A year and a day ago the Federal Reserve, the US central bank, took the decision to instruct Lehman Brothers to file for bankruptcy after 158 years of trading. It was a case of too big to fail and too big to save. Within days, the world economy fell off a cliff and has never recovered.
With its roots in barter, exchanging manufactured goods for raw cotton, Lehman’s history is inextricably a part of the history of capitalism. The company began its diversification into financial services in the 1880s (around the time of Marx’s death).
In the 20th century, Lehman was instrumental in enabling the explosive growth of profitable commodity production and exchange, notably through finding the capital for retail giants like Woolworths, then television and later computer manufacture. It also helped finance Halliburton, the oil company at the heart of the Bush administration’s war on Iraq.
At its pinnacle it was among the elite of the world’s financial services companies, actively spinning the web of debt that enmeshed the world. As the credit crunch took hold in August 2007, it closed its sub-prime mortgage lender with the loss of 1,200 jobs.
But it was all too late. A year later, its liabilities exceeded its assets to such an extent that not even the American government could bail Lehman Brothers out and it went to the wall. Today, like much of the global capitalist economy, Lehman Brothers is bankrupt but still trading. So many dead men walking.
As the world was considering the significance of the passing of Lehman yesterday, prime minister Gordon Brown was opening a new chapter in the rapidly worsening global economic crisis that went hand-in-hand with the decline of banking and finance.
Brown was a key figure in ensuring the subordination of the British economy to financial interests, announcing a new “golden age” for the City just weeks before it all went pear shaped. Now he’d come to present the bill for the damage, not to the bankers, but to the assembled ranks of the representatives of the organised working class at the TUC in Liverpool. They listened with protest messages raised while for the first time he talked of public spending cuts to come after the next election.
Attempts to restore the flow of credit have failed. Global stimulus packages have concentrated on eliminating huge swathes of the global car industry, dumping hundreds of thousands of workers on the streets. Unemployment is soaring. Tens of millions around the world are already without work, soon to be homeless if they aren’t already, without healthcare or pensions. And now Brown talks of cuts.
Politicians of all parties are competing to prepare voters for the devastation to come, the price to be paid for keeping the capitalist system in existence. This bidding process finds parties competing for the right to inflict the impact of the crisis on the majority of the world’s population, forcibly if necessary.
Commentators may delude themselves with good news, but the majority will see no sign or possibility of a “recovery”. They will not benefit from an illusory “return to growth” that is in essence the prelude to a further lurch towards outright slump.
Lehman Brothers was broken by fantasy financing that in the form of debt fuelled the economic boom. And there are mountains of debt still out there with claims on real assets and future earnings. In the absence of a recovery, these assets – in the shape of jobs, pensions and homes – are likely to be wiped out by capitalist bankers and corporations.
So this is no time to be caught up in discussions about ending “unbridled free market capitalism”, nor speculating on “a realignment of world capitalism”, nor even pushing for the kind of change that would “renew capitalism in a fairer form”. These are mere palliatives that leave the basic cause untouched and untreated.
What we must now do is to acquire the power to switch from a credit-dependent system of for-profit production based on legalised exploitation of labour to production for need guided by democratic decisions based on collective ownership. That’s how to fight the cuts as well as create a sustainable future.
Gerry Gold
Economics editor
For revolutionary solutions to create a sustainable, not-for-profit economy in place of global capital alongside a real democracy based on People’s Assemblies. Visit our web site at www.aworldtowin.net
Showing posts with label fantasy finance. Show all posts
Showing posts with label fantasy finance. Show all posts
Wednesday, September 16, 2009
Friday, June 05, 2009
New improved 'fantasy finance' fuels the crisis
The maelstrom of scandal and political in-fighting that is shaking the New Labour government to its foundations – who knows what other ministers may have resigned by the time you read this – is fuelling the fires of the global crisis of capitalism.
The political meltdown, with its constitutional consequences, has added new dimensions to the economic, financial and ecological hydra-headed mother of all crises. Each of its parts is interacting and adversely affecting the others.
Just the suggestion that Brown would replace Chancellor Alistair Darling with Ed Balls, for example, triggered a negative reaction on the financial markets. The political crisis in the UK is undermining its credit rating – and hence its ability to raise new funds. So Darling is staying on at the Treasury to try and calm the markets if nothing else because it’s either borrow or bust (or should that be borrow and bust?).
Capitalist governments have been competing with each other in their zeal to replace decades of kow-towing to the free market demands of transnational corporations with supersized versions of Keynesian-style intervention to try and get the economy moving.
It’s easy to lose sight of the reason for all of this frenetic activity. The over-riding motivating force is a hopeless endeavour – trying to reverse the inevitable collapse of consumer demand which has exposed the mountains of overproduced commodities and production overcapacity.
To pay for it, treasuries have been pumping more oil on the fire, offering government bonds to the gamblers in the global casino and adding zeroes to their own balance sheets – simply by printing money, aka quantitative easing - to finance the issue of “new, improved” fantasy finance.
In doing so, they are attempting to burden generations to come of their increasingly unemployed populations with unsustainable levels of tax, whilst preparing to greatly reduce spending on health, education, pensions, social services, and the benefits on which tens of millions depend.
According to the Organisation for Economic Co-operation and Development, governments will this year attempt to issue almost $12,000 billion of debt, up from $9,000 billion two years ago (and many times the level a decade ago.) The US alone is projected to sell almost $8,000bn.
The weakest links are showing signs of breaking, however. In Latvia, a bond auction on Wednesday which saw no bidders triggered a minor panic in Eastern European markets. Latvia's economy is set to contract by 18 per cent this year and unemployment is soaring. Already in May, the credit ratings agency Standard and Poor issued a warning reducing the UK government’s triple-A credit rating from stable to negative adversely affecting its ability to raise funds to bridge the gap.
According to the Financial Time’s Martin Wolf, real spending in the UK is forecast to rise by 7.2 per cent alone this year, while the value of goods and services produced shrinks by a (probably over-optimistic) 2.75 per cent. This is the vice that the capitalist system is caught in. It’s also the recipe for hyper-inflation in the near future.
Wolf puts the scale of the problem in its historical context: “A financial implosion can do fiscal damage comparable to that of a sizeable war. Indeed, this is quite likely to prove the fourth most adverse fiscal event since 1800, after the second world war, the first world war and the Napoleonic wars.”
It is time to acknowledge that the cost to ordinary working people of repairing the broken system of production for profit will be just too great, just as the burden of New Labour is too heavy for society to carry. The combined political and economic crisis offers tremendous opportunities to shake not just the Brown government but the entire edifice of the capitalist system. Let’s not miss it.
Gerry Gold
Economics editor
The political meltdown, with its constitutional consequences, has added new dimensions to the economic, financial and ecological hydra-headed mother of all crises. Each of its parts is interacting and adversely affecting the others.
Just the suggestion that Brown would replace Chancellor Alistair Darling with Ed Balls, for example, triggered a negative reaction on the financial markets. The political crisis in the UK is undermining its credit rating – and hence its ability to raise new funds. So Darling is staying on at the Treasury to try and calm the markets if nothing else because it’s either borrow or bust (or should that be borrow and bust?).
Capitalist governments have been competing with each other in their zeal to replace decades of kow-towing to the free market demands of transnational corporations with supersized versions of Keynesian-style intervention to try and get the economy moving.
It’s easy to lose sight of the reason for all of this frenetic activity. The over-riding motivating force is a hopeless endeavour – trying to reverse the inevitable collapse of consumer demand which has exposed the mountains of overproduced commodities and production overcapacity.
To pay for it, treasuries have been pumping more oil on the fire, offering government bonds to the gamblers in the global casino and adding zeroes to their own balance sheets – simply by printing money, aka quantitative easing - to finance the issue of “new, improved” fantasy finance.
In doing so, they are attempting to burden generations to come of their increasingly unemployed populations with unsustainable levels of tax, whilst preparing to greatly reduce spending on health, education, pensions, social services, and the benefits on which tens of millions depend.
According to the Organisation for Economic Co-operation and Development, governments will this year attempt to issue almost $12,000 billion of debt, up from $9,000 billion two years ago (and many times the level a decade ago.) The US alone is projected to sell almost $8,000bn.
The weakest links are showing signs of breaking, however. In Latvia, a bond auction on Wednesday which saw no bidders triggered a minor panic in Eastern European markets. Latvia's economy is set to contract by 18 per cent this year and unemployment is soaring. Already in May, the credit ratings agency Standard and Poor issued a warning reducing the UK government’s triple-A credit rating from stable to negative adversely affecting its ability to raise funds to bridge the gap.
According to the Financial Time’s Martin Wolf, real spending in the UK is forecast to rise by 7.2 per cent alone this year, while the value of goods and services produced shrinks by a (probably over-optimistic) 2.75 per cent. This is the vice that the capitalist system is caught in. It’s also the recipe for hyper-inflation in the near future.
Wolf puts the scale of the problem in its historical context: “A financial implosion can do fiscal damage comparable to that of a sizeable war. Indeed, this is quite likely to prove the fourth most adverse fiscal event since 1800, after the second world war, the first world war and the Napoleonic wars.”
It is time to acknowledge that the cost to ordinary working people of repairing the broken system of production for profit will be just too great, just as the burden of New Labour is too heavy for society to carry. The combined political and economic crisis offers tremendous opportunities to shake not just the Brown government but the entire edifice of the capitalist system. Let’s not miss it.
Gerry Gold
Economics editor
Thursday, October 09, 2008
End of an era
In a talk to black Londoners last night, American-born playwright Bonnie Greer remarked that we are witnessing the end of an era – the age of bling and its associated cultures. She is right. We have reached the end of the age of easy credit and growth-driven consumerism – along with all the illusions that went with it.
The ruling classes hope that the unprecedented £500 billion rescue package and interest rate cut announced by the New Labour government yesterday will stabilise the markets and prevent further gigantic meltdowns. But the biggest banking bail-out ever will certainly not prevent what the International Monetary Fund (IMF) describes as “a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s.” As the IMF’s chief economist has said: “The situation is exceptionally uncertain and subject to considerable downside risks.”
The bail-out may provide temporary relief and give Brown some political credibility. But underneath the hopes, everyone is aware that it is a short-term fix which relies on a confidence trick. In reality, bail-outs simultaneously create the basis for even greater defaults – that of entire governments. It is one thing for Iceland or Ireland to underwrite their banks, it is another for Britain or the US. They will also lead to tax increases, inflation and public spending cuts.
J.K Galbraith, historian of the 1929 Wall Street collapse, speculated in his famous book, The Great Crash, whether it would ever be repeated. He concluded that there was a built-in disconnect between a “regulated” form of capitalism and the reality of the markets. As all speculative bubbles have shown, there are no limits to corporate and individual greed, and the willingness of people to take risks. Events today have proved him right.
A crucial difference between 1929 and today, however, is that the forces of globalisation have made it impossible to localise capital or debt. Globalisation has drawn the world’s population together in an entirely new way. It is not an American, British or even Western crisis. The near-collapse of the US mortgage giants, Fannie Mae and Freddie Mac, meant that a fifth of China’s currency reserves were also endangered. In fact, China stands to lose more than any other country for a US financial collapse.
At least one financial journalist has noted the helplessness of governments around the world. Anthony Hilton of the Evening Standard remarked that “no one has ever seen anything like this before, so they are making it up as they go along. As a result much of what they have done so far has contributed to make things much worse.” Hilton proposes that the IMF should be enabled to deal with the crisis as a kind of “neutral” overseer. Governments unable to face financial meltdown on their own, would be backed up by “a global policeman” (Brown’s words). However, the resources of the IMF are puny in comparison with the estimated black hole of $45 trillion in fantasy finance which is haunting the US financial system alone. It is simply impossible for the IMF to stuff the genie of global debt back into the bottle.
People interviewed yesterday in the streets of London expressed their anger at being held responsible for a mess that they had not created. “Let those who made the mess clean it up”, was the reaction of one young worker. Let’s go a step further. Global capitalism’s seismic disarray can only be “cleaned up” by a democratic ownership and control of the financial and economic system itself. Let’s make this the dawn of a new era in which there is a real future for the majority.
Corinna Lotz
AWTW secretary
The ruling classes hope that the unprecedented £500 billion rescue package and interest rate cut announced by the New Labour government yesterday will stabilise the markets and prevent further gigantic meltdowns. But the biggest banking bail-out ever will certainly not prevent what the International Monetary Fund (IMF) describes as “a major downturn in the face of the most dangerous shock in mature financial markets since the 1930s.” As the IMF’s chief economist has said: “The situation is exceptionally uncertain and subject to considerable downside risks.”
The bail-out may provide temporary relief and give Brown some political credibility. But underneath the hopes, everyone is aware that it is a short-term fix which relies on a confidence trick. In reality, bail-outs simultaneously create the basis for even greater defaults – that of entire governments. It is one thing for Iceland or Ireland to underwrite their banks, it is another for Britain or the US. They will also lead to tax increases, inflation and public spending cuts.
J.K Galbraith, historian of the 1929 Wall Street collapse, speculated in his famous book, The Great Crash, whether it would ever be repeated. He concluded that there was a built-in disconnect between a “regulated” form of capitalism and the reality of the markets. As all speculative bubbles have shown, there are no limits to corporate and individual greed, and the willingness of people to take risks. Events today have proved him right.
A crucial difference between 1929 and today, however, is that the forces of globalisation have made it impossible to localise capital or debt. Globalisation has drawn the world’s population together in an entirely new way. It is not an American, British or even Western crisis. The near-collapse of the US mortgage giants, Fannie Mae and Freddie Mac, meant that a fifth of China’s currency reserves were also endangered. In fact, China stands to lose more than any other country for a US financial collapse.
At least one financial journalist has noted the helplessness of governments around the world. Anthony Hilton of the Evening Standard remarked that “no one has ever seen anything like this before, so they are making it up as they go along. As a result much of what they have done so far has contributed to make things much worse.” Hilton proposes that the IMF should be enabled to deal with the crisis as a kind of “neutral” overseer. Governments unable to face financial meltdown on their own, would be backed up by “a global policeman” (Brown’s words). However, the resources of the IMF are puny in comparison with the estimated black hole of $45 trillion in fantasy finance which is haunting the US financial system alone. It is simply impossible for the IMF to stuff the genie of global debt back into the bottle.
People interviewed yesterday in the streets of London expressed their anger at being held responsible for a mess that they had not created. “Let those who made the mess clean it up”, was the reaction of one young worker. Let’s go a step further. Global capitalism’s seismic disarray can only be “cleaned up” by a democratic ownership and control of the financial and economic system itself. Let’s make this the dawn of a new era in which there is a real future for the majority.
Corinna Lotz
AWTW secretary
Friday, September 19, 2008
'Managing' the crash
Every passing day sees more of the consequences of the global meltdown coming to light. Financial institutions implode and disappear and increasingly desperate measures are taken by private sector banks, central banks and governments.
Now the focus has changed from trying to avert the crash, to managing its descent, softening its landing as it falls to earth, ensuring that the capitalist financial system survives, at all costs.
This is the real meaning of Alistair Darling’s statement that "financial stability had to trump the competition concerns". This justifies changing the law to allow the new Lloyds TSB-HBOS conglomerate to dominate the British banking system. "We will take whatever action is appropriate to maintain stability in the banking system," he said. "The entire economy depends on that."
On the other side of the Atlantic, the US Treasury is proposing a plan to absorb all of the bad debt arising from the mortgage crisis. Unsurprisingly, since this would pass the whole cost directly to US taxpayers and the Chinese financiers of American government debt, the US stock market had its best day for years.
It can’t and won’t last. This is a truly insane open-ended proposal, given that, as a result of the decades of unregulated explosion of fantasy finance, nobody in the world has any idea of the true value of the outstanding credit and debt. Hey, but we could then get back to raking in the profits.
For Darling, Brown and Bush, survival of the system that has failed, is broken, will come even at the expense of millions, perhaps billions of people who will be its victims as the markets find their “solutions”. With a week of dramatic, unprecedented contraction and consolidation in the finance industry comes the first wave of unemployment. Estimates of 40,000 job losses from the New Labour-sponsored takeover of HBOS by Lloyds-TSB are hardly even the tip of the iceberg. Predictions for the impact on the US workforce put job losses as high as 500,000 per month.
In response to the news that Britain has seen the biggest climb in unemployment benefit claims in 16 years, Trades Union Congress general secretary Brendan Barber said the "figures show that unemployment is starting to accelerate and it now looks very likely that total unemployment will reach two million during 2009." So what stirring message has he for the six million plus trades union members as recession engulfs the economy?
“the TUC is concerned that unemployment has been sneaking up in the last few months and it's up to unions, employers and the government to halt and reverse this trend as soon as possible. With unemployment rising, people are looking to the government for a response and economic measures will be far more welcome than yet another round of welfare reforms.”
The TUC’s “expert” was just as hopeless as his boss. Head of economics and social affairs Adam Lent said: "Poor growth and falling consumer confidence are a far greater risk to the economy than inflation, which is still relatively low. The Bank of England can play a key role in helping to reinvigorate the economy by cutting interest rates this month." To the TUC bureaucracy, we say: Thank you and good night.
Even the Tory Daily Telegraph has acknowledged that the crisis may have something to do with the “internal contradictions of capitalism”. One aspect of this is that New Labour is the party using the levers of the capitalist state to shore up the system, whatever it takes. We are witnessing not just market failure on a grand scale but the utilisation of the machinery of state by bankers and corporations to save their skins. This road leads in one direction only, as history has demonstrated.
The Convention of the Left starts tomorrow. Those attending have an historic responsibility to shape and build a movement that answers the capitalist crisis by posing the revolutionary alternative – an economy based on co-ownership and self-management and a truly democratic politics based on people’s power in place of corporate power.
Gerry Gold
Economics editor
Now the focus has changed from trying to avert the crash, to managing its descent, softening its landing as it falls to earth, ensuring that the capitalist financial system survives, at all costs.
This is the real meaning of Alistair Darling’s statement that "financial stability had to trump the competition concerns". This justifies changing the law to allow the new Lloyds TSB-HBOS conglomerate to dominate the British banking system. "We will take whatever action is appropriate to maintain stability in the banking system," he said. "The entire economy depends on that."
On the other side of the Atlantic, the US Treasury is proposing a plan to absorb all of the bad debt arising from the mortgage crisis. Unsurprisingly, since this would pass the whole cost directly to US taxpayers and the Chinese financiers of American government debt, the US stock market had its best day for years.
It can’t and won’t last. This is a truly insane open-ended proposal, given that, as a result of the decades of unregulated explosion of fantasy finance, nobody in the world has any idea of the true value of the outstanding credit and debt. Hey, but we could then get back to raking in the profits.
For Darling, Brown and Bush, survival of the system that has failed, is broken, will come even at the expense of millions, perhaps billions of people who will be its victims as the markets find their “solutions”. With a week of dramatic, unprecedented contraction and consolidation in the finance industry comes the first wave of unemployment. Estimates of 40,000 job losses from the New Labour-sponsored takeover of HBOS by Lloyds-TSB are hardly even the tip of the iceberg. Predictions for the impact on the US workforce put job losses as high as 500,000 per month.
In response to the news that Britain has seen the biggest climb in unemployment benefit claims in 16 years, Trades Union Congress general secretary Brendan Barber said the "figures show that unemployment is starting to accelerate and it now looks very likely that total unemployment will reach two million during 2009." So what stirring message has he for the six million plus trades union members as recession engulfs the economy?
“the TUC is concerned that unemployment has been sneaking up in the last few months and it's up to unions, employers and the government to halt and reverse this trend as soon as possible. With unemployment rising, people are looking to the government for a response and economic measures will be far more welcome than yet another round of welfare reforms.”
The TUC’s “expert” was just as hopeless as his boss. Head of economics and social affairs Adam Lent said: "Poor growth and falling consumer confidence are a far greater risk to the economy than inflation, which is still relatively low. The Bank of England can play a key role in helping to reinvigorate the economy by cutting interest rates this month." To the TUC bureaucracy, we say: Thank you and good night.
Even the Tory Daily Telegraph has acknowledged that the crisis may have something to do with the “internal contradictions of capitalism”. One aspect of this is that New Labour is the party using the levers of the capitalist state to shore up the system, whatever it takes. We are witnessing not just market failure on a grand scale but the utilisation of the machinery of state by bankers and corporations to save their skins. This road leads in one direction only, as history has demonstrated.
The Convention of the Left starts tomorrow. Those attending have an historic responsibility to shape and build a movement that answers the capitalist crisis by posing the revolutionary alternative – an economy based on co-ownership and self-management and a truly democratic politics based on people’s power in place of corporate power.
Gerry Gold
Economics editor
Wednesday, September 17, 2008
An 'orderly' failure
Manchester United have a new sponsor this morning – the federal government of the United States of America! Yesterday, the global insurance company AIG was in private hands. This morning, 80% of the shares are owned by the government following a hastily-arranged take-over to prevent the company’s total collapse and a systemic failure of the global financial system.
Such is the measure and speed of the unravelling of the credit crisis that significant financial institutions are passing into the hands of the US government. In a series of desperate moves, Washington has taken control of mortgage lenders Freddie Mac and Fannie Mae. Last night in an extraordinary step, AIG was loaned up to $85 billion in emergency funds in return for a government stake of 79.9%.
George Bush is not going into the insurance business, however, which is just as well for the rest of the planet. AIG will be kept afloat just long enough to sell off its assets and repay the loan. In other words, the objective is orderly liquidation (after which United will need new sponsors). In a statement, the Fed, America’s central bank, said it was acting to prevent “a disorderly failure of AIG” which would “add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance”.
The dramatic moves came after earlier plans for a private sector bail-out were dashed by a further 21% slump in AIG’s shares, reducing the market capitalisation of the biggest insurance company in the world to just over $7.5bn (£4.2bn). AIG’s crisis has nothing to do with ordinary insurance, however. The corporation, which is a pivotal part of the global financial system, has lost billions of dollars on derivatives and mortgage-backed securities and is bankrupt.
And so the great unravelling goes on, with the mountains of fantasy finance created over the last 30 years taking their toll on banks, insurance companies, mortgage lenders and investment houses. Today, Lloyds TSB is arranging a merger with HBOS – whose shares have been driven down on rumours of a crash.
State intervention on both sides of the Atlantic cannot halt, stabilise or reverse this process. The accumulated debts in the financial system – running into thousands of trillions of dollars – are so enormous that they cannot possibly be absorbed through central bank actions. Nor will the crisis unfold in an “orderly” way. It is like the collapse of a house of cards - it has a momentum of its own, which is already taking its toll of jobs, pensions and people’s homes. Official figures released this morning show a leap of 81,000 in UK unemployment in August alone. The subsequent loss of purchasing power will fuel the recession and the drive towards slump.
To sit back and wait for the dust to settle would not only be foolish but irresponsible. The ever-closer alliance between the state and corporate finance has sinister political implications, with its echoes of the 1930s in Germany and Italy. We have to take maximum advantage of the crisis to make the case for revolutionary political and economic changes as the way forward. Our Stand Up for Your Rights festival on October 18 emphasises the need to take control of our lives away from New Labour, the state and the corporations. Register for the festival today!
Paul Feldman
Communications editor
Such is the measure and speed of the unravelling of the credit crisis that significant financial institutions are passing into the hands of the US government. In a series of desperate moves, Washington has taken control of mortgage lenders Freddie Mac and Fannie Mae. Last night in an extraordinary step, AIG was loaned up to $85 billion in emergency funds in return for a government stake of 79.9%.
George Bush is not going into the insurance business, however, which is just as well for the rest of the planet. AIG will be kept afloat just long enough to sell off its assets and repay the loan. In other words, the objective is orderly liquidation (after which United will need new sponsors). In a statement, the Fed, America’s central bank, said it was acting to prevent “a disorderly failure of AIG” which would “add to already significant levels of financial market fragility and lead to substantially higher borrowing costs, reduced household wealth and materially weaker economic performance”.
The dramatic moves came after earlier plans for a private sector bail-out were dashed by a further 21% slump in AIG’s shares, reducing the market capitalisation of the biggest insurance company in the world to just over $7.5bn (£4.2bn). AIG’s crisis has nothing to do with ordinary insurance, however. The corporation, which is a pivotal part of the global financial system, has lost billions of dollars on derivatives and mortgage-backed securities and is bankrupt.
And so the great unravelling goes on, with the mountains of fantasy finance created over the last 30 years taking their toll on banks, insurance companies, mortgage lenders and investment houses. Today, Lloyds TSB is arranging a merger with HBOS – whose shares have been driven down on rumours of a crash.
State intervention on both sides of the Atlantic cannot halt, stabilise or reverse this process. The accumulated debts in the financial system – running into thousands of trillions of dollars – are so enormous that they cannot possibly be absorbed through central bank actions. Nor will the crisis unfold in an “orderly” way. It is like the collapse of a house of cards - it has a momentum of its own, which is already taking its toll of jobs, pensions and people’s homes. Official figures released this morning show a leap of 81,000 in UK unemployment in August alone. The subsequent loss of purchasing power will fuel the recession and the drive towards slump.
To sit back and wait for the dust to settle would not only be foolish but irresponsible. The ever-closer alliance between the state and corporate finance has sinister political implications, with its echoes of the 1930s in Germany and Italy. We have to take maximum advantage of the crisis to make the case for revolutionary political and economic changes as the way forward. Our Stand Up for Your Rights festival on October 18 emphasises the need to take control of our lives away from New Labour, the state and the corporations. Register for the festival today!
Paul Feldman
Communications editor
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