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Brown nails his colours to the hedge funds

New Labour’s Gordon Brown has spent his entire period in high office, first as chancellor, and more recently as prime minister, ensuring that the interests of the global financial sector are inextricably enmeshed with the British economy.

Yesterday he intervened personally on behalf of the gamblers and speculators to postpone European negotiations on trying to regulate the derivatives market until after the forthcoming election. Some 70% of the world’s hedge funds are based in London, with an estimated 80% of Europe’s hedge funds and 60% of private equity firms based in the UK. 

Clearly it is they and the capital markets they operate that will determine what happens to the British economy whoever the Queen invites to form the new government in the next few weeks. The hedge funds have the power to make or break governments as they are demonstrating in the case of Greece. 

Brown and his chancellor Darling are in cahoots with Timothy Geithner, Barack Obama’s Treasury Secretary in the US, in defending the freebooting masters of the universe. Last week Geithner wrote to EU officials warning that the directive was protectionist and would damage US funds. His letter angered Michel Barnier, EU commissioner for financial services, who said he was not amenable to pressure and would not take instructions "from Paris or London and certainly not from Washington."

Chancellor Darling, who lobbied his Spanish opposite number over the weekend, said Britain would seek more concessions because the current draft directive proposed by Spain threatened blocking international funds from the European market. The chancellor believes that this outcome would be “deeply damaging” to the hedge fund and private equity industries as well as to returns made by pension funds.

So you can see that despite the chorus of calls for regulation that echoed around the world during the worst days of the global meltdown, the interests of the capital markets make powerful governments of whatever political stripe into their servants, willingly or not. And the pressure is building, driving the elected governments of countries and unelected regional blocks into deeper conflict between themselves, but more importantly with their populations.

Brown’s two key interventions in two days – first supporting British Airways against the democratic decision by Unite members to resist the assault on their working conditions and income, and now putting himself between the European Union and the hedge funds, say more about New Labour than the tsunami of words that have already begun to flood the airwaves in the run up to the election.

The capitalist system of production together with the financial sector, its inseparable twin, express their requirements to capitalist governments which carry them out at whatever cost to the people they supposedly represent according to the mythology of “democracy”. 

It’s one of the reasons why we call on the people to hang on to your votes in this election. Many people are asking how they can express their opposition when there is no party to represent their interests. In hanging on to your vote, we’re not suggesting that you sit on your hands. 

We need to build a new kind of democratic organisation, one that will discuss how to transfer the ownership and control of land, finance, production, food distribution, housing and transport to the people who work in and use them. 

To make a start, in response to the EU’s urgent warning to the UK to follow Greece in cutting public sector spending to reduce its debt, People’s Assemblies could organise a mass campaign to defy the financial masters. “It’s not our debt and we won’t pay it!”

That would be a start towards forming an international movement to defeat the power of capital in the form of global corporations and financial institutions in every country, uniting working people around the world against their common enemies. 

Gerry Gold
Economics editor
17 March 2010

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