There can be no doubt the capitalist class are gripped with panic on account of the financial crisis. Here’s an extract from John Mauldin’s Newsletter, praising the Federal Reserve for forcing JP Morgan Chase to take over stricken bank Bear Stearns. If they had let it go to the wall,
“Credit markets would simply have frozen this morning. As in ground to a halt. Hit the wall. End of the world, impossible how to get out of it type of event.”
Does this man sound as if he’s ideologically committed to free enterprise capitalism? He’s much too intelligent for that. Capitalists are committed to staying rich. That’s all.
On Wednesday March 19th persons unknown started rumours to the effect that giant British bank HBOS was going bust. In the panic-stricken atmosphere of the financial crisis that was the direct equivalent of shouting ‘fire’ in a crowded theatre. People would be trampled to death. But that was the whole point. That was the joy of the exercise. Then ‘persons unknown’ could loot the bodies.
New Labour refers to such people as ‘wealth creators.’ It should be obvious that spreading rumours to make money while others lose theirs is not creating wealth, just pocketing it.
The tone of justification for these people’s obscene incomes is changing. Until recently they presented themselves as masters of the universe. That is why they were able to, indeed entitled to spend £35,000 on a cocktail. That is why they paid no tax.
Now their cry is, ‘spare some change.’ This is not a supplication, though. It is a threat. They are saying that a banking collapse doesn’t bear thinking about. That is why we have to cosset them. Socialist Appeal says ‘no’. It’s time to get rid of these people. It’s time to take over the banks.
Martin Wolf, writing in the Financial Times, has been calling for the nationalisation of Northern Rock ever since the crisis broke, while Brown and Darling dithered. Martin Wolf surveyed the world financial crisis, this ‘rising auction of scary scenarios,’ on March 11th with a mixture of awe and dismay. He comments, “Losses of $2,000bn-$3,000bn would decapitalise the financial system. The government would have to mount a rescue. The most plausible means of doing so would be via nationalisation of all losses.”
Note that the representatives of the bourgeoisie don’t have an ideological objection to nationalisation. Ideology is something you tell to the children. They are all in favour of losses passing into the ownership of the nation, as long as profits remain in their pockets.
Wolf goes on with his scary scenarios, “While the US government could afford to raise its debt by up to 20% of GDP in order to do this, that decision would have huge ramifications. We would have more than the biggest financial crisis since the 1930s. It would be an epochal political event.”
Wolf is the doyen of financial journalism. On March 25th he discussed the collapse of Bear Stearns, the US’s fifth largest bank. When it was on the point of collapse the Fed stepped and engineered its takeover by JP Morgan Chase. The alternative was financial meltdown. Wolf drew the lessons.
“Remember Friday March 14th: it was the day the dream of global free-market capitalism died. For three decades we have moved towards market-driven financial systems. By its decision to rescue Bear Stearns the Federal Reserve, the institution responsible for monetary policy in the US, chief protagonist of free market capitalism, declared this era over. It showed in deeds its agreement with the remark by Joseph Ackerman, chief executive of Deutsche Bank that, ‘I no longer believe in the market’s self-healing power.’ Deregulation has reached its limits.”
The point about high finance is it puts us all in the same boat. Events in one part of the world have repercussions all over. Back to John Mauldin.
“But for now, we need to bail the water out the boat and see if we can plug the leaks. Allowing the boat to sink is not an option. And get this. You are in the boat, whether you realize it or not. You and your friends and neighbors and families. Whether you are in Europe or in Asia, you would have been hurt by a failure to act by the Fed. Everything is connected in a globalized world. Without the actions taken by the Fed, the soft depression that many have thought would be the eventual outcome of the huge build-up of debt would in fact become a reality. And more quickly than you could imagine.”
So the question is: who is going to pay for this ‘epochal political event,’as Martin Wolf describes it, or mess as most of us would call it? The bosses want to make sure it’s not them. But it’s their mess!We need to take over the banks to bring order out of chaos and growth out of stagnation. In future months we will be urged the need to nationalise loss-making financial institutions. We are not just interested in nurturing losses. Those who incurred the losses can look after them – and that’s not us. We need to take over the lot. We need to separate the fat cats from their wads. We need to run the banks in our interests as part of a socialist plan. We need to run them under democratic workers’ control and management. And we need to start organising ourselves to do this now.