Brexit Bites Back

Thomas Klikauer

Photograph Source: Ungry Young Man – CC BY 2.0

In recent months, British public opinion on the issue of Brexit has shifted. Many people in Britain are becoming more critical of Brexit. With the help of plenty of dark money, Murdoch’s press, and the gross misjudgement of a conservative prime minister, the UK held a referendum on Brexit (the British exit from the European Union) in 2016. 51.9% voted for Brexit. The policy of leaving the EU was confirmed in the UK’s 2019 election. And, on January 31, 2020, Britain officially left the EU.

With that, Britain was free from the illusionary shackles of the supposedly un-democratic EU. Self-determination and democracy were put back into the hands of the British people. Strangely, the UK’s current prime minister – Rishi Sunak – was not democratically elected by the British people, nor was his predecessor Liz Truss – both conservatives.

Well, at least Brexit stopped the migration of undocumented individuals by boat across the English Channel, right? Not quite. In fact, the opposite happened after Brexit. In 2022, up to November, more than 40,000 people had crossed the Channel in small boats. This was the highest number since these figures began to be collected in 2018. In 2021, the total was 28,526 people, while in 2020 it was 8,404.

Worse, the UK economy is going downhill. This, it seems, also fuels growing anti-Brexit attitudes. Recently, and this came for the first time, British media and even some conservative politicians began saying rather openly that Brexit might have been a mistake.

To get out of their self-engineered troubles, some British politicians are now suggesting the adoption of the so-called Swiss Model, a new paradigm on how to structure the UK’s relationship with the EU.

According to the Swiss model, the UK would have to do whatever the EU tells it to do – without any right to participate in EU decision-making governing the EU’s €15tr economy. Like Switzerland, the UK is not a member of EU. It is outside the EU’s 450 million people. This occurred because Brexit has shown that, when you put up trade barriers to your most powerful neighbour, you will get hit hard. All this came just as the nude Cambridge economist predicted in 2019. She was spot on!

Almost two years after Brexit, the economic development of the UK – in comparison with that of other G7 countries and the OECD – shows that the consequences of Brexit can no longer be ignored. The country is falling behind the EU and the OECD economically. Yet, the Britain’s conservative press has created the false idea that the Tories are good for the economy. What is worse for the conservatives is that their traditional excuses – the Covid-19 pandemic and the Ukraine – don’t seem to wash any longer with the British public.

The silence on the B-word – Brexit – seems to have been broken. Today, the B-word can be said again. The economy in the United Kingdom is so bad that Brexit can no longer be denied as a major cause for the current misery.

A few years ago, Boris Johnson was the UK right-wing populists’ man. He was the Tory prime minister who ensured there was a hard Brexit. After rafts of scandals, he is no longer in power. His immediate successor – Liz Truss – failed bitterly. After that came the current prime minister, Rishi Sunak, together with chancellor of the exchequer Jeremy Hunt. Both politicians are more pragmatic at the UK’s Brexit rudder.

Only a few weeks ago, Britain’s leading and very conservative newspaper, The Times, carried an article headlined Britain mulls Swiss-style ties with Brussels. In it, The Times writes that the British government is considering how it could bring Britain closer to the EU.

In contrast to hard-Brexit UK, Switzerland has direct access to the EU’s internal market. Unlike the UK, it also pays the EU, complies with EU regulations, and accepts the free movement of people. In a referendum in September 2020, the Swiss confirmed their model.

Today, some suggest that a frictionless trade with the EU is only considered realistic if the UK, similar to Switzerland, has access to the EU single market. However, Britain wants access without the free movement of people,  despite a severe labour shortage in the UK.

Even though the EU had already rejected this in 2019, London is still hoping for an EU-UK compromise in the long term. Increasingly, the devastating impact of Brexit can no longer be hushed up by the British government.

Meanwhile, Sunak and Hunt need to get British fiscal policy and the British economy back on track. Their hard Brexit makes this very difficult, since the UK is no longer part of the EU’s single market and customs union, and exports have been declining.

Interestingly, UK government ministers now want to remove as many trade barriers with the EU as possible. The plan is to do this over the next decade. Yet, all this should – in the hallucinations of the British Tory party – be done without the UK becoming a member of the single market.

Meanwhile, Sunak has postponed the UK’s planned membership in the Trans-Pacific Free Trade Area. He did this in order not to block the UK from a closer trade relationship with the EU. In other words, the EU is already shaping British trade policy, even though the UK is no longer part of the EU. Perhaps BoJo’s grand idea of a post-Brexit Global Britain has been quietly retired, like his infamous Brexit bus.

With the dying hallucination of Global Britain, there is no longer any talk of a trade agreement with the United States, which would also complicate EU-UK relations. However, the UK’s rapprochement with the EU remains politically hyper-explosive inside Great Britain. Improved EU-UK relations are unimaginable for the Brexit hardliners – particularly after they propagated their phantasm of Brexit-wonderland for half a decade.

When it comes to the inevitable – Britain needs the EU – the Tory government immediately paddled back while sticking to its Brexit-is-great script, even though this is so clearly not the case. At a recent conference of the powerful and extremely influential Confederation of British Industry, the UK prime minister made it clear that there would be no case where the UK would comply with EU regulations. Goodbye, Swiss model.

More importantly, Sunak did not respond to the CBI’s request to follow the Swiss model. He also rejected the CBI’s idea of allowing more immigration from the EU. The CBI sought this to ensure that British companies would no longer suffer so much from their acute labour shortage. All this is bad for the UK as it will increase its economic problems.

On the other hand, some of this might well be good for Sunak and the hard-Brexiters. The PM depends on the support of Brexit hardliners inside his own party. Perhaps, this internal party support is more important to him than the campaign financing by the CBI for Sunak’s Tory party.

Meanwhile, the proponent of a hard Brexit – Tory boss Jacob Rees-Mogg – never grows tired of stressing that the public voted for Brexit and that the public wanted to end the free movement of people. There should be no more discussion, he argues.

Lord Frost – the mastermind who failed as the UK’s Brexit negotiator – said that any kind of Swiss model with EU regulations was completely unacceptable. Meanwhile, Lord Cruddas – the British billionaire and donor to Britain’s conservative party – threatened that he had enough money and influence to thwart the plan to move towards a Swiss-style relationship with the EU.

Worse was to come. Right-wing populist Nigel Farage, who was extremely instrumental in campaigning for hard Brexit, tweeted, “this level of betrayal will never be forgiven. The Tories must be crushed.”

At least partly because of Nigel Farage’s successful Brexit campaign and the UK’s successfully leaving the EU, living standards in the UK have fallen and are set to fall even more in the next two years. Out of fear of being attacked by the UK’s right-wing press, the hard-line Brexiters, and pro-Brexit Labour voters, opposition leader Keir Starmer has been reluctant to call for a Brexit model different than what Britain has today.

Meanwhile, Labour’s opposition spokeswoman for financial affairs, Rachel Reeves, admitted the obvious about the Brexit mess, “The Brexit deal the government secured has cost our economy dearly.” At the same time, Greens MP Caroline Lucas said,

The huge elephant in the room is #Brexit. Hunt didn’t once mention how it contributed to 4% productivity drop, 15% trade drop, 6% food price increase, lower wages, workforce shortages & highest inflation in G7.

Labour is proposing a trade agreement with the EU that would overturn some trade barriers. But fearing the pro-Brexiters, Labour’s Sir Keir Starmer has strictly rejected a UK membership in the European single market. Meanwhile, UK prime minister Sunak and his Tory off-sider Hunt have been accused, by the pro-Brexit hard right, of having hijacked the government in the interests of the EU.

And the hard pro-Brexit right has powerful allies, such as the staunchly nationalistic and right-wing Daily Mail headlining, Rishi Sunak and Jeremy Hunt killed the dream of any Brexit dividend stone dead. The reactionary tabloid argued that Hunt and Sunak are about to destroy what Brexit should have brought in terms of benefits: a country with low taxes and high wages, where the economy and the public experience growth. This is a delusional mirage, given the current economic situation of the UK.

Facing severe economic hardship because of Brexit and rising energy costs, Sunak is forced to turn towards a kind of European-style social democracy. The recent economic development of the UK – in comparison with other G7 countries and the OECD – shows that the consequences of the Tories’ hard Brexit can no longer be ignored.

The UK is falling behind economically, and this can no longer be excused with the pandemic and the Ukraine war. According to the most recent forecast by the UK government’s very own Office for Budget Responsibility  (OBR), the standard of living of Britons will fall by a whopping 7.1% over the next two years. The biggest fall on record, this negates the income progress of the past eight years. Brexit bites back!

Worse, data from the OBR and the European Commission show that no European country will fare as badly during next year as the UK. Its gross domestic product is set to fall by 1.4%. The UK is the only one of the G7 countries with an economy that has not yet reached pre-pandemic levels.

The latest survey by YouGov shows that 56% of respondents believe that Brexit was a mistake. Of the people who voted for Brexit in 2016, a whopping 70% still think that this was correct. Overall, one in five who voted for Brexit in 2019 now thinks it was the wrong decision. In other words, a whopping 20% of all Brexit-voters thinks what they had done was wrong.

The British economy has suffered sustained damage as a result of Brexit – something hard-line Brexiters like Sunak refuse to acknowledge, blaming instead the so-called Covid-19 legacy and the Ukraine.

Meanwhile, Michael Saunders, the former member of the Monetary Policy Committee of the Bank of England, suggests, “If we hadn’t had Brexit, we wouldn’t be talking about an emergency budget like we had this week.”

From an economic point of view, Brexit is like kicking the soccer ball into your own goal. In the wake of all this, public opinion in the UK is becoming more critical of Brexit. Lord Deben (Tory) said, “Our situation is worse in every area because we’ve left … people now know the terrible damage that leaving the EU has done.”

Perhaps many people voted for Brexit in 2016 and again in 2019 out of frustration with the general situation and for all sorts of other reasons. Many might have been misled by a well- engineered propaganda campaign by Murdoch’s powerful press, nationalistic right-wing populists like Farage, and hyper-narcissistic and power hungry politicians like Boris Johnson.

Now they are starting to realise the damage Brexit has caused to Britain. In the UK today, the B-word is being talked about again. Yet, Tory politicians that got Britain into the mess seem to know no way out. Then again, would the EU take the UK back?

Stellantis announces indefinite layoffs for 1,350 Belvidere Assembly Plant workers

George Marlowe

On Friday, Stellantis announced that it would indefinitely lay off 1,350 workers who remain at the Belvidere Assembly Plant in Illinois by February 28, 2023. The attack on Stellantis autoworkers’ jobs is the latest attack against workers’ jobs as part of a global restructuring of the auto industry ahead of the 2023 contract talks with the United Auto Workers.

The company justified its attack on jobs by citing broader macroeconomic factors and the drive towards electrification by the auto companies. “Our industry has been adversely affected by a multitude of factors like the ongoing COVID-19 pandemic and the global microchip shortage, but the most impactful challenge is the increasing cost related to the electrification of the automotive market,” Stellantis said in a statement.

Belvidere Assembly Plant in Illinois [Photo: WSWS]

“This difficult but necessary action will result in indefinite layoffs, which are expected to exceed six months and may constitute a job loss under the Worker Adjustment and Retraining Notification (WARN) Act,” the company added.

“It’s a bunch of BS,” one furious Belvidere assembly worker told the World Socialist Web Site. “They are trying to get people scared so those who are eligible to retire will go sign papers to retire. Then they can hire new-hires.”

Predictably, the the United Auto Workers (UAW) union apparatus issued the most perfunctory and hollow statements in response to the threats by the company. UAW Vice President and Director of the Stellantis Department Cindy Estrada said, “We are all deeply angered by Stellantis’ decision to idle the Belvidere Assembly plant without a plan for future product.” Estrada, who has made hundreds of thousands of dollars in income off the backs of UAW rank-and-file members, has helped push one round of concessions after another on autoworkers in the service of management.

UAW President Ray Curry added, “We believe Stellantis is grossly misguided in idling this plant which has produced profits for the company since 1965. Announcing the closure just a few weeks from the holidays is also a cruel disregard for the contributions of our members from UAW Locals 1268 and 1761. We will fight back against this announcement.”

Far from fighting back, the UAW has overseen the savage attack on the workers at Belvidere. In 2019, the 57-year-old plant employed close to 5,000 people working three shifts producing the Jeep Cherokee.

Since the onset of the COVID-19 global pandemic, the company has laid off two shifts and destroyed jobs while the UAW has done nothing to defend workers’ jobs. The devastating impact of the job cuts has rippled through the region, including for those who work for Stellantis’ parts suppliers such as Magna, Syncreon, Android Industries and others. Laid off workers have had to uproot their lives and transfer to Stellantis plants in Michigan or take lower paying jobs in the Belvidere and Rockford metro region.

The cuts have resulted in unsafe working conditions as well. In August, autoworker Travis Baker died after suffering a severe injury at the plant. Workers at the plant reported the company shutting off lights, cutting costs and not spending any money to improve safety and working conditions.

Stellantis made close to $8 billion in profits in the first half of 2022, up 34 percent from 2021. The company has made record profits to the tune of tens of billions over the past decade. Last year, the company awarded its CEO Carlos Tavares $20.5 million in salary, more than 300 times the annual income of the average worker. The profits Stellantis made have been generated entirely off the backs of its workers.

In the wake off a $52 billion merger with the Italian-American Fiat Chrysler and the French PSA, Stellantis has pursued a brutal cost-cutting operation as it seeks to move all production towards electrification, to compete with the other global auto companies, including Ford, General Motors and Tesla.

In October, Stellantis threatened the jobs of thousands of workers at the Warren Truck Assembly Plant in Detroit. The company blamed workers for absenteeism and defects, warning that the plant, which employed over 5,230 workers, could be closed. Instead of defending the workers, UAW Local 140 President Eric Graham joined the company in scapegoating them.

Stellantis told Crains that “all options are on the table” with regards to Belvidere. Heading into 2023 contract negotiations, the auto companies are carrying out a strategy they have used in prior contract battles. They claim that jobs can be “saved” if workers accept further concessions. Corporations like Stelantis are seeking to extract even greater concessions from workers than in previous contracts as they invest billions in capital expenditure in the transition to electric vehicle production.

Moreover, the auto companies are hoping to extract billions in economic ransom in the form of tax cuts from local and state governments, with the promise of retaining jobs—promises that have been repeatedly broken. Illinois’ billionaire Democratic Governor J.B. Pritzker is pushing for subsidies and tax cuts to keep auto jobs in Illinois, both at Belvidere Assembly and Ford’s Chicago Assembly Plant (CAP). The business press has speculated that CAP is also threatened with closure, as Ford pursues electrification. Part of such a deal would include massive attacks on autoworkers imposed with the help of the UAW. The closure of the two assembly plants would have a devastating impact on the lives of tens of thousands of workers, affecting over 36,000 auto-related manufacturing jobs in Illinois.

Will Lehman campaigners speak with morning shift Stellantis workers at Belvidere Assembly plant on October 18, 2022 [Photo: WSWS]

“We’re being pushed into economic slavery”

“They’re going to negatively affect people’s livelihoods,” an angry Belvidere worker told the WSWS. “They’re going to decimate an entire economic area. I can’t survive off unemployment either. It’s not just us--all the suppliers, all the other vendors, all the other businesses that depend on that revenue, on the goods and services they provide.”

He added, “Corporate, big business ways are not our ways. They’re not thinking about us. They’re not worried about how they’re negatively impacting people. Now they’re going to flood the market with a whole bunch of workers that probably will have to settle for something less than what they’re used to.

“George Carlin said it best, it’s the rich against the poor, it’s an exclusive club and we’re not in it. Big corporations and politicians go hand in hand. These are the people who make the rules. Their number one rule is let’s make rules that make money. Their number two rule is don’t break rule number one.

“We’re being pushed into economic slavery. The poor are forced to serve the rich. There should be a gigantic meeting about this. There should be something done.”

He noted the imposition of a pro-management settlement on railroad workers, who were stripped of their right to strike by President Biden and Congress. “When I heard that they said Congress was going to force the rail workers to take a deal, how does that work? You’re forcing them to take a deal? How can you legitimize that?”

Channel Islands: Up to 12 people killed in explosion at Jersey apartment block

Steve James

As many as 12 people are thought likely to have been killed when an explosion collapsed a block of flats in St Helier, Jersey. At the time of writing, five people were confirmed dead, and four residents were still unaccounted for. An uncertain number of visitors were still thought to be missing.

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The huge blast, captured on CCTV and heard across the island, occurred at 4am Saturday morning. Social media clips and press photos show the modern three-storey Haut du Mont apartment building, off Pier Road, as completely destroyed, with debris scattered and cars damaged over a wide area. Neighbouring blocks of flats have also been damaged. Pockets of flame continued to burst from the wreckage for hours. Residents in nearby flats have been evacuated to St Helier Town Hall.

Chief Fire Officer for Jersey's Fire and Rescue Service, Paul Brown, told a press conference Saturday that the fire service had been called out to the building the previous evening. The island's police chief, Robin Smith, confirmed to the Jersey Evening Post that the callout related to reports of residents smelling gas at the property, owned by state-controlled housing provider Andium Homes. Gas on the island is provided by Island Energy. Investigation of the incident is likely to take weeks.

Pier Road, the roofs of Commercial Buildings, and the harbour, St. Helier, Jersey [Photo by Dan Marsh - Own work / CC BY 3.0]

Should a gas buildup be confirmed as causing the tragedy, it would not be the first major gas related emergency on the island. In 2014, Jersey Gas, forerunner to Island Energy, pled guilty in health and safety breaches after a huge gas holder fire in 2012, also in St Helier. The fire, which started during repair of a gas leak, resulted in large scale evacuation of nearby streets, a 400-metre exclusion zone, and the eventual demolition of the gas holder. Jersey Gas were found to have sent poorly trained and equipped workers, lacking even a fire extinguisher, to deal with the leak in an area which had not been risk assessed. One worker suffered burns when their equipment started the potentially catastrophic fire. The company was fined just £65,000.

Three years later, Island Energy Group, which also provides gas on Guernsey and the Isle of Man, was taken over by infrastructure asset managers Ancala Partners. Ancala's “diversified portfolio” also includes solar, wind and anaerobic power generators, Liverpool Airport, the largest private rail company in Scandinavia Hector Rail, Portsmouth Water and the Holmleigh Care Group which runs 48 care homes and 3 hospitals.

The St Helier explosion, if gas is confirmed as the source, will be the latest in a series of gas related blasts across Britain and Ireland.

October 7 this year, 10 people died in a huge explosion in the tiny village of Creeslough, County Donegal, in Ireland. Eight more were injured by the blast which destroyed apartments that collapsed onto the Creeslough Applegreen service station. Among those killed were residents of the apartment, shoppers, a staff member at the service station and motorists parked outside. The youngest victim was only five years of age. Two teenagers died. The population of the entire village numbers 400.

While gas is suspected to have caused the disaster, a huge police operation has been launched into its origins. Donegal is one of only three counties in the Republic of Ireland not on the country's natural gas network. Liquid petroleum gas (LPG) is frequently used for heating and cooking. As of late November, gardai (police) are reported to have taken 300 statements and are following 500 lines of enquiry. DNV, a company specialising in testing energy systems, has been mobilised. A huge mound of debris and wreckage was excavated from the site to a nearby undisclosed location.

While Northern Ireland has four natural gas operators, the main provider in the Republic, Bord Gáis Energy, does not offer a service to isolated Donegal. The company was owned by the Irish state until its sale was forced as part of the terms on the European Union/IMF bailout of the Irish banking system following the financial meltdown of 2008/9. Bord Gáis Energy is now owned by the British service giant Centrica, part of the former British Gas privatised in 1986.

On August 8, a gas explosion destroyed one house and damaged several others in Thornton Heath, south London. A four-year-old child, Sahara Salman, was killed. The explosion forced the evacuation of hundreds of people from the surrounding area and generated immense anger, particularly as many had called gas provider Southern Gas Network (SGN) to report a smell of gas in the area. On August 12, SGN operations director, Martin Holloway was shouted down at a meeting with residents who accused the company of having “blood on its hands”. ITV reported a resident telling Holloway, “A little girl lost her life because of you lot taking your time, and how many people have been telling you that there’s been a problem.”

On October 21, local Labour Party MP, Siobhain McDonagh, spoke in an adjournment debate in Westminster about the incident. She quoted Sahara's mother Sana, who was one of those who called SGN and was also injured. Sana said, “What did I get as a result of this phone call? I tried to help and warn of a possible gas explosion and my own daughter and in turn our family are victims of such an explosion just days later.” McDonagh said that insurers were refusing to compensate residents whose property was damaged. She noted that the 36-inch cast iron gas pipes in the area were supposed to have been replaced under an emergency programme following an explosion in Scotland. The work was stalled and many of the cast iron pipes due for replacement remain operational.

On October 18, last year, a gas explosion destroyed four houses in the Kincaidston area of the town of Ayr, Scotland. Four people were hospitalised and a large area cordoned off. After nearly a year, following a Freedom of Information request, the BBC reported that the Health and Safety Executive (HSE) had found “numerous localised spots of corrosion” in pipework under the destroyed housing. Damage on the plastic coating of the pipes, which dated from the 1970s, could have led to a gas buildup. The HSE found no blame could be attributed and speculated that the coating was damaged when the estate was built. Scottish Gas Network, also the owner of Southern Gas Network, has subsequently replaced all the piping in the estate.

In 2001, according to the Daily Mail, following a 1999 explosion in Larkhall, South Lanarkshire that killed a family of four, the HSE reported that 56,500 miles of metal pipework in Scotland, some dating to the 19th century, should be replaced with plastic piping. As of 2021, just 125 miles was being replaced annually, although SGN’s annual report claimed it had replaced 849 kilometres (527 miles). The replacements will take decades. In 2021, the group reported an operating profit of £526 million.

Catastrophe in care at German children’s hospitals

Tino Jacobson & Markus Salzmann

A wave of infections in Germany is pushing hospitals and their staff to the limit. In addition to the strain of the coronavirus pandemic, now in its third year, seasonal sickness from influenza and respiratory syncytial virus (RSV) have increased the burden on health care. Children’s hospitals in particular have their backs to the wall and can no longer cope with the current tide of RSV infections.

Healthcare high-rise of the Charité Hospital [Photo by Wikimedia Commons / CC BY 4.0]

The dramatic situation is a result of the government’s disastrous health care and pandemic policies. Its rigorous policy of mass infection, recently taken to extremes with the lifting of the most minimal protective measures—such as masking in public areas and compulsory isolation for those infected—as well as the opening of schools and day-care centers without any mitigation measures, has intensified seasonal infections and drastically increased the risk of multiple reinfections. This affects children in particular.

RSV is a virus that affects the upper and lower respiratory tract. In principle this disease can be contracted at any age but is one of the most common pathogens in infants and young children. The incidence of RSV disease worldwide is 48.5 cases and 5.6 severe cases per 1,000 children in the first year of life.

Children, as well as adults with immunodeficiency or pre-existing lung and heart conditions, are particularly afflicted by severe courses. In recent weeks, physicians and health experts have warned of a sharp increase in RSV infections in children. Typically, the cold season does not begin until early December. The peak of the infection wave therefore still lies ahead.

The situation in children’s hospitals has been catastrophic for years and continues to worsen. A major problem is the shortage of staff on the one hand and the lack of intensive care beds in children’s hospitals on the other. Michael Sasse, senior physician in charge of pediatric intensive care at Hannover Medical School, summed up the deadly consequences saying, “Children die because we can’t take care of them.”

A survey conducted by the German Interdisciplinary Association for Intensive Care and Emergency Medicine (DIVI) in late November described the situation as follows: “Of 110 children’s hospitals, 43 facilities recently no longer had a single bed free in the normal ward. Only 83 vacant beds remain in total in pediatric intensive care units across Germany—that’s 0.75 vacant beds per hospital.”

According to the survey, one in two of 130 children’s hospitals said they had been unable to admit at least one child in the last 24 hours following a request from the ambulance service or emergency department. As a result, critically ill children had to search for available intensive care beds at other children’s hospitals, traveling long distances and losing vital treatment time.

According to the secretary general of the DIVI, Florian Hoffmann, the situation has been getting worse from year to year to the detriment of critically ill children. The health care system has been “driven to the wall” for years, says Jakob Maske, federal spokesman for the Professional Association of Pediatric Doctors (BVKJ).

The president of the German Child Protection Association (DKSB), Heinz Hilgers, also attributes the catastrophic situation to “decades of neglect” by politicians. “Because of the exclusively business orientation of the system, which is designed for full capacity utilization,” no improvements have been attempted, he said.

Three pediatricians associations and several hospital physicians criticized the “irresponsible conditions” in Berlin in an open letter to the Berlin Senator for Health Ulrike Gote (Green Party). The letter states: “The health as well as the life of our children and young people is massively threatened.”

This is the reality in the German capital, governed by a coalition of Social Democrats (SPD), Left Party and Greens. Many days Berlin hospitals entirely lack free beds and parents cannot find pediatricians for their newborns. Moreover, emergency rooms are heavily overloaded. Back on January 24 of this year, the initiative sent a first urgent letter and on September 20 a second one to Gote and Federal Minister of Health Karl Lauterbach (SPD).

It is not surprising that these appeals fall on deaf ears. The current situation is the result of a deliberate policy pursued over years and decades by the established parties.

It was, after all, the federal coalition government of SPD and Greens from 1998 to 2005 that created this miserable situation in the health care system with the introduction of flat-rate payments per case (DRG system). An architect and proponent of the introduction of flat rates per case was Karl Lauterbach himself.

Dominik Schneider of Dortmund Hospital describes the consequences of this system for children’s hospitals as follows: “In the last 30 years, including the introduction of the DRG system in Germany, the number of children’s hospitals has fallen by a fifth and the number of beds by a third. At the same time, the number of children requiring inpatient treatment has increased by about 10 percent.”

As a consequence of the catastrophic situation in children’s hospitals, Lauterbach cynically demands that the nursing staff of other hospital departments, already working at their limit, should jump in to assist the intensive care units of the children’s hospitals. Jakob Maske rightly criticizes this proposal to transfer staff as “complete humbug,” since assignment in the children’s ward requires special proficiencies.

In addition, Health Minister Lauterbach plans to suspend the staffing limit for nurses, which will lead to even greater understaffing in the wards and amounts to further overloading nurses. Due to staff shortages and the transfer of existing nursing staff to pediatric wards, many health care facilities are postponing planned surgeries.

Last week, the federal coalition of the SPD, the Greens and the liberal Free Democrats (FDP) passed a legislative package to ease the burden on nursing staff and hospitals. The result is a new instrument for setting staffing levels in clinics, which remains vague and is not to be implemented until 2025. The Verdi trade union, which in recent negotiations has locked-in the precarious situation of nursing staff for the coming years with so-called relief collective agreements in several federal states, played a key role in drafting the bill.

In addition, a small amount of financial relief for children’s hospitals was legislated. These facilities are to receive an additional €300 million in both 2023 and 2024. This is no more than the proverbial drop in the bucket since pediatric hospitals and wards have been bled dry for decades.

Lauterbach recently announced, to great media fanfare, that the flat rate per case system in children’s hospitals would be abolished. “In the future, it will no longer be economic constraints but medical necessity” that will determine treatment in the clinics. He himself described his reforms as a “revolution.”

In fact, the opposite is the case. The DRG system will not be touched, and the central element of the reform is the reduction of inpatient stays. This means not only a decline in the quality of care, but also a deterioration in the financial situation of small- and medium-sized hospitals. In the end, therefore, even more “economic constraint” will prevail.

The lack of importance attached to the lives and health of the population by the federal and state governments is shown not only by the more than 158,000 deaths caused by the unscrupulous profits-before-lives policy pursued during the pandemic, but also by the 2023 budget adopted by the federal government. While military spending will increase from just under €50 billion to €58.6 billion, the health budget, which was temporarily increased during the pandemic, will be cut from €64.3 billion to €24.5 billion.

BIS warns of dollar debt ‘black hole’

Nick Beams

In its latest quarterly review issued last week, the Bank for International Settlements has identified a potential black hole for financial markets that could play a major role either in setting off a financial crisis or accelerating one.

The BIS, an umbrella organisation of the world’s central banks, said that “embedded in the foreign exchange (FX) market is huge, unseen dollar borrowing.”

Bank for International Settlements (BIZ) in Basel, Switzerland [Photo by Wladyslaw Sojka (Free Art License 1.3)]

The report, entitled “Dollar debt in FX swaps and forwards: huge, missing and growing,” focusses on the central role played by the dollar in the foreign exchange markets.

The amounts are enormous, around $80 trillion, and involve the daily transactions in currency markets of around $5 trillion. Each day, financial entities, pension funds, insurers and banks undertake deals centering on the dollar as the key global currency. At any given point there are myriad deals involving currency swaps between the dollar and other currencies.

For example, the review notes, “an investor or a bank wanting to do an FX swap from say, Swiss francs into Polish zloty would swap francs for dollars and then dollars for zloty.”

But the problem identified in the review is that there are no statistics covering these operations. The various dollar payment obligations “do not appear on balance sheets and are missing in standard debt statistics” and are recorded “off-balance sheet in a blind spot.”

Reporting on the review, Financial Times columnist Gillian Tett, posed the question: “Does it matter if you lose track of $80 trillion?”

The BIS clearly believes it does because, while dollar swaps and transactions proceed smoothly and routinely in “normal” times, it is a very different matter when a crisis erupts.

“The FX markets are vulnerable to funding squeezes,” the report said.

“This was evident during the Great Financial Crisis and again in March 2020 when the COVID-19 pandemic wrought havoc. For all the differences between 2008 and 2020, swaps emerged in both episodes as flash points, with dollar borrowers forced to pay high rates if they could borrow at all. To restore market functioning, central bank swap lines funneled dollars to non-US banks offshore, which on-lent to those scrambling for dollars.”

According to the BIS, the lack of information regarding dollar debt because it is off balance sheet makes it “harder for policymakers to anticipate the scale and flow of dollar rollover needs. Thus, in times of crisis, policies to restore the smooth flow of short-term dollars in the financial system (e.g., central bank swap lines) are set in a fog.”

This meant that when panic was quelled, as the Fed allowed other central banks to supply dollars and backstop markets in 2008 and 2020, they acted on little information about who owed the debt.

The BIS warnings that the institutions supposedly in charge of the financial system are flying blind will be passed over by those who point to the fact the markets continue to function, ignoring the fact that two major crises have erupted in the past decade and a half.

This was the essential content of a discussion on the Bloomberg channel on the BIS review. In other words, nothing much to see here.

But, tasked with trying to secure the stability of the financial system as a whole, the BIS is clearly concerned and has called for the development of statistics that track outstanding short-term dollar obligations, conscious of the enormous disruption that took place in this area in 2008 and March 2020.

It noted that it was “not even clear how many analysts are aware of the existence of large-scale off-balance sheet obligations” and sounded a warning to those who might try to ignore the problem.

“Off balance sheet dollar debt,” it concluded, “may remain out of sight and out of mind, but only until the next time dollar funding liquidity is squeezed. Then ‘hidden leverage’ and maturity mismatch in pension funds’ and insurance companies’ portfolios … could pose a policy challenge. And policies to restore the flow of dollars would still be set in a fog.”

The issues highlighted by the BIS are by no means the only area of concern.

Last week, the FT published an article entitled “Financial Stability: the hunt for the next market fracture,” consisting of a series of short comments from various journalists pointing to areas of growing concern.

It noted that after a decade of falling interest rates “global financial markets are facing a reckoning” because of the tightening interest rate regime being imposed by central banks, led by the US Fed. This was sucking liquidity—the ability to transact without dramatically moving prices—out of markets.

The result was that “violent” and sudden moves in one market “can provoke a vicious loop of calls and forced sales of other assets, with unpredictable results.”

Elaine Stokes, a portfolio manager at the investment firm Louis Sayles, told the FT the market was “illiquid”, “erratic” and “volatile”. It was “trading on impulse and we just can’t keep doing that.”

Various shocks in the market, such as the closure of the nickel market in London at the start of the pandemic, the bailout of European energy providers and the September-October pensions crisis in the UK were “being scrutinised as oracles of wider dislocations to come.”

A contribution by another journalist noted that while liquidity had long been a hallmark of the $24 trillion US Treasury market, it had “dried up” because of higher interest rates and reduced buying by the Fed and the Bank of Japan.

In her comment on the BIS findings, Tett noted that another area of “fog” was the US Treasury market which, like dollar swaps, underpins much of the financial system.

“During the dramatic market turmoil of March 2020, it became clear that secondary market trading structures have big vulnerabilities that were not understood—or reported—before.”

While the US Treasury and Securities and Exchange Commission was trying to fix the problem “progress is slow.”

Of course, like all financial commentators and analysis, while providing some insights at times, she did not draw out the essential conclusion: that the “problems” are inherently unsolvable because they are rooted in the contradictions of the capitalist economy and financial system itself.

This is why the very measures aimed at stabilising the financial system after the crises of 2008 and 2020 by pouring in trillions of dollars have only created the conditions for the eruption of an even deeper crisis.

Australian “energy relief” plan to subsidise business while household bills continue to soar

Mike Head

Australia’s Labor government unveiled an “Energy Price Relief Plan” last Friday that will pour more money into the pockets of business, including coal producers, while promising households only token reductions in sky-rocketing electricity and gas bills.

Eraring coal-fired power station on the shores of Lake Macquarie, southeast of Newcastle, NSW. [Photo by CSIRO / CC BY 3.0]

Facing seething working-class discontent and breakouts of strikes, the government is desperate to appear to be offering some relief to ordinary people, who face the greatest reduction in living standards since World War II due to surging inflation and loan interest rates, and ongoing cuts to real wages.

After a meeting of the extra-constitutional and bipartisan “National Cabinet” of federal, state and territory leaders, Prime Minister Anthony Albanese claimed that the plan would take an average of $230 off the expected rise in a household energy bill for next year. 

However, this is from a government that barely scraped into office in May after pledging to reduce typical electricity bills by $275, only to immediately drop the promise and deliver price hikes that are already about double that amount.

Even if the $230 claim eventuates—and that is by no means likely—it would make little difference to the cost-of-living crisis confronting the working class, which sees prices for essentials such as food, petrol and energy rising by around 8 percent annually, on top of home mortgage payments increasing by thousands of dollars a month.

According to the Australian Competition and Consumer Commission’s latest estimate, released last Wednesday, households between April and October suffered a $300, or 23 percent, leap in their typical, annual electricity bill. 

In October, the Labor government’s first budget revealed that electricity bills were expected to jump by 20 percent this financial year and 36 percent in 2023-24, for a staggering increase of 63 percent. As a result of the “relief” package the growth next year is supposed to be 23 percent, but is still producing a predicted combined jump of 47 percent over the two years.

Gas bills, which Labor’s budget forecast would soar by 20 percent this financial year and 20 percent in 2023-24, for a combined increase of 40 percent, are now forecast to increase by 18 percent this year and 4 percent next year, for a combined jump of 22.7 percent. On both electricity and gas bills, households on the government’s sub-poverty level welfare payments have been promised a further 10 percent reduction—a puny $23 or so.

Yet even these pledges are based on vague “Treasury modelling” and depend on deals that remain to be haggled out with the state and territory governments, which can regulate energy prices in their jurisdictions. The promised bill reductions will not be paid as rebates, but as slight decreases in power prices, which will not start until June at the earliest.

Even more obscure is how much of this “relief” will go to businesses, rather than households. Deliberately, no figures were provided for this. Instead, there were deeply-buried references to special assistance for “manufacturers” and “small business,” with eligibility yet to be settled by the various governments.

Businesses that are reliant on electricity and gas have far larger bills than households and would therefore take a big share of the $3 billion said to be on offer from the federal and state governments for the subsidies. Some idea of the expected corporate benefit could be gleaned from Energy Minister Chris Bowen, who said the package would save businesses from going bankrupt.

Albanese also spoke about “keeping industry going.” Asked by a journalist how the scheme would work for business, including how a “small business” would be defined and how much they would receive, he evaded the question. “That will be worked through by the treasurer and the state and territory treasurers in coming weeks,” Albanese said, with a report back to the National Cabinet early next year.

The Sydney Morning Herald estimated that the government would spend up to half a billion dollars compensating coal producers in New South Wales and Queensland for imposing price caps, on top of the government’s $1.5 billion share for bill relief to households and businesses. “A federal government source” said the total federal contribution could be just over $2 billion when including compensation for coal producers, but this was yet to be finalised.

The plan proposes temporary one-year price caps—$12 per gigajoule for gas, and $125 per tonne for black coal. These caps will have only a marginal impact, if any, on energy giants’ profits. Almost all domestically contracted coal is under that cap already, and the highly-profitable gas price was below $12 before the US-NATO proxy war against Russia. In fact, the package is designed to protect the war super-profits these conglomerates are making on their exports. “We’re not capping export prices,” Bowen emphasised.

Albanese also stressed that the scheme would not affect gas or coal contracts overseas. On the contrary, gas exports would expand. He said the deal included the fast-track development of the $1.5 billion Santos Narrabri gas field in NSW, which would involve up to 850 coal seam gas wells being drilled. The Liberal-National state government of Premier Dominic Perrottet has now declared the project to be “Critical State Significant Infrastructure,” in order to sideline environmental legal challenges to its approval.

Albanese’s government has ruled out any measures that would impinge on the massive war-profiteering by the energy companies, such as imposing a windfall tax to fund household relief or requiring gas to be set aside for domestic use, rather than export. 

The existing petroleum resource rent tax touches only a tiny fraction of the super-profits. Analysis by the Australia Institute recently estimated that despite reaping profit increases of between $25 to $40 billion a year, gas companies are paying only an extra $1 billion in tax.

Nevertheless, the Greens have offered to help the government rush through the necessary legislation for the “relief” plan via a sudden one-day recall of parliament this week. Labor may need the Greens’ support to get the bill through the Senate. Greens leader, Adam Bandt, said he opposed compensating coal companies, and nominally proposed a two-year freeze on electricity bills funded through a windfall tax. But he was confident the Greens could “find a way through” to a compromise position with the government “in good faith.”

Last Thursday, the Albanese government also announced what amounts to billion-dollar subsidies for companies producing “green energy.” It reached agreement with the state governments on a “capacity mechanism” that will pay renewable energy providers to have their capacity available during certain periods to ensure there are no power shortfalls. Energy Minister Bowen said the scheme would “unleash” $10 billion in investment in wind, solar and battery projects.

These are just the latest profitable deals that the Labor government has struck with energy giants. In September, liquefied natural gas exporters promised to make 150 petajoules of uncontracted gas available to domestic users in 2023, but only at export prices, which have surged to double their previous levels.

Regardless, mining company and financial market representatives denounced the price caps last Friday, rejecting any intervention whatsoever into their lucrative markets. Credit Suisse energy analyst Saul Kavonic said the plan represented “a declaration of war on the gas industry” and would likely trigger a major industry advertising campaign against the policy, like the one against a minimal mining tax a decade ago.

US COVID death toll surges in third winter of the pandemic

Benjamin Mateus

The United States is entering its third COVID winter with a new surge of COVID cases, hospitalizations and deaths being reported on the few COVID dashboards that continue to provide a glimpse into the state of the pandemic. The seven-day average of cases has nearly doubled since mid-October to 61,570 cases, although these figures remain unreliable and woeful undercounts. 

Even worse, the seven-day average in COVID deaths has turned sharply upwards again. While pre-Thanksgiving figures were trending under 300 per day, they surged to over 560 per day on a seven-day average after the holidays. Specifically, Johns Hopkins Coronavirus Resource Center logged more than 1,000 COVID deaths on December 7. 

Hospitalizations have followed the same trend seen in deaths, having surged 25 percent to almost 38,000 admissions in the last two weeks. These are only compounding the strain on health systems from the flu and RSV epidemic.

As COVID deaths turn upward from an already unacceptable level, one major demographic issue is coming more and more to the fore: the elderly, despite being the most heavily vaccinated age group, are dying in massively disproportionate numbers.

For the week ending November 19, the Centers for Disease Control and Prevention (CDC) reported that Americans aged 65 and older accounted for 92 percent of COVID fatalities.

In the summer of 2021, when the vaccination campaign had attained its peak among the elderly, that figure was only 58 percent, and most of these were unvaccinated. This figure demonstrated the life-saving aspects of vaccines, particularly for those over 65. However, as the virus has continued to evolve, it has become more immune-evasive and is killing the elderly at an alarming rate, regardless of their vaccination status.

Overall, those 65 and older, who make up 16.8 percent of the population, have accounted for 75 percent of the 1.07 million COVID deaths in the US, or 808,113, as of the latest figures from Statista.

Those 65 to 74, who represent 10.1 percent of the population (33.67 million), accounted for 22.7 percent (244,086) of COVID deaths, or a rate three times higher than their representation. COVID wiped out 0.7 percent, or 1 in every 138 in this age group.

The 75-to-84-year age group represent 4.9 percent of the population (16.21 million) and accounted for nearly 26 percent of all COVID deaths (279,276), a rate five times higher. There was one COVID death for every 58 people in this group.

Those who are 85 and older paid the highest price. With around 6 million in this age demographic, representing just 1.8 percent of the US population, they accounted for 26.5 percent of COVID deaths (284,751), a rate of nearly 15 times their representation in the population. Almost 5 percent of all those over 85 and older have been killed by COVID so far, one in every 20.

The meaning is clear: COVID disproportionately kills the oldest in society, and the older the person infected, the more likely the infection will be fatal. The bipartisan Trump-Biden policy of promoting mass infection of COVID amounts to “geronticide,” the deliberate culling of the elderly on a massive scale.

This is not an accident, but a deliberate policy, and it is viewed as having significant benefits for capitalist society, disproportionately removing those who are regarded as a “drain” on “society’s resources,” by which the capitalists mean people who can no longer work and contribute to their profits.

That COVID is “forever” is not a byproduct of the adaptation of the virus, whatever its ability to evade immunity. It is the product of policies that prohibit any constraints on economic activity, and which demand the public minimization of the continuing COVID danger by the White House and the CDC.

Political hacks like Dr. Ashish Jha and Dr. Rochelle Walensky have failed in their public heath duties to put into place measures to protect the population against what is still a life-and-death threat. 

Uptake of the bivalent boosters—the centerpiece of the White House’s COVID response—has been abysmal. Only 13.5 percent of all eligible people have received the bivalent boosters since they became available in September. Among the elderly, little more than a third have taken these jabs. This is not some failure of personal initiative on their part.

The lifting of all mitigation measures across the country, the reopening of schools to in-person instruction without the infrastructure initiatives to ensure safe clean air, and the infamous remark by Biden in September that the pandemic was over and it was time to put the pandemic behind us and return to normal, have created the conditions that continue to give the coronavirus free rein. 

When COVID deaths were evaluated through the microscope of socio-economic indices, a study published in April 2022 found that COVID mortality was five times higher among adults in low socioeconomic positions, 72.2 per 100,000, compared to the richest with only 14.6 per 100,000. Furthermore, 72 percent of these differences were attributed to a job that was never performed remotely, “particularly blue collar, service, and retail sales workers.”

These differences were not racial in character, but occupation-linked, with the COVID death totals for whites, blacks and Hispanics corresponding roughly to the proportion of each group in the population.

A study published in JAMA Network not only demonstrated that life expectancy disparities existed before the pandemic between those in low versus high socioeconomic groups, two years into the pandemic, the poorest saw nearly a five-year decline in life expectancy while those in the richest deciles held on to their privileged life expectancy well over 85 years of age. As such, the working class can expect to retire and fall immediately into the grave.

With the surge in COVID cases, once more, the most vulnerable in nursing homes are being placed at risk. The latest estimates by the Kaiser Family Foundation on deaths in long-term care facilities. Fewer than half of them are up to date on their COVID vaccinations and only 23 percent of nursing home staff are. Additionally, primary care physicians and prescribers are wary of ordering them anti-viral therapeutics like Paxlovid when they are infected.

Meanwhile, with the world’s population recently passing the eight billion mark, discussions in the bourgeois press have turned to the issue of the cost of caring for the elderly. The Economist recently posted a glossy, high production video titled “the true costs of ageing,” that opens with the lines, “When people retire, they start costing more money and the cost will soon be unsustainable. The current approaches for the care of the elderly are a drain on society’s resources.” 

The editors go on to discuss that with a reduced work force the cost of paying out pensions and health care will be catastrophic because the elderly “spend less, pay less in taxes, and cost more,” driving down GDP and leading to economic stagnation. They add, “If you look at it from an economic perspective, we are spending too much money doing the wrong thing … and the mistakes cost more than just money.”

According to RBC Wealth management, “the projected lifetime cost of care for a healthy 65-year-old is $404,253—and that doesn’t factor in long-term care costs, which could be as high as $100,000 a year.” The removal of 800,000 such people (the number of over-65s killed by COVID in the US) would save the American government $320 billion, plus another $80 billion a year, plus additional “savings” from additional deaths. Such calculations are undoubtedly being made in government and Wall Street offices.

The International Monetary Fund (IMF) has reported that the “cost of aging” means high-income countries will have to drop their population’s consumption considerably due to the “new demographic realities.”

The pandemic has been a boon to the financial sectors, and the working class, as reflected in the massive decline in life expectancy, has paid the price.