Banks bail-out is a con and a swindle
The £50 billion bail-out of the banks is a desperate act by a cornered government. Worse, it is a futile bid to shore up a capitalist financial system that is in meltdown precisely because of the actions of the very same people the money is being handed over to.
Christmas has come early for banks who, egged on by New Labour and the Tories before them, created a world of fantasy finance based on building and trading in debt. Now that the wheels have come off the financial merry-go-round, the banks have gone cap in hand to the state.
They have not been disappointed. New Labour, without any shred of democratic approval, is to buy shares in eight banks and building societies (the shares will have no voting rights attached) and make another £250 billion available through the Bank of England.
So the banks are being handed new capital so that they can pay off their creditors and cover bad debts over the coming years. In other words, other banks and lenders are the priority, not ordinary people’s savings and deposits. There’s no guarantee that any of this money will ever find its way back to the Treasury. In fact, as the global financial crisis worsens the likelihood of the banks staying afloat diminishes by the day.
Financial capitalists are the ones who benefit from this state-perpetrated con and swindle. While New Labour can find cash for the bankers, the rest of us have to suffer the consequences of a crisis not of our making:
- there’s no state bail-out for people losing their jobs
- repossessions and homelessness are growing but the state washes its hands
- new cancer drugs are too “expensive”, so there’s no state funds for those
- fuel and energy prices have gone through the roof but surprise, surprise, New Labour won’t do anything
- the cost of living is soaring but the government says workers have to accept below-inflation pay deals.
From the trade unions and Parliament there is a deafening silence, a cowardly acquiescence as New Labour makes bailing out capitalism its only mission in life. One of the few honourable exceptions is the MP John McDonnell, who rejected the rescue package, saying:
Pouring taxpayers money into bailing out the banks by recapitalisation without nationalisation will mean that ordinary taxpayers pay for the crisis caused by the mistakes and greed of the bankers. Nationalisation to control the banks, prevent repossessions and halt company closures is the only way to provide the security needed.
The question is, however: Who is to carry through public ownership of the banks? Certainly not New Labour! This is an out-and-out capitalist government, as events of the last few weeks have demonstrated for all to see, which is as bankrupt as the system it presides over.
And the crisis will deepen as the world of fantasy finance continues to unravel under its own momentum, driving the real economy into slump. The system is beyond bailing out, as the negative reaction of the US markets to the $800 billion toxic debt buy-up package approved by Congress shows. State insolvency has hit Iceland and the United States could be next in line.
The entire financial system has failed but that doesn’t mean that capitalism itself will simply walk off the stage of history. We need to create a new revolutionary politics in the course of building mass opposition to the New Labour government and its policies. There is an urgent need to work out a plan to reconstruct the financial system along new lines, refounding them as people’s banks. These would have no private shareholders and repudiate the toxic debts accumulated by reckless speculation. They would put social needs first and not be driven by profit.
Achieving this transformation is, of course, an immense task. Rejecting the bankers’ bail-out is an important first step. Taking part in AWTW's October 18 Stand Up for Your Rights festival would be a great second step!
AWTW Communications editor
8 October 2008
Who Pays for the Credit Crunch?
Monday 13th October, 7.30pm
Committee Room 10, House of Commons
Organised by the Left Economic Advisory Panel