Economy

US Democratic Congressman Dennis Kucinich described the
$700bn bail-out of the US banks by the Bush administration as: “The largest
single act of class warfare in the modern history of this country” In Britain £50bn is being doled out in a similar scheme.
That’s approximately £833 for every man, woman and child in the country, or
£1,500 for every taxpayer. If someone was to help themselves to £1,500 of your
money and spend it wouldn’t you at least want to know how and why? Yet the
language saturating the media is full of panic and obfuscation.

Over the past couple of weeks, Britain,
many other European countries and the US have announced plans to nationalise
large chunks of the financial sector, thereby taking a good proportion of the
commanding heights of the economy into public ownership. The British government
has been forced to effectively part-nationalise three of the country’s biggest
banks, RBS, Lloyds TSB and HBOS. The plan, which includes putting treasury-appointees
on the boards of all three banks, will cost the taxpayer in the region of £37
billion. Many of the major European powers are unveiling similar plans, and
even the US, the ideological bastion of free-market capitalism, has been forced
to invest $250 billion into buying stakes in nine of its banks (though these
‘non-voting preference shares’ mean the US government will have no direct control
over the running of these banks).

New Labour is the bastard child of
Thatcherism. Blair, Brown and Mandelson inherited from the evil witch the
belief that the market (capitalism) was god and that the rich are the wealth
creators we must all bow down to.

As Marxists know, and as the present crisis
has shown, this is the opposite of the truth. But this has been the foundation
of all the policies carried out by New Labour over the past years.

Last
month we reported how insurance giant AIG had to be bailed out by the US
government for $85bn. It’s all part of ‘Socialism for the rich, capitalism for
the poor.’

Less than a week after the bailout, the company held a week-long retreat for
its executives at the luxury St. Regis Resort in Monarch Beach, Calif., running
up a bill of $440,000,

At the opening of a House committee hearing about the near-failure of the
insurance giant, Congressman Henry Waxman showed a photograph of the resort.
Waxman said the executives spent $200,000 for rooms, $150,000 for meals and
$23,000 for the spa. 

Bradford
& Bingley has finally been put out of its misery. After months of
cliff-hanging the government has been forced to nationalise the bank. In
many respects the ‘rescue’ plan is a clone of the $700bn Paulson plan being
pushed through in the USA. The basic idea is that the good stuff is sold off to
the private sector while the taxpayer is lumbered with the bad debts, the
toxins. Socialism for the rich and the rigours of free enterprise for the rest
of us!

Last week US Treasury Secretary Henry
Paulson unveiled a dramatic plan to arrest the present financial crisis and
prevent future economic catastrophe. It is to cost $700bn.

It sounds like a breathtaking break from
neo-liberal philosophy. It’s not really. Neo-liberalism was always a giant lie.
Homeless people don’t matter. People in danger of losing their jobs in a
recession don’t matter. But, when it comes to banks and billionaires,
self-reliance is for the birds. These people are hapless bums.

“I like
thieves. Some of my best friends are thieves. Why, just last week we had the
president of the bank over for dinner.”  W.C. Fields.

The
capitalist system is in the throes of the worse financial crisis since the
Great Depression. This is the view not only of the billionaire George Soros,
but also of the International Monetary Fund, the custodian of the capitalist
system, and all the serious capitalist commentators. 

For ten years Gordon Brown has been mouthing the
phrase “no return to boom and bust”. Now we see it is meaningless. Darling in
his Mansion House speech in June also brushed off the threat of recession,
asserting that “our
economy will continue to grow.” But there has been a boom and it has
turned to bust. Brown and Darling are denying what is going on in the real
world before their eyes. They can’t do anything about the recession since they
are not prepared to act against the source of the problem, the capitalist system.
More and more people will begin to see that if the only way we can control the
economic system and make it work in our interests is if we own it.

In 1976 the Lucas Aerospace Company was faced with the
prospect of making up to 20% of its 18,000 workers redundant. Lucas was a big
conglomerate that had just come into existence, partly with the support of the
1974-79 Labour government’s industrial policy. They wanted to create ‘national
champions’ and thought ‘big is beautiful.’ Not if you’re going to lose your job
as a result, it isn’t!

British capitalism is in big
trouble.  The official annual inflation
rate has hit 3.3%, its highest level for 16 years. The governor of the Bank of England, Mervyn
King, has been forced to send a letter to the Chancellor of Exchequer, Alastair
Darling, to explain why the Bank has been unable to keep inflation from rising
at more than 2%, which is the target set by the government for the Bank.

Bradford and Bingley are the latest bank to catch a cold in
the present financial crisis. They’ve declared a loss of £8m for the first four
months of 2008. This compares with £108m profits they made in the same period
last year. The main reason for the losses is because they’ve had to
write down £89m of their assets. ‘Write down’ is banker-speak for the fact that
they realise they can whistle for their money.

There’s an old saying that, ‘When the USA sneezes, we all catch
cold.’ Alistair Darling and Gordon Brown know that the USA is already
in recession. They know that the financial crisis is causing the
hatches to be battened down all over the world. But, they say, Britain
is immune. They’ve even commissioned a Treasury report to try to prove
it. Don’t believe them. The chill winds of economic crisis are
coming our way. The parallels between the US, which is already in the
mire, and the UK are stark.