Thanks for pointing out the slight differences in the US and Australia over housing "foreclosures". I don't think that detracts from the argument - people are abandoning their houses leaving lenders and the holders of the securitised loans with losses as housing prices spiral downwards.

Today the estimates of value lost are now approaching $1 trillion, not the $300 bn I mentioned. Things change rapidly in a week as the financial system continues its fast-slow melt.

Some Republicans are now opposing the bailout.

It is true (as I mention in the article) that Chinese and Middle East sovereign wealth funds invested heavily in the investment banks and derivatives based on securitised loans. So the impacts will flow throughout the world. China recently cut interest rates to help growth.

It is also true that the US could export the burden through inflationary measures like printing money.

But a major impact will be on US taxpayers initially and working class Americans, and this too has the capacity to flow through to the rest of the world.

And global credit will tighten and become more expensive, cutting production and future production.

I disagree with Keith that this crisis will favour McCain. Obama is strengthening his lead in the polls. People blame the Republicans - the party of tax cuts for merchant bankers and de-regulation of the finance industry - for this mess and see McCain as an insider for the last 35 years who has supported the failed policies of Bush.

Chris Warren (from the MEAA??) argues that we are not a global world. He implies that globalisation of labour would destroy our present living standards (I think. Apologies if that is not your argument.) I support the globalisation of labour. Australian workers have more in common with Chinese workers than we do with Rudd, Turnbull, Lowy, Fortescue, Packer, Murdoch or Fairfax. A union movement in Australia under rank and file control prepared to fight to defend wages and conditions would be able to improve our living standards and export them offshore. Unions today are poodles cuddling up to a rotweiller.

Passy

I'd gladly pay Australian workers the same wages as Chinese workers. Can I adopt their work practises as well?

If you really think it possible to raise Chinese wages and conditions to the same level as those in Auastralia. You are fanciful.

Not sure what you mean Keith.

My point was that the best way to raise living standards is for unions to fight for them through strike and other industrial action rather than rely on some form of trickle down theory of wages. Tom Bramble from Socialist Alternative (www.sa.org.au) is his new Cambridge University press book (released yesterday) on the Way Forward for the Trade Union Movement gives an historical analysis of the last 50 years and concludes that when rank and file workers take control of their union and take industrial action to win gains, the union movement both in numbers and in ability to increase living standards is at its highest.

He compares for example the Your Rights at Work Campaign - top down, with tokenistic demos, massive advertising at the expense of rank and file involvement and ultimately a failure because the ALP has kept most of Workchoices - with the 1969 campaign to free Clarrie O'Shea. In the latter case there were rolling general strikes, (organised by 17 left wing unions and their rank and file) that freed O'Shea after 5 days and saw the penal powers become a dead letter for ten years.

A return to militancy and a bottom up approach holds the key to defending our wages and conditions (especially if the Australia economy, as I suspect it may, goes into recession as a consequence of the crisis in the US spreading worldwide). That enables workers coming to Australia (e.g. on 457 visas)to benefit from a strong union movement and its defence of wages and conditions and sends an international signal (including to Chinese workers) that the way forward is to organise and strike.

One the question of a possible recession in Australia, what do people make of the $4 bn bailout by Swan of non-bank lenders here, to stimulate competition? Is this a sign of confidence or fear or something else?

Passy “Col Rouge, I am not sure what the point is you are making about Moldavia. I do not support Stalinism, and in my article nowhere do I argue that.”

But the consequence of what you “promote” and “support” has ended up with Stalin and others of his ilk.

That is the danger in what you support and promote.

“In the case of capitalism those who survive get the benefit of the collapse in value by buying up assets cheaply.”

Actually it is those who plan and anticipate who survive, the greedy go to the wall.

Whereas In the case of the socialist state which has ownership of everything

everyone merely exists, regardless of the foresight and no one is allowed to benefit.

“Capitalism is a system of exploitation; crisis is built into it. We may be entering a new period of deep crisis.”

Kennedy dealing with the Cuban Missile situation
was a “crisis” for western capitalist system.
this is merely a “bump in the road”

And socialism is a system which deliberately represses the individual and where the members of the central committee become an aristocracy and the most ruthless becomes a lot more than a titular monarch (regardless what the original plan is).

Norman Mailer was brief

“The function of socialism is to raise suffering to a higher level."

Thomas Sowell was forthright

“Socialism in general has a record of failure so blatant that only an intellectual could ignore or evade it.”

Churchill was always succinct

"It is a socialist idea that making profits is a vice. I consider the real vice is making losses."

And as to those “socialists” who have left any enduring “legacy” I would quote HH Munro

“Great Socialist statesmen aren’t made, they’re still-born.”

Keith re McCain “Basically after working all weekend, doing the work the US taxpayers pay and expect him to do, he'll propose lending the bank's the US$700 billion.“

I agree

Like you said, Obama and the democrats wanted to just throw them the money.

But McCain and the republicans, rightly, don’t do “giveaways” with public funds.

*Socialism is the democratic control of society through truly democratic vehicles so that production occurs to satisfy human need, not make a profit.*

Passy, right here, is frankly where your argument is flawed. As
a consumer, I judge the products that I buy, by results, not by
ideology, motivation, or what drives them. I don't care if you or
anyone else, make a profit or not. I vote accordingly, with my
wallet.

The key to Capitalism is that it allows individual innovation and
thus productivity, like no other system that you have been able
to show. In other words, if two companies are making widgets
and one does so profitably and is the widget that I as a consumer
want to buy, then I don't care if your socialist widget is well
meaning and that nobody makes a profit, its results that matter.
Only competition and innovation will produce those kinds of results.

What is happening on Wall St right now is not a failure of capitalism,
more a failing of democracy, but alas, its the best system that
we have.

For 8 years now I have claimed that the Bush-Cheney team, are little
more then a bunch of dummies. History is clearly proving me correct!
Cheney has told us before, that the US $ is not their problem, but
the world's problem. He may yet eat his words and the people who
voted for Bush-Cheney, will pay a huge price for their mistake,
as we now can see.

Every industry and human endevour, will attract crooks. It is the
role of Govt to establish and impliment rules, so that they cannot
function and that those who break the rules, are locked up.

Clearly democracy failed here, for Wall St has been full of crooks
and now the American people will pay a huge price, for getting
their judgement so wrong. That is democracy at fault, not
capitalism. Those of us us said "I told you so" might be
smartarses, but Americans can only blame themselves right now.

Col Rouge and Yabby

Thanks.

If capitalism is so fantastic, why are 3 billion people malnourished and 1 bn starving when the world produces enough food to feed everyone. Why were the gains of the last 20 years in lifting people out of poverty wiped away by the market increasing food prices markedly? The starving don't have the luxury of "voting with their wallets".

The idea that Lenin or Marx led to Stalin is wrong (and I don't care how many Churchill quotes you put here, that doesn't prove the point.) I suggest reading the Binns article on State captialism or How the Revolution was lost (the two I quoted previously). Stalin was the gravedigger of the revolution. He established state capitalism in Russia (much as the mercantilists did in England centuries before) and Stalin's rule echoes and repeats the bloody and dictatorial establishment of capitalism across the globe, including England and Western Europe.

Wall St is an example of the market playing out its logic. If it is true the rate of profit is lower now than a decade ago, and certainly much lower than the 60s, then the drive for "adequate" profits will see more Wall Streets, I susepct, as opaque and seemingly non-risky investments with high returns are floated through other sectors of the economy. But the returns in the end depend on the rate of profit and extraction of value from worekrs.

One consequence of Wall St will be smaller wallets (or what is in them) if our unions let the bosses get away with job cuts and wage cuts.

And again, any thoughts on the non-bank lenders "bail out" by Swan to the tune of $ 4bn? Obviously The Labor Government thinks interest rates will rise into the future. So even if the RBA cuts rates, the benefits will not be passed on to consumers becuase the banks will say their cost of finance has gone up on the market.

The term bail out in this context is not exact but it will do.