Workers' Fight workplace bulletin editorials, 22 September 2008

Workers' Fight workplace bulletin editorials
22 September 2008

After a long slide downhill, the stock markets finally went up sharply, last Friday. Of course, traders had been banned from betting on falling prices - the main cause of the previous slide. But above all, this sudden "recovery" of the market, as it is already portrayed by the media, was due to the £350 billion bail-out announced by the Bush administration.

Isn't it ironical that the same capitalists who keep whining about the state's "interference" in their business and hailing "free competition" and "private entrepreneurship", should feel optimistic only when the state pulls billions out of public funds in order to line their pockets?

Ironical, yes, but not surprising. This is merely a reminder that in this profit system based on private property, profiteering is private, but not the source of the capitalists' profits - whether it is public funds or the exploitation of our labour!

No limits to the capitalists' bail out

Of course, the capitalist class can feel reassured. Since the collapse of lending giant Bear Stearns, in March, the US government has rescued five of the largest US financial institutions - each time by transferring most of their debt to the public purse.

With its latest bailout package, it goes one step further, by extending the state's guarantee on personal bank accounts to the sums deposited in investment funds. Financial speculators can be sure, therefore, that whatever losses they incur will be compensated by the state!

This is a blatant incentive to greedy risk-taking - i.e. to the very cause of the present crisis. But what else can governments do? Their capitalist masters need the financial bingo machine to operate, even at the cost of causing havoc. And their politicians will use every possible trick in the book to avoid the markets' paralysis, even if it means taking public finances to the brink of bankruptcy.

Here, Brown and Darling have not gone as far as Bush - not yet, at least. But already, the Bank of England is backpedalling on its stern warnings that it would end its credit facility to the banks in October. It has now been extended till next January - and this, despite the fact that the banking fat cats have already borrowed £200 billion!

The fact is that many British banks are still overloaded with unrecoverable debts inherited from the credit bubble, while being short on cash. HBOS nearly went to the wall because of that, but because it holds one fifth of the country's mortgages, it was just too big to be allowed to fail. Had it come closer to bankruptcy, had its customers started to empty their accounts, Darling would have had no option, but to take it into public ownership. Luckily for him, Lloyds-TSB offered to step in. This breaks the government's own anti-monopoly law? Never mind, it will introduce new legislation to make an exception, in the name of the "national interest" - or rather, the interest of capital!

Publicly-funded vultures

All British banks are in a mess, but this does not mean that their big shareholders will lose out.

After US bank Lehman Brothers filed for protection from its creditors, Barclays suddenly emerged as a "white knight" for the bank's US operations. In reality, Barclays, which had been bargaining with Lehman Brothers over some form of deal for a long time, broke off negotiations to force the bank into filing for bankruptcy. Then, Barclays came back to pick up the pieces it wanted, at a bargain-basement price - regardless of the cost for the Lehman Brothers' 45,000 employees.

But the cherry on Barclays' cake is that, while it was the first British bank to ask the Bank of England for help last summer and then had to write off £2 billion worth of unsaleable debt bonds, it still found £700 million to buy a quarter of the bank's US operations (although it plans to keep only 15% of its employees!). And guess where this money comes from? From the Bank of England's loans to the banks, of course - i.e. public funds!

So, this is what Darling's bail-out of the banks is used for. Not to help struggling households to get more affordable interest rates or loans, nor to ensure that the banks provide credit to the rest of the economy (in the case of the XL tour operator's bankruptcy, Barclays refused credit). No, it is used to allow the biggest banks to enlarge their empires by swallowing their weaker rivals!

But none of this will stop this or the next government from telling us that due to inflated public debt, austerity is needed, with cuts in public services, jobs and wages - assuming, of course, that we, workers, allow them to get away with this! Even then, the real task will remain: to get rid once and for all of this bankrupt system, with its chronic crises, to replace it with a social organisation at the service of the entire population.