As the clocks struck midnight in Washington on Sunday, the Bush government scrambled to rescue Citibank, formerly one of the world’s most powerful financial institutions, to prevent it from total collapse when the markets opened today. Another weekend, another bail-out of bankrupt banks as the era of fantasy finance unravels in remorseless fashion.
This time the bill for US taxpayers was $20 billion down and another $270 billion in guarantees in the likely event that Citibank cannot sell off its so-called toxic assets – bad debts to you and me. Not even the planned sacking of 75,000 staff could stop the downward plunge of Citibank shares. So the US Treasury’s printing presses continue to spew out crisp new dollar bills in a desperate attempt to keep the show on the road.
And that’s all it amount to. Despite all the bail-outs in the United States and Britain, the banks still refuse to lend to each other and to most corporate and small business customers. That is because the financial system remains weighed down by incalculable debts, tied up in packages that there is no longer a market for.
These so-called securities are now so insecure they are literally not worth the paper they are printed on. Even the US Treasury believes that to be the case. At the end of last week, it announced that it would not buy distressed mortgage securities through the Troubled Asset Relief Program (Tarp). Yet this plan was at the heart of the package voted through by Congress in October at the second attempt. Another month, another plan.
Governments are literally staggering from pillar to post in increasingly frantic efforts to sort out the financial system and “kick-start” the real economy at the same time. Today in Britain, hard-pressed, debt-burdened consumers will be told it’s their responsibility to save the capitalist economy by spending like there is no tomorrow.
The media is increasingly gripped by the need for governments to do something, anything, to stem the flow of job losses, home repossessions and the other consequences of the recession that have followed the financial crash. The right-wing Daily Express was almost beside itself at the weekend, declaring in its editorial: “Like it or not, the global economy depends on high indebtedness and rampant consumerism. We have created this monster and we must continue to feed it. Otherwise it will devour us.” (November 22).
So there you have it. The monster of globalised capitalism demands to be fed, assuming a mythical power over people, with shocking results if they don’t obey. It’s hard to believe we are living in the 21st century when you read drivel like this, which is more suited to fairy tales about the Dark Ages than a description of the state of affairs in 2008.
The fact is that we don’t actually have to feed the “monster”. It would make more sense to slay the dragon and set society on a more rational course where real people, not speculators and capitalists, assume rational control of social affairs. Don’t, of course, expect to see any recommendations along these lines from the Express or the rest of the media. And certainly not from New Labour, the party of choice for big business.
AWTW communications editor