Economic hardship, COVID and political instability dominate today’s Malaysian election

Kurt Brown

An unpredictable election is being held in Malaysia today as a result of a snap dissolution of parliament last month by Prime Minister Ismail Sabri Yaakob, the leader of the United Malays National Organisation (UMNO). With the official opposition parties in disarray, UMNO and its Barisan Nasional (BN) coalition are hoping to capitalise on recent state election victories.

Political instability continues, however, and harsh economic conditions prevail for the working class and rural poor, making the outcome of the election far from certain.

Malaysian opposition leader Anwar Ibrahim shows his ballot during the election at a polling station in Seberang Perai, Penang state, Malaysia, Saturday, Nov. 19, 2022. [AP Photo/Vincent Thian]

Through a combination of gerrymandering, autocratic methods of rule and domination of the media and state apparatus, UMNO-led alliances ruled Malaysia for over 60 years after formal independence in 1957. It therefore came as a political shock when UMNO and BN lost the May 2018 election, despite the gerrymander and pork-barreling of funds to UMNO-preferred electorates.

The underlying cause for UMNO’s loss was mass social anger at inflation, low wages and shocking levels of ruling-class corruption.

The victor, Pakatan Harapan (Alliance of Hope), a supposed multi-racial coalition led by former UMNO Finance Minister Anwar Ibrahim. Marketing itself as progressive and reformist, Pakatan was predicated on ending the vices of UMNO, including endemic corruption, Malay chauvinism against the sizeable Chinese and Indian minorities, Malay crony capitalism, anti-democratic rule and police-state measures.

However, extreme opportunism and desperation for electoral gain at any price has been the norm for Pakatan since its inception. This has caused a collapse in the Pakatan vote in recent state elections.

Ordinary Malaysians confront a growing disparity between wages and rampant inflation, driven by a supply-chain crisis that flows from the ruling elite’s refusal to eradicate COVID, along with the US-NATO led war in Ukraine against Russia.

In the middle of this year, food inflation, including for chicken, which is a staple animal protein, reached 10 percent. This hit middle-class and poorer households particularly hard. In the case of chicken, inflation was significantly driven by price increases for fertilisers due to Western sanctions on Russia (which is a major supplier), with associated increases in the cost of animal feed and crops.

For households in the bottom 40th percentile, approximately 83 percent of average income is required to cover food and non-food expenses, leaving a meagre buffer of 17 percent to absorb any price shocks. For households in the top 20th percentile, the buffer is about 50 percent.

As a result, comments like the following on Facebook have proliferated: “I am eating only two meals a day now. I still need to feed my baby, no matter how difficult life is now.” And on Instagram: “I shop for groceries at wholesale markets instead of supermarkets and I have cut back on outdoor dining. On top of that, we only run one air conditioner between 7pm and 7am.”

There is also the experience of COVID, with about 36,500 official deaths recorded so far. Most of these occurred during the mid-2021 Delta wave, when daily official COVID deaths horrifically exceeded 200 per day from mid-July to the end of September. While daily COVID fatalities are currently much lower at about 5 to 10 per day, dangerous immune-evading variants such as XBB continue to emerge. The official government figures are undoubtedly understated.

Harsh realities like these have translated into hostility toward official politics from workers and the rural poor. As a result, a recent Merdeka Center survey based on 1,209 voters noted that “it is possible to imagine that no single coalition will attain a large enough plurality to form a government with just one other party or coalition.”

UMNO’s calling of an early election, which would otherwise have been held shortly after July 2023, has been prompted by two factors.

First, there is UMNO’s recent state election victories. In Malacca in November 2021, BN secured 21 of 28 seats. This was followed in Johor in March when BN won 40 out of 56 seats. Both results overturn the 2018 state election results, particularly in Johor where Pakatan previously won with a significant margin of seats.

These state election results, however, particularly in Johor, have been plagued by massive voter abstention. Of the 56 seats contested in Johor, 40 had a voter turnout of between 50 and 60 percent, reflecting a generalised level of alienation from political parties, particularly Pakatan.

Far from being in a position of strength, BN only gained an additional 17,000 votes in Johor compared with 2018. That was despite the number of registered voters increasing by about 750,000 due to changes in electoral laws in January that resulted in the automatic registration of voters from ages 18 to 20, as well as previously unregistered voters, disproportionately represented by voters under 30.

Second, UMNO’s early election push was due to the expiry in late July of the “Memorandum of Understanding [MoU] on Political Stability and Transformation.” The MoU was signed in September 2021 by UMNO and Pakatan. That came after UMNO and BN ousted their ethnic Malay rivals, Bersatu and its Perikatan Nasional (PN) coalition led by former Prime Minister Muhyiddin Yassin.

Having deposed Muhyiddin, BN nevertheless formed a de facto coalition government with Pakatan on the basis of ethnic Malay chauvinism. Led by Anwar, Pakatan is made up of ex-UMNO operatives who opposed the blatant corruption within UMNO because it marred the credibility of Malay crony capitalism.

Under the MoU, Pakatan was to support the government or abstain from voting on the budget, supply and motions of no confidence, effectively propping up an otherwise defunct government. In return, the government was to push through certain reforms, including the automatic voter registration laws.

The opportunist character of the MoU was outlined by disgraced former UMNO Prime Minister Najib Razak, who recently lost his appeal against a 12-year sentence for embezzling RM 42 million (USD 9.4 million) from the Malaysian state investment fund, 1MDB. Najib noted in July: “It’s weird that PH [Pakatan] keeps slamming [the government for being incompetent, corrupt and racist] but sticks to [the] MoU.”

For Malaysia’s working class and rural poor, if the 2018 election was about ousting UMNO and bringing in Pakatan as the hope for the future, these expectations have been repeatedly dashed.

The following comments from young Malaysians in the lead up to the Johor state election point to this disaffection: “[The politicians] only talk to each other when they make decisions, they don’t care what we want or think.” “We know they are guilty of stealing so much money from the country… But when regular people steal bread because they are hungry and desperate, they go to jail.” “We don’t need politicians. We can still survive.”

Voters aged 18 to 40 are estimated to make up 58 percent of the electorate, adding to the volatility of the political turmoil.

Infections, hospitalisations and fatalities rise as COVID-19 surges unhindered throughout Australia

Owen Howell

Australia is witnessing a major upsurge in the COVID-19 pandemic, fueled by the emergence of infectious and vaccine-resistant Omicron subvariants and the dismantling by all governments of public health measures to stop the spread.

Health officials are clearly nervous about the surge of infections. While federal and state governments are refusing to re-implement safety measures, they have issued tepid recommendations for mask-wearing and social distancing.

Over the past week, more than 79,000 new infections were reported across the country, 31 percent higher than the November 11 figure. Weekly totals have increased in every state and the Australian Capital Territory. The sharpest rise was in Queensland, where infections soared 73 percent from 5,828 in the week ending November 11 to 10,106 this week.

In NSW and Victoria, where the surge began earlier, cases have doubled within a fortnight. The two states recorded a combined total of more than 48,267 new infections in the week ending Friday, up from 22,676 two weeks earlier.

The official case count, totaling more than 10.5 million infections, is acknowledged to be a vast undercount. Recent serological surveys suggested that 16.9 million people—two-thirds of the population—have already been infected at least once by COVID-19.

Hospitalisations have also risen sharply. Across the country, 2,145 COVID-19 patients are in hospital and 64 are in intensive care. The majority of these are in NSW, where emergency department presentations shot up to 248, from 169 last week. A total of 1,148 people in the state are hospitalised for the virus, the most since September 23. Hospitalisations in Victoria jumped 28.5 percent compared with a week ago, to a total of 352.

In the week ending Friday, 108 people died from COVID-19, up from 83 the previous week. A further 13 fatalities in Victoria were reported today, bringing the country’s total to 15,980.

COVID-19 deaths in Australia up to November 18, 2022 [Photo: (Data from covidlive.com.au)/WSWS]

The systematic removal of all safety measures against the pandemic, beginning last December, has resulted in more than 13,700 coronavirus deaths this year alone.

In Queensland, the state government changed its “COVID risk rating” to “amber,” recommending masks in some indoor settings and for the elderly. NSW Health also updated the rating to “amber” on Friday, “encouraging” the use of masks on public transport and requiring masks in public hospitals and health facilities along with limited visitor numbers.

NSW Health deputy secretary Deb Willcox said the decision was informed by a sudden wave of infection among health workers. “As of 16 November, there were 1,089 health care workers in isolation up from 645 the previous week,” she said.

Along with the fast-tracked removal of effective health measures, the Albanese Labor government’s dismantling of testing, with reporting of positive rapid antigen tests no longer mandatory, has made the true degree of viral transmission difficult to determine.

In a statement acknowledging this, NSW Health wrote: “PCR testing rates have almost halved from what they were at the beginning of the Omicron BA.4/5 wave… [The] changes in Covid-19 testing and reporting means that notification numbers no longer reflect the level of community transmission.”

Independent pathology provider 4Cyte Pathology closed its drive-in PCR testing locations throughout Victoria on Wednesday due to “changes in government policies.” Of 169 COVID testing centres listed on the Victorian government’s website, 77 were closed as of Friday.

The proportion of positive PCR tests in NSW jumped this week from 14 to 16 percent, a further indication of the rapid spread. Meanwhile, catchments of sewage tested in Victoria recorded a “strong” or “very strong” detection of COVID-19.

Despite the severe nature of the new wave, federal health officials are doubling down on the government’s “let it rip” policy, claiming that the worst of the pandemic is “over,” and that Australians must “live with the virus.”

Health Minister Mark Butler told Radio 3AW he hoped the wave would peak by Christmas. “The advice I’m getting is this is likely to follow the trajectory of Singapore… and their wave, in the words of the technical advisers we receive advice from, was ‘short and sharp’ and it’s come down very quickly.”

Chief Medical Officer Paul Kelly, who described the possibility of mass infection with the arrival of Omicron just under a year ago as a “Christmas present,” reassured big business that lockdowns were “not likely,” no matter how high case numbers soared. “My advice at the moment is to be alert but not afraid, I think it would be a good way to look at it,” he said. 

These statements are not based on a scientific assessment of the risks posed by deadly, contagious COVID-19 variants, but are a reflection of the pro-business character of the official response to the pandemic in Australia and worldwide.

In stark contrast to this rosy picture, a recent study by researchers from the University of Tasmania and Deakin University estimated that more than half a million Australians may have symptoms of Long COVID in early December, with 110,000 of them suffering “significant impacts” that would limit their activities.

Professor Martin Hensher, the study’s lead author, said: “It is likely that several tens of thousands of Australian adults will be unable to work in December due to Long COVID.” Hensher noted that Australia was an outlier among similar countries in not having instituted large-scale national surveys about Long COVID.

Doctors are calling on the government to increase data gathering, surveillance, and extra support to care for patients. Professor Karen Price, president of the Royal Australian College of General Practitioners, said on Thursday: “Patients are reporting problems navigating the health system to get proper Long COVID assessment, diagnosis, and appropriate treatment and that must change. There are not enough specialist Long COVID clinics, especially in rural and remote areas, and those clinics that are up and running can’t meet demand.”

Aged care facilities around the country are being hit by a new round of COVID outbreaks. There were 199 new outbreaks reported in residential homes over the past week, raising the current active total to 462. There were also 2,859 combined new resident and staff cases and 40 resident deaths.

The Australian ruling elite is nevertheless pressing ahead with a full economic reopening, accompanied by the evisceration of health measures. Woolworths Group, Australia’s largest supermarket chain, announced this week the removal of its mandatory vaccination policy for staff. The grocery giant, which owns supermarket chain Woolworths and department store Big W, is now only “strongly encouraging” workers to get vaccinated. 

Woolworths also announced plans to change several other COVID protocols, including the removal of plastic screens at self-service check-out counters and physical distancing stickers on the floor. These reminders are being removed, doubtless at significant cost to the company, because they are incompatible with ruling-class lies that the pandemic is over.

Woolworths, the country’s largest private employer with a 180,000-strong workforce, is among the first retailers to revoke the vaccine mandate. This is part of a broader attempt by the financial elite and its political representatives to make the pandemic a distant memory, even under conditions of mass infection, debilitation, and death. Other corporations are certain to follow this step.

The Shop, Distributive and Allied Employees’ Association (SDA), the main union covering Woolworths employees, has not uttered a word of protest over these new developments. This is in line with the role of the trade unions throughout the pandemic.

Despite the growing opposition of healthcare workers, educators and other sections of workers to the intolerable conditions they face under a continuing pandemic, the unions have supported the lifting of restrictions and have consistently opposed lockdowns and other public health measures.

Musk’s attack on Twitter workers brings company to the brink of collapse

Kevin Reed

Media reports on Friday were speculating about the possible collapse of the social media platform Twitter following the resignation of another 1,200 employees the previous day in response to a recent ultimatum given to them by Elon Musk.

The New York Times reported in an article entitled “Elon Musk’s Twitter Teeters on the Edge After Another 1,200 Leave,” that the billionaire owner sent a flurry of urgent all-hands-on-deck email messages on Friday morning to the remaining staff members.

Elon Musk attends the opening of the Tesla factory Berlin-Brandenburg in Gruenheide, Germany, March 22, 2022. [AP Photo/Patrick Pleul]

In one message, Musk said, “Anyone who actually writes software, please report to the 10th floor at 2 p.m. today,” and, in another message 30 minutes later, he said he needed to learn about Twitter’s “tech stack,” a term that describes the social media company’s core software infrastructure.

The Wall Street Journal reported that Musk told the employees that he “planned to be at Twitter’s headquarters himself until midnight, and then back again Saturday morning, and suggested employees based in other locations should fly to San Francisco.”

In departing the company, employees said Musk pushed people to work well over 40 hours a week, but they did not think there was vision to justify it. One worker told the Journal, “Long hours doing good work is awesome, but not with a gun to your head.”

Peter Clowes, a software engineer, posted a lengthy explanation for his decision to leave Twitter, including, “If I stayed, I would have been on-call constantly with little support for an indeterminate amount of time on several additional complex systems I had no experience in. Maybe for the right vision I could have dug deep and done mind numbing work for awhile. But that’s the thing…

“There was no vision shared with us. No 5 year plan like at Tesla. Nothing more than what anyone can see on Twitter. It allegedly is coming for those who stayed but the ask was blind faith and required signing away the severance offer before seeing it. Pure loyalty test.”

The mass exodus from Twitter was in response to a Thursday deadline Musk had given to staff members early Wednesday morning in an email with the subject line, “A fork in the road.” Musk told employees that “to build a breakthrough Twitter 2.0 and succeed in an increasingly competitive world, we will need to be extremely hardcore.”

For Musk, being “hardcore” means “working long hours at high intensity.” The email went on to say, “If you are sure that you want to be part of the new Twitter, please click yes on the link below,” and finished with the ultimatum, “Anyone who has not done so by 5pm ET tomorrow (Thursday) will receive three months of severance.”

The fact that more than 1,000 employees rejected Musk’s provocation is an indication of the hatred for the world’s wealthiest billionaire and his management tactics. The Wall Street Journal expressed astonishment at the response of the Twitter workers to Musk’s “management playbook,” given that he has previously gotten away with similar fascistic methods at his two other properties, Tesla and Space X.

In 2012, for example, the Journal reported that Musk threatened Tesla workers in an email with the subject line “Ultra hardcore” that they needed “to prepare yourself for a level of intensity that is greater than anything most of you have experienced before” and that “revolutionizing industries is not for the faint of heart.” According to the Journal, “He wasn’t wrong.”

The present dire situation at Twitter, a social media company with 400 million active users internationally who have grown to depend on the platform for critical communications and news updates, is the latest in a series of convulsions connected with the private takeover of the company by Elon Musk in a $44 billion acquisition that became official on October 27.

After removing the company from the stock exchanges, Musk fired Twitter’s executive leadership, dismissed its corporate board of directors and proceeded to cut one half of the staff or 3,700 people after a catastrophic decline in advertising revenue. The resignation of 1,200 more people who rejected Musk’s “fork in the road” decree is clearly a blow to the organization that may well prove to be fatal.

In a lengthy OpEd in the New York Times on Friday, former head of trust and safety, Yoel Roth wrote that he chose to leave his position “at Elon Musk’s Twitter.” Roth added that the wave of employee resignations, “caused the hashtag #RIPTwitter to trend on the site on Thursday — not for the first time — alongside questions about whether a skeleton crew of remaining staff members can keep the service, now 16 years old, afloat.”

In response to the question “why does everyone think Twitter is doomed?,” a Twitter user named Mosquito Capital identifies himself as a Site Reliability Engineer with more than a decade of industry experience tweeted an extensive list of scenarios that are “real threats to the integrity of the bird site over the coming weeks.”

A report in the Guardian on Friday explored the potential for catastrophic system failure at Twitter and said, “There are now concerns that the site will be vulnerable to technical failures and bugs, amid signs that the complex system underpinning Twitter is already creaking. Two-factor authentication has already been affected and there have been issues with retweeting.”

The Guardian goes on to explain that Musk himself had warned earlier this month, following the the departure of top figures from the company and prior to his ultimatum, that, “Without significant subscription revenue, there is a good chance Twitter will not survive the upcoming economic downturn. We need roughly half of our revenue to be subscription.”

Throughout the crisis, Elon Musk has maintained and deepened his sophomoric cynicism and contempt for critics through his Twitter account. Following the resignations on Thursday afternoon, Musk replied to the tweets of others with, “Don’t wanna jinx it, but there’s a chance we can keep Twitter alive …” and, “The best people are staying, so I’m not super worried.” Later that evening, Musk tweeted, “And … we just hit another all-time high in Twitter usage lol.”

Nine refugees, mostly children, die in fire in Turkey: A social crime

Hasan Yıldırım

The fire that killed nine people, eight of them children, in Bursa, Turkey last week was a product of the horrible conditions in which refugees fleeing the devastation of imperialist wars are being condemned.

The victims in the fire in Bursa, Turkey. [Photo: FİSA Çocuk Hakları Merkezi]

Amina Eltaha Elmuse, Hussein Aljasem and their children, who fled the NATO-backed regime change war in Aleppo, Syria, and sought refuge in Turkey, were living under “temporary protection” in Bursa. On the night of November 9, a fire broke out in the building where they were residing, killing the mother, Amina Eltaha Elmuse, as well as the couple’s children, one-year-old Yasir, three-year-old Muhammad, four-year-old Ahmed, nine-year-old Merem and 10-year-old Ali Aljasem. The couple’s nephews, 10-year-old Ahmed and 11-year-old Ali El Cesim, also died in the fire.

According to fire brigade reports, smoke from the stove backfired due to a blocked chimney and filled the room where nine people were sleeping. They were poisoned by carbon monoxide gas. A fire broke out when sparks falling from the stove chimney ignited the furniture. As the flames engulfed the room in a short time, nine people, unconscious due to poisoning, could not escape and burned to death.

According to a report by the FISA Center for Children’s Rights, “In the first 10 months of 2022, at least 17 children lost their lives in fires in their homes. ... We see that fires or poisonings mostly occur in neighborhoods where people from the lowest income groups, migrants or Roma, live; where there are violations in access to services. The reasons are clear: poverty, inequality and lack of control.”

In Turkey, refugees and migrants work under harsh conditions without legal rights for wages below the already very low minimum wage. They constitute the most deprived and vulnerable section of the working class and are forced to live in crowded homes and in places that do not meet basic needs.

Moreover, far-right political forces such as the Victory Party seek to promote national chauvinism and divide workers by repeating the lie that refugees receive cash assistance from the Turkish state and live in comfort. In reality, Syrians in Turkey (officially around 3.7 million people) are not even recognized as legal asylum seekers. Only those who meet certain conditions receive a very low cash allowance from the European Union, in accordance with a dirty deal between Brussels and President Recep Tayyip Erdogan’s government.

In Turkey, where the official annual inflation rate has reached 85 percent, 90 percent of the population is estimated to be living below the poverty line. This is accompanied by massive social unrest and growing militancy among the working class. All factions of the ruling class are united in deflecting this growing social opposition in one way or another. From Afghanistan to Iraq and Syria, millions of people were forced to flee their homes as a result of US-led imperialist aggression and regime change wars, in which the Turkish ruling elite has been complicit. Now the refugees are being made scapegoats for the social catastrophe of capitalism.

DISK union confederation’s executive Seyit Aslan said that two of the children who lost their lives were textile workers. In his statement, Aslan said, “Migrants, who are supposedly under protection, are exploited in the heaviest way and lose their lives at workplaces. So, who is responsible for these deaths? Unquestionably, those who started the ongoing war in Syria, the imperialists and their collaborators are responsible for the continuation of this war and those who caused the region to turn into a bloodbath.”

Orhan Sarıbal, Bursa MP of the main bourgeois opposition Republican People’s Party (CHP), also said, “Poverty is a fundamental problem in Turkey. But what Syrians are going through is completely different. It should also be linked to the war and migration in Syria.” He added, “These people are made to work in Turkey as cheap labor without any security. They have no security of life. While those with money live in villas, these poor people live in despair in such places. In the end, the dead are left with the dead. Poverty kills.”

These statements are hypocritical. In fact, the CHP attacks the refugee policy of President Erdogan’s Justice and Development Party (AKP) government from the right and pursues a chauvinist anti-Syrian policy. The CHP promises to repatriate refugees if it comes to power in next year’s elections.

As for DISK, it is a pro-CHP union confederation, and like all other corporatist unions, far from trying to unite the working class, it undermines workers’ actions and imposes sellout contracts. To date, DISK has made no more than a few token statements against the relentless exploitation of refugees and child labor.

The Erdogan government is tasked with preventing refugees from crossing into Europe, in line with its dirty deal with the EU. Ankara’s escalating of tensions with Athens has only intensified the criminal policy of push-backs of refugees, who are desperately trying to cross the Aegean Sea to Greece.

The Fortress Europe policy has turned the Mediterranean into a refugee graveyard. As the World Socialist Web Site has recently reported, “More than 3,000 migrants died, or have gone missing, presumed dead, while trying to reach Europe by sea in 2021.” Moreover, “Of the year so far, ‘In 2022, 1,386 boats have been stopped on their way towards Greece,’ and a staggering ‘44,041 people have been arrested.’”

Erdogan’s government announced a policy of sending back refugees and started building settlements in the Syrian province of Idlib under control of the Turkish army and its Islamist proxies. The policy of sending back refugees is not only advocated by major bourgeois parties like the CHP and AKP or the far-right middle class Victory Party. The pseudo-left forces lining up behind the CHP are also openly or covertly supporting this policy.

For example, the Workers’ Party of Turkey (TIP) advocates “a foreign policy and diplomacy understanding that will make it possible for asylum seekers in our country to voluntarily return to their country and to make living in Turkey no longer the only option.” The TIP, which is a part of the Kurdish nationalist People’s Democratic Party-led “Labor and Freedom Alliance,” has declared that it will support the candidate of the right-wing Nation Alliance led by the CHP against Erdogan in the presidential elections.

Under these conditions, asylum seekers are subjected to physical attacks by right-wing extremists. The latest of these attacks took place in the Erzin district of Hatay. On November 5, 14-year-old Fidan Tunç went missing and five days later her body was found hanging from a tree. One person was detained as part of the investigation. As this person was allegedly a Syrian, a mob incited by far-right elements in the district organized attacks on houses where Syrians live, forcing many refugees to flee their homes.

This attack on refugees was not the first. In August 2021, a far-right mob in Ankara’s Altındag district took to the streets shouting anti-Syrian slogans and raided a neighborhood where they lived. In November of the same year, three Syrian refugees were burned to death in Izmir. On May 1 this year, in Adana’s Dogankent neighborhood, after a quarrel between refugees and Turkish citizens, the homes of Syrians were attacked.

Following Sunday’s terrorist attack in Istanbul in which six people were killed, an anti-refugee campaign was launched by far-right forces on social media after it was announced that the alleged perpetrator was Syrian.

UK Chancellor Hunt unleashes class war budget

Robert Stevens

Thursday’s budget by Britain’s Conservative government was a declaration of war on working people, as Chancellor Jeremy Hunt unveiled a £55 billion package of spending cuts and tax rises.

Hunt was brought into government last month under orders from the financial markets, which had just collapsed the pound in response to the unfunded tax giveaways laid out by the short-lived government of Liz Truss.

The Chancellor of the Exchequer Jeremy Hunt leaves 11 Downing Street on his way to deliver his Autumn Statement to parliament. [Photo by HM Treasury/Flickr / CC BY-NC-ND 2.0]

Hunt tore up that budget, pledging “eye-wateringly” brutal cuts. He was as good as his word. His budget focused on draconian austerity, years into the future, based on crippling real-terms spending cuts. According to the Treasury’s own analysis, Hunt’s budget leaves around 55 percent of households massively worse off.

As the chancellor delivered his hour-long speech, the Office for Budget Responsibility (OBR) said that, even with cost-of living support factored in, families will lose a staggering 7.1 percent of disposable income over the next two years. A 4.3 percent collapse in incomes in 2022-23 will be the largest since records began in 1956 and the second largest fall in 2023-24 will see families lose 2.8 percent. At a stroke, whatever growth there has been in living standards in the last eight years is being wiped out.  Unemployment will rise by 500,000—surging from 1.2 million to 1.7 million.

This is on top of the already staggering drops in income for tens of millions of workers as paltry wage settlements and welfare benefit payments continue to fall way behind inflation. This October, even the lower CPI measure of inflation hit a 41-year high—rising to 11.1 percent from 10.1 percent the previous month. RPI inflation shot up to 14.2 percent. The OBR’s bleak assessment is based on its relatively rosy prediction that inflation will peak this year and fall to 7.4 percent next year.

Introducing the budget, Hunt declared, “The International Monetary Fund expect one third of the world’s economy will be in recession this year or next”, but the OBR “judge that the UK, like other countries, is now [already] in recession.” He noted, “This year, we are forecast to borrow 7.1 percent of GDP or £177 billion; next year, 5.5 percent of GDP or £140 billion. Underlying debt as a percentage of GDP starts to fall from a peak of 97.6% of GDP in 2025-26.”

Hunt then outlined two new fiscal rules, “that underlying debt must fall as a percentage of GDP by the fifth year of a rolling five-year period. The second, that public sector borrowing, over the same period, must be below 3 percent of GDP.” He warned, “The furlough scheme, the vaccine rollout, and the response of the NHS did our country proud—but they all have to be paid for.”

The media trailed the budget as a resurrection of former Tory Chancellor George Osborne’s brutal austerity agenda from 2010-16. But this is far worse. In the eight years to 2019, including Osborne’s five years as chancellor, the government carried out a total of around £30 billion in spending cuts. Yesterday Hunt announced £35 billion in spending cuts in one budget.

With inflation heading towards 20 percent, public spending will rise by only 1 percent in real-terms in the next parliament, saving £21 billion, and capital spending will be frozen in cash terms (a £14 billion saving). With a general election set for 2024, Hunt has scheduled the main spending cuts, as demanded by the markets, years into the future. Each subsequent year sees an enormous rise in cuts.

Current spending plans remain until April 2025, but are followed by £11.6 billion in cuts in 2025/26, £23.2 billion in 2026/27, and £36.3 billion in 2027/28, compared to previous plans.

While around 250,000 of the highest earners making above £125,000 will be drawn into paying the top rate of income tax (45 percent) for the first time, as the Mail noted, “All workers face paying more in tax as a freeze on the personal allowance, basic and higher thresholds is extended to 2028, dragging people deeper into the system by ‘stealth’. As a result 3.2 million people will be liable for tax for the first time, and 2.6 million more in the higher rate [paid on incomes over £50,271] in five years’ time.”

The National Health Service (NHS) and education budgets receive next to nothing in real-terms. Hunt said that the NHS would have to operate according to “Singaporean efficiency” methods as he allocated it an additional pittance of £6.6 billion spread over the next two years.

The Health Foundation assess that to equal per capita health spending across 14 European Union countries, NHS spending would have needed to rise by an average of £40 billion per year in the past decade. Starved of resources, the NHS is no longer able to provide universal health care, with a record 7.1 million people now waiting for treatment, and nearly 50,000 nursing vacancies unfilled.

School-aged education, already suffering an existential funding crisis, will receive even less, getting an extra £2.3 billion annually in the next two years.

Household energy bills have doubled in Britain in the last year and will shoot up again by another £500 to over £3,000 for a typical household next April. Only the most vulnerable will receive any financial support to cope with the bills.

Another devastating blow to workers is the decision to allow local councils to put up Council Tax by a maximum of 5 percent. Around 95 percent of councils—the majority run by the Labour Party—will raise bills by the maximum. In some areas, such as Nottingham, some households will be hit with Council Tax bills approaching £2,500 annually. This will still not scratch the sides of an estimated £2.4 billion collective shortfall for local authorities this year, rising to £3.4 billion next.

Rents for four million people in the social housing sector are to go up, with Hunt announcing that tenants will face increases of 7 percent. But 4.4 million (19 percent of households) who rent from landlords in the private sector—where there are no rent controls—face even higher payments due to a shortage of properties and passed-on mortgage rate increases. More than five million households will see their annual mortgage payments rise by an average of £5,100 between now and the end of 2024.

Millions of workers over 23-years-old suffer another real-terms pay cut as the minimum wage rises by just 92p an hour, from £9.50 an hour to £10.42 from April 2023. The 9.7 percent increase is already below CPI inflation and over four percent lower than RPI inflation. Vast number of workers are to be forced into jobs on this wage, as Hunt announced that 600,000 more people on the Universal Credit benefit will be obliged to meet a “work coach” to increase their hours or earnings.

Millions of public sector workers face planned government pay settlements of just 2 percent in 2023/24. According to the Trades Union Congress, on this basis “hospital porters’ real pay will be down by £1,000; maternity care assistants’ real pay will be down by £1,200; nurses’ real pay will be down by £1,500 and paramedics’ and midwives’ real pay will be down by nearly £1,900.”

Hunt trumpeted the Tories’ “compassion” as he lifted state pensions, benefits and tax credits by 10.1 percent (September’s CPI inflation level), to come into effect next April, imposing another real-terms cut.

This scorched earth policy could not proceed if a widely hated government were not propped up by the Labour Party and trade union bureaucracy.

US hospitals are closing as demand for care increases

Cordell Gascoigne

Declining revenue and increasing expenses are contributing to a growing number of hospital closures in the United States. Moreover, many hospitals that remain open face large financial losses and negative operational margins, both of which are expected to continue through the end of the year. These losses will result in cutbacks, layoffs and downsizing that will reduce patients’ access to needed care. 

In the past year, 19 hospitals have filed for bankruptcy, closed or announced plans to close. In Hammond, Indiana, Franciscan Health is set to end in-patient and emergency care at its 226-bed hospital by the end of 2022 because of low patient volumes. This drastic measure replaces the company’s previous plan to scale down the hospital to a 10-bed inpatient unit and emergency department.

In Reno, Nevada, St. Mary’s Regional Medical Center will be shutting down its maternal child health program, citing a significant downturn in deliveries and staffing shortages. St. Mary’s will no longer accept obstetric patients for delivery but will continue to provide gynecologic services and emergency care for expectant mothers. The hospital is sending its current patients to “appropriate care destinations,” which no doubt will further strain the hospitals that receive them. 

In Cleveland, Ohio, St. Vincent Charity Medical Center, which is transforming itself into a provider of outpatient services, ended its in-patient and emergency room services on November 11. The effects of COVID-19 on the health care system are the primary factors for its decision, according to the hospital. 

Earlier this month, Wellstar Health System closed the Atlanta Medical Center in Marietta, Georgia, citing increased costs for staff and supplies and declining revenue. Meanwhile, Wellstar President and CEO Candice Saunders draws an annual salary of nearly $2.5 million.

Southwest Georgia Regional Medical Center in Cuthbert, Ga., shown here on Friday, Oct. 7, 2022, closed two years ago. [AP Photo/Jeff Amy]

In addition, Berwick Hospital Center in Pennsylvania filed for Chapter 11 bankruptcy on September 30. The filing took place less than two weeks after the hospital had shut down its emergency department due to a lack of staffing. On the same day, Blessing Health System in Quincy, Illinois, closed its hospital in Keokuk, Iowa, citing low in-patient volume. The Tennessee-based Franklin Community Health Systems closed ShorePoint Health Venice, a 312-bed hospital in Venice, Florida, in September as well.

Many hospitals that remain open face dire financial straits. In September, the American Hospital Association (AHA) projected that between 53 percent and 68 percent of the nation’s hospitals will end 2022 in debt. This means a potential doubling of the 34 percent of hospitals that were in debt by the end of 2019 (i.e., before the pandemic). This debt will not only prompt consolidations and layoffs but also flood surviving hospitals with more patients when they are already at capacity. 

The AHA also made two predictions about hospital margins in 2022. Its “optimistic” prediction is that they will be 37 percent lower than in 2019. Its pessimistic prediction is that margins will be 133 percent lower.

“In either case, hospitals stand to lose billions of dollars in 2022,” said Lisa Goldstein, senior vice president of management consulting firm Kaufman Hall, on behalf of the AHA at a conference call attended by myriad hospital executives. “It will be the worst year since the start of the pandemic.”

Nonprofit health system executives on the conference call said that the projections are grim not just for hospitals, but also for patients, who will be forced to travel longer distances, wait much longer for medical attention and perhaps forgo necessary treatment.

“The numbers are all going in the wrong direction, and I’m concerned we’re going to see more healthcare providers close as a result of the current financial reality, which will impact access to care,” said Jack Lynch, president and CEO of Main Line Health (MLH), a nonprofit system with five hospitals in Philadelphia. “In my 35 years as a healthcare leader, this is the most fragile I’ve ever seen the American healthcare system.”

MLH has seen its total expense per admission increase by 26 percent, surpassing the 14 percent increase in revenue per admission, according to Lynch. He added that MLH reported a $6 million loss for its fiscal year. “These losses are unsustainable and will impact our ability to meet expectations and healthcare needs of those in the community,” he said. Lynch continues to collect his salary, however, which totals $1,737,055, according to NonProfitLight.com.

Mike Slubowski (total salary $2,866,730), president and CEO of 88-hospital Trinity Health, said his organization has 3,900 vacant registered nurse positions and a 14 percent clinical support staff vacancy rate. Staff shortages “are like nothing we’ve ever seen before,” he said, reporting that Trinity had had to take 13 percent of its emergency departments, 12 percent of its beds and 5 percent off its operating rooms offline. 

“We have some locations with as high as 20 percent to 25 percent of their beds offline and half of their operating rooms and diagnostic services offline due to nurse staffing shortages,” he said. “We’re doing all we can, including innovating how we deliver patient care, but it isn’t enough. Hospitals, long-term care facilities, home care and physician practices lack the resources needed to solve the healthcare workforce crisis ourselves.”

A major factor in the collapse of the health system is the criminal response of the ruling class to the coronavirus pandemic. The pseudoscientific policy of “herd immunity” was initiated by former Republican President Donald Trump and has been continued by Democratic President Joe Biden, despite the latter’s promise to “follow the science” and end the pandemic. Both parties promoted the reopening of schools and nonessential workplaces so that production and the generation of profit could continue. 

This policy has resulted in successive waves of mass infection and death. The official death toll in the United States alone has surpassed 1.1 million. Successive waves of infection have placed an enormous strain on hospitals and health care workers. Moreover, the Biden administration has sought to normalize the pandemic and to portray endless infection as inevitable and SARS-CoV-2 as endemic. 

Decades of underfunding and short staffing also have contributed to the crisis in the health system. Symptoms of this unnecessary lack of resources have included the reuse of masks, longer working hours for staff, and shortages of beds that have forced hospitals to board patients in hallways.

The intense physical and psychological strain has prompted nurses and medical staff to retire or quit in droves, which has exacerbated the crisis. Rather than providing desperately needed funding to support the health system and hire more workers, the Biden administration has spent $21 billion to send weapons to Ukraine for its proxy war with Russia—and has requested another $21 billion from Congress for the same purpose.

As fallout from crypto collapse spreads, concerns grow over financial stability

Nick Beams

Further cracks are opening in the global financial system, both in expected and unexpected places, amid continued warnings about its overall stability.

In the crypto world, the collapse of the currency trader FTX has sent out shock waves with a number of companies on the skids because of their exposure to Sam Bankman-Fried’s essentially Ponzi scheme operation, the viability of which depended on the continual inflow of money.

The FTX Arena, of the collapsed crypto currency trading firm, and venue of the Miami Heat basketball team, Friday, Nov. 11. [AP Photo/Marta Lavandier]

On Wednesday, the crypto broker Genesis Trading announced it was halting trading at its lending unit, blaming the “unprecedented market turmoil” set off by the demise of FTX.

It said it had decided to suspend redemptions and halt new loan applications because of “abnormal withdrawal requests which have exceeded our current liquidity.” In other words, there was a run on the company it was unable to meet.

Genesis had already been hard hit because it was heavily connected to the Singapore-based crypto hedge fund company Three Arrows Capital, which filed for bankruptcy in July. It has been revealed that Genesis lent Three Arrows $2.4 billion that is now probably lost.

Crypto firms BlockFi and Voyager Digital are also reported to be under pressure. According to a report in the Wall Street Journal, BlockFi, which said it has “significant exposure” to FTX, is preparing to file for bankruptcy.

Bloomberg reported that Voyager was now “twisting in the wind” because Bankman-Fried was going to rescue it in a $1.4 billion deal, and it is now trying to find a replacement buyer for its assets.

The full extent of the fallout from the collapse of FTX has yet to be determined, but there are certain to be other firms that will go under because of the extent of Bankman-Fried’s operations.

The crypto crisis has its own peculiarities and, to borrow from Tolstoy’s famous quote regarding families, each crypto firm is “unhappy in its own way.” But whatever the circumstance of each firm, there is an underlying cause.

While money was pouring into the financial system from the US Federal Reserve and other central banks, the crypto families were “happy in the same way” as money was made hand over fist.

But the financial environment has completely changed because of the tight monetary policies of the world’s central banks as they seek to crush the global wages movement of the working class in response to the highest inflation in four decades.

The problems that have erupted in the crypto world are developing in all areas of the financial system as set out in the financial stability reports of the world’s major central banks—the latest being that of the European Central Bank issued on Wednesday.

Summarising the report, the Financial Times said it warned that the “toxic combination of recession, soaring inflation, rising funding costs and lower liquidity is threatening to trigger financial market turmoil in the euro area.”

The report noted that the turmoil in the long-term UK bond market (gilts), when the movement in yields occurred at a historically unprecedented pace, revealed the vulnerability to sharp shifts in market prices that could spark a broader crisis.

The inherent instability in financial markets was set out as follows:

“Uncertainty around the outlook for inflation and interest rates has heightened the risk of disorderly asset price adjustments in financial markets, notwithstanding recent corrections. Many investment funds remain heavily exposed to further valuation and credit losses. Those with large structural mismatches and low cash buffer are particularly vulnerable to market dislocation and the outflow of funding.”

It is not only the major financial firms that are facing problems but governments as well.

The ECB reported that prolonged high budget deficits in a number of countries, together with rising funding costs, because of interest rate rises, “may not only limit the fiscal space available to shelter the economy from future shocks, but may also put debt dynamics on a less favourable trajectory, especially in countries with higher levels of debt.”

The meaning of these words was spelled out by ECB Vice President Luis de Guindos in presenting the report. He said government measures to deal with the energy crisis and its devastating impact on the population had to be targeted and temporary.

“It cannot be the same ‘whatever its takes’ fiscal policy approach that we have seen during the pandemic,” he said.

Like the events in Britain, when former Prime Minister Liz Truss’ mini budget set off a financial crisis, an incident in South Korea illustrates the inherent fragility of the financial system.

South Korean bond markets have been plunged into turmoil because the newly elected right-wing governor of the Gangwon province, Kim Jin-tae, refused to honour debt commitments incurred in the building of a Legoland Korea theme park.

The theme park, which opened on May 5, was intended to boost the depressed economy of the province but failed to generate sufficient revenue to pay the debt used to construct it. On September 28, Kim announced he would not honour the commitment made by the previous province administration.

The South Korean bond market, the total value of which is more than $2 trillion and already under stress because of the interest rates emanating from the US, was thrown into turmoil. As an article in Foreign Policy put it, “Kim’s declaration all but threw a match” into what was a “dry winter forest.”

The withdrawal of support for a supposed government-backed project cast a dark shadow over the riskier corporate bond market.

It noted that one of the safest bonds in South Korea, that issued by the Korea Electric Power Corp, saw the yield on its three-year debt climb from around 2.2 percent at the start of the year to 5.8 percent and its latest issuance, worth about $146 million, could not find a buyer.

In response to the turmoil the government and financial authorities have had to intervene. The government has provided a liquidity facility of more than 50 trillion won, equivalent to $35 billion.

The Bank of Korea has injected the equivalent of $67 billion into the short-term bond market, and South Korea’s five largest banks have stepped in to pledge $67 billion in liquidity.

As the Foreign Policy report noted, there is an “absurdist” quality to these measures.

On the one hand, following the interest rate hikes initiated by the US Fed, the Bank of Korea has been “aggressively raising the benchmark rate to curb inflation by reducing liquidity, but on the other hand, the South Korean government is injecting liquidity to the market to stave off a total economic collapse.”

The old saying “those whom the gods would destroy they must first make mad” comes to mind.

Drawing a parallel with the UK crisis, which saw the demise of Liz Truss, and the crisis sparked by the actions of Kim, it concluded that “electing bad politicians leads to a bad economy.”

That may well be the case. But the deeper meaning of both events is that, as in the case of war, where even seemingly minor incidents can spark a full-scale military conflict, such is the brittle nature of the financial system everywhere that what might be viewed as accidents can trigger a major crisis.