Workers' Fight workplace bulletin editorials, 22 January 2008

22 January 2008

 Stock market seizure - we won't pay for their mess!

After the crunch in the banking industry, the world's stock markets have been hit by a systemic seizure. This Monday and Tuesday morning saw some of the biggest falls in share prices for two decades, especially in the so-called "emerging" countries. The most wealthy countries, like the USA were less affected. But European markets saw drops of 5% to 9%.

In the City, Monday's fall was the 4th largest since 1987, at 5.8%. Within minutes of the Stock Exchange reopening on Tuesday, shares had lost another 3%. Over £70bn in share value has disappeared into thin air in less than 25 hours!

Such a sum sounds meaningless to most of us. However, it represents more than 6 weeks of government expenditure for the country's 60 odd million inhabitants! Not exactly petty cash!

However, this stock market crisis hasn't come out of the blue. Over the past year, share prices have been following a downward trend - especially since the middle of August, when the shortage of credit became too obvious to be denied.

Of course, this did not stop a self-satisfied Darling from hailing the "healthy fundamentals" of the British economy. And the odds are that this will be his line once again, when the hiccups of the stock market force him to make a statement.

Of course, to a large extent, the money which has disappeared from the stock markets was little more than fool's gold, anyway - the result of the frantic financial speculation on which a large part of the capitalist class relies to make its profits.

But fool's gold or not, this will not prevent the capitalists from seeking to recoup their losses. And it is not hard to figure out how they will try to do it. They will cut investment, meaning factory closures and job cuts. They will save on machinery, and therefore on safety. They will reduce costs, and therefore real wages. In short, they will present the working class with the bill. And for good measure, they will tell us that we have to keep our heads down and work harder, for the sake of the "British economy", the "national interest" or whatever other nonsense!

But, contrary to what Darling claims, this is precisely what is fundamentally unhealthy about this system. Why should workers foot the bill for the epileptic fits of the capitalists' bingo machine? For Brown and his big business friends, this goes without saying. But not for us. In fact, this would be a good time to prepare ourselves to make the capitalists pay for their mess for a change!

 A sweet rock for british finance

After months of protesting that the billions loaned by the Bank of England to Northern Rock would be repaid very soon, without taxpayers having to bear the cost, Darling has finally revealed his real plans. And whichever way the bank's bail-out is done, the cost will definitely be borne by the taxpayer.

If it is via the government's "preferred option", that is, a private consortium buying a majority share, Darling will still provide the state's guarantee for a total of £55 billion worth of loans (if not more, because no-one can be sure about what Darling is really cooking up). This means that if the bank fails to repay any of its loans on time, which is likely, the taxpayer will have to pay.

But if the bail-out is done via the "last resort option" considered by Darling - nationalisation, which Labour would rather avoid, for fear of upsetting Middle England - this will make no difference. The shareholders will be paid off, well above the value of their shares, and the biggest among them will be able to walk away without having to disburse any of the fat dividends they earned in the past. Besides, under this business-friendly government, nationalisation will merely cover up the state's largesse to the bank, under the veil of state secrecy.

The government protests that its only concern is to protect Northern Rock's depositors' savings. But, in that case, why weren't the bank's assets sold to allow depositors to switch to another bank?

The truth is, that Labour's real concern is for the bigger fishes living in Northern Rock's muddy waters. Among them are the few big players which own more than half of the bank's capital, with just two of them sharing almost 20%. Then there are the small number of big banks which have loaned dozens of billions of pounds to Northern Rock and would be very upset if they were not paid back with interest. And then there are the aspiring profiteers, like Brown's mate, Richard Branson, and the bank Goldmann Sachs, which stands to make a big profit, by selling £25 billion worth of bonds on behalf of Northern Rock, as part of the bail-out.

Next time Brown or his ministers tell us that we must agree to "wage restraint" and be satisfied with underfunded public services, we will remember their generosity to the wealthy.