Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Wells Fargo's Counter-Stimulus StrategyRoger Bybee's feature in our current issue shows how big corporations are taking the financial crisis and recession/depression as an opportunity to eliminate jobs in the United States. ArcelorMittal, the world's largest steel company, is trying to shut down two steel mills, one in Hennepin, Ill., and one in Lackawanna, N.Y., despite the fact that the mills are profitable and have willing buyers.Today's New York Times includes an article indicating that at least one corporation—Wells Fargo—is willing to follow this sort of strategy, even though it was the recipient of tens of billions of dollars of government bailout money. Wells Fargo, the main creditor for the clothing manufacturing company Hartmarx, which is in bankruptcy, is trying to prevent the company's board from selling the company to Emerisque, a London-based private investment firm specializing in "reviving heritage brands," according to its website. According to the Times article (see part of it below), Unite Here ("the union that represented Hartmarx's workers"—do the not represent them anymore, now that the company is in bankruptcy?—the article doesn't tell us) is threatening to kick up a fuss if Wells Fargo succeeds in blocking the sale. The article quotes Unite Here president Bruce Raynor as saying: "The surest route for the bank to recover its money is to make a deal with a well-respected private equity firm that owns and runs several successful brands," Mr. Raynor said. "Emerisque is not only offering substantial recovery for the bank, but to protect the jobs of workers." It seems a little odd for the union to be finding common cause with private equity, given the track-record of private equity firms of stripping companies of assets and downsizing workforces, as we reported in a feature article in our July/August 2008 issue. Should the Hartmarx workers trust Emerisque's promises? Pres. Obama's statements in support of the Republic Windows and Doors workers' sit-in in December was encouraging, if only because it indicated a strategy that workers can take in confronting banks and companies that are trying to screw them, and can bring public opinion to bear on the occasional politician. Given that workers at the Hart Schaffner Marx plant (owned by Hartmarx) outside of Chicago made the tuxedo that Obama wore on his inauguration day, can those workers count on him to stand by them, too? —cs Wells Fargo Said to Be Squeezing Clothier Hartmarx, Raising Liquidation Fears Read the rest of the article. Labels: Barack Obama, counterstimulus, Hartmarx, labor, Roger Bybee, unions, Unite Here, Wells Fargo Chris Sturr Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). Steelworkers Attack ArcelorMittalFrom yesterday's WSJ; find background on the situation in this feature article in our current issue. The CEO of ArcelorMittal—the largest steel firm in the world—is Lakshmi Mittal, who is one of the richest people in the world. He is so rich that, as Roger Bybee reported in his feature article for us, he spent $55 million on his daughter's wedding. If you're wondering how even the super-rich could spend that much money on a wedding, it helps to know that they rented out Versailles for the reception. —csSteelworkers Attack ArcelorMittal Fed Up With Plant Shutdowns, Protesters Smash Windows at Annual Shareholder Meeting in Luxembourg By ROBERT GUY MATTHEWS ArcelorMittal is facing increasing worker protests around the world, including a violent confrontation during an annual shareholder meeting Tuesday in Luxembourg, as frustration mounts over plant shutdowns and the reluctance of the world's biggest steelmaker to commit to reopening idled facilities. Although ArcelorMittal has already cut production in half and shut down plants and blast furnaces around the world—including some iron ore operations idled Tuesday in Indiana—it still makes more steel than customers need and expects global steel demand to sink by up to 20% this year. On Tuesday, an estimated 1,000 steelworkers from the company's plants in France and Belgium attacked its headquarters in Luxembourg, setting off smoke bombs and smashing windows in an effort to disrupt an annual shareholder meeting. The meeting went on despite the protests. Lakshmi Mittal, chief executive officer of ArcelorMittal, told shareholders that customers are buying less steel and using their current inventory. Producing steel that could not be sold, he said, was pointless. Mr. Mittal said that he would shift steel production from higher cost plants to more efficient steelmaking plants, but declined to say where or when. Many of the companies higher cost plants are located in Europe and the U.S., where labor costs are higher. Raw material costs in those countries also tend to be higher because those plants tend to be further from mines that produce the raw materials. In addition, plants in those regions are tied to certain markets, particularly automotive, that have seen a steep drop off in demand. In the U.S., the local steel union mounted a nonviolent protest at the company's Chicago headquarters two weeks ago, over the anticipated permanent closure of ArcelorMittal's Hennepin, Ill., plant. Duane Calbow, vice president of the local 7367 United Steelworkers, said that Chicago workers are frustrated because the company doesn't seem interested in running the plant or trying to sell the existing operations or find other uses for the facility. Read the rest of the article; read Roger Bybee's feature article on ArcelorMittal (the sidebar on Marie Antoinette is particularly juicy). Labels: ArcelorMittal, Lakshmi Mittal, Roger Bybee, Steel industry Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). More on Canada (N. Folbre on NYT econ blog)More on Canada's banking system, as Pres. Obama visits our neighbor to the north. This one is by left economist and UMass-Amherst professor Nancy Folbre, at the New York Times Economix blog, to which she seems to be contributing regularly (we re-posted something by her from there on early childhood education last week). She makes some of the same points that Maurice Dufour makes in the article we posted this morning, but Folbre's discussion of public spending, and single-payer in particular, is excellent. And it is nice to see her criticize the fatuous Fareed Zakaria. (For a great critique of Zakaria's oeuvrre, see frequent D&S author Roger Bybee's article in Extra! from a few months back.Canada and the Recession: Angles of Deflection By Nancy Folbre O Canada. That big, beautiful country to the north is a lot like us, just colder and a few degrees less ... neoliberal. Canada has moved more slowly than the United States to deregulate its economy and shrink its social safety net. The resulting differences in the impact of global recession are small, but instructive. As Fareed Zakaria points out in a recent Newsweek article, Canada is weathering the financial crisis better than we are. Canadian banks are more old-fashioned (that is, centrally regulated) than our own. Stricter leverage requirements have been enforced. Subprime mortgages have not been encouraged. Prohibitions against foreign bank takeovers have protected Canadian institutions from competition from the United States, but also buffered them against financial contagion. Mr. Zakaria overstates the case when he claims that no government bailout has taken place there. The Canadian government has provided substantial assistance to the financial sector. But its efforts to increase available credit remain far less costly than our trillion-dollar subsidies. A more serious concern for Canadians is the likelihood that the sinking American and global economy will pull them down. If unemployment continues to rise over the next few months in the United States, as predicted, many families will lose their health insurance coverage or struggle to pay premiums they can ill afford. By contrast, increased unemployment won't reduce Canadian access to health care. As the economist (and fellow Economix blogger) Uwe Reinhardt explains, the single-payer Canadian health care system delivers very good results for about half the per-person cost of ours—with huge savings from reduced paperwork. Economic disparities in access to health care are significantly lower there. President Obama promises to expand health insurance coverage in the United States with little threat or inconvenience to the private sector. But some Democrats in Congress, led by Representative John Conyers, advocate a single-payer "Medicare for All" bill strongly influenced by the Canadian model. Both American and Canadian unemployment insurance systems are less generous than those of most countries of Northwestern Europe. Neither provides assistance for more than 40 percent of the unemployed. But Canadians have long provided a higher replacement rate for lost earnings. According to latest estimates from the Organization for Economic Cooperation and Development, a married worker earning the average wage, with two children, could expect 78 percent wage replacement in Canada, compared to 52 percent in the United States. The differences are even greater for those earning higher than average wages, because of low benefit ceilings. The recently passed Economic Stimulus and Recovery Act offers incentives to states to expand unemployment provision to part-time workers and to those leaving jobs for "compelling family reasons." The Canadian unemployment insurance system offers more comprehensive family benefits, including paid sick leave, paid compassionate care leave, and paid maternal and parental leaves of up to 50 weeks. Many American workers aren't even eligible for the 12 weeks of unpaid family leave guaranteed by the Family and Medical Leave Act—although President Obama promises to change that. There's no evidence that Canada's public provision of health care and social benefits has reduced its economic growth, and the federal budget just presented is the first to show a deficit in 11 years. What explains more support for public spending there? Slightly lower income inequality may encourage slightly more solidaristic policies. Such policies, in turn, reduce income inequality. The French social-democratic traditions of the province of Quebec exert a distinct influence. The Canadian political scientist Keith Banting argues that explicit efforts to develop a strong but multicultural national identity have strengthened norms of mutual support. The national anthem ends with a promise (at least in translation of the original French) to protect Canadian homes and rights. (This is the full post.) Labels: bailout, banking crisis, banking regulation, Barack Obama, Canada, Fareed Zakaria, financial crisis, Maurice Dufour, Nancy Folbre, Roger Bybee Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
