IMF on Economic shrinkage and Northern Crock from Adam Applegarth

[Wednesday]

The Great Crunch of 2008?
Gloomy mumbling on the UK housing market from the International Monetary Fund:

“There remains the concern that the US experience might presage steep housing downturns in other countries that have also experienced a rapid rise in house prices, with associated risks for output growth,” said the IMF.

The other European nations that the IMF says are at risk of seeing falling housing prices are France, Republic of Ireland, Netherlands and Spain.

A number of recent reports have pointed to cooling house price inflation in the UK.

The Department of Communities and Local Government said earlier this week that the annual inflation rate for property fell from 12.4% to 11.4% in the year to August.

The IMF has cut global growth forecasts:

In its latest World Economic Outlook report, the IMF now expects the global economy to grow 4.8% next year, [it] expects worldwide 2007 growth to hit 5.2% [and] says the greatest threat to the global economy remains the downturn in the global financial markets.

Oh. That’d be the credit crunch.

The IMF expects the US to see a particularly sharp slowdown in economic growth next year.

It now predicts the American economy will expand just 1.9% in 2008, compared with its previous forecast of 2.8%. […] In Europe, it is projecting that the UK economy will slow to 2.3% in 2008 from 3.1% this year [Emphasis added]

Northern Crock
The other day, Northern Rock’s chief executive Adam “not a banker” Applegarth and bank chairman Dr Matt “pop-scientist” Ridley appeared before the Treasury Select Committee and blamed the BBC for the first run on a bank in decades.

Yes, they blamed the BBC. Robert Peston, who broke the story of Nothern Rock’s reciept of an emergency loan from the Bank of England, defends himself thusly:

I understand that Northern Rock and the authorities feel that if they had made the announcement of the Bank’s support in their own time and in their own way, depositors might not have quite been so alarmed. But none of them are actually claiming that the run would not have happened. Because when they ask themselves whether they would have kept their savings in a bank which had been forced to ask the Bank of England for emergency help, they know what the answer is.

I knew Peston was no walkover.

Blaming the BBC is a low blow. The people queuing to get their savings weren’t panicking, they were responding rationally. It seemed as if keeping money in Northern Rock was a risk. Certainly, no other bank had taken the emergency loan from the central bank – and none since.

Peston, as a public servant tasked with reporting on economic matters, could hardly sit on a story of such importance to us all.

Under scrutiny, Applegarth admitted he has no qualifications in banking. The mind boggles. I expect he aced in bullshitting. It says on wikipedia that he “read Mathematics and Economics” at university. The drying up of credit markets was totally unexpected, he says. Hmm…

Ridley, on the other hand, is a aristocratic scientist who writes mass market science books laced with neoliberal politics and subjective, that is to say unscientific, observations. For example, in his opus The Origins of Virtue he suggests that Hitler stole the idea of exterminating Jews and communists from Karl Marx – a communist of Jewish heritage. Ridley is a truly bizzare individual. Must be the gene pool…

So, what next for the troubled Northern Rock?

On Monday, it said it was continuing talks with a number of “potentially interested” suitors, but that discussions were at a very early stage.

Its statement came after a consortium led by Sir Richard Branson’s Virgin Group put forward plans to take control of the bank.

Mr Ridley confirmed that the Northern Rock had now borrowed £13bn from the Bank of England, but declined to guess how much more it might need.

When will these guys resign? Or are they waiting for Branson, or whoever takes control, to give them the chop? Have they no shame?

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Anger at New Labour sweeps through CWU

[Wednesday]

Essential reading from this week’s Socalist Worker, a look at attitudes towards the Labour Party amongst its working class donors/victims.

In both Scotland and Wales, the CWU and other unions can apply pressure to Labour by threatening to support the nationalists instead – something which has been suggested by the GMB’s Paul Kenny, and others.

But in England, where is there to go? Not back to the Liberals – that’d be absurd. Not the Greens – the name implies a single issue, and one other than working people. Nor Respect – not in its current form, at any rate.

Yuri Prassad isn’t foolish enough to suggest unions in England should start backing Respect instead of Labour – in fact, it’s hard to discern the SWP’s vision for the coalition – rather, he reflects the view of many CWU members who would rather the union backed people who support their struggles instead of funding the Blue Labour backstabbers.

Anyhow, for those too lazy to click a hyperlink, here’s the article:

Anger at New Labour sweeps through CWU

The union’s dispute with Royal Mail has raised sharp questions over its political fund, writes Yuri Prasad

There is a deep crisis in the postal workers’ CWU union that centres on its political fund – but reflects much wider troubles in the relationship between the unions and the Labour Party.

There are also “rumblings within the GMB union” over the union’s link to Labour, according to a report in last Sunday’s People newspaper.

Questions about union funding of Labour have emerged in every trade union that has taken strike action under New Labour – and on a scale not seen under previous Labour governments.

At the root of the crisis is the way the Labour leadership has wholeheartedly embraced privatisation and neoliberalism – the ideology behind Gordon Brown’s public sector pay freeze.

According to the Electoral Commission, between February and June this year the CWU donated £277,627 to the Labour Party – yet with every cheque signed, attacks on the union have increased.

In the week of the first postal strike in June, the Labour Party accepted £3,500 from the CWU to help pay for its leadership contest.

Within days Brown was condemning the postal workers and telling parliament that their union must show restraint.

“The question of Labour and our strike has been massive in Scotland,” says Tam Dewar, area delivery rep for the CWU’s Glasgow Amal branch.

“I know of at least four unit reps in my branch that have left the union’s political fund during the course of the strike. I’m not at all surprised by that because it’s not just Brown and the ministers who are against us.

“I wrote to eight local MPs asking them to support our strike and only got replies from four – that’s a disgrace. If we want to stop the haemorrhaging of the political fund, we must ensure that we only financially support those who support us.”

This feeling is now widespread in the union. At a mass meeting during last week’s unofficial postal strike in east London, the greatest cheer went to the rep who said she would take forms to leave the political fund around all her workmates at the end of the dispute. “There must be no more money for Gordon Brown,” she said.

She was absolutely right. The union should not be funding those who are attacking it. Money should only be going to those who broadly support the union’s policies and back it in key confrontations – even if that means battles with government ministers.

This doesn’t necessarily mean abandoning the political fund. But it does mean radical change.

Political funds do not exist simply to fund Labour – more broadly, they give workers a collective political voice.

There are some within the trade union movement who believe that unions and politics should not mix. They would like to see unions concentrating simply on economic issues and ignoring the ways in which politics impacts upon every workplace struggle.

This would be a major mistake. For example, where working class people are divided by racism, it undermines our ability to fight back in a united way. Therefore it is good that the CWU is affiliated to anti-racist campaigns such as Unite Against Fascism.

But anger against Labour is now so strong that without significant changes to how the CWU’s political fund is used, it may well be abandoned – leaving the union without a political voice.

The firefighters’ FBU union is an example of this. The union voted to disaffiliate from Labour in 2004. This followed a prolonged strike in which Labour ministers played a critical role in backing employers.

But when the union broke with Labour, it had no alternative political project in mind and has since played no significant part in the creation of new voice for working people.

The CWU can do much better than that. Across Britain many CWU activists are demanding change. They want action now that enables the union to fund left wing MPs and councillors from parties other than Labour, such as Respect.

There will be strong resistance to this move from some in the CWU’s leadership. But without such a change, the numbers of union members leaving the fund will become so great that the potential political voice that it offers will be gravely weakened.