------------------------- Via Workers World News Service Reprinted from the April 5, 2001 issue of Workers World newspaper ------------------------- LAYOFFS RISE, FIRMS CUT BACK; MARKETS YO-YO AS JOBS DISAPPEAR By Fred Goldstein On March 28, a day on which the Dow Jones average on the stock market rose 282 points and consumer confidence was said to have gone up considerably, a number of ominous economic developments were announced. Nortel, the world's largest maker of telecommunications equipment, announced it would lay off 5,000 workers in addition to the 10,000 who have been laid off since the start of the year. Walt Disney announced 4,000 layoffs in the face of the slowing economy. Ericsson, the giant Swedish telecommunications company, announced 3,300 layoffs in Sweden and Britain and the stopping of production at two British mobile phone plants. American Greetings, the largest publicly traded greeting card maker, announced 1,500 layoffs. MarchFirst, a global technology consulting firm, laid off 3,500 workers on top of the 2,000 that it had already laid off over the last six months. Two California-based specialized chip-making companies that supply Internet equipment makers like Cisco Systems announced layoffs. Conexant Systems said it would lay off 1,500 regular workers and 125 contract workers. And PMC- Sierra announced 230 layoffs. Palm Inc., maker of Palm Pilot handheld computers, projecting fourth-quarter profit losses, plans to lay off 650 workers. LAYOFFS ALL OVER THE GLOBE In Japan, the Ministry of Economy, Trade and Industry announced that Japanese retail sales fell 0.6 percent in February, after rising for the first time in 45 months in January. Japanese capitalism is struggling to raise itself out of its worst recession since World War II. On the same day Aiwa Co., majority owned by Sony Corp., announced it would shut down eight of its nine plants in Japan, Malaysia, Indonesia and Wales and cut its 10,000 work force by about half. If so-called consumer confidence was rising, as announced that day, banker confidence was not. "For the first time since the 1998 financial crisis," wrote the Wall Street Journal on March 27, "the Federal Reserve Board conducted a survey of senior loan officers-usually a quarterly report- ahead of schedule." This survey followed a plea from Federal Reserve Board Chair Alan Greenspan to the bankers to loosen credit. It came after Greenspan lowered interest rates, giving banks more leeway to lend. "Of the 54 domestic banks and 22 U.S. branches of foreign banks included in the Fed study," continued the Journal, "not a single one reported easing lending standards." According to the survey 52 percent of U.S. banks had tightened credit for large and midsize companies and 43 percent had tightened credit for small businesses. SALES ARE DOWN On the same day the Commerce Department announced that new home sales fell 2.4 percent in February and existing home sales fell by 0.4 percent. It also announced a decline in durable goods shipments of 0.2 percent, which turned out to be 4 percent after excluding Pentagon orders and aircraft-in other words, shipments of things that consumers buy. This selected one-day snapshot illustrates that, while the fate of the stock market is ultimately rooted in the economy, on any given day--or week, for that matter--there can be a total disconnect based on the speculative interests of the giant institutional investors and brokerage houses that manage to make money no matter which direction the market goes in. But these negative currents deeply affect the workers and the oppressed. The layoffs, no matter how limited at the present, are still devastating to the workers and the communities affected. When Proctor & Gamble announced 9,600 layoffs last week, it came as a blow to the working class and middle class of Cincinnati, the site of P&G's world headquarters. When Boeing announced its intention to move its headquarters out of Seattle, it came as a destabilizing shock to the whole city. And for every large-scale layoff that gets announced in the headlines, there are the hundreds of layoffs of five, 10, 50 or 100 workers that never get announced and often do not appear in government statistics. But aside from the immediate problem of the present layoffs, the greater danger that must be watched is the possible unfolding of a much larger downturn, driven by worldwide capitalist overproduction. No one can tell what the short-term evolution of the present economic situation will be. The ruling class certainly does not know. And it is even more difficult for the working class to know, because it is divided and fragmented and does not have access to economic data. The advisers to the capitalist class, as well as the bankers and the bosses themselves, are all in the dark. The industrialists know that their profits are down and that their orders are shrinking. The bankers know that production is down and lending is riskier. The analysts are divided between those who see a big recession coming and those who think the worst is over. But on one thing they are all united: whether the crisis is major or minor, profit margins must be protected at all costs and workers and their families must pay the price. The workers must be made aware that the bosses, in the struggle to overcome each other with larger and larger profits, fight their battles by expanding production, paying the workers as little as possible, and selling to make the highest profit possible. This is an iron law of capitalism. When the goods cannot be sold at a high profit, they cut back production or shut down altogether. It is a sign of capitalist overproduction. This battle has been raging at a furious and brutal pace in the past decade. Tens of millions of people in Asia were devastated by it in 1997 and 1998. The giant capitalists were able to contain the crisis in Asia and keep it from spilling into the big imperialist countries. In fact, the U.S., Germany, France, England, Italy and other imperialist countries took advantage of that crisis to enrich themselves. They bought up bankrupt companies, thereby obtaining exploitation rights over millions of Asian workers. Now, after 10 consecutive years of this kind of global competition by the giant transnational corporations, which have spread to every corner of every continent in search of profits, there is an economic slowdown that is affecting companies and workers all over the world--in Europe, Japan and the U.S. as well as in the oppressed countries. AT WHAT POINT IS IT A GENERAL CRISIS? It is impossible to tell yet whether or not this is the moment when the world market has become so saturated with commodities that a massive global contraction is in the offing that will spill over into the centers of world capitalism. But one thing is certain. The long period of capitalist stability, based on the continuous expansion of capitalist production and the steady upward movement of profits in the imperialist countries, is over. The triumphal expansion of the capitalist market and all the ideological garbage about the so-called end of history is over. The period of capitalist instability is being ushered in. The Federal Reserve Board and Alan Greenspan have moved quickly to put money into the economy by lowering interest rates. They have prevailed upon most of the world's central bankers, with the exception of the European Central Bank, to do the same. The ruling class has restructured President Bush's tax cut proposal to put $60 billion into the economy right away. The U.S. financial authorities are pressuring the Japanese government and ruling class to pour money into its economy to start people buying again. These are rapid-fire reactions by the ruling class to forestall the kind of disastrous crisis that they know is inherent in their system. In the statement issued after its March 20 decision to lower interest rates from 5.5 percent to 5 percent, the Federal Reserve Board of Governors noted the global character of the downturn. But the working class and the leadership of all the organizations of the workers and the oppressed have to be keenly aware of, and prepare for, the possibility of a catastrophic development. The capitalist downturn may be relatively mild at present, but it is widespread. The saturation point will come eventually, as surely as night follows day. The system based on profit cannot avoid it indefinitely. The leaders of the working class must not be taken by surprise. The time to begin strategizing over how to combat the crisis is now. - END - (Copyright Workers World Service: Everyone is permitted to copy and distribute verbatim copies of this document, but changing it is not allowed. For more information contact Workers World, 55 W. 17 St., NY, NY 10011; via e-mail: [EMAIL PROTECTED] For subscription info send message to: [EMAIL PROTECTED] Web: http://www.workers.org) ------------------ This message is sent to you by Workers World News Service. To subscribe, E-mail to: <[EMAIL PROTECTED]> To unsubscribe, E-mail to: <[EMAIL PROTECTED]> To switch to the DIGEST mode, E-mail to <[EMAIL PROTECTED]> Send administrative queries to <[EMAIL PROTECTED]>
