XL collapse exposes chaos of capitalism

Saturday’s Morning Star has a very informative editorial which details how and why the tour operator and airline XL went bust:

Madness of the market

ONCE again, capitalism has shown its cuddly, people-friendly face with the collapse of holiday giant XL Leisure Group.

Around 85,000 people stranded abroad, several hundred thousand advance bookings dishonoured, staff finding out that they didn’t have a job in mid-flight, over 1,700 jobs potentially vanishing and the Unite union not even being informed by the company that it was in trouble with its refinancing arrangements after a major bank pulled out on August 14.

And yet, in the full knowledge that it was, indeed, in trouble and desperately trying to arrange a bail-out, the companies in the group continued to take people’s cash and make bookings that there was precious little chance that they could honour.

Not that this implies any dishonesty or deliberately dodgy dealing by the companies. Far from it – at least in the terms of the market economy.

The logic of capitalism meant that they had to continue trying to trade their way out of trouble and that same market-oriented logic said that they could not allow any hint of trouble to become public knowledge because people would obviously then cease to book with the companies, thereby sealing their fate.

Indeed, as late as August 31, a company spokesman was saying that “the XL Leisure Group is experiencing strong trading, with bookings for 2009 already outperforming last year.”

But, as for the long-suffering passengers, they inevitably get the sticky end of the deal and, the less well off that they are, the stickier it becomes.

Granted, customers well off enough to book full package deals through travel agencies are covered by the CAA air travel organisers’ licensing scheme and will be offered repatriation flights or their money back if they have an advance booking.

And, if they booked by credit card, their card insurance should cover them.

But people not having credit cards to book with, or booking a flight only, because they could not afford the full package, will face an extra fee to get home.

And it’s not only the passengers. The staff have an even worse situation to deal with.

No jobs and an industry that is contracting by the day, with airlines such as Alitalia and Zoom either collapsing or in terminal decline and a resulting glut of unemployed staff on the jobs market.

So, who is to blame for this situation?

In 2004, the Times reported that a major British bank “is poised to become the largest oil trader in the City of London as banks rush to profit from the soaring oil price and booming oil speculation market.”

In 2008, that same bank pulled the rug out from under XL because of financing associated with fuel. In other words, a major oil speculator shuts XL because the company can’t pay the price for fuel that the speculators have driven up.

And the bank’s partner in financing XL – a major Icelandic bank – acquired the still-profitable French and German XL subsidiaries on Friday morning after the rug-pulling exercise, in what can only be described as a perfect example of asset-stripping, although it would probably claim that it was saving what could be rescued from the stricken company.

But the fact remains that, if the company was stricken, it was the banks that did the striking.

Talk about having your cake and eating it.

It is difficult to imagine a better example of the amoral chaos of market capitalism or, for that matter, a better reason for social ownership of banks and big businesses generally.

Advertisements

England needs a health minister

Oh god. Ben Bradshaw again, knocking the Welsh Assembly Government’s policy of booting profiteers out of their health service, something far more popular than flogging bits of the NHS off…

Note that the BBC wrongly reports that he’s the English Health Minister. Mr Bradshaw is English, but he’s a minister in the British government – there is no devolved administration in England, unlike Wales. (Sadly, the absence of an English parliament is not pointed out) Note also that Labour shares power with Plaid Cymru in Wales – Bradshaw is attacking the policies of his own party!

Cardiff-London tensions re-ignite

An English health minister who criticised health policies in Wales has returned to the attack.

Ben Bradshaw told a conference the English NHS provided a better service despite spending less per patient than the health service in Wales.

Mr Bradshaw attacked Welsh policies of free prescriptions and free hospital parking again and said ruling out using the private sector was “dogmatic”.

The Welsh Assembly Government said it was “putting the patients first”.

Earlier this year, Mr Bradshaw sparked a row between the assembly and UK governments by saying the money spent on free parking would be better spent on improving patient care.

His keynote speech to a CBI conference on health in London on Thursday threatens to re-open tensions between Cardiff and Westminster.

He told delegates the benefits of the English approach would become clearer in time.

He said he was “fed up” with being told that England suffered from health apartheid “because millionaires in Wales get their prescriptions free or Scotland plans to allow anyone who wants to park in busy hospital car parks for free.”

Mr Bradshaw said: “What about the fact that in England you can get your operation much more quickly, you don’t have to wait for more than four hours in A and E any more and it is easy to see a GP when you want?

“These things matter more to the public. We are already delivering them in England and we have been doing so while spending less per head on health than in Scotland and Wales.”

‘Widely welcomed’

Responding to the criticism, an assembly government spokesman said: “Devolved government means that each administration is free to pursue its own priorities.

“Mr Bradshaw is entitled to his views.

“Free prescriptions and parking reforms have been widely welcomed by patients in Wales.

“We are putting the patient first and removing barriers to accessing healthcare.

“We see prescription and car parking charges as a tax on the sick.

“Investment in improving access to healthcare will improve the health and well-being of the people of Wales.”

At the Plaid conference this weekend, Adam Price called on Welsh Labour to break free from Westminster. Certainly, at the moment it’s path is leading away from New Labour. If only English Labour would do the same…

Labour needs a policy contest

Gordon Brown has apparently been enduring the company of Thatcher. He chose to do this too, invite the former PM round for tea again – perhaps because he’s wanting to check the details of her taxpayer-funded state funeral, perhaps he’s senile… I’m sure the SNP will relish the chance to again advertise this budding relationship at the up-coming Glenrothes by-election, where the head teacher of Brown’s old school is standing for Labour.

As for talk of a leadership challenge to Brown, the leader of the Socialist Campaign Group has it right:

Entering the latest row on Saturday evening Labour MP John McDonnell – who has long been urging a leadership election – described current Labour infighting as “like watching the crew having a punch up on the deck of the Titanic”.

The MP for Hayes and Harlington said: “Most Labour Party members are looking on aghast as the Blairites and Brownites fight an irrelevant turf war.

“Without a single policy difference between them they are willing to destroy a Labour government. I challenge both of them to publish a policy programme to put before our members for support and let’s test the views of our supporters on the way forward for Labour.”

[BBC]