The Morning Star’s editorial on this, the day after the bailout of the banking sector:
Give them the Chavez choice
(Monday 21 April 2008)
SOMEWHERE in the depths of the City, lurking behind closed doors, a coven of high-ranking bankers must be pouring out the champagne and celebrating raucously at the tops of their well-bred voices.
And they certainly have something to celebrate.
Following on from years of furious-paced gambling, during which they raked in the profits from speculating on mortgage debt, which they themselves had encouraged eagerly with ill-advised lending, their bonanza came to a sticky end recently with the US sub-prime mortgage crisis.
They lost, they say, billions of pounds. Their little flutters left their banks not only carrying huge losses, but suspicious of each other and unwilling even to carry out their normal business of lending money to their colleagues, fearing that their mates in the other banks were concealing a level of losses that made them a bad risk.
So much, you might say, for solidarity between partners in crime. There’s not much honour among thieves and they deserve what they got.
But the bankers are celebrating. And they are celebrating with good cause because, unlike the normal punter who puts a few quid on the 3.45 at Newmarket, they lost their bets but they aren’t going to have to cough up the readies to the bookie.
That nice Alistair Darling is going to make sure that they don’t, by throwing £50 billion in the pot that they can borrrow to cover their losses, using as security – Yes, you’ve guessed it – precisely those dodgy chunks of mortgage debt that they don’t trust themselves.
Now that’s a pretty good deal by anyone’s standards, especially since the good old Chancellor and the Bank of England have already coughed up a cool £50 billion to cover the Northern Rock crisis.
But are they satisfied? Not a bit of it. In fact, one banker, who rejoices in the job title of “head of spread betting at GFT Global Markets,” said: “The market reaction, at least in the short term, may well be one of disappointment that further funds have not been earmarked as part of a more long-term plan.”
There’s no pleasing some folk, is there?
And, considering that the banks have already refused in large numbers to pass on interest rate cuts to their customers, is it at all likely that this latest largesse will turn them into public benefactors with generosity oozing from every pore?
Mr Darling didn’t seem to think that he could raise considerably less cash to help out the poor victims of Labour’s cock-up over the 10p tax rate, so one would think that the latest little miracle of finding £50 billion to help the rich would leave the bankers reeling with stunned gratitude. It hasn’t.
But has Mr Darling any choice in the matter? He clearly doesn’t think so. With the importance of the banking and finance sector, he is worried that this bank-induced crisis could cause a catastrophic slump and damage the economy of the country.
But there are other choices. Choices that could be made in a democracy, if the word democracy has any meaning at all.
If it is the government that runs the economy – as the politicians insist every election – and not the bankers, then direct control of the speculators is a choice that could and should be made if they can’t control themselves.
It might be described as the Chavez choice, which the Venezuelan leader gave to big oil.
Work for the country and not for your private interest, or we will take the choices out of your hands.