“I like thieves. Some of my best friends are thieves. Why, just last week we had the president of the bank over for dinner.”  W.C. Fields.

The capitalist system is in the throes of the worse financial crisis since the Great Depression. This is the view not only of the billionaire George Soros, but also of the International Monetary Fund, the custodian of the capitalist system, and all the serious capitalist commentators. 

As I write, financial markets in Wall Street, New York, the City of London and all over are in turmoil.  In just 24 hours, two out of the four largest investment banks in the US have disappeared.  Lehman Brothers, around for 158 years, has declared bankruptcy and 25,000 employees around the globe have lost their jobs. 

Merrill Lynch, the world’s largest investment bank, has been taken over by the largest high street bank in America, the Bank of America.  Bank America was virtually ordered by the US financial authorities to take over Merrill Lynch, paying $50bn.  Otherwise, that bank too would have gone bust, putting thousands more out of work.  Even worse for capitalism, it would have meant that both Lehman and Merrill Lynch would have defaulted on their contracts and obligations and thus brought down many other banks (15 were rumoured to be in trouble). 

The Financial Times has hailed the effective takeover of Fannie Mae and Freddie Mac by the US government as “what could become the world’s biggest ever financial bail-out.” Treasury secretary Henry Paulson has promised he will pump in ‘unlimited liquidity.’ Don’t you wish the government would grant you unlimited liquidity? When it comes to the food and fuel bills of the poor and the working class, the British and American governments find that the cupboard is bare. But now it’s not bare. Predictably markets all over the world have breathed a sigh of relief. Fannie and Freddie have effectively been nationalised – and big business thoroughly approves!

One year on, this earthquake in the global financial system has left banks, insurers, pension and municipal funds, hedge funds and private equity companies tottering and falling.  Collateral damage has been immense and the after- shocks are still to come.

“Outsourcing of public services to the private and voluntary sectors has almost doubled to close to £80bn in little more than a decade and makes up a far larger part of the economy than previously thought.” (Financial Times 09.07.08) A third of all public services – far more than previously thought – are now delivered by the private and voluntary sectors, according to this report commissioned by the government.

For ten years Gordon Brown has been mouthing the phrase “no return to boom and bust”. Now we see it is meaningless. Darling in his Mansion House speech in June also brushed off the threat of recession, asserting that “our economy will continue to grow.” But there has been a boom and it has turned to bust. Brown and Darling are denying what is going on in the real world before their eyes. They can’t do anything about the recession since they are not prepared to act against the source of the problem, the capitalist system. More and more people will begin to see that if the only way we can control the economic system and make it work in our interests is if we own it.

Bradford and Bingley are the latest bank to catch a cold in the present financial crisis. They’ve declared a loss of £8m for the first four months of 2008. This compares with £108m profits they made in the same period last year. The main reason for the losses is because they’ve had to write down £89m of their assets. ‘Write down’ is banker-speak for the fact that they realise they can whistle for their money.