China's Signaling Under President Xi Jinping

Prashant Dikshit

China's President Xi Jinping has now emerged supreme. The 19th National Congress of the Communist Party of China consolidated his authority not just for five years but in, a certain view, for life. Normally, a reappointment of a head of state ought not to emerge as a cause of concern for India but for the methods employed by the Chinese regime under Xi’s leadership to intimidate India, whilst pursuing a strategic economic control of large parts of the world. 

When India was confronted by the Doklam standoff, many analysts were baffled by the nature of the escalation dynamics of the syndrome. The scenario suggested that whilst the troops of the Chinese Peoples Liberation Army (PLA) were demonstrating a rather belligerent attitude towards the Indian troops, there was no attempt by Beijing to establish a supply line, should the confrontation escalate to a larger armed conflict. It was as if a military adventure in the garb of building a road in the Bhutanese territory has been halted but allowed to appear ominous and threatening especially to the Indian regime. There was seemingly a message to the US as well with whom India’s burgeoning strategic partnership was publicly castigated by Chinese leaders.

However, the picture is clearer now. As suspected then, it was as much a demonstration of domestic supremacy within the political realm of the People's Republic of China (PRC) as also to the immediate neighbor, India. While most believed that a power struggle was in the offing leading to the five-yearly congress of the Chinese Communist Party, it is now evident that Xi Jinping was orchestrating his rise to power.

The sequence of recent events indicated the nature of activities. The Chinese regime had scoffed at the Philippines, launched proceedings and the rulings in the Permanent Court of Arbitration (PCA) against them with respect to the so called “Nine-Dash Line” in the South China Sea and clearly asked India to refrain from commenting on the issue.  It was a gesture of hegemony.

One will also do well to take note that the operation of the port at Hambantota in Sri Lanka by the Chinese could only be reshaped at the intervention of the Indian government by bringing a security clause but not without the Chinese company obtaining 80 per cent shares in the port managing company. And, encroaching Bhutanese territory to build a road was to negate the spirit of the security treaty between India and Bhutan. One would believe that the last action, in this series of actions, was to declare the 3,000 km-long road corridor as part of China Pakistan Economic Corridor (CPEC), from Gwadar in Pakistan to Kashgar in the PRC passing through territory claimed by India. 

During all this, border issues are not being allowed to be resolved whilst the Chinese regime deliberately scuttles Indian efforts at joining the Nuclear Suppliers Group and blocking India’s efforts to get Jaish-e-Mohammad Chief Masood Azhar declared as an UN-designated terrorist. Xi's launch of the One Belt One Road (OBOR) initiative was meant to isolate India from this global process.

The phenomenon of economic stranglehold has unfolded somewhat like this: Chinese companies with the protection of their regime in Beijing have spearheaded the pursuit of infrastructure building contracts with loans being arranged through Chinese banks at reasonably high rates compared to what is being provided by the International Monetary Fund and the World Bank. Most of these contracts have come about in countries where governance is poor and whose rulers are willing to be bribed in return for awarding contracts. However, down the line, when the regimes are unable to repay the loans, the Chinese regime coerced  these governments to transfer the liabilities in acquiring their mines and other businesses. 

For example, under Xi’s tutelage, China has established a military base in Djibouti in the Horn of Africa. It is located next door to a US base. For this purpose, billions of dollars in Chinese loans have been made available to Djibouti’s heavily indebted government. Up to 2014, Chinese banks, contractors, and the government loaned over US$86 billion to African countries, of which Angola, the Democratic Republic of Congo (DRC), Ethiopia, Kenya, and Sudan were the top recipients. These large loans are beginning to raise questions about debt loads in African countries, showing indications of a potential debt crisis.

In another instance, on 7 July 2017, a report emerged, which stated that China’s signature US$5.1 billion Jakarta-Bandung high-speed rail project in Indonesia had to be shelved. But Chinese infrastructure developers are still taking a dominant position in Indonesia’s ambitious 35,000MW electricity expansion despite the disastrous 10,000-megawatt (MW) “crash” power programme, which finished years behind schedule and left state-run power supplier PLN with serious maintenance and performance issues. The crash programme began under the previous Susilo Bambang Yudhoyono administration and the Chinese-led consortiums built one of the largest coal plants using lo-tech boilers and second-hand equipment. 

It has also been assessed that the PRC is purposefully acquiring “anti-access/area denial” capabilities. The idea is to use pinpoint ground attack and anti-ship missiles along with a growing fleet of modern submarines and cyber and anti-satellite weapons to destroy or disable another nation's military assets from afar.

The PRC under Xi is signaling with the world’s largest army in the world, with an active force of 2.3 million, when China's real military strength is increasingly emerging elsewhere. Instances of expansionism and sheer financial strangulation could lead to strategic control and eventually a cause for armed conflict.

American Muslims Fear Backlash After New York Attack

Abdus Sattar Ghazali

The seven-million strong American Muslim community fears a backlash after the Tuesday (Oct. 31) attack in New York when a driver ploughed a truck through crowds in lower Manhattan killing eight and injuring a dozen more.

Imam Mohammad Qatanani, spiritual leader of the Islamic Center of Passaic County (N.J.), said: “People here feel they will be blamed as a religion and as a people. Because this guy was a Muslim, Muslims will be blamed anywhere and everywhere.”

According to Pittsburg Post-Gazette the Islamic Center of Passaic County had already received eight telephone threats, prompting police to assign extra patrols to the area.

“They say they’re going to kill us, they’re going to burn the place down, all using extremely foul language,” said the mosque’s president, Omar Awad. “They say, ‘We’re going to come rip your … beard off.‘”

The New Jersey office of the Council on American Islamic Relations reported threats had also been made against the Omar Mosque, next door to the apartment house where lived Sayfullo Saipov, the man who is accused of plowing a rental truck into bikers and pedestrians.

Tensions have flared within the Muslim community as well, with two men getting into a fistfight at a mosque in a dispute over the cause of Saipov’s alleged radicalization, according to Post-Gazette.

“When we figured out he was from Paterson, we knew trouble was coming,” Rami Abadi, a 32-year-old graphic designer told Washington Post. Abadi attends the mosque next to the apartment building where Saipov was living. “All eyes are going to be on Paterson now. Because of one psycho,” he added.

Little Istanbul: Paterson is home to one of the largest Muslim populations in the United States. Islamic leaders in the city of 147,000 people estimate Paterson’s Muslim population at 25,000 to 30,000.

Neighborhoods have been dubbed Little Ramallah or Little Istanbul for their respective Arab and Turkish residents. Peru has a consulate in the city to serve the large number of Peruvians.

Paterson was an engine of the Industrial Revolution, its factories churning out textiles and embroidery that helped earn it the nickname Silk City. But many of the industrial jobs are gone, and nearly a third of Paterson’s population lives in poverty, the city beset by crime and drugs.

It has been in this environment that the Muslim community established itself over decades, with a mix of Arab, Asian, African-American and European members of the faith. The Islamic Center of Passaic County, formed nearly three decades ago in Paterson, draws about 2,000 people for Friday communal prayers.

Now, some are afraid they will be made to answer for the actions of a man many leaders of the community say they didn’t know.

Pittsburg Post-Gazette quoted Qatanani  as saying that Saipov did not attend the Passaic County mosque. As for the Omar Mosque, congregants disagreed over whether he prayed there.

The Omar mosque had been targeted by the New York Police Department, which conducted broad surveillance of Muslims in New Jersey, New York and beyond after 9/11, a program uncovered by The Associated Press in 2011. An NYPD report from the surveillance found no evidence of criminal activity at the Omar Mosque, Pittsburg Post-Gazette said.

President Trump: The day after the truck attack, Trump tweeted that the United States “will be immediately implementing much tougher Extreme Vetting Procedures.” Trump also said he wanted to send the attacker to the military prison at Guantanamo Bay, Cuba, and called for the attacker to receive the death sentence.

“Trump has taken this horrific act and used it as an excuse not just to attack the Muslim community and immigrant Americans but also to attack some of the most fundamental rights this country holds,” said Albert Fox Cahn, the legal director of the Council on American-Islamic Relations’ New York chapter.

There was no similar call to action by Trump in the aftermath of last month’s Las Vegas shooting, in which a white Christian man, Stephen Paddock, killed 58 people — the deadliest mass shooting in modern U.S. history. “The hypocrisy is jarring,” Cahn said.

Muslim Advocates: Farhana Khera, executive director of Muslim Advocates, said Wednesday (Nov 1) that attack in New York should not be used as an excuse to fear mongering and civil rights viiolation.

In a stement Farhana Khera said:

“While our nation mourns the victims and law enforcement agencies investigate this horrific attack, President Donald Trump and Senator Lindsey Graham have sought to divide Americans, trumpet bigoted policies, demonize immigrants and Muslims, and erode our justice system.  According to Senator Graham, he and the President believe we are fighting a ‘religious war’ but they fail to look at the facts.  As NYPD Deputy Commissioner John Miller said today,  this attack “isn’t about Islam.”

“Violence isn’t owned by any one faith or political ideology – witness Charlottesville, the congressional baseball shooting, and the Charleston church shooting.  Any ideology can be used as an excuse for deranged behavior.  Sayfullo Saipov represents Muslims as much as the Ku Klux Klan represents Christians.

“Trump and Graham are suggesting that the suspect should be treated as an enemy combatant and sent to the U.S. military base at Guantanamo Bay, outside our criminal justice system.  This reckless proposal ignores the reality that our federal courts have regularly handled proceedings for numerous al Qaeda and ISIS suspects, including the recent conviction of the Chelsea bomber. By calling for an end to the diversity visa program and renewing his calls to pervert our national security screening process,  Trump is seizing on this attack to further his agenda to radically transform our immigration system to keep out Muslims and other non-white immigrants.”

Feds file terrorism charges against Sayfullo Saipov: Federal prosecutors brought terrorism charges Wednesday against the Uzbek immigrant Sayfullo Saipov, saying he carried out the attack in response to the Islamic State group’s online calls to action and picked Halloween because he knew more people would be out on the streets, the Associated Press reported. Even as he lay wounded in the hospital from police gunfire, 29-year-old Sayfullo Saipov asked to display the ISIS flag in his room and said “he felt good about what he had done,” prosecutors said in court papers. The charges can bring the death penalty.

Interfaith Vigil for Peace:  In response to the attack, religious leaders from Jewish, Muslim, Christian, Buddhist and Hindu community organized Wednesday’s interfaith Vigil for Peace. It was held in Foley Square, located between the African Burial Ground National Monument and New York County Supreme Court, and which served as a triage centre on September 11, 2001.

The assembled crowd joined in prayer and song, and representatives from the city government and community nonprofits addressed the tragedy and grief after the attack and the importance of coming together in solidarity.

There have been several unforeseen consequences of Trump’s victory and the apparent Muslim “animus” of Trump’s administration, Harold Levine, a Jewish New Yorker, told Al Jazeera after the vigil.

One such consequence is the opening up of “channels of communication between New York’s Muslims and the Jewish community”.

Last year, Levine did not have any Muslim friends. He did not know that Islam considers Moses, David and Solomon to be prophets. He did not know that both Jews and Muslims use non-secular calendars and traditionally pray multiple times a day. Today, he is involved with the Jewish-Muslim Outreach Initiative for Congregation Beit Simchat Torah, has volunteered to serve multiple Iftar meals and counts several Muslims – including Dr Debbi

Zaid Nagi, the vice president of the Yemeni American Merchants Association in New York, was quoted by Al Jazeera as saying that each time an attacker turns out to be a Muslim, he knows that his life and the lives of those in his community will only get harder. “They look like us; they sound like us,” Nagi said, “but they do not represent us.”

Trumps Foreign Policy And Legal Woes

Arshad M Khan

Tales of exaggeration and outright lies by this president are not new.  In 1974, the New York Times did a profile on the young Trump.  He claimed he was worth $200 million when his taxable income then was $2,200 a week; that he was of Swedish heritage; that he had graduated at the top of his class at Wharton!   Claims of high intelligence are repeated often, and an assurance of how he would get better deals abroad.

Which brings us to his foreign policy.  His campaign promoted America First, a doctrine earning its name before WW2 when proponents wanted the US to stay out of another European war.  Roosevelt thought otherwise and the Japanese ended the issue.

Since the election, however, the only isolation Mr. Trump has initiated is in the unintended alienation of allies.  Against foes, he has been quite belligerent.  He has threatened to annihilate North Korea; he ordered missile strikes against Syria when the evidence of its culpability was vague; the stepping back from the Iran nuclear deal and his clear backing of the Saudis place him in the Sunni camp against the Shias.

While closely aligned with Netanyahu, he claims to be pushing for a peace deal.  He certainly has of a different source.  Beset by the new Trump-Netanyahu-Saudi alliance, the Palestinian factions Hamas and PLO have agreed to peace (at least a truce) and power sharing.

Trump’s pugilistic approach to trade has offended friends and rivals prompting Angela Merkel’s caustic remark that if Americans want to sell cars here, why don’t they make cars Germans would want to buy.  Meanwhile, China and Russia are drawing closer, swooping up Iran, possibly Turkey and other peripherals while Trump threatens Pakistan, now less dependent than ever on America.

He has sent an additional 6,000 troops to Afghanistan, a drop compared to Obama’s efforts which failed.  They have made no difference and the Taliban control half the country.

If all of this constitutes foreign policy, its strategy remains a mystery while it has all the makings of a mishmash response to events in ways ill-informed even thoughtless.

Meanwhile the specter of his Russian problem looms larger turning partly real with the indictment of Paul Manafort Jr., who managed the Trump campaign briefly, and the guilty plea of campaign foreign policy adviser George Papadopoulos for lying to the FBI about his connection with the Russian government’s efforts to influence the 2016 election.  The latter could conceivably lead to the White House particularly when Papadopoulos is busy negotiating a lenient sentence in exchange for information and could involve others.

Of course, the Clinton campaign spent $12 million trying to get dirt dug up on Trump including the notorious dossier compiled by Christopher Steele, a former British Intelligence operative turned consultant, who founded Orbis Business Intelligence the firm hired.

Six of one and half a dozen of the other as each campaign tried to acquire ammunition to smear the other.  So, what else is new?

Israel As A Bulwark Against Communism

Nauman Sadiq

Is this not one of international politics most significant ‘coincidences’ that the Balfour declaration for the creation of Israel was adopted in the same fateful year, November 1917, in which the February and October 1917 communist revolutions were taking place in Russia?

No informed person can deny the importance of energy for industrial economies, but it is generally assumed in the foreign policy circles that oil took the center stage in international politics after the collective Arab oil embargo of 1973 against the West, when the price of oil quadrupled within a short span of time.

It is a fact that Washington became so paranoid after the 1973 oil embargo that it put in place a ban on the export of crude oil outside the US borders — which is still in place — and began keeping 60 days stock of reserve fuel for strategic and military needs.

More to the point, the view that oil took the center stage in global politics after the 1973 oil embargo is a mistaken assumption. Direct and indirect control of energy resources played a critical role in international politics since the early 20th century.

The great powers of yore first realized the importance of oil during the First World War when Germany’s military capabilities were severely handicapped due to the shortage of fuel for its aircrafts, ships and mechanized ground forces, such as heavy artillery and armored corps.

Notwithstanding, here is a list of a few sources which will serve as irrefutable evidence to bring home the point that the critical importance of the Middle East’s oil predates the 1917 Balfour declaration for the creation of Israel:

First: The Anglo-Persian Oil Company was founded in 1908: Volume production of Persian oil products began in 1913 from a refinery built at Abadan, Iran; for its first 50 years, it was the largest oil refinery in the world.

Second: The Standard Oil of United States was established in 1870: the Standard Oil Company and SOCONY Oil Company became partners in providing markets for the oil reserves in the Middle East. In 1906, SOCONY (later Mobil) opened its first fuel terminals in Alexandria, Egypt.

Third: The Burmah Oil was incorporated in 1886: It played a major role in the oil industry in South Asia for about a century through its subsidiaries and was also instrumental in the discovery of oil in the Middle East through its significant influence over British Petroleum (BP).

Fourth: The Iraq Petroleum Company: The forerunner of the Iraq Petroleum Company (IPC) was the Turkish Petroleum Company (TPC), which grew out of the growing belief, in the late 19th century, that Iraq contained substantial reservoirs of oil.

And lastly: The San Remo Conference: The San Remo Resolution adopted on 25 April 1920 incorporated the Balfour Declaration of 1917. Under the Balfour Declaration, the British government undertook to favor the establishment of a Jewish national home in Palestine. Britain received the mandate for Palestine and Iraq; France gained control of Syria, including present-day Lebanon.

After taking a cursory look at this incontrovertible proof, it becomes amply clear that the establishment of a Jewish homeland in Palestine on religious and historical grounds was merely a pretext for creating a settler colony in the energy-rich and Arab-majority Middle East. The location for the creation of Israel was carefully chosen right next to the geo-strategically critical Suez Canal through which most of Persian Gulf’s oil and maritime traffic between the Mediterranean and the Indian Ocean passes every day.

In the fateful year of 1917, the First World War was nearing its end and the communist revolutions were taking place in Russia. The rise of communism in Russia was a unique phenomenon which threatened the industrialized nations and their control over their colonies and the global political and economic order.

Geographically, the former Soviet Union was right next to the Persian Gulf countries, including Saudi Arabia, Kuwait, UAE, Iraq and Iran, which together hold more than half of world’s proven oil reserves — 800 billion barrels out of world’s total proven crude oil reserves of 1500 billion barrels.

In the event of an outbreak of a war between the Western powers and the Soviet Union, the latter clearly had an advantage over the Western powers to seize the Middle East’s oil resources due to its geographical proximity. Apart from such a contingency, another factor which must have played a role in the thinking of Western military strategists is the appeal of egalitarian socialist economic system to the masses of the Third World and particularly the Arabs. The fact that some rudimentary socialism emerged during the Pan-Arab nationalist movements of 1960s lends further credence to this theory.

Here, we must keep in mind the demographics of Palestine in the 1920s: there were approximately 50,000 Jews; 50,000 Christians; and more than 700,000 Arab Muslims in the areas comprising present-day Israel and Palestine. Over the course of next few decades, however, the demographics were changed by shipping hundreds of thousands of East European Jews to Palestine.

Let me clarify here that I am not a Holocaust denier. I do feel sympathy for the European Jews who genuinely were the victims of Nazi atrocities. But by what logic or norm of justice, Roosevelt and Churchill pledged to compensate the victims of the Europeans at the cost of a third party, which had no business in that whole sordid saga? If A commits a crime against B, B is entitled to get compensation from A, but not from C which is an unrelated party.

As I have contended earlier that the case for Israel was predicated on two arguments: historical and religious, but neither of those arguments are plausible. International politics is mostly about inter-state rivalries and the conflict of national interests. The colonial powers wanted to create a settle colony in the middle of Arab-majority Middle East to appropriate its vast energy resources.

With the benefit of hindsight, it appears that the Western powers didn’t need such a settler colony when they have already acquired numerous leased military bases all over the Middle East in which 35,000 US troops are currently stationed to protect Washington’s ‘strategic interests’ which is a euphemism for energy interests.

The value of a land-based colony has been further diminished with the advent of modern navies and naval-airpower, especially aircraft-carriers which are like mobile and floating military bases protecting the trade and energy interests of the corporate empire in the international waters and the Persian Gulf.

But the nuclear-powered Nimitz-class aircraft-carriers were only a subsequent development (developed in 1975); back in 1917, when the colonial powers conceived the idea of market-powered, Zion-class aircraft-carrier: the USS Israel, they had little idea that it will become more of a liability than an asset.

Australian government starves refugees on Manus Island

Oscar Grenfell 

Six hundred refugees are suffering dehydration, hunger and worsening mental health problems at the Manus Island Detention Centre in Papua New Guinea (PNG), after the Australian government moved to close the facility last Tuesday. The shutdown followed a ruling by the PNG Supreme Court last year that the centre was “illegal” because it deprived the refugees of their freedom without charge.

The asylum-seekers are threatened with an attack by heavily armed PNG military and police personnel. Begsy Karaki, a senior officer in charge of the Lombrum naval base where the centre is located, declared on Thursday that his troops were prepared to remove the asylum seekers with force if they received an order.

Australian contractors, hired by the Liberal-National Coalition government of Malcolm Turnbull, cut pipes and emptied water tanks before leaving the centre Tuesday morning. The final shipment of food, which arrived on October 29, contained less than two days of rations.

The remaining electricity to some sections of the camp was shut-down on Wednesday. Many refugees at the facility are unable to charge their mobile phones, which they have relied upon to maintain contact with the outside world.

On Friday, PNG naval and immigration forces blocked a boat of local residents that was transporting food to the centre. The day before, they prevented a church group from bringing emergency supplies.

These measures are in line with the Coalition government’s strategy of forcing the asylum-seekers out of the centre by starving them, depriving them of water, communication and every other necessity of life. The Australian government is demanding they go to other facilities on Manus and the Pacific Island of Nauru, which the refugees have said are unsafe.

On Wednesday, Nat Jin Lam, the regional representative of the United Nations Human Rights Commission (UNHCR), said that two “alternative accommodation” centres at Lorengau were not fit for human habitation.

Directly rebuffing the claims of the Australian government, Lam said the facilities he had inspected were still under construction. One of them reportedly lacks running water and power and neither have a security fence. “I would not be bringing any refugees to stay there, not in that state,” Lam said. One refugee who accepted a transfer to the facility left shortly after arriving, making a three-hour walk back to the main detention centre.

The crisis on Manus Island underscores the criminality of the “border protection” program implemented by successive Coalition and Greens-backed Labor governments. Their policies, including consigning refugees to concentration camps in the Pacific, have made Australia a world model for the persecution of asylum-seekers.

On Thursday, Behrouz Boochani, an Iranian refugee at the Manus Island camp shared a shocking picture on Twitter of asylum-seekers digging a well. “They were digging for hours and finally found water,” Boochani wrote. “I don’t know if this water is clean enough to drink or not, but the refugees are drinking from it.” Refugees have also sought to stockpile water in bins and to collect any rainwater.

Boochani and other asylum-seekers have indicated that the situation within the camp is becoming increasingly dire. On Thursday, he tweeted: “At the moment hundreds of naked men are lying around me. They are starving and their bodies are getting weak.”

There are also growing fears of disease outbreaks as a result of the lack of running water and functioning toilet facilities.

Refugees do not have access to required medication or treatment, and at least one of the detainees self-harmed this week. A United Nations report last year found that asylum-seekers on Manus Island had “amongst the highest recorded rates” of depression, anxiety conditions and post-traumatic stress disorder “of any surveyed population” in the world.

The Australian government’s actions have provoked mounting opposition. The UNHCR issued a statement on Friday night, demanding that services be restored to the centre. It rejected the Coalition government’s claim that it is no longer responsible for the men, and called for them to be transported to the Australian mainland immediately.

Former PNG Prime Minister Sir Michael Somare said Australia’s stance was “ruthless and “hypocritical.” “Don’t treat them as animals, they’re not animals, they’re human beings,” Somare said. His two governments, however, like successive PNG administrations, actively collaborated with Australia’s persecution of asylum-seekers.

Within Australia, prominent human rights organisations have voiced support for a legal case by the refugees before the PNG Supreme Court, aiming to halt their forcible transfer. On Friday, at least three students were arrested after briefly occupying the Sydney office of the Department of Immigration and Border Protection.

Immigration Minister Peter Dutton has responded by repeatedly declaring that “activists” are responsible for the ongoing standoff because they have supported the refugees’ refusal to leave the centre.

Prominent Labor MPs, including the party’s federal leader, Bill Shorten, have sought to cover-up their own responsibility for the unfolding catastrophe. It was the Greens-backed Labor government of Julia Gillard that in 2012 reopened the Manus Island centre, and decreed that the refugees sent there would never enter Australia.

In a statement on Friday, Shorten denounced the government for failing to arrange “resettlement” options. He reiterated the Labor Party’s rejection of the right to seek asylum, which is enshrined in international law, declaring, “We would never countenance anything that would put the people smugglers back in business. Australia is not and must not be a resettlement option.”

Shorten touted an “offer” by the newly elected New Zealand Labour government of Jacinda Adern, to “resettle” 150 of the asylum-seekers. Adern, who is in a coalition with the far-right New Zealand First Party, centred her election campaign on denunciations of immigrants and refugees.

Moreover, international law experts have previously indicated that the forcible government transfer of refugees from one country to another could amount to human trafficking. Demonstrating the real character of the New Zealand proposal, Shorten favourably likened it to a “people swap” arrangement with the United States.

Under that deal, just 54 refugees are being “resettled” from detention centres in the Pacific to the US. They have first been subjected to an “extreme vetting” process, including prolonged interrogations, and face an uncertain future, as the Trump administration escalates its attacks on immigrants.

For their part, the Greens have denounced the Coalition government as “inhumane” and “callous.” They were in a de facto coalition government with Labor when it reopened Manus, however, and thus bear central responsibility for the disaster that is unfolding.

Escalation of Universal Credit rollout in UK threatens millions more with poverty

Robert Stevens

In the days since the Universal Credit (UC) welfare benefit was rolled out more broadly, many people have been plunged into severe poverty.

Beginning last month Universal Credit, the Conservative government’s cover scheme for slashing welfare, was introduced to a further 45 job centres across the country. Each month about another 50 will be added. UC was first introduced in 2010, with about five job centres a month bringing it in at that stage.

Universal Credit is a benefit payment system for working-age people that merges all entitlements into one payment. The benefits replaced are income support, income-based jobseeker’s allowance, income-related employment and support allowance, housing benefit, child tax credit and working tax credit. As of October, 610,000 people received receive universal credit, with more than a third of these in employment.

According to an Institute for Fiscal Studies report, Universal Credit will cost 2 million in-work families £1,600 a year and more than 1 million out-of-work families £2,300 a year. Research by the Child Poverty Action Group found that single parents and families with three children faced losing an average £200 a month.

Huge cuts in the value of the benefit have already been imposed. In 2016, cuts to UC were implemented for some 80,000 households. By 2020, UC cuts will be extended to 1 million households across the UK, saving the government £3 billion a year. This is part of the government’s commitment to imposing £12 billion in welfare cuts, as part of its ongoing austerity programme, by 2020.

The UC cuts, first announced in 2015, lower the amount people can earn before low-wage subsidies are reduced. The changes cut the amount of money working people can expect to be paid by the government when their employers provide only a pittance in wages. The new earnings level at which benefits will begin to be withdrawn is now set at a flat £192 a month, down from previous levels of £222 a month for a couple and £263 a month for a single parent.

UC will hit the most vulnerable people particularly hard. It will push a million more children into poverty by 2020, with 300,000 of them under five. According to disability charities, half a million disabled people and their families will be worse off under Universal Credit. This is due to the removal of disability premiums and cuts to child disability payments. Up to 100,000 children face an annual loss of £1,000 under the system.

Thousands of people have been thrust overnight into abject poverty due to the fact that it takes at least six weeks for claimants to first receive a payment under the UC system. Almost a quarter of all claimants have had to wait more than six weeks to receive their first full payment of the benefit because of errors and problems involved in evidencing their claims. The only way that claimants are able to receive any money in the meantime is if they can demonstrate dire financial need, such as not being able to eat or afford heating. They can then apply for a “short-term advance” loan that must be paid back, but is only worth a maximum of 50 percent of the value of their benefit.

The rollout of UC is resulting in people, including their families, going hungry and forced to turn to food banks. Others have been evicted or refused a home. Speaking to the BBC, a UC claimant who had already been waiting two weeks for a payment said, “I’ve got no money, nothing, I don’t even have four pence to my name.” The woman said she relied on food banks and pointed out that her friends had been forced to wait for 12 weeks to receive a payment.

In one case, a student was not able to receive a UC payment for months because of a mix-up in the housing benefit element of it. After four months, he had built up rent arrears of over £4,000 that was supposed to paid directly from his UC to the hostel where he was staying.

For the last four years, many people in desperate need were forced to call a premium cost UC hotline for advice, which—until it was ended last month—charged them up to 55 pence a minute.

As well as facing delays in receiving UC payments, many of those on the benefit continue to receive punitive “sanctions” aimed at cutting the pittance they receive even further. Financial penalties are imposed if claimants do not adhere to a Claimant Commitment, which stipulates strict and often arbitrary conditions on looking for work, applying for jobs, reporting a change in circumstance, paying rent and attending training.

In the city of Leeds—where 50,000 current Housing Benefit claimants and 55,000 current Tax Credit claimants are due to transfer to UC by June 2018—a quarter of single unemployed people moved onto UC have been hit by sanctions. In areas where UC has been rolled out in Leeds, data shows a big increase in the numbers of people in rent arrears, and using food banks.

The government is imposing UC, despite losing a parliamentary vote on its extension to millions more people. On October 18, Parliament voted by 299 votes to zero to temporarily halt the introduction of UC. Opposition parties in Parliament, led by Labour, passed a motion calling for the government to pause the rollout of UC. The vote was allowed as part of an Opposition Day Debate, of which there are 20 per parliamentary session.

In the face of mounting anger in the population, Theresa May’s crisis-ridden government instructed its ministers and MPs to abstain. This was due to their fear of a rebellion as at least 12 Tories as well as MPs from its governing partner, the Democratic Unionist Party, were prepared to back Labour. Despite the call, one Tory, Sarah Wollaston, backed the Labour motion.

The government responded to the vote by declaring it was not binding and that it would continue to roll out UC regardless.

Despite the rhetoric spouted by Labour leader Jeremy Corbyn over the terrible impact of UC on millions of the working poor and unemployed, Labour’s motion—signed by Corbyn and his main ally, John McDonnell—called only for UC’s rollout to be paused for six months and modified. Nothing in principle is opposed regarding the UC system, with Labour MP Debbie Abrahams introducing the motion with a “genuine offer to work with the Government to address the very real concerns about universal credit, particularly its design flaws, the administrative issues and the cuts.”

On the basis that UC is a “simplified online-only way of receiving benefits,” Scottish National Party MP Mhairi Black said, “I find myself in a bizarre situation: I am going to stick up for the principles behind a Tory policy.” Pointing out other “absolutely reasonable” aspects of the system, Black continued, “[I] stress again that we are not calling for universal credit to be scrapped altogether.”

In his speech to Parliament during the debate, Tory MP Matt Warman was able to declare, “It is important to … realise why Members on both sides of the House agree on the principles of universal credit. For all the smoke and fury, even the Labour Party is calling only for a pause in this reform, because all of us, on both sides of the House, know it is essential. If we do not persist with it, we will not deliver the essential savings and the benefits that are vital for our constituents.”

Billionaire CEO Joe Ricketts shuts down DNAinfo and Gothamist after unionization vote

Michael Walters & Alexander Fangmann 

Billionaire Joe Ricketts, the owner of the local news focused websites DNAinfo and Gothamist, abruptly shut down their web presence and removed online access to their archives on Thursday, in evident retaliation for a recent successful unionization vote. However, the move should be viewed not just as an act of right-wing union busting but as an outright act of political censorship by Ricketts, who is heavily active as a supporter of the Republican Party, and whose $2.1 billion net worth derives primarily from his role as founder of the financial brokerage firm TD Ameritrade.

DNAinfo and Gothamist, the latter of which had been acquired by Ricketts only in March, focused on local issues in New York City, Chicago, and other large American cities including Los Angeles, San Francisco and Washington, DC. By reporting primarily on local issues, their reporters often covered stories that larger news outlets did not, including stories about police brutality and municipal political corruption. Such information was popular enough to draw around 15 million site visits per month.

Last week, the National Labor Relations Board (NLRB) held a formal vote, in which 25 out of 27 newsroom employees in the New York office voted to join the Writers Guild of America East (WGA East). The NLRB vote was held after Ricketts refused to recognize the union after workers had agreed to the WGA East’s unionization effort in April.

Ricketts, who epitomizes the outlook of the financial aristocracy, has been outspoken in his hostility to unions or to any encroachment on the rights of the bourgeoisie to trample on workers in any way they see fit. In an entirely self-serving September 12 blog post titled “Why I’m Against Unions at Businesses I Create,” Ricketts wrote that “unions exert efforts that tend to destroy the Free Enterprise system,” and blamed them for destroying the supposed “esprit de corps” between ownership and labor.

According to a report in the New York Times, Ricketts told workers during the unionization effort, “As long as it’s my money that’s paying for everything, I intend to be the one making the decisions about the direction of the business.” At around the same time, DNAinfo’s COO sent an email threatening that unionization might be “the final straw that caused the business to close.”

After Ricketts purchased Gothamist in March, co-founder Jake Dobkin began a campaign of dissuading his reporters from unionizing, insisting that Ricketts would close the company if they did. It is notable that after acquiring Gothamist, the site removed from its archives several articles critical of the Ricketts family.

In February, DNAinfo fired five of their more high-profile reporters including their Criminal Justice editor Murray Weiss, political reporter Jeff Mays and investigative reporter James Fanelli.

Workers at both websites were apparently blindsided by the decision to shut down operations, with reports indicating that reporters were filing stories in Chicago up until the point that all links to the sites were redirected to a letter from Ricketts explaining his reasons for the closure.

In the letter Ricketts cynically states. “… DNAinfo is, at the end of the day, a business, and businesses need to be economically successful if they are to endure. And while we made important progress toward building DNAinfo into a successful business, in the end, that progress hasn’t been sufficient to support the tremendous effort and expense needed to produce the type of journalism on which the company was founded.”

Ricketts’ decision to cut off access to the site and its archives was seen as a particularly vindictive form of retaliation against the now-fired journalists and editors, who are normally expected to provide examples of their work when applying to jobs. Since then, access to old articles has apparently been restored, though it is not clear if this will be permanent. A company spokesperson on Thursday said that details concerning preservation and archiving of site content would be addressed in the coming weeks.

With the closure of the sites, 115 journalists and staff members are now out of a job. According to the Times, they have been offered a paltry three months of “administrative leave” at full pay, and four weeks of severance pay.

In response to these sweeping attacks on journalists and the information they produced over the course of many years, the WGA East issued a characteristically tepid statement, making clear it would not mobilize its membership in defense of the fired journalists, instead working to dissipate popular outrage into futile legal appeals. “It is no secret that threats were made to these workers during the organizing drive,” the WGA East wrote. “The Guild will be looking at all of our potential areas of recourse and we will aggressively pursue our new members’ rights.”

Ricketts and his children, Todd, Laura, Pete and Tom have been extremely influential in national and state politics, funding Democrats and Republicans alike, spending millions of dollars influencing the 2016 US presidential election. Joe and his wife Marlene had initially opposed Trump during the 2016 Republican primaries and donated almost $6 million to anti-Trump super PACs.

Drawing the candidate’s ire, Trump tweeted “I hear the Rickets [sic] family, who own the Chicago Cubs, are secretly spending $’s against me. They better be careful, they have a lot to hide!” As the race drew closer to the election Ricketts eventually donated $1 million to a pro-Trump super PAC and had spent almost $15 million on the election cycle.

In exchange for their support, Todd Ricketts was nominated by Trump as Deputy Secretary of Commerce. Eventually Todd withdrew his nomination to avoid scrutiny of his network of financial holdings. Todd has donated over $209,000 to largely Republican causes including current Governor Bruce Rauner as well as to Chicago’s Democratic Mayor Rahm Emanuel.

Laura Ricketts was a fundraiser for Hillary Clinton’s campaign and has donated over $440,000 to mainly Democratic candidates including current gubernatorial candidate Daniel Biss, former Cook County State’s Attorney Anita Alvarez and former Governor Pat Quinn, and State Attorney General Lisa Madigan.

Pete Ricketts is the current Republican Governor of Nebraska.

Tom Ricketts was instrumental in the family’s successful bid to purchase the Chicago Cubs baseball team. Again, exemplifying the aristocratic principle, the family threatened to relocate the Cubs to the suburbs if the city stood in the way of their plans to remodel the stadium and redevelop large areas around the stadium.

Joe Ricketts’ decision to close the publications and block access to years of reporting should come as a dire warning to the working class. Democratic rights are being systematically and ever more dramatically chipped away. As social inequality grows to ever greater heights the capitalist aristocracy can no longer accept the right to a free press.

Along with the campaign being waged by Google and other internet companies to censor political opposition to the policies of the US government, which has already found expression in the blacklisting of the WSWS and other left-wing websites and journalists, even mainstream media sites are being reined in and shut down. Absent the independent political intervention of the working class, there is little stopping the billionaires and corporations that own news outlets and social media platforms from resorting to similar tactics.

French state of emergency expires in name, but police state remains

Alex Lantier & Kumaran Ira 

On November 1, nearly two years after its imposition after the 13 November 2015 terror attacks in Paris, the French state of emergency formally expired. It was by far the longest time that democratic rights were suspended in France since the state of emergency was created by law and then imposed in 1955, amid the Algerian war for independence against France.

The passage of the November 1 deadline does not, however, signify that the French masses are now secure in the enjoyment of democratic and social rights formally guaranteed by the post-World War II constitution. It does not even signify a return to the conditions that existed before the 2015 terror attacks carried out by the Islamic State (IS) in Paris. Rather, it is ever clearer that France’s state of emergency was part of a fundamental political shift internationally by the capitalist class towards dictatorship.

The French state of emergency proved to be the first of a series of escalating attacks on democratic rights by NATO governments, ever more directly targeting popular opposition to war and austerity. Across the Pyrenees, Madrid is imposing Article 155 of the Spanish constitution to suspend Catalonia’s elected government and, after the brutal police crackdown on the October 1 Catalan independence referendum, impose direct military-police rule in the province.

As the state of emergency expired in France, US intelligence officials were testifying to the US Congress that social media corporations censor oppositional views, which they denounced in McCarthyite manner as tools of foreign subversion. “We all must act now on the social media battlefield to quell information rebellions that can quickly lead to violent confrontations and easily transform us into the Divided States of America,” said one.

Within France, politicians and the media boast that the state of emergency could be re-imposed at any time. Interior Minister Gérard Collomb said, “We may have to put it back in place, we will make sure we can handle crisis situations. If things became very dramatic, we could come back to the state of emergency.”

Moreover, French President Emmanuel Macron is pushing through an even deeper attack on democratic rights than the state of emergency two years ago. Before the state of emergency expired, he set up a permanent state of emergency in the form of a draconian anti-terror law signed on October 30. It permanently dispenses with basic democratic rights, prolonging the most widely used police powers of the state of emergency. It allows security forces to:

* carry out arbitrary searches and seizures in private homes or any area declared a “security zone;”

* impose house arrest and electric monitoring of individuals for up to one year at a time;

* carry out warrantless identity checks in areas around borders, train stations, and airports in which two-thirds of the French population lives;

* collect and store all electronic, telephone and e-mail data of anyone police believe could be connected in the present or future to “serious crime.”

The law also institutes draconian limitations on freedom of conscience and expression. It allows the state to dismiss public sector workers whose beliefs it declares to be “incompatible” with their duties. It also allows security forces to close down any place of worship whose “ideas or theories” are considered to incite terrorism, hatred, or discrimination.

Two years after the imposition of the state of emergency, it is untenable to claim that this was simply a “war on terror” reaction to IS attacks like the 7 January and 13 November 2015 terror atrocities in Paris. Rather, it was the response of the ruling class to a mortal crisis of capitalism. It used these attacks to respond to escalating class tensions after a quarter century of imperialist war and social austerity since the Stalinist dissolution of the Soviet Union in 1991 by a turn towards dictatorship and the legitimization of neo-fascism.

The main targets of the state of emergency were not the Islamist networks that carried out the 2015 attacks. Rather, it aimed to terrorize working class suburbs in France and popular opposition to ever deeper assaults by the European Union (EU) and the French ruling class on basic social rights.

During the state of emergency, there were over 4,300 extrajudicial searches and seizures, and over 750 people were put under house arrest. Just under 1,000 legal cases were opened, 75 security zones were set up, and 41 people are still under house arrest in France. However, the state of emergency led to only 20 counter-terrorism investigations.

This number pales in comparison to the over 1,700 fighters whom Islamist networks sent from France to Syria, as over 5,000 Europeans in total went to Syria. The vast majority of those passing through these networks long enjoyed tacit official support, as NATO waged war for regime change in Syria. The forces that carried out the 7 January attack on Charlie Hebdo and the November 13 attacks could plan and carry out the attacks not because they escaped detection, but because the networks of which they were a part were protected tools of war policy.

Both attacks were prepared by well-known members or associates of the Buttes-Chaumont group in Paris. This is Al Qaeda’s most famous cell in France, founded by veterans of the CIA’s covert war in Afghanistan against the USSR in the 1980s; it retains close links to Al Qaeda in the Arabian Peninsula and Al Qaeda in the Islamic Maghreb and is closely watched by French intelligence. Both the Kouachi brothers that attacked Charlie Hebdo, and Salim Benghalem, who helped Abdelhamid Abaaoud plan the November 13 attacks, were members of this cell.

French imperialism reacted to the attacks not by shutting down Islamist terror networks, but by using the attacks to shift politics far to the right, amid a collapse of France’s old, discredited political system. After the 2015 terror attacks, neo-fascist leader Marine Le Pen was repeatedly invited to the Elysée presidential palace by then-President François Hollande.

Le Pen emerged as a credible presidential candidate under conditions where the intelligence ties of the Islamist attackers were hushed up, and magazines and newspapers falsely blamed the attacks on a religious war they claimed broad sections of France’s Muslim population were waging.

A key role in this was played by pseudo-left groups like the New Anti-capitalist Party. Having backed the war in Syria, they were silent on the security services’ complicity with the Islamist networks and implicitly backed the charade of the “war on terror.” As the two main parties of France’s post-1968 political system, Hollande’s Socialist Party (PS) and The Republicans (LR), both collapsed, the pseudo left thus helped shift French mainstream bourgeois politics far to the right.

Above all, Hollande used the state of emergency to ram through unprecedented social cuts demanded by the banks. After a decade of austerity in Europe, anger exploded last year in youth and sections of the working class in France at Hollande’s labor law. The state of emergency played a key role in setting up violent police crackdowns on protesting students and strikers, and in creating conditions for the union bureaucracy to wind down the protests, after the PS took the unprecedented step of threatening to ban them.

The resort of the ruling class in France and internationally to dictatorial measures is, however, not in the final analysis a sign of strength but of desperate weakness. As it threatens the working class with dangers of dictatorship and war unprecedented since the bloodiest years of the 20th century, the bourgeoisie is also exposing the insoluble crisis of the capitalist regime and blowing up the mechanisms through which it contained the class struggle.

The task of the Parti de l'égalité socialiste and the other sections of the International Committee of the Fourth International is to give a revolutionary and socialist perspective for the workers struggles to defend basic social and democratic rights that are on the horizon.

UAW-corporate corruption scandal spreads to Ford and GM

Eric London

The United Auto Workers (UAW) in the United States is the subject of an expanding scandal that has cast a light on its corrupt and incestuous relationship with the Big Three auto companies.

In late July, a federal indictment was unsealed detailing charges against top UAW officials and a corporate executive at Fiat Chrysler (FCA). On Tuesday, the Detroit News reported that the FBI is adding Ford and General Motors to its investigations into a network of bribes funneled through training centers jointly operated by the UAW and the auto companies.

The indictments involving FCA revealed that leading UAW executives received over $4.5 million in payouts from company officials. The money was allegedly transmitted through the joint training center and laundered through several charities, children’s centers and hospice programs. Union officials lavishly spent money officially earmarked for worker training on themselves and their relatives, purchasing furniture, jewelry, designer clothing, international vacations and other luxury items.

Those charged so far include Monica Morgan, the wife of former UAW Vice President General Holiefield, who would be indicted but for his death in 2015; former UAW negotiator Virdell King; Chrysler lead negotiator Al Iacobelli; and Chrysler financial analyst Jerome Durden. Durden and King have both pleaded guilty to corruption charges as part of a deal with prosecutors. UAW Vice President for Chrysler Norwood Jewell is also involved, though he has not been charged, as he allegedly received gifts purchased with money stolen by other officials.

According to a report in the Detroit News, the investigation is now expanding to other top UAW executives, including UAW Vice President for GM Cindy Estrada, who oversaw the UAW-GM training center, and her predecessor, Joe Ashton.

Though not named as prominently as Estrada in the Detroit News report, UAW Vice President for Ford Jimmy Settles oversees the UAW-Ford training center and is also likely under suspicion. All these officials oversee their own charities with funds worth hundreds of thousands or millions of dollars.

The revelations that top officials at the UAW received direct handouts from company executives can come as no surprise to anyone following the operations of the UAW. For decades, the UAW and the other organizations that call themselves “trade unions” have functioned as instruments of corporate management. They are not “workers organizations,” but cheap-labor contractors and an industrial police force that work to suppress any opposition from the workers they claim to represent.

In the case of the UAW, the relationship is particularly naked. While the UAW was forged in the bitter and insurrectionary battles led by socialist-minded workers in the 1930s, it came to be dominated by a pro-capitalist and nationalist bureaucracy. In the 1980s, the UAW and the AFL-CIO trade union apparatus responded to the decline of American capitalism and the social-counter revolution launched by the ruling class by integrating itself more closely with corporate management, forcing through concession contract after concession contract. The “training centers” involved in the corruption scandal were set up then, serving as slush funds for union executives.

In recent years, the UAW—led by executives involved in the corruption scandal—has resorted to outright fraud to force through measures demanded by the companies.

The 2015 contract in particular was rammed through in the face of a groundswell of opposition from auto workers, including the first defeat of a national contract backed by the UAW since 1982 (at Fiat Chrysler). The contract that was pushed through at FCA and then GM and Ford built on measures in earlier contracts, including a multi-tier wage system, poverty-level wages, the expanded use of temporary labor, and cuts in health care and retirement programs.

That these contracts were implemented through bribery and kickbacks makes them legally inoperative. It also lends further support to widespread allegations that the UAW stuffed ballots to pass the contract at Ford in the final vote in 2015.

The World Socialist Web Site played the central role in mobilizing and organizing opposition to the 2015 contracts. It warned at the time that “the biggest obstacle to unifying the working class is the United Auto Workers and the other unions.” We noted that “top union executives receive hundreds of thousands of dollars, padding the salaries and expense accounts derived from dues and cash diverted from the strike fund with compensation from their positions on corporate boards, joint labor-management operations and the UAW’s retiree health care trust.”

In response to the opposition of workers, the UAW hired public relations firm BerlinRosen to improve its image and stop workers from using social media. UAW President Dennis Williams denounced “outside groups” that “like to stir people up” for helping defeat the FCA deal.

AFL-CIO Metro Detroit lead counsel Bruce Miller called the WSWS “vultures on the left dressed in red garb who preach their love for the workers while they advocate on behalf of the enemies of working people.” No word from Miller as to whether the corruption charges change his evaluation of who advocates “on behalf of the enemies of working people...”

Given the current campaign led by the Democratic Party and US intelligence agencies to use allegations of Russian efforts to “sow divisions” in the US to justify a regime of Internet censorship, it should be recalled that it was the UAW that first began employing the term “fake news” to attack the WSWS and autoworkers for using social media to share information and coordinate opposition to the 2015 contract.

The outcome of this operation can be seen in the conditions faced by auto workers. Last month, a 21-year-old Ford Woodhaven Stamping temporary worker named Jacoby Hennings died in an apparent suicide after being disciplined for tardiness by the company. A police report acquired by the World Socialist Web Site shows that Hennings died after seeking help from the UAW. Hennings’ desperation is an acute expression of a near universal phenomenon among autoworkers and the entire working class, which faces precarious and temporary work, uncertain hours, low wages, and a complete absence of rights or real grievance procedures on the shop floor.

The companies, the union, and the entire political establishment fear more than anything else that workers will break from the stranglehold of the trade unions to advance their own interests. Former federal prosecutor Peter Henning told the Detroit News, “If the companies are buying labor peace by corrupting union leadership, that has to be a significant concern. This sends a message that union leaders are just in it for themselves. This can rile up members and lead to an insurgency.”

An insurgency is precisely what is required. Under conditions of growing international tensions, deepening social inequality, mass deportations and police violence, there is no doubt that the coming period will involve the outbreak of large-scale social struggle involving millions of workers and young people. The UAW scandal is further proof that in the trade unions workers confront not their representatives, but their most determined enemies.

Workers need new organizations to advance their interests against the massive corporations that control both political parties, the media, the courts, the police and the unions. New organizations—workplace and neighborhood committees—will be based on the principle of the class struggle and will seek to draw together different strata and sections of the working class to harness their strength in a common fight against the capitalist system.

China Shifts Course, Predicting ‘Minsky Moment’ of Global Financial Instability

Jack Rasmus

The past year the US and global ‘real’ economies have enjoyed a moderate recovery. Much of that has been due to China stimulating its economy to ensure real growth in anticipation of the Communist Party’s convention, which has just ended. China’s president Xi and central bank (Peoples Bank of China) chair, Zhou, have announced, post-convention, that China’s real growth will slow and have warned a global ‘Minsky Moment’ (i.e. financial crisis) may be brewing. China will now try, once again, to tame its shadow bankers and speculators who have been feeding China’s debt and bubbles, and prepare for the global financial instability that is brewing.

The global financial bubbles–in stocks, bonds, currencies (crypto and real), derivatives, real estate, etc.– have been fueled since 2008 by capitalist central banks–led by the US Federal Reserve and followed even more aggressively by the European Central Bank and Bank of Japan. Central bank ‘free’ money has boosted stock and other financial asset prices into bubble territory and produced historic capital gains profits for corporations, professional investors, and the wealthiest 1% households in the US and worldwide. The world’s approximately 1500 billionaires’ wealth now totals more than $6 trillion–and that is only the officially admitted figure. More is not accounted for in the dozens of tax havens worldwide in which they park their money away from public and tax collectors’ view. US and other governments meanwhile are feverishly trying to pass even more tax cuts for billionaires and multi-millionaires, so they can keep even more $ trillions for themselves. Financial speculation has become the primary means by which the super-rich enrich themselves even more–with the help of central bankers and their paid-for Congressional government tax cutters.

Central banks have enabled their wealth acceleration by providing virtually free money for them to invest in financial markets through borrowing (debt) and leverage. Government tax cutters also let them keep more and more of the free money, profits, and their financial capital gains. Financial bubbles are the consequence. More and more financial writers have begun lately to write articles in the mainstream business press forewarning of the growing bubbles that are the engines of the the super-rich wealth acceleration.

The central banks and their policy of free money have created their own contradictions however. They have enriched the rich as never before, but in so doing have enabled and fueled the bubbles that threaten it all. After 8 years of pumping free money into private banks, corporations, and investors, the US central bank has this past year begun a desperate effort to raise interest rates and try to slow the flow of liquidity from the ‘free money firehose’ since 2008 that have produced a tripling of corporate profits, a quadrupling of US stock prices, bitcoin and crypto-currency bubbles, and $6 trillion of corporate bond debt issuance, much of which has been passed on to shareholders in dividend and stock buyback payouts. But the massive money and capital income growth has also produced financial asset bubbles that are now growing alarmingly as well. So the Fed over the past year has tried to raise interest rates a little to slow down the bubbles. It will be too little, however, as I have argued elsewhere that the Fed cannot raise rates much higher without precipitating a financial credit crunch that will generate the next recession. So the Fed talks tough on rates but does very little. The central banks of Europe and Japan do even less. Global banks and investors are addicted to the free money from the central banks and that policy will change little apart from token adjustments and talk.

The Fed’s (and all central banks’) dilemma is that raising rates and selling off its balance sheet (that will also raise rates) will cause the dollar to rise in global markets, cause in turn currency collapse in emerging markets that will sharply reduce US multinational corporations’ profits offshore. The Fed will not jeopardize US multinational corporations’ offshore profits therefore by raising rates too much. Higher rates will also shut down the US construction sector, already weak (new residential housing is declining), and reduce US consumption spending that is also barely growing, as it is based on debt and savings reductions instead of real wage growth. So the Fed is engaged in a charade of raising rates. And whomever Trump reappoints to the Fed chair after Janet Yellen won’t matter. The same free money policies will continue. For the system is addicted to free money and low rates for years to come–and that will continue feeding financial bubbles.

The Fed, like all central banks today, has become an institution whose main task is to continue subsidizing capital and capital incomes. As the Fed raises rates tokenly, other State institutions (Congress, Presidency) are also embarking on massive tax cuts for corporations and investors to offset the moderate hikes in interest rates coming from the Fed. More than $10 trillion in corporate-investor tax cuts occurred under Bush-Obama. Trillions $ more is coming under Trump.

In the 21st century, advanced capitalist economies are increasingly being subsidized by their states–monetarily by their central banks with free money and fiscally by their governments with more and more tax cuts for corporations and investors. Via both central banks and legislatures, the State is increasingly engaged in reducing capital costs and thus subsidizing capital incomes. This is the primary emphasis of ‘neoliberal’ policy in the 21st century capitalist economy.

The weaker capitalist sectors–Europe and Japan–are engaged in even more aggressive central bank free money provisioning. Europe’s central bank has just announced a ‘sleight of hand’, fake change in monetary policy: reducing its monthly free money injection (which has been benefiting mostly going to Germany and France bankers and corporations), while extending the period over which it will continue its program. It will provide less per month but for longer. Just moving the money around, as they say. Not really reducing anything.

The Bank of Japan has been even more generous to its bankers, investors and businesses. The Bank of Japan has refused to engage in a free money/higher rates charade (US) or language manipulation to fake a reduction in the free money flow (Europe). Japan’s central bank has announced it will continue buying and subsidizing corporate bonds, private stocks, and other financial assets, at an historic pace, thus contributing to propping up financial markets with no end in sight. Not suprisingly, Japan stock and financial markets are also on a tear, rising to levels not seen in 20 years. Similarly, financial asset markets have begun to escalate as well in Europe.

As I have indicated in my just released book, Central Bankers at the End of Their Rope, capitalist central banks are the original primary culprits of the free money policies adopted by all advanced capitalist economies–a policy that has been fueling debt and leverage, and stoking financial asset markets now entering bubble territory once again–i.e. creating the ‘Minsky Moment’ of financial instability about which China’s PBOC central bank chair, Zhou, has just forewarned.

Two big decisions will occur in the US in the first week of November: Trump will announce his new nominee for the chair of the US Federal Reserve Bank and the right wing-dominated US House of Representatives will define the Trump corporate-investor tax cuts further.

But whoever leads the Fed, there will be no real change in policy set in motion decades ago by Greenspan, continued by his protege, Ben Bernanke, and extended by Janet Yellen. Free money will continue to flow from the Fed (and even more freely from the central banks of Europe and Japan). Whether Powell, Taylor, Cohn or whoever are appointed, the policy of free money will continue. Rates will not be allowed to rise much. The private bankers and investors want it that way. And their ‘bought and paid for’ politicians will ensure it continues. Meanwhile, the Trump tax cuts will additionally subsidize corporations and investors at an even greater rate with Trump’s multi-trillion tax cuts. The Trump tax cuts (which follow more than $10 trillion under Obama and Bush) will enable US Corporations to continue paying record dividends and stock buybacks to enrich their shareholders. The $6 trillion in dividends and stock buybacks since 2010 will be exceeded by even trillions more. Income inequality trends in the US will therefore continue to accelerate unabated.

It is true the global economy has ‘enjoyed’ a brief and mild growth spurt in 2017, as noted previously. That growth has been driven by China’s stimulus and by US business inventory investing in anticipations of Trump tax and other deregulation (also cost reduction) policy driven changes. But the growth of the summer of 2017 will soon slow significantly. Now China will purposely slow, as policy shifts to rein in its own financial bubbles and in part prepare for a global ‘Minsky Moment’ crisis that is coming.

Meanwhile, the Trump bump in US economic growth will also fade in 2018, driven up until now largely by inventory investing by business that won’t be realized in sales and revenue in 2018. Working-middle class household consumption has been based on debt and savings reduction instead of real wage income recovery this past year. That is not a basis for longer term growth. Household consumption cannot be sustained. US autos and housing are already fading. Simultaneously, escalating costs of healthcare insurance premiums will cut deeply into consumer spending in 2018 as well. And government spending, now stagnant, will also slow, as Congress cuts social programs in order to offset deficits created by the massive tax cuts for corporations and investors.

In Europe, political instability forces will keep a lid on economic recovery there (a ‘hard’ Brexit looking increasingly likely, Catalonia independence uncertainty, new breakaway regions in Italy soon also voting for independence, the rise of right wing governments in eastern europe, etc.). In Japan, business interests will continue to ignore prime minister Abe pleas to raise wages, as they have for years, while Japan gives the green light to become the global financial center for crypto-currency speculative investing.

Consequently, odds are rising there will be a recession in the US, and globally, by late 2018 or early 2019. That will likely be accompanied soon, before or after, by a new ‘Minsky Moment’ of financial instability that will exacerbate the real economic downturn.