So, the government urges banks to pass on the interest rate cut – but the bank it just bought, Northern Rock, hasn’t done this, so the banks have instead hiked rates. And in return for not passing on the rate cut, the government has allowed the Bank of England has again pumped billions into the money markets…
There’s a great editorial in The News Line today:
PRIME MINISTER Brown said yesterday that he will not be diverted from taking ‘unpopular’ decisions to ensure Britain gets through the global credit crunch.
Afterwards the Bank of England confirmed that a further £15 billion had been put into the banking system to try to ease its no-cash crisis, on top of the almost £200 billion that has already been handed over to Britain’s bankrupt bankers.
A 10 Downing Street spokesman also tried to insist that the talks between Brown and the bankers from Lloyds, Barclays, HSBC and the Royal Bank of Scotland were not a crisis summit, an assertion that left most people laughing.
As is well known, the bankers are demanding that they have the same facility available to them as the Federal Reserve bank has put at the disposal of the US banks.
These get unlimited cash credit with all of their bad mortgage debts accepted by the Federal Reserve bank as collateral.
That this is the road to state bankruptcy, prompted by a truly desperate situation of a financial and growing industrial collapse, is more than obvious.
The Bank of England, appreciating just how vulnerable a badly indebted Britain is to a worsening of the crisis and a run on the banks and the pound, leading to sky high interest rates, is hesitating before taking such a huge and desperate gamble.
Brown, for his part, is seeking to insist that the bankers do the minimum, that is pass on any cuts in the Bank of England’s interest rate to their mortgage holders, something that the cash hungry banks are refusing point blank to do.
Meanwhile, Brown’s trade minister and the former CBI bosses organisation leader Lord Digby Jones has said that he is sticking with Brown, and not resigning from the Labour government.
Jones however confirmed he will quit before the next election because he cannot back the Labour Party.
He added: ‘I am a supporter of and believe in what Brown is doing. My plan now is to get on with the job.
‘I will continue to give him personally my full support and I am delighted to be doing this important job for my country.’
Brown responded that Lord Jones was ‘doing a good job’ and was ‘staying on as a trade minister’.
In fact Brown’s government of all the talents is an embryo national government with open representatives of the bosses and the military in its ranks, such as Jones and Admiral Lord West, the security minister. Whatever the frictions between Brown and the ruling class, the bosses still need Brown for the dirty work that lies ahead. This is why Jones and West are staying on board.
Jones says that he wants to get on with the job, while Brown states that he is not afraid of ‘taking unpopular decisions’.
The bankers, Brown and his business and military friends know exactly what the job entails.
In a situation where the worldwide financial and economic crisis is worsening by the hour, and where Britain is even more indebted than the US, a deepening of the crisis will result in the banks and the pound being in the front line.
When this happens Brown will extend his government of all of the talents into becoming a fully-fledged national government, including the Tory and Liberal leaders.
It will then impose draconian crisis measures onto the working class and the middle class, hiking up interest rates, cutting public sector wages by decree, and abolishing benefits that they consider capitalism can no longer afford.
The workers movement and the trade unions will have to respond to such a savage attack by calling a general strike to bring down the Brown-led government to bring in a workers government.
This will only be able to resolve the capitalist crisis in one way, by expropriating the bosses and the bankers and bringing in socialist measures.