Cheaper goods have resulted from the globalisation of production and the suppression of the struggles of the working class which has led to a persistent downward trend in real wages.

Now that situation has changed dramatically, triggered by the pandemic. Global production has been thrown into disarray and the working class is moving back into struggle, not only against the effects of the pandemic but in response to the impact of the policies leading up to it.

Whatever confusion the central bankers may have, they are guided by a sure class instinct, honed by the experience of centuries of rule: that the future course of the profit system over which they preside depends on the defeat of the growing movement of the working class by whatever means necessary, including authoritarian forms of rule.

For the working class, the crucial issue is the fight for an internationalist and socialist perspective aimed directly at the conquest of political power.

This week’s gyrations in financial markets, together with the deepening of the murderous policies of the ruling class on the pandemic, indicate this confrontation is coming increasingly to the fore.

New study in the BMJ provides damning testimony of the impact the pandemic has had on life expectancy

Benjamin Mateus

The actual toll of the COVID pandemic has been assessed in several recent studies and analyses, which have highlighted in detail both the deadliness of the virus and its extensive reach across the globe. Despite these repeated confirmations, high-income nations and the financial oligarchs continue to insist that the cure in the form of elimination of the disease globally remains far worse than the disease, which allows the virus a free rein to upend livelihoods and kill millions so that financial institutions are unfettered by the demands placed on their craving for ever more enrichment.

A nurse holds a phone while a patient affected with COVID-19 speaks with his family from the intensive care unit [Credit: AP/Daniel Cole]

On November 3, 2021, BMJ (formerly the British Medical Journal) published a probing investigation on “the effects of COVID-19 pandemic on life expectancy and premature mortality in 2020” across 37 high-income and upper-middle-income nations. The study is a continuation of previous work done by the same group on estimating excess deaths during the pandemic in 2020. The findings corroborate previous reports and stand as testimony to the malign policies of the ruling elites which can only be construed as deliberate and intentional social murder.

By including in their analysis countries that employed more comprehensive pandemic-fighting measures, the BMJ study provides a stark contrast to the policies followed by the US and Europe. It provides irrefutable evidence against the ignorant mantra of Thomas Friedman of the New York Times, and other apologists for mass death, who put forward the slogan, “The cure can’t be worse than the disease.” From the standpoint of science and public health, the cure has always been better than the devastation wrought by allowing the virus to rip through communities across the globe.

Rather than using excess deaths, the BMJ study employed data on all-cause mortality, which stands as a more reliable measure of the pandemic’s impact, allowing comparisons between countries. The authors explained, “Although using excess deaths has been considered the ideal method for measuring the impact of the pandemic, this metric does not take into account age at death. When people die at an older age, they lose fewer years of remaining life. Analysis of life expectancy and years of life lost (YLL) provides a more nuanced estimation of premature mortality at a population level.”

Figure 1: Changes in life expectancy at birth associated with COVID-19 pandemic in 2020.

Life expectancy is a measure of how long a population can expect to survive if the factors that contribute to deaths for various ages remain constant for the remainder of their lives. Years of life lost utilizes age distributions for these deaths, giving greater weight to deaths at younger ages. It is calculated using the number of deaths observed rather than “hypothetical life tables.” The study notes, “Life expectancy depends solely on mortality, and YLL depends on both the mortality and the age structure of the population.”

The study found that in the 15 years before 2020, all 37 countries studied showed a rising trend in life expectancy at birth for both men and women. However, for 2020, the first year of the pandemic, this trend dropped precipitously. The reduction in life expectancy was most significant in Russia, with 2.32 years, followed by the United States with almost two years. Bulgaria, Lithuania, and Poland were next in descending order.

However, the authors found that life expectancy was not impacted for South Korea, Norway, and Denmark, where strict mitigation measures remained the norm. In Taiwan and New Zealand, life expectancy actually climbed, highlighting the beneficial impact that measures eliminating the virus from their borders had on maintaining access to healthcare and population-based interventions that protected citizens from the hazards posed by day-to-day life.

Regarding Years of Life Lost (YLL) in 2020, only Taiwan and New Zealand had a decline (an improvement) in this category. Iceland, South Korea, Denmark, and Norway had no demonstrable change in the expected years of life lost, corroborating the life expectancy data.

However, in the remaining 31 countries, the 222 million years of life were lost in 2020 (130 million in men and 92.6 million in women), were 28.1 million higher than expected, showing the impact of the pandemic. Men accounted for 17.3 million of these excess years of life lost, while women lost 10.8 million.

When age categories were evaluated in the 31 worst-hit countries, excess YLL increased with age in both genders, showing the disproportionate impact of COVID-19 on older populations. However, Finland, Iceland, New Zealand, South Korea, and Taiwan saw excess YLL for the elderly decline, meaning the intensive mitigation measures employed against the virus benefited the elderly the most.

The findings on life expectancy were especially remarkable for younger populations in the US, especially in men. When the US was compared to Lithuania, Poland, and Spain, “between the observed and expected age-specific death rates by age intervals,” those under the age of 65 in the US and Lithuania were “responsible for a high proportion of the total losses in life expectancy.” By comparison, in Poland and Spain, older age groups drove the loss of life expectancy.

Figure 2: Age group components of difference between observed and expected life expectancy in 2020 among the US and three comparator countries

This is damning testimony demonstrating that the working class in the US, in particular male workers, have been impacted disproportionately. However, the impact of COVID on younger people has been much more severe in 2021, meaning the figures cited in the study will be far more horrific in the pandemic’s second year. In 2020, more than 70,000 people between 25 and 65 died due to COVID. In 2021, over 111,500 in this age bracket have been killed, despite access to COVID vaccines.

The authors found “[that] with a similar burden of excess deaths per 100 000 in Spain and the US (161 and 160, respectively), excess YLL (per 100 000) was substantially higher in the US (3400) than in Spain (1900), indicating higher numbers of deaths at younger ages in the US compared with Spain. Indeed, the ratio of YLL rate in people aged under 65 and 65 years or older at death was 0.29 in the US, whereas it was only 0.07 in Spain. Despite a lower excess death rate than Lithuania, Poland, and Spain, the reduction in life expectancy in the US was higher than in these three countries.”

The death toll in the second year of the pandemic has outpaced the first year of the pandemic. Approximately 2.35 million died in the first 12 months since the World Health Organization declared a Public Health Emergency of International Concern on January 30, 2020. With three months left to the second anniversary of this declaration, another 2.64 million have already died as the world enters the sixth wave of the pandemic.

Indeed, with the introduction of the COVID vaccines, there has been a push by governments of high-income countries to completely force open every economic avenue that remains closed regardless of its devastating impact on the working people of the planet upon whose back the financial oligarchs have enriched themselves.

This critical study published in theBMJ by these courageous researchers should be applauded and studied. It carefully demonstrates that the virus can be eliminated and lives can be protected. The policies that have promoted “let the bodies pile high”, “let it rip”, and “learn to live with the virus”, are fraudulent and criminal. In fact, their findings provide irrefutable evidence to indict these ruling criminals responsible for the massive loss of life and livelihood.

However, these same principled scientists who have been decrying the dangers posed by the ruling elite’s criminal policies must engage with the working class, the only progressive force for whom the issue of eliminating the pandemic is most urgent. It is the turn to the working class that will generate the necessary response to their analysis.

Combatting Global Warming: The Solution to China’s Demographic “Crisis”

Dean Baker

There have been numerous news articles in recent years telling us that China faces a demographic crisis. The basic story is that the market reforms put in place in the late 1970s, together with country’s one-child policy, led to many fewer children being born in the last four decades. As a result, the number of current workers entering retirement, exceeds the size of the cohorts entering the workforce, leading to a stagnant or declining workforce. This is supposed to be a crisis.

I used the word “supposed” because it is not in any way obvious that a declining workforce is any sort of crisis. We see shifts of population all the time, which can lead many cities or regions to have a decline in their population or workforce, even if the country as whole does not. That doesn’t necessarily mean a crisis for the areas losing population, unless of course the population decline is due to the loss of a major employer.

A drop in the growth rate of the workforce, or an actual decline, will likely mean slower GDP growth, but so what? A country’s standard of living is determined by its income per capita (along with many other factors), not its absolute level of GDP. India’s GDP is almost eight times Denmark’s, but Denmark is the far richer country. The reason is that India has more than two hundred times as many people.

If a country’s growth rate is slower because the growth rate of its workforce slows, that is hardly a disaster. People can still be seeing improvements in their standard of living, and in the case of China, these improvements would still be quite rapid even if its annual growth rate slowed by 2-3 percentage points from its recent pace of more than 6.0 percent annually.

There is a common argument that countries with aging populations, like China, will suffer because each worker will have to support a larger number of retirees. It is easy to show that this view is silly. Even a modest rate of productivity growth will swamp the impact of a declining ratio of workers to retirees. With output per worker increasing, both workers and retirees can enjoy rising living standards even as the ratio of workers to retirees fall.

That should not sound surprising. The ratio of workers to retirees has been falling in the United States for the last two decades, yet we have seen substantial increases in living standards, even if the wealthy have gotten the bulk of these gains. The idea that China’s declining ratio of workers to retirees poses a supply side problem, where it cannot produce enough goods and services to support its population is absurd on its face.

The Problem of Secular Stagnation

It turns out that the major problem of an aging population is not too much demand, but rather too little. Older people tend to spend less money than people in their working years. Also, when a country’s workforce is not growing, companies need to spent less money on investment. Employers need more capital when they hire more workers, this could mean desks and computers, or it could be machinery in a factory, or a truck on the road. The more workers companies hire, the more capital they need, which means more investment.

But if the workforce stagnates, then companies need to spend less on investment. They will still modernize their equipment and replace worn out items, but they don’t have to invest to accommodate the needs of a larger workforce.

With both consumption and investment falling relative to GDP, economies will face the problem of inadequate demand. In principle, the economy is capable of producing more goods and services than households and businesses are prepared to buy. This is the situation that we faced in the Great Depression, and again, on a smaller scale, in the Great Recession. It means mass unemployment. In the Great Depression unemployment peaked at 25 percent of the workforce.

It is ironic that the economists warning about the implications of an aging population not only got the magnitude of the problem wrong, they even got the direction wrong. With our aging population, we don’t have to worry about too much demand, we have to worry about too little. This is yet another example of the old saying that economists are not very good at economics.

 

Spending Money: The Cure for Secular Stagnation

We discovered the cure for secular stagnation in the 1930s, the government has to spend money to make up for the failure to spend by the private sector. President Roosevelt embraced this strategy to a limited extent with his New Deal programs. These put millions of people back to work, while modernizing our housing and infrastructure.

Of course, the government spending program that really got the economy back to full employment was World War II. With the country united behind the need to defeat Germany and Japan, budget deficits ceased being an issue. We saw record low unemployment rates in the war years as tens of million of workers were either serving in the military or producing the food, clothes, and weapons needed by the military.

The war provided the political support for massive spending (and budget deficits), but it was the spending that got the economy to full employment. Money spent on civilian uses will create jobs every bit as well as money spent on the military.

This brings us back to China’s demographic crisis and global warming. As Paul Krugman wrote in a recent column, China is going to have to make a massive adjustment in its economy in the years ahead. It has been spending an incredible 43 percent of its GDP on capital formation, either investment goods purchased by businesses, or residential housing. By comparison, the figure for Japan is 24 percent and for the United States less than 22 percent.

This massive spending on capital formation made sense when China was seeing rapid growth in its labor force and also a huge shift in its population from rural to urban. But this process is now reaching an end point, both with a decline in its working age population and the rural to urban shift largely completed.

Currently, over 62 percent of China’s population lives in urban areas. The figure for most wealthy countries is close to 80 percent, but the pace of shift for China will be much slower going forward than in the past. In 1980, less than 20 percent of its population was urban.

This means that China’s big problem going forward is to find a way to spend a very large amount of money. For simplicity, let’s say that their needed spending on capital formation falls to 23 percent of GDP, roughly splitting the difference between Japan and the United States. This would mean that China’s government has to figure out what to do with 20 percent of its GDP.

This is an incredible amount of money. In 2021, 20 percent of China’s GDP would be $5.4 trillion. According to the I.M.F.’s projections, the annual amount would be almost $8 trillion in 2026. Over the next decade, it would be more than $80 trillion, that’s more than 20 times the original $3.5 trillion Build Back Better plan. In short, it’s real money.

It is also important to note that China is already heavily invested in clean energy. China is by far the world leader in solar energy, with more than twice as much as the United States, the second largest user of solar power. It is also by far the world leader in wind energy, again with more than twice as much installed wind power as the United States.  And, China also has more than twice as many electric cars on the road as any other country.

This means that China has a large domestic clean energy sector which can stand to gain by further spending on reducing greenhouse gas emissions. Of course, no one expects that the country will spend anything like $80 trillion over the next decade reducing greenhouse gas emissions, but it certainly can commit considerable resource to this effort. In addition to the benefits to the environment, this spending will help China’s economy grow and keep its workforce employed.

This is one of the opportunities created by China’s supposed demographic crisis. The issue is that because of the aging of the population it faces the prospect of a huge shortfall of demand in the economy. This is a good problem for a country to have, if its leadership is adept in managing its resources.

There are many grounds on which to criticize China’s government. It severely represses minority populations, most extremely the Uighurs, many of whom have been imprisoned for months or even years. It also does not respect freedom of speech, freedom of the press, or basic labor rights. But there is no doubt that it has done an outstanding job in managing its economy over the last four decades in a way that has led to an enormous improvement in living standards for the overwhelming majority of its population.

If China wants a path through its “demographic crisis,” or, in other words, coping with secular stagnation, devoting substantial resources towards greening its economy would be a great path forward. In the process, they can also give a big hand to the rest of the world, both by sharing the technology and showing how it can be done, as well as reducing the damage they are doing to the planet themselves.

Ukraine’s complicated path to NATO membership

Slavisha Batko Milacic

Amid numerous discussions about the future of Ukraine – a country that has been unable to form a single nation in 30 years of independence, and is torn apart by interethnic, linguistic and economic contradictions, Europe should ask itself just what Ukraine really means to it. And the answer will be the same – a buffer zone, because this clearly reflects Ukraine’s geopolitical role in relations with NATO and the EU. The Alliance needs Ukraine as a buffer zone, and even not all of it at that.

During the early 1990s, when Ukraine was not yet torn apart by civil war, NATO was seriously eyeing this former Soviet republic. As for Russian president Boris Yeltsin, he was not ruling out joining the Alliance himself. In 1994, NATO signed a framework agreement with Kiev as part of the Partnership for Peace initiative.

Five years later, Ukraine demonstrated its “pro-Atlantic” slant by supporting NATO’s operation in the Balkans. On June 12, 1999, Kiev even closed the country’s airspace for Russian planes flying to Pristina for several hours. That move caused an angry backlash from many Ukrainians, who consider themselves a part of the Orthodox Slavic world. And still, the first small step towards Euro-Atlantic integration seemed to have been made.

There is no place for failed states in the Alliance

Twenty-seven years on, Ukraine is a fragmented country, with a crumbling economy, a corrupt government and a vague foreign policy. Its biggest foreign policy breakthrough was gaining a “visa-free” status, which gives Ukrainian citizens a chance to look for illegal jobs in prosperous European countries without the need to apply for entry visas. That said, all the assistance Ukraine got from the United States and Europe did not help it to bring back Crimea or gain victory over its own citizens in Donbass. Moreover, Brussels and Washington have strong doubts about the country’s defense capability. The fact is that of all the post-Soviet countries NATO was smart enough to accept only the former Soviet Baltic republics, which spent 2 percent of their GDP on defense – a great deal of money considering their small budgets (for comparison, Belgium spends 0.9 percent and Hungary -1.27 percent).

With Ukraine’s official defense outlays of at least 5.93 percent of GDP (2021) the country should be a mighty military power not afraid of anyone and a welcome new member for NATO. However, military supplies have long become a source of easy money for the country’s political elites, and the change of presidential teams did not change this a tiny bit. Ukraine keeps getting all imaginable foreign assistance, which is written off, disappears on the front line of a smoldering war and is resold to third countries. Meanwhile, despite its wealth of unresolved problems, Kiev keeps knocking on NATO’s door, apparently hoping that Brussels will help sort them out.

Ukraine’s main role is that of a buffer zone

In fact, the only role Ukraine can hope for is that of a buffer zone. In the European geopolitical model, the conflict with Ukraine is forcing Russia to put on hold its aggressive intensions in Europe, and having snatched yet another chunk of Ukrainian territory, the Russians will take some time to digest it. Kiev is certainly not happy about such a scenario and in June, President Volodymyr Zelenskyy appealed to NATO with a demand to immediately accept the country into the alliance. He emphasized that NATO membership will be the only way to end the conflict in Donbass. NATO Secretary General Jens Stoltenberg promised that someday Ukraine will become a member of the alliance, but this will not happen overnight. Naturally enough, Ukraine’s pro-presidential media ignored that latter part of Stoltenberg’s message and started describing in glowing terms the joys of an early entry into the Alliance. And this despite Russia’s firm opposition to NATO’s expansion, which means that Ukraine’s entry into the Alliance will automatically entail active measures by Russia to ensure its own security.

Realizing full well that neither NATO nor the EU are eager to take in Ukraine any time soon, President Zelensky and his administration started portraying Ukraine as a “Shield of Europe”. Well, this propaganda ploy, intended for foreign and domestic consumption, might work for some time for some EU countries, which remain jittery about the imaginary picture of Putin’s tanks racing down Europe’s highways. And again, the Ukrainian right-wingers will have a new reason to pride themselves on their role as “defenders of Europeans” against the “Russian hordes”. But why on earth should Putin want to seize Europe? Who would he be selling gas to? What kind of a threat is Moscow posing to Brussels then?

Gas blackmail? But this is “just business,” and there are other gas suppliers out there. Meanwhile, the “Shield” is costing Europe a great deal and the price tag keeps going up. Kiev demands to preserve gas transit for itself, wants gas supplies at preferential prices and new sanctions against Moscow. At the same time, Ukrainian politicians insult their neighbors, make no attempts whatsoever to rein in the domestic ultra-right, who pose a threat to the whole of Europe, and are mired in corruption. So whether NATO and the Russian Federation really need a buffer zone is a big question. What we certainly do not need, however, is a “Shield” that we pay for from our own pockets…