If this time last year I had been told that people like Will Hutton, Vince Cable and Geoffrey Robinson would be calling for a bank to be nationalised, I would have rolled my eyes and said, “yeah, right!”
The run on the Northern Rock has led to such calls being made because it looks as if the government will use taxpayers money to help sell the bank, thus lining the pockets of billionaires like Richard Branson. The Tories are just demanding that taxpayers’ money be safeguarded. Anyhow, here’s the News Line editorial which says it all better than I could:
THE collapse of the US sub-prime market has produced a major banking crisis in the UK, which has seen the Northern Rock bank being put on an unprecedented £25 billion life support machine by Prime Minister Brown and his Chancellor, Darling.
Meanwhile, other British banks have suffered massive falls in share prices, with Barclays leading the way with an £18 billion fall in its share price valuation over the last two months.
Last week it was forced to reveal its $1.3 billion loss from the US sub-prime mortgage market.
The HSBC bank also revealed that it lost $3.4 billion in the third quarter of 2007.
For the rest, as of last Friday, the Royal Bank of Scotland’s (RBS) share price was down by five per cent while the Alliance and Leicester was down by 6.3 per cent. The RBS will be revealing its third-quarter figures on December 6.
However, the source of the British banking crisis, the world crisis of capitalism, is deepening. The dollar is still falling rapidly, while oil and gold prices are rising in inverse proportion, as the capitalists seek to get rid of the various paper promises to pay and secure real value.
As the Governor of the Bank of England has spelt out, the period ahead is going to be one of falling output and rising inflation, in which British capitalism will be highly vulnerable to big shocks that emerge out of the world crisis.
The current Opec summit almost produced such a shock, when Saudi Arabia just managed to fend off an Iranian-Venezuelan attempt to terminate the role the US dollar plays in the world oil trade, and promote the euro to its place. However, it is only a matter of time before another attempt is made to do this.
This rapidly deepening capitalist crisis means that the British government and the British banks have got absolutely no room for manoeuvre at all – they are literally hoping for the best, but more and more fearing the worst – that they will be hit by shocks that will break the back of the banks.
As far as Northern Rock is concerned, two private investors – a consortium led by Richard Branson’s Virgin Group and investment firm Olivant Advisers – have confirmed they have made proposals to ‘rescue’ the bank.
They want to purchase the bank for a cut price. They want to be let off paying the interest on the £25 billion cash lifeline, and they want that lifeline extended indefinitely, so that they are virtually state-sponsored.
This is how weak British capitalism is today. This is ‘risk-taking’ capitalism for you, with the taxpayers taking all of the risks. This is capitalism as a 100 per cent parasite.
The Liberal Democrats are advocating that the bank be nationalised as the cheapest way out of the crisis.
The Labour government is no doubt considering the proposition. However, it is opposed to nationalisation on principle. It is a privatising government that long ago declared that nationalisation, even the continuing nationalisation of the Royal Mail, was somehow or another a continuation of the ‘command economy’ of Stalinist Russia.
They are also very worried that workers will be encouraged by such an action to demand that failing industries that threaten their jobs be nationalised, along with bosses who are seeking to transfer abroad.
Any Brown-sponsored nationalisation would be of the Mussolini variety. The fascist dictator did nationalise failing industries – in order to pump state funds into them before handing them back to grateful bosses.
However, bailing out a string of private banks is the surest road to the bankruptcy of the state.
The issue before the working class is not the best way of bailing out banks such as Northern Rock, but how to deal with the threat that the developing crisis of capitalism poses to the working class and the middle class.
This crisis can only dealt with by revolutionary measures to resolve the capitalist crisis.
This requires a socialist revolution to secure the nationalisation of the banks and the major industries, and the abolition of the £1.4 trillion of domestic debt. It also requires the drawing up of an economic plan by the working class, and its implementation, to revolutionise society by producing, not profits for a few, but use values to satisfy the material and cultural needs of the people. [Emphasis added.]
And remember, before it could nationalise Northern Rock the government would have to seek permission from the EU…
And respect to Neil Clark, whose post “An Important Principle: No Subsidy without Equity” ends with the following:
In the interests of fairness, it’s time to campaign for the adoption, by the government, of a very simple principle: not a penny of taxpayers money should be handed over to a privately owned company without the public gaining equity in that company.