The Great Bankster Robbery

 

Banks versus the People

 

The central question in this election is what to do about the banks? With 2.45 million people unemployed the economy is not producing enough and not creating enough jobs. One answer would be to invest more, spend more and cut taxes especially on low income families. But this would raise the budget deficit which at £167bn is already the highest since the Second World War. There is a serious employment crisis facing the country with no obvious answer in terms of spending less or spending more. Of course capitalism is a global system and the economic crisis is destroying jobs and increasing poverty across the world. But this is used by the banks, government and parliament as an excuse to avoid their own responsibilities and failures.

 

On 15 September 2008 Lehman Brothers, a major US bank, went bust and triggered an international financial crisis. The banks had been enjoying a boom built on ever rising house prices and feeding frenzy on US sub-prime mortgages. Massive profits and unbelievable bonuses rested on a huge mountain of bad debts. As soon as the economy began to slow down, a spark lit this inflated financial bubble turning it into a flaming inferno. In 2008-9 the British banking system virtually collapsed. The failure of Northern Rock which preceded the crisis was followed by the collapse of RBS and the Lloyds banking group.

 

The British economy is especially vulnerable to a banking collapse. The City is one of the world’s major financial centres responsible for about 8% of the country’s output. In the bubble years from 2001-2007 bank assets doubled to £6 trillion. The amount of taxpayers’ money needed to prop this up was enormous. By nationalising these bad debts the government is now on the brink of bankruptcy. None of the three main parties want much attention focused on what went wrong and who was responsible. All their policies concentrate on making the people pay with cuts in public spending and tax increases. The banks are escaping scot free.

 

Banksters

 

The Banks provide a vital public service. They take savings from some parts of the economy and transfer them elsewhere to enable trade and commerce to function and bills to be paid. They provide the oil which enables the capitalist economic engine to keep going. The crisis known as the “credit crunch” meant the banks went on strike and stopped lending. The whole economy stood on the brink of disaster. Because of the central strategic position of the banks in the economy the government had little choice but to surrender to their demands.

 

The banks are much more than a social service dedicated to a healthy functioning economy. They are private businesses whose prime aim is profit, not charities serving the people. Like the swash buckling pirates of the Caribbean, their Executives are the buccaneers of modern capitalism. Gambling, robbery and plunder are among the black arts of private banking. They call themselves “risk-takers”. We risk and they take! Ferdinand Pecora, the chief counsel to the US Senate Committee on Banking in the early 1930s coined the term “Bankster”. The combination of “banker” with “gangster” described the behaviour of the top bankers before the Great Wall Street Crash in 1929.

 

British banks have their own “banksters” directing operations. Barclay’s president Bob Diamond received £63.3m pay package in March 2010. (Daily Mail, 20 March). Sir Fred “the Shred” Goodwin, was chief executive of the Royal Bank of Scotland (RBS), when it made losses of £24.1bn in 2008 and he was paid off with a £700,000 per year pension. Eric Daniels, chief Bankster of the Lloyds-TSB and HBOS group received a pay and bonus deal worth up to £6.8million this year to top up his £1.12million annual salary. He told employees that the bank faced "very, very few restrictions". All thanks to the injection of up to £5.5bn of taxpayers' funds. (Daily Mail, 26 March 2010)

 

Regulatory Failure

 

Powerful banks not only dominate finance and the economy but have powerful influence at the heart of government. Their interests hold sway with the Bank of England, the Treasury and the Prime Minister. The City and the banks have been traditionally influential in the Conservative Party. But in 1997 New Labour embraced the City and this new relationship was signified by making the Bank of England independent. This meant a new freedom for the banksters to make profits and bonuses.

 

The Banksters remain the ‘untouchables’ of the British economy. No control was exercised by shareholders. They were happy to rake in dividends in good times and accepted state support when they failed. The Financial Services Authority (FSA) was set up to guarantee minimal regulation. It is effectively a banksters quango to protect them from public scrutiny. It saved the banks from too much regulation or ‘interference’ by parliament. Parliament failed to exercise public scrutiny over the banks or pass necessary laws and ensure effective implementation. This is where the major system failure took place.

 

The Great Bankster Robbery

 

The private ownership of the banks leaves immense power in the hands of banksters. It enables them to hold the country to ransom. They are threatening to go on strike by withholding vital finance. They are demanding that the government take action to cut public services and raise taxes to restore the “confidence” of the “markets”. The “markets” are code for banksters and “confidence” refers to their expectations about future profits and bonuses.

Would a country like Greece or the UK facing bankruptcy be helped by interest free loans or a “holiday” from interest payments? On the contrary while the vultures are circling overhead the robbers are demanding more and more. Currently the UK is paying £42bn in interest payment to banks. This is expected to rise to £78.8bn by 2014-15. The screw is being turned ever tighter.

 

Whilst the Irish workers have accepted 20% pay cuts the Greek workers are refusing to pay the robbers by taking industrial and political action. The banksters are very worried. The “markets” are jittery. They are now demanding 7.45% interest payments for lending to Greece. The Eurozone (Germany and France) have stepped in to offer £26.4bn at 5% (Financial Times 12 April). If the Greek workers are screwed too hard too quickly, there could be a political crisis or even some sort of revolution against banks. This could spread into other countries. The Greek workers have thus convinced the German banks to come up with a better offer!

Public ownership and democracy

 

Public ownership combines state ownership with public control and accountability. Democracy provides the foundations on which public ownership is built. First workers must control management and exercise democratic vigilance inside the enterprise. Second parliament has to ensure accountability and regulation in the public interest. The recent nationalisation of the banks is not public ownership. It was the policy of the banksters to escape their debts, save them from bankruptcy and keep them out of public control. The plan is to return them to the private sector as soon as conditions allow.

 

Public ownership is an essential policy to ensure the economy serves the people. Because of the central position of banks they must be taken from the banksters and brought under public control. This should be extended to other basic public services such as the railways, utilities (water, electricity and gas), house building, public transport, health and education. Health and education are managed by state bureaucracy. These must now be run on a democratic basis. There should be no cuts in public services. There must be public investment to create new jobs and reduce unemployment.

 

Putting people first - making the Banksters pay

 

How will the UK’s national deficit be paid? The banks will pay if the government defaults on the debt or inflation burns away its real value. The people will pay if the government cuts public spending or increases taxes. But the question of how this debt is distributed depends on who has economic and political power. With public ownership and a democratic parliament the costs will be shifted to the banks. But privately owned banks and an unreformed parliament puts the burden onto public sector workers. All the three main parties are agreed that the people must pay for the banksters’ greed and reckless gambling.

 

* Public ownership of the banks

 

* Parliamentary reform and regulation of banks

 

* Cutting waste spending on Trident, Afghanistan war, arms spending, interest payments, ID cards, consultants fees etc.

 

* No cuts in public services. Reduce pay of top executives. Cut management bureaucracy

 

* Public spending and tax reduction to create employment

 

* Progressive taxation and action against tax evasion - offshore accounts

 

After the election the next government will implement the policies of the banks by making people pay. The task of defending jobs, pay and public services will depend on trade unions. Trade unions must be freed from the shackles which the employers and the courts placed on them using the anti-union laws. These laws must be scrapped so that unions are accountable to members.

 

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