Is it "casino capitalism"? no, it is just plain vanilla capitalism!

29 September 2008

This weekend, we were told that Bradford & Bingley, the 8th largest British bank, was to be "nationalised". But the truth is somewhat different. In fact, the bank's 197 branches and 140 outlets together with £21bn of savers' deposits - i.e. all the bank's "positive" assets - go to Banco Santander at a bargain basement price of £400m. Only B&B's "negative" assets were "nationalised" - i.e. its mortgage portfolio worth £50bn, half of which is owed to the bank's creditors. Besides, it was precisely because many of these mortgages (mostly "buy-to-let" loans to greedy landlords) were dubious, that B&B's share price dropped by 95%!

Piles of debt and heaps of lies

So, in fact, Darling has only "nationalised" some healthy mortgages, a pile of unrecoverable ones and a huge debt! He claimed that any losses will "eventually" be paid by the banks. But it is a con in which "eventually" is the key word. A scheme, which is funded by the banks and designed to compensate savers in case of bankruptcy, will pay Banco Santander £18bn of customer savings that B&B has spent. But as this scheme is allegedly skint, the Treasury is putting £20bn into it! "Eventually", the Treasury will pay itself back out of the scheme, but not before 2011. But whether the banks are made to increase their contributions to the scheme remains to be seen!

In other words, Brown and Darling are lying through their teeth to cover up their wholesale bailing out of the finance profiteers at our expense.

Significantly, their lies are echoed by Cameron's own. When he states that it would have been less costly for tax payers to hand B&B over to the Bank of England, he must think we are idiots!

Indeed, where do the Bank's £200bn loans to the banks since April and its one-off £40bn loan to the same banks this week come from? They are IOU's on public funds. The more such IOU's are issued, the more the public debt balloons and the more tax payers' money is used to repay this debt. In short, the Tories' "solutions" are the same as Labour's!

Such hypocrisy is really rich coming from a party which has its share of responsibility in the present crisis. After all it was the Tories' drive to de-mutualise building societies which helped to turn the housing market into big business for the banks. Of course, Blair and Brown took the Tories' financial merry-go-round even further, but that was only because the Tories were thrown out of office before they had time to go that far!

Significantly, both parties are posturing as "tax payers' champions", but neither of them has much to say about the hundreds of us who stand to lose our jobs due to this bail-out and other job cuts across the economy. Apparently, workers do not deserve as much consideration as "tax payers", even if most of us do pay taxes unlike some of the wealthy!

No medicine for terminal diseases

Ironically, Cameron's motto is now to expose Brown's "casino capitalism".

As if this financial casino was a recent invention! From its birth to the Great Depression of the 1930s and up to the long series of crashes, which started with the collapse of the dollar in the early 1970s, the capitalist system has gone from crisis to crisis.

In the second half of the 19th century, already, Karl Marx showed that, due to its private ownership of the means of production and its irrational search for individual profit at the expense of society as a whole, capitalism could only reproduce itself through such crises, no matter how devastating they were for the vast majority of the population.

Marx's conclusion was that capitalism had no future, that it had to be replaced with a social organisation in which the common ownership of the means of production would provide the basis for a society capable of catering for the needs of all.

Although Marx's analyses of the mechanics of capitalism are over a century old, they have not aged one bit. But capitalism has. It has become increasingly decrepit and senile. The more and more frequent turmoil of the past 3 decades, culminating in today's crisis, which is now widely considered to be as serious as the 1929 crash, is but the latest illustration of this system's terminal madness.

No-one can tell whether all of these on-going bail-outs in the US, in Britain and the rest of Europe, will allay the crisis (but it would be temporarily, at best) or whether they will spread it even further - to the currency sphere, for instance.

But what we, workers, can be sure of, is that beyond today's necessary fight to defend our jobs and conditions against the attempts of the bosses to make us foot the bill for their crisis, there is only one realistic objective worth organising for - to overthrow this demented system, once and for all.