Gerry Bates writes on the national debt in the AWL’s Solidarity:
Sack the bank bosses! Bring finance under democratic social control
Bank of England and government support for the banks so far totals something like the equivalent of £18,000 for every child, woman, and man in the UK.
The Bank of England’s Financial Stability Report of 27 October 2008 gives the figures: a total of £1107 billion.
It can’t be right? After all, the average household in the UK is about 2.4 people. That average household doesn’t have £43,000 (£18,000 times 2.4) to give to the banks, even if it wanted to.
Indeed, the Government and the Bank of England have not been packing up £1107 billion in banknotes to hand over to the banks. The entire total of bank notes and coins in the UK is much less than that, about £50 billion.
The Government has been extending credit and guarantees to the banks. Across the system, a lot of the dodgy assets “cancel out”, so not all the £1107 billion in guarantees can be called in.
That is why the figures for Government guarantees to banks are so huge; yet still may be not enough. But there is more to it all than the huge notional figures.
As Anatole Kaletsky put it in The Times: “The provision of £100 billion of state guarantees to a grossly mismanaged and insolvent mortgage bank [is] a gross insult to the hundreds of thousands of workers in businesses from coal, steel and textiles to performance cars and advanced electronics whose jobs could have been saved with Government guarantees or ‘temporary’ nationalisations costing one-tenth or even one-hundredth of the £100 billion”.
Also, in real money the bail-out policies mean a much increased total debt from Government to the public, and therefore, as Marx put it in another context, “with it, pressure of taxes, the rise of the vilest financial aristocracy…”
£200 billion increase in the national debt looks likely. Assume the rate of interest the Government pays on that debt is about 5%. That is £10 billion a year extra in interest payments — equal, for example, to one-quarter of the Government’s total schools budget.
Meanwhile Government-supported or even Government-owned banks are run in just the same way, by the same people or the same sort of people, as the pre-crash privately-owned banks.
Ron Sandler, put in by the Government to run Northern Rock, gets £90,000 per month — £1,080,000 per year — more than the £690,000 basic salary of Northern Rock’s previous chief executive, Adam Applegarth.
Northern Rock workers are losing their jobs, and Northern Rock mortgage-holders are being evicted from their homes.
The Government does no more than plead and cajole with the banks to continue lending and to hold off on evictions.
The vast guarantees for the bank bosses, without anything in return, are indeed an insult; and, with jobs bleeding away and evictions mounting, an insult we can’t afford.
The labour movement should demand that the Government:
• nationalise all the big banks and high finance, without compensation for the big shareholders;
• sack the bank bosses;
• reorganise high finance as a public banking, mortgage, and pension service, under democratic and workers’ control;
• organise the allocation of credit, under democratic control, to safeguard jobs and homes, and to expand public services.