A wunch of bankers

[Monday, again]

In its editorial today, The News Line holds forth on the banking crisis:

BOTH the HSBC and Barclays banks along with the Royal Bank of Scotland have suffered major share losses in the past week, as investors revealed that they did not believe the protestations coming from the three major banks that they were not ensnared by the US sub-prime mortgage crisis.

This has already seen the Merryl Lynch, and Citigroup Banks sack their chief executive officers and along with Morgan Stanley reveal some $15 billion dollars of debt due to the fact that up to three million US mortgage payers, in the risky sub-prime classification could not keep up with their mortgage payments.

HSBC has already announced 750 job cuts in the US and is expected to reveal a further $1 billion of sub-prime mortgage debt.

This will happen when HSBC declares its losses for the three months up to September, next Wednesday.

Barclays has also been in denial over the impact of the sub-prime mortgage crisis on its profits.

The disbelief that these statements has been greeted with led to a ‘certainty’ on the London exchange that Barclays was about to reveal a $10bn sub-prime mortgage deficit.

Barclays shares plunged 9 per cent during Friday trading, leading to trading being suspended for a time. In all shares in the Royal Bank of Scotland ended down 3 per cent, while HBOS, HSBC and Alliance & Leicester all lost more than 2 per cent.

Barclays spokesmen have now had to deny that its chief executive John Varley is about to quit.

Again, the more fervently that this rumour has been denied, the more fervently has it been believed by shareholders.

The situation has been made worse by the confirmation by the head of the US Federal Reserve, Bernanke, that the US economy is slowing down and is set to slow ‘noticeably’ by the end of the year.

He warned that there would be even more ‘financial restraint’ on economic growth in the period ahead as ‘credit becomes more expensive and difficult to obtain’.

Strongly hinting that a series of rate rises are ahead, Bernanke added: ‘Investors have also become more cautious and are demanding greater compensation for bearing risk.’

The position of the governor of the Bank of England, Mervyn King, on the future is now well known. He said, ‘I think most people expect that we have several more months to get through before the banks have revealed all the losses that have occurred, and have taken measures to finance their obligations that result from that, but we’re going in the right direction.’

He added: ‘There is always, in a period like this, the possibility that a shock from outside the UK, one from the world economy, might create further fragilities, but to some extent there are always risks, there are always fragilities.’

King is also on record as saying, referring to the Northern Rock bank, that ‘In the absence of a government guarantee, it was actually rational to queue up and take your money and it would have been dishonest for us to have pretended otherwise.’

And if the government’s assurances are not believed and not taken to be a real guarantee of deposits, it will be all the more ‘rational’ for depositors to form queues at all of the dodgy banks to demand their cash.

With oil soaring to over $100 a barrel, and gold soaring well above $820 dollars an ounce, while the dollar drops like a stone, all the conditions are there for a major international crisis, the shock of which will expose all of the ‘fragilities’ of the British capitalist system through a run on the banks and the currency.

In this situation, the only way out for the working class and the middle class will be through a socialist revolution to expropriate the bosses and the bankers, to bring in a socialist planned economy. This will prove to be the only way forward.

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2 Responses to “A wunch of bankers”

  1. a very public sociologist Says:

    The WaRPs must be wetting themselves thinking The Crisis they’ve been predicting since the SLL went independent is finally coming to fruition. Here’s to hoping all those discos with Uncle Gerry paid off!

  2. charliemarks Says:

    aye, bless ’em – could be they’re a wee bit closer to the truth these days. Or should that be the other way round.

    I must say, I do enjoy reading The News Line. It’s like the Sun for revolutionary socialists, but without the bingo and tits.


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