Northern Rock – use it to set up a Post Bank, or sell it to Tesco?

The government nationalised the ailing bank, formerly a building society, but only after many months of foot-dragging. And only on a temporary basis, natch.

Word is, Northern Rock could be sold to Tesco, handing the supermarket even greater power in the economy. Given that a majority of shareholders voted against plans to improve workers’ rights at the company, we know that Tesco isn’t very socially-responsible – so why give them a stake in the banking sector?

There’s a better alternative, as Louise Nousratpour reports:

A coalition of unions and businesses will step up their campaign for a “post bank” tomorrow with proposals that government-owned Northern Rock be used to offer services via post offices.

The group will publish plans arguing that their proposal would give a boost to the Post Office network and provide a vital community service.

A Post Bank would “revive and protect” post offices, support local communities and help smaller firms, especially as the banking system was still in “disarray,” they argue.

The report Delivering the post bank outlines four options the government could follow to establish the post bank. These range from using Northern Rock as a foundation for a mutually structured people’s bank to buying out the current relationship between the Post Office and Bank of Ireland.

Support for the idea of a post bank is growing within all three main political parties as well as among a range of campaign groups.

Postal workers union CWU leader Billy Hayes urged Business Secretary Lord Mandelson, who has been pushing for the part-privatisation of Royal Mail, to endorse this “vote-winning” initiative.

“We have met the challenge to create a workable model for the creation of a post bank,” he said.

“Our new report builds upon the conceptual idea and provides practical blueprints that will appeal to the general public who are disillusioned with the old, tired banking model.”

Federation of Small Businesses chairman John Wright said: “Northern Rock presents the government with a considerable opportunity and it should not consider selling it off privately, but instead should use it to establish a post bank and invest in the long-term future of the Post Office.”

Finance union Unite national officer Paul Reuter argued that the ambition should be to “secure the future of the workers in Northern Rock as well as securing the Post Office network while, at the same time, resolving the problem of financial exclusion and meeting the needs of small businesses.”

Dot Gibson of the National Pensioners Convention added: “Ministers need to rise to the challenge and secure a future for the post office network that serves local communities rather than pander to those who want to run it down and sell it off.”

Advertisements

Nationalised Express – public ownership for East Coast rail route

Great news, as it is a step towards ending the corporate domination of our railways which has cost us dearly both as taxpayers and passengers.

The general secretary of the Rail, Maritime and Transport union has backed the move:

“RMT welcomes todays announcement by the Government on the renationalisation of the East Coast route but this shouldn’t be a short term, crisis measure.

“It should be a long term solution to the chaos that privatisation has brought to the UK’s most lucrative rail franchise.

“RMT’s national AGM will send a clear message to the Government today that they should strip National Express of their other franchises and use this opportuinity to begin the process of renationalising the rail network,” said Bob Crow.

John McDonnell MP, RMT Parliamentary Group Convenor, said:

“The public control of the East Coast Mainline franchise should be a stepping stone to full and permanent public ownership.

“This East Coast franchise should be used as a public sector benchmark – and if the public sector performs better then let’s have other franchises back in public ownership too.”

The Green Party agrees, saying

The government should go further. Under cross-default clauses, the Transport secretary, Lord Adonis, could strip National Express of all its contracts, now that the group has handed back one franchise.

The Green Party remains the only major party in Britain to call for the full re-nationalisation of the railways.

Rupert Read, candidate for Norwich North and Green Party spokesperson on public services, said:

“Train privatisation, from the beginning, was a very flawed model. We can’t keep socialising private companies’ losses and privatising their profits. We need a national train network under direct public control and with full public accountability.”

“National Express must pay back whatever monies are outstanding from their rail franchise of the East Coast Main Line – it would be quite wrong for National Express to continue to profit on some lines, while the taxpayer has to foot the bill on others. To use the government’s own rhetoric, this should be a zero-tolerance issue.”

Sir Richard Branson, co-owner of the Virgin west coast franchise, has expressed an interest in bidding for the east coast franchise if it became available.

Read responded to this by saying: “Virgin would then have control of England-Scotland services, as well as London to Birmingham, Liverpool, Manchester, Leeds and Doncaster. The entire idea of privatisation was to inject competition, and this would be substituting a public monopoly for a private monopoly. That cannot be allowed to happen, and as a Green MP for Norwich North, I would be absolutely steadfast in resisting it.”

LDV: the bailout has failed, it’s time to nationalise

Hundreds of jobs are in jeopardy at van-maker LDV and its suppliers after the company went into administration yesterday.

The firm was going to be bought out by Westar, a company based in Malaysia, after being owned by a Russian oligarch who is a friend of the Business Secretary Lord Mandelson.

Mandelson had agreed a five million pound bridging loan, but Westar is unable to raise funds, and the deal has collapsed.

For the workers at the company and its suppliers in Birmingham, the last few months have been incredibly stressful – like thousands of workers at Vauxhall’s plants in Luton and Ellesmere Port, they fear unemployment and the heartache it brings to families.

As soon as I heard that the company would be taken over by an overseas firm, I feared that the result would be the outsourcing of production – in other words, factory closures here in England.

This cannot be allowed to happen, either at LDV or Vauxhall.

There’s no reason why the government can’t step in like it did with the banks – here there are sound economic and environmental reasons for acting. As I’ve said before, there will be a market for fuel efficient vehicles once demand picks up, and if the productive economy is not rebuilt we will suffer a decline in living standards.

Short of nationalisation, these auto firms could be converted to cooperative ownership, with the government providing a loan out of the billion set aside to help the car industry.

Workers at Visteon showed the way forward by occupying their plants to demand justice. This is the only effective course of action open to workers at LDV and Vauxhall.

Organise, occupy, nationalise!

Reactions to Northern Rock nationalisation, rounded up

One minor problem with my last post. Or rather, the title of it. I should of made reference to the railways rather than the energy companies, since there’s something of a consensus on the former.

Anyhow, here’s the official reactions to the official nationalisation that I have unofficially compiled:

David Osler betrays his roots as a subversive:

Finally Alistair Darling has gotten the message. The erstwhile bearded Trot himself has brought the UK’s number five mortgage lender within the ambit of proletarian property relations. Only another 199 of the top 200 monopolies to go and Britain becomes a workers’ state, comrade. Shame the government didn’t see things the same way when Rover was going tits up. But in the financial services-driven British economy of today, grubby little manufacturing concerns seem somehow not to count. What this episode proves is that nationalisation really is no worse than, say, bestiality, ebola, paedophilia, diabolism or any given combination thereof, and could at least be seriously discussed in other contexts.

David Lindsay reminds us of historical instances of public ownership:

Nationalisation is not a party point. Labour and the Tories have both done it repeatedly, and it is the Tories whose record in this regard is more uniformly successful. Admittedly, they have used the device much less frequently. But their nationalisation of electricity was a great success, and their nationalisation of Rolls Royce was a triumph in the long term.

However, if the money can now be found to nationalise Northern Rock, then it should be found to renationalise the railways (which only make a profit at all because of guaranteed public subsidies – give that a moment to sink in) and the rip-off utilities.

Lenin (not the “late, great…” but the “living, great…”) hints at the company he keeps:

A friend of mine who works in the City and is knowledgeable about the laws, regulations and internal procedures of investment banking said to me the other day: “Investors are the most pampered people in the world. There are so many laws and regulations designed to protect their rights, it’s unbelievable.” Laws designed to protect the property rights of the owners. Who would have imagined such a state of affairs? Well, today investors are predictably furious about the temporary nationalisation of Northern Rock. If a neoliberal government like ours undertakes a nationalisation, you know it’s serious. But the owners aren’t happy. Their shares, their shares! The socialistic government has stolen their money! Somehow they promise to mount a legal challenge, just as the shareholders in Railtrack did when the government allowed the company to go bankrupt rather than bailing it out with yet further billions in public money. The City is also alarmed. The government exists, as far as they are concerned, to defend their interests and as far as they are concerned that means the guarantee of private profits with public money, and private ownership with public risk. This sort of thing gives people ideas.

Nevertheless, there cannot be too much shock. Practically everyone knew that nationalisation was the only option in this case, and it was simply not plausible to continue ploughing in billions – the Bank of England has loaned the company £55bn, which is eleven times its value at its peak last year, and many more times its present value of £380m, while – while the owners floundered and frittered it all away. If anything, it would have been an obvious decision several months ago, long before a single penny of subsidy had been issued. The government has tried desperately to avoid it. And after all, the nationalisation is only a temporary measure designed as much to protect the institution and return to private capital in good condition once the economy gets back into good shape. And it will be run by highly paid individuals from the banking industry, such as Whatever the shareholders say, the rentier class will probably be quite relieved as a whole. Even Martin Wolf of the FT backs the nationalisation and gives a few reasons why the grasping bastards who have run the thing into the ground shouldn’t be given any compensation. The Tories are arguing that this decision amounts to a ‘humiliation’ for Alistair Darling, and are raising the spectre of a return to the 1970s (a much maligned and underestimated decade). On the one hand, it’s faintly embarrassing in itself that to change your mind is supposed to be a source of embarrassment, but on the other hand, Darling has sort of brought that on himself by straining so hard to avoid nationalisation. Anatole Kaletsky is predicting catastrophe on the absurd grounds that nationalisation is a form of market ‘distortion’ and anyway the government is crap at running things. Are there really people who still believe in the free market fairytales? Does he not know how his employer pays the bills? […]

We were told that privatising utilities would bring us more efficient, lower cost services. British Gas has just jacked up the prices and is making record profits, while energy companies like Npower do the same. The privatization of water has been disastrous in many places, and in the UK it has led to exorbitant costs and low maintenance. The privatised airports are uncomfortable and overcrowded because they allot most space to commercial facilities and provide little seating or other amenities. Privatization also led to increased unemployment and diminished bargaining power for labour. In each of the industries privatized by the Tories, employment fell dramatically – in steel by 75%, in railways by two thirds, and in electricity and water by about a half. Right-wing economists complain about over-employment, but the danger was always in the contrary temptation – to cut necessary staff and make the service unsound. And what is the point of having ‘competition’ in the banking industry when they all provide much the same lousy service and rip you off? Wouldn’t a publicly owned and accountable industry be better for customers? And why should we have to pay for their crisis? If a company can’t or won’t keep its business running to keep people employed, shouldn’t the government use its initiative, nationalise, defend jobs and engage in industrial conversion if necessary? Oh, Jesus no, don’t start thinking like that! Winter of discontent, remember? You don’t want to go back to the bad old days, especially not when everything is so fabulous.

Permanent Revolution, while not permanently right, isn’t wrong:

“Anybody who suggests that the Labour government has gone back to 1970s socialism deserves ridicule.”

That’s how the Financial Times greeted chancellor Alistair Darling’s decision yesterday to nationalise Northern Rock.

Like the rest of the intelligent bosses’ press the FT along with the Economist long ago advocated what the Labour Party leaders hated having to think about. […]

Of course the FT is right; this nationalisation –, like the first big one the Tories carried out in 1951 of the ailing British steel industry – has got nothing to do with socialism. Like that measure the NR move is designed to rescue capitalism from its self-inflicted wounds.

But unlike – British Steel, this nationalisation is intended purely as an intensive care measure, designed to put the patient back on its feet with a transfusion of public money. I don’t suppose the chancellor will be asking future private owners for the £90,000 a month (!) Ron Sandler will be paid to oversee the operation.

If the nationalisation was a socialist measure it would first guarantee the jobs of the NR staff and put the running of the company in their hands; they could hardly come up with a worse business plan that previous managers. It would be an opportunity to use the fact of public ownership to extend social housing schemes.

The truth is that NR’s nationalisation should be the first step in the nationalisation of the whole financial sector. The high-risk profit making imperative of the system is responsible for the current mess, something that is even encouraged by the gun-to-the-government’s-head attitude the banks have when the markets collapse.

ReeSWPect:

Now the government has had to admit that the market has failed. Twice. Once when the bank collapsed, and again when no private sector firm would come up with a decent offer to save it.

But now the danger is that New Labour’s nationalisation will just concentrate on making the bank profitable once more and then privatising it again.

But if this nationalisation is to mean more than plumping up the profits ready for re-privatisation the government should be focussing on the needs of Northern Rock’s staff, it’s borrowers and the tax payer.

Northern Rock should now be run in their interest. Firstly there should be no redundancies. Second, the government should use the weight of this massive bank, which controls 23 percent of all mortgages, to assist in a genuinely affordable housing programme.

New Labour’s private market ideology, inherited from the Tories, is now in tatters. It failed when Railtrack was effectively nationalised, it failed when tax payers paid £2 billion to failed tube privatiser Metronet, and it has now failed again with Northern Rock.

Lindsey German, Respect’s candidate for London Mayor, said: “The whole labour and progressive movement now needs to demand that New Labour change course. New Labour should stop representing the interests of the rich to the poor and start representing the needs of the poor to the rich.”

The Campaign for Public Ownership, welcomes the belated nationalisation:

For the last 29 years, British governments of both Conservative and Labour persuasion have put the interests of capital, before those of people. It’s time the pandering to banks and big business ended. If the government can bring a failing bank into public ownership, why can’t they do the same to Britain’s railways and public utilities? The vast majority of the public would like to see renationalisation back on the political agenda, yet their wishes are ignored by our political elite.

Proponents of privatisation claimed that the selling-off of Britain’s public utilities, public transport and infrastructure would improve efficiency and benefit the consumer. In fact, the opposite has occurred. Britain‘s privatised railways are the most expensive in Europe, despite receiving four times more in taxpayers subsidy than British Rail. As prices have rocketed, services have deteriorated with commuters who have paid thousands of pounds for their season tickets being forced to stand in toilets. Railways in Britain are no longer run as a public service as they are in the rest of Europe, but in order to maximise profits for shareholders.

British householders meanwhile face massive hikes in gas and electricity prices imposed by privately owned utility companies, such as Npower, which recorded profits of £377m in 2007. Yesterday, the Sunday Express revealed that British Gas, which recently imposed a 15% price hike on its customers is making £1,200-a-minute in profits. Thirty years ago, utility bills were a very minor item in the household budget, now millions of Britons are struggling to afford them.

It’s clear that while proving a bonanza for the banks and wealthy shareholders, privatisation has been a disaster for the majority of the British public.

Northern Rock’s nationalisation should not be a ’one-off’ temporary measure but the start of a new programme of public ownership.

The Morning Star says it’s been A mucky business:

THE whole Northern Rock fiasco has been a mucky business from beginning to end.

What was, a year ago, the darling of the Stock Exchange, with shares priced at over 1226p each, is now a crisis-ridden mess with shares priced at under 90p.

Despite all of the hot air pumped out by the money-men in the stock market, this fiasco is solely and exclusively the responsibility of greedy, profit-fixated speculators prepared to take any risk for a fast buck. And, boy, have they come unstuck.

Chancellor Alistair Darling claims that he is now “nationalising” the bank because that is the only way that the taxpayers’ money, which he so freely used to underwrite the failing enterprise, can be safeguarded.

But those of us who hold nationalisation dear, as a step towards the elimination of speculation and predatory capitalism, must step carefully here.

What Mr Darling calls nationalisation holds about the same relationship to the real deal as a farmyard chicken does to a golden eagle.

Bear in mind our treacherous Prime Minister’s description of the Chancellor’s brand of nationalisation. “We want,” he said, “a successful company that we can pass onto the private sector at the earliest opportunity.”

He insisted that the problems in the US sub-prime mortgage market which, he claimed, had led to the collapse of Northern Rock, could not have been foreseen.

But, despite all the talk, it was not merely the US sub-prime crisis that triggered Northern Rock’s problems. It was British banks losing their nerve and pulling the rug out from a company that had taken one gamble too many.

And it is not Mr Darling’s brand of nationalisation that will save it.

The issues that are important in this situation are the jobs of Northern Rock employees, which the unions are rightly concerned about.

And don’t forget the stability of the British economy, which will hardly be guaranteed by stripping out the problems of Northern Rock and handing it back to the same gang of speculators that screwed it up in the first place, the vultures of the City.

Putting Ron Sandler in charge of the company at over £1 million a year, with a deputy on very little less, is hardly a good sign.

It is to hoped that Mr Sandler’s reputation for toughness will mean that he can stand up to the hedge-fund profiteers who, having bought and increased their shareholdings after the share price dropped through the floor, are now the loudest in their protestations that the government is trying to rip off shareholders and demanding massive compensation for their supposed losses.

Hedge funds RAB and SRM involvement in campaigning for a fair deal for shareholders has raised eyebrows in light of the timing of their purchase, with many of their shares bought after the bank’s troubles began last autumn.

The hedge funds have, in fact, been increasing their stake in recent days and clearly hope to talk their sticky fingers into the public purse.

It will help if Mr Sandler resists both that and the temptation to cut jobs in order to slim the company’s costs.

But any real solution rests on messrs Brown and Darling resorting to real nationalisation, not the cosmetic exercise that they are contemplating.

And the chance of that happening with this new Labour gang is about the same as a farmer rearing golden eagles in a chicken run.

Rock to be nationalised – but why not something of worth to us, like the energy companies?

Yeah, the inevitable has happened.

Nationalised in all but name a few months ago, the final act of consummation will take place tomorrow…

Temporary public ownership was how the poor Darling Chancellor was left spinning it today, Prime Minister Brown doing his Macavity schtick.

Here’s something I never thought I’d see NuLieBore doing:

Nationalisation will be pushed though parliament with emergency legislation on Monday.

But hey – gotta save the capitalist system! It’s a different story when it comes to rescuing the productive economy – think of those million manufacturing jobs lost since 2001, the companies that move overseas in search of cheaper labour…

As Neil Clark has said, remarking on today’s news and the first month of The Campaign For Public Ownership:

now that the rubicon has been crossed, why can’t the government also announce that it is renationalising the railways and the other public utilities and assets flogged off in the last 29 years? Nationalisation ought to be an integral part of the government’s industrial and economic strategy not a ‘last resort’

Earlier, the PM had spoken in support of Scottish Labour’s munchkin-like leader, Wendy Alexander, and her stance towards a review of Scotland’s devolved powers. Which means: Brownie came out for more devolved powers for Scotland and more devolved powers for Wales. (What’s missing here, folks?)

“There is an issue about the financial responsibility of an executive or an administration that has £30bn to spend but doesn’t have any responsibility for raising [that].

“In any other devolved administration in the world, there is usually a financial responsibility that requires not only the spending of money by the administration but also its responsibility to take seriously how it raises money.”

Ironic that he said this after letting the Treasury bail-out the financial sector, massively adding to public borrowing…

On devolution, at least, his move was clever – the awkwardness over his Scottishness, his “Britishness” drive, and his support for the Union (of Scotland and England, and no other…) – all swept aside by what was to follow…

The Tories are gunning against nationalisation of the ailing bank – despite the fact that just about every establishment institution has said it’d be the best thing to do, from the Economist to the Liberal party…

The bad news is that this is nationalisation in a state capitalist style – jobs will be cut under the rule of Ron Sandler, the Lloyd’s man appointed boss of the Rock by Brown. Will Unite put up a fight? I’m sure the workers of Northern Rock will – they’ve kept the bank going, soldiering on in these uncertain times.

Other bad news is for all those small shareholders – many current and former NR workers and customers from when the bank was a mutual – who might get little out of it. Now, I am inclined to say, tough shit – why haven’t you sold them by now?

But that would be cruel, after all, the government had been signalling that a private deal was on the cards. And after all, socialists believe that small shareholders should be compensated fairly. The big shareholders (other City institutions) should be told to go take a flying fuck at the moon… (I understand there aren’t too many in the case of Northern Rock.)

To finish, I quote in full tonight’s post by John McDonnell, leader of the Socialist Campaign Group of backbench Labour MPs, in which he comments on the Agency Workers Bill and future union support for New Labour:

Next Friday we reach the crunch date in Parliament on the Agency Workers Bill. For years New Labour has blocked every attempt so far through European legislation and in the UK Parliament to introduce legislation to give agency workers the same protections in law as other workers. This has meant not only that agency workers have become the victims of often grotesque exploitation but also that they have been used by ruthless employers to undercut the wages and conditions of other workers.

Last year Government ministers blocked my Trade Union Freedom Bill which would have given all workers basic trade union rights. This week the Government is attempting to undermine the Agency Workers Bill which is scheduled for debate as a private members bill on Friday. This time the Government is trying to prevent a vote on the Bill by offering a sop of a deal it has cooked up with the employers’ CBI, proposing to set up a commission of inquiry “to review the rights of temporary and agency workers.”

This is a typical New Labour grubby tactic aimed at stalling, preventing or at the last ditch watering down the effectiveness of any legislation. We have had years to study the rights of agency and temporary workers and years of exposing the exploitation they face.

In the Labour anad Trade Union movement we have been waiting over a decade for the Government to introduce basic trade union rights for these vulnerable workers who are mostly women and migrant workers. Addressing this issue was a core commitment in the famous Warwick agreement between the unions and New Labour.

To renege on this commitment once again will call into question in the minds of many trade unionists why their trade union remains affiliated to New Labour. For many Labour Party members the creation of the alliance between the New Labour leadership of Gordon Brown and unscrupulous employers to undermine this legislation begs the question why Brown and his followers are in the Labour Party. If they want to serve as the electoral voice of big business they should have the honesty to leave Labour and set up their own pro business party.

The debate over the Agency Workers Bill has become critical not only to the future of these vulnerable workers but also potentially is becoming a critically important test for the future of trade unions within New Labour and for the future of the Labour Party itself.

Is Northern Rock’s nationalisation now inevitable?

All parties are insisting that it wouldn’t be for “ideological reasons” – that is to say, it would not be because they believe that there should be “common ownership of the means of production, distribution, and exchange, and the best obtainable system of popular administration and control of each industry or service”.

Rather, the nationalisation of Northern Rock would be a quick way of ending the crisis and allow the bank to be sold on with ease – though the government would face legal challenges from shareholders, this is thought less damaging than the continuation of the crisis.

The Economist, the Liberal Democrats, and now, the Bank of England itself?

Over to Faisal Islam of Channel Four News

The Northern Rock board does have two takeover bids on the table – but questions remain about the funding for both.

The Financial Services Authority has to monitor the Rock to ensure it remains solvent. Mervyn King at the Bank of England has underpinned the Rock’s liquidity with over £25bn of public money. Alistair Darling is left seeking a solution that protects the taxpayer… and the reputation of the government.

Senior sources within the tripartite negotiations say that the Bank of England now believes that nationalisation is the best option for the Northern Rock. One senior figure raising serious doubt that any bidder would be able to raise the billions of pounds required, in current market conditions. The government would have to make the final decision, but as it stands, there appears to be a growing momentum towards nationalisation.

Today the credit crisis crunched harder than it ever has amongst big European banks – a remarkable $10bn writeoff from UBS, one of the world’s biggest. And those banks remaining reluctant to lend to one another.

The model being pointed to at the highest levels of the financial system is the rescue of the Johnson Matthey Bank in 1984. It started as a gold dealer but got into trouble because of imprudent lending.

After failing to organise a City bailout, the Bank of England took control of JMB for £1, held on to it for three years and then sold it for a healthy profit.

Six decades ago a Labour nationalisation was a cause for celebration in the north east. It’s unlikely that a northern rock nationalisation would be quite such a vote winner.

Depositors would be rapidly refunded under a draft nationalisation bill being prepared by authorities. But it’s resistant shareholders who could lose out the most from nationalisation, and their legal team is ready for a fight.

The queues of savers from September, have not been replaced by queues of viable bidders. One strong contender dropped out on Friday saying that it could not repay repay the Bank of England’s loan, compensate shareholders, and turn in a profit.

The threat of nationalisation has been a useful tool in bargaining shareholders down, but enduring financial market misery means that it may well happen.

Nationalisation for Northern Rock?

[Monday]

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.