[Dryerase] Alarm!--Wall Street looking like Lombard Street

[Alarm!Wires]

Wall Street is looking a lot like Lombard Street

By Chris Kortright
The Alarm! Newspaper Contributor

Capitalist ideologues and neo-liberal theorists always talk about slumps 
in the economy. Slumps are a natural part of the “science” that is 
claimed to stand behind the machinery of capitalism.  These faithful 
followers of the capitalist system talk of the market as if it were a 
roller coaster; there are inevitable drops, but these drops lead to 
accumulation of capital for the stronger corporations. The leading 
priests of capitalism have been trying to keep our faith by telling us 
that apparent weaknesses are actually the inherent strengths of the 
system.
On August 5, when the Dow closed at 8,044 after a disastrous free fall, 
Harvey Pitt, head of the US Securities and Exchange Commission, 
proclaimed his faith in the system’s inevitable resurrection. He said, 
“I believe that our economy is strong, that we have many fundamentally 
sound companies, that we are undertaking significant and far-reaching 
reforms and that stock prices in the market will eventually reflect all 
the good things that are happening.” This statement was made just after 
the Dow Jones slid more then 700 points last July. Can these economic 
faith healers explain away the relatively consistent downward trend that 
stocks have been taking?
While most people discuss the Dow’s free fall as an indicator of our 
present slump, the US Dow Jones Total Market Index (TMI) provides a more 
comprehensive marker for economic analysis. The Dow only measures the 
stock performance of leading US corporations. The TMI assesses the 
overall economic system. According to the Dow Jones website, the TMI 
index includes ninety-five percent of the investable market, tracking a 
total of 1,650 stocks. In the past year, the Dow only showed a downturn 
of seventeen percent whereas the TMI has fallen by twenty-four percent. 
The TMI shows a more accurate picture of the market than the Dow, and 
gives an image that looks less and less like a roller coaster with its 
inevitable upturn. Despite the falsely positive picture presented by the 
Dow, our economy and the global market has been in a two-year recession 
with no sign of recovery.
In their attempts to save face, corporations have been posting business 
expenses as capital expenditures (items included in the profit balance). 
This deceptive practice has had a tremendous effect on the market. The 
most talked about cases—Enron and WorldCom—are not isolated events. 
Xerox, AOL Warner, and Qwest are all under investigation by the US 
Department of Justice for similar practices. But with all of these 
attacks on the faith of the market, the people hurt the most are not the 
stock holders or the CEOs (including those looking at jail time), it is 
the workers.
Massive lay-offs follow the profit losses and bankruptcies. WorldCom’s 
global operation has already fired 17,000 workers and the numbers are 
rising. The lay-offs are not just an issue of US workers. In the past 
six months, the Swedish corporation Ericsson fired 25,000 workers, 
representing a quarter of their work force; British Telecom fired 13,000 
workers; Alcate, a French telecom company, fired 10,000 workers; in 
Germany, 12,000 telecom and banking jobs were lost. Looking at these 
numbers is frightening, but the workers that are hit hardest during 
market down turns are not banking and telecom workers, it is the 
manufacturing sector.
The manufacturing sector has borne the brunt of the market crisis. In 
Britain, 400,000 manufacturing jobs were lost in the past three years, 
representing ten percent of the work force. The same trends are accruing 
here in the US. Six months ago, the Ford Motor Company announced that 
they had a “bloated” work force. Ford promptly took care of business, 
closing five plants and firing 35,000 workers. As you read this, the 
International Longshore and Warehouse Union (ILWU) is negotiating (or 
trying to negotiate) with the ports to limit automation that would 
severely cut longshore workers. US unemployment is projected to reach 
six and a half percent by fall. Things are getting worse.
The analogy of a roller coaster to represent capitalism’s up and down 
turns no longer works. Wall Street and the global capitalist system is 
starting to look a lot more like Lombard Street to me. Lombard is a 
steep curvy street that tour guides in San Francisco refer to, jokingly, 
as the crookedest street in the world—except for Wall Street. On a 
roller coaster, we are strapped into our seats at the whim of the 
system. But really, capitalism is much more like a car without brakes on 
Lombard Street. If we stay in the car we will inevitably die. However, 
we do have the option to pull hard on the steering wheel and remove 
ourselves from this death-trap known as capitalism.

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