What's Left 2015-07-12 Volume 20
This week, independent news outlet ProPublica exposed the snake oil salespeople on Wall Street who have targeted struggling municipalities as a new source of profit. It turns out that desperate city councilors trying to meet negotiated pension obligations and fund crumbling infrastructure are easy prey.
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“FEATURE”
In the city of debt and money
This week, independent news outlet ProPublica exposed the snake oil salespeople on Wall Street who have targeted struggling municipalities as a new source of profit. It turns out that desperate city councilors trying to meet negotiated pension obligations and fund crumbling infrastructure are easy prey. Ironically, this unfortunate situation is the direct result of policies promoted by Wall Street in the first place. While many right-wingers blame public sector workers for demanding negotiated settlements be honoured, the real reasons are a little more mundane.
During the height of the finance-driven economic boom times of pre-2008, employers with pension funds (including cities) were told the good times would never end and that free money from expanding stock markets would keep budgets afloat. As such, they took investment “holidays”, cutting taxes instead of continuing to put money into pension funds. When the financial crisis hit, cities discovered that this was just a shell game and they were left holding massively underfunded plans.
Now, finance capital is back and offering a new solution: borrow to invest. Interest rates are artificially low thanks to Central Bank/Federal Reserve action, but investment profits are sky-high. Apparently, if cities borrow now, they will be able to pay back the debt and still have money left to pay pension obligations.
So, is it actually possible to avoid a crisis by following these recommendations? Nope. It may be free money for the financial institutions who manage these funs at no risk to themselves (while charging a healthy commission), but not for the cities. In the long run, profit levels are not guaranteed and interest rates have only one direction to go: up.
Cities are in a bind but should not be taking advice from the same fat cats who put them in this mess. Capitalism will not solve their problems and elected officials are going to have to look at innovative investments and public ownership programs to get their towns and cities back on their feet.
More: When Wall Street Offers Free Money, Watch Out
“CANADA”
A week of tentative agreements
Worker solidarity proved fruitful this week as tentative agreements were reached in a number of workplaces, including some for long-standing conflicts.
After 22 months on strike, workers at Crown Holdings, members of United Steelworkers Local 9176, reached a tentative agreement. The workers, known for making the cans that contain some of summer’s most appreciated beverages, may be back to work soon. The deal still needs to be ratified, but should end an extended product boycott.
Almost two months after going out on strike, Halifax water workers from CUPE locals 227 & 1431 reached a tentative agreement this week. However, while the bargaining committee is hopeful, picketing will continue until the deal is ratified.
In the Greater Toronto Area, a tentative agreement was reached between 8 Metro grocery stores and 4,000 Unifor-represented retail workers. Retail is a fast-growing sector where negotiations can prove difficult, given low wages, high turnover and few hours of work. Workers should ratify the agreement over the next few days.
More: After 22 months on strike, a tentative deal for Crown Holdings workers
More: Tentative deal in Halifax Water labour dispute
More: Unifor Metro grocery store workers reach tentative agreement
“ELSEWHERE”
Internet security makes snooping hard, governments complain
Governments aren’t pleased that internet security has improved in recent months. In a bizarre suspension of all reason, security agencies and conservative leadership in the United States and in the United Kingdom have called for an end to encrypted communications. They continue to argue that they need to be able to capture, catalog, and search through all electronic communications in order to protect the public.
In response, some of the smartest civil liberties advocates and security engineers have stated that such a development would significantly alter the internet as we know it – compromising government, bank, and commercial security. It would also expose any and all private information stored online, including health records and human resources information.
Encrypted information is the backbone of so much that happens today, and is essential for any online activity that requires a level of trust. Without encryption, no electronic information will be secure, including from those who may use it for criminal purposes.
Mechanisms already exist for the government to investigate and pursue charges against those engaged in criminal activities online. The police aren’t allowed to enter your house without a warrant and they shouldn’t be able to monitor your bank accounts and personal communications without one either.
More: The Risks of Mandating Backdoors in Encryption Products
More: [[https://citizenspress.us10.list-manage.com/track/click?u=27d7d00e19a37005743125d7e&id=8ef1982855&e=8484a6ba75][The End of Encryption? NSA & FBI Seek New Backdoors Against Advice from Leading Security Experts]]
UK Conservatives delivery on promised austerity in budget
On Wednesday, the United Kingdom saw its first truly conservative budget since 1996. If the nastiness of the cuts came as a surprise – like it seemed to for much of the media – it shouldn’t have. The UK Conservatives ran on a campaign of cuts to services for the poor and working class in order to reallocate subsidies to the corporations they represent.
Cuts to education debt support, elimination of welfare, further privatization of government services, cuts to housing supports, undermining disability benefits, downloading services to cash-strapped municipalities – the list goes on. The cuts went so far that even capitalists were surprised, and many liberals questioned the long-term consequences for British society. Make no mistake, this was the platform of the Tories in the election and, unlike the Left who often try to build bipartisan support, when the Right is elected on a platform, they push that platform through as fast as they can.
More: Budget 2015: Recap of George Osborne’s Conservative spending plans
The “debate” on financial regulation in US
Some large players in the financial industry have launched an aggressive marketing and lobbying campaign for the deregulation of their sector, again. The campaign is aimed at convincing the public and politicians that financial regulations brought in after the 2008 recession are no longer needed and are slowing the global economy.
As a tactic to achieve deregulation, these players in the financial industry are attempting to create the artifice of debate as a way to delegitimize the regulations necessary to avoid yet another financial crash. The debate is between big money and the existing rules that ensure regulations keep the banks in check. While it is easy to dismiss this kind of debate as esoteric (a position of ambivalence the industry is hoping the public will embrace), these rules affect the stability of markets and will have real effects on workers – just like the 2008 crash did. After the economy tanked, banks were regulated to limit the amount of debt they could have on their books if they did not have assets to back this debt up.
More: U.S. Financial Regulation, Five Years After Dodd-Frank
More: Banks May Have Overplayed Their Hand Fighting Wall Street Regulation
More: Democratic Senator Warren pushes bank breakup, tax changes
Failure of New York City’s first Social Impact Bond
The first Social Impact Bond (SIB) to be tested in New York City has failed to deliver on its promises. The program the Bond was invested in, saw millions of dollars spent counseling youth in prison with the goal of reducing their chances of re-offending. Despite the program, re-offending rates remain unchanged. In response, the heads of the Bloomberg and GoldmanSachs foundations (who were promoting and investing in the SIB) tried to explain the failure as merely a minor setback. Unfortunately for them, promoters of public services are calling it what it was: a complete debacle. This money could have been spent paying the bail, a strategy that has proven to reduce re-offending rates in other states.
The program was set to fail from the start, as bankers controlled the funding. Most of the youth would not have been incarcerated if they lived in a different state – which would have meant lower re-offender rates. So, part of the solution to the problem is to not just send youth who have committed minor crimes to prison, but to support them on the outside by providing meaningful and helpful social programmes.
On the money side, borrowing to pay for social services is nonsensical and finance should be kept far away from future attempts at solving this problem.