Free-market Bush warns of hardship

[Thinking Man's Idiot]

Free-market Bush warns of hardship

(Tuesday 30 September 2008)

HYPOCRITE: President Bush begging Congress to bail out his neoliberal economic policies.

US President George W Bush warned on Tuesday that "millions face economic hardship" after the US House of Representatives rejected his "Troubled Asset Relief" legislation by a vote of 228-205.


The largest bail-out plan since the Great Depression, which would have allowed the government to buy bad mortgages and other deficient assets held by crumbling financial institutions, was turned down by over two-thirds of Republicans and 40 per cent of Democrats on Monday.

The Republican and Democrat legislators who displayed stiff resistance to the Bill rejected it as an undeserved handout for fat cats and a rush to economic judgment.

The result sent speculators into a sell-off frenzy, wiping billions off world stock markets.

US legislators are expected to reconsider the Bill on Thursday.
In a statement released on Tuesday, Mr Bush warned that the US economy is at a "critical moment."

He insisted: "Our country is not facing a choice between government action and the smooth functioning of the free market. We're facing a choice between action and the real prospect of economic hardship for millions of Americans."

The European Union called on Washington to "take its responsibility" for the global financial crisis and urged US legislators to quickly reverse their vote.
EU commission spokesman Johannes Laitenberger said: "The United States must take its responsibility in this situation for the sake of their own country and for the sake of the world.

"European authorities are assuming their responsibilities," Mr Laitenberger crowed.

Belgium, France and Luxembourg have said that they will inject almost 6.4 billion euros (£5bn) to keep Dexia afloat, the second Belgian bank this week to get a government and shareholder bail-out.

In Ireland, Dublin has issued a sweeping guarantee to insure deposits and bank borrowings against a potential collapse.

Communist Party USA chairman Sam Webb urged the White House to announce and enforce a moratorium on foreclosures, debt forgiveness and a renegotiation of mortgage terms.

Mr Webb suggested that legislators should pass a stimulus Bill of half a trillion dollars, paid for by repealing Bush administration tax cuts and a special tax on financial transactions and institutions.

He called for the imposition of "a new regulatory environment on financial markets" and observed that it was time for US citizens and politicians to begin to "debate the merits of public takeover of our financial and energy complex.

"Can our country, given the challenges we face now and into the 21st century, afford to allow these industries to remain in the hands of profiteers?" Mr Webb asked.

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[Thinking Man's Idiot]

Nationalise mortgages!

(Tuesday 30 September 2008)

by PAUL HASTE

COLLAPSING CAPITALISM: Two people standing outside a financial board in central London.

LEFT-WING economists called for the nationalisation of Britain's entire mortgage industry on Tuesday as the first step to defend working people from the spectacular collapse of capitalism.


As the continuing financial crisis brought banks and stock markets around the world crashing down, Labour MP John McDonnell demanded that the government takes "swift and decisive action before it's too late.

"After bank takeovers and the failure of the US bail-out plan, we are facing further collapses and a long, deep recession," warned the Left Economic Advisory Panel chairman.

Mr McDonnell pointed out that, "if the market fails, the only solution is government intervention, but simply addressing this crisis on a case-by-case basis means that the economy is staggering from one crisis to another into recession.

"But we can't wait much longer. Gordon Brown must take the home loans industry under public ownership and control and must override the Bank of England to cut interest rates decisively," Mr McDonnell insisted.

The bank's governor Mervyn King met the Prime Minister for crisis talks on Tuesday, but both men failed to give assurances to Britain's workers that they would not be made to pick up the tab for wealthy bankers' gambling debts.

Mr Brown's first decision as chancellor when Labour was elected in 1997 was to hand over to the Bank of England the power to set interest rates, effectively conceding government control of the economy to an elite clique of money men.

Mr McDonnell explained that the government had then fuelled the crisis by "allowing the housing market to be used for profiteering speculation rather than to provide homes, leading to this self-fulfilling crisis of confidence in financial institutions."

He added that bankers and City traders who for years had preached that "there is no alternative to the free market" are now running to the state to demand that the government bail them out.

Despite the crisis's exposure of capitalism as nothing more than a casino, Tory leader David Cameron thought it an opportune moment to warn people not to use the turmoil as an excuse to "trash" his friends in the City, in a speech to his party conference.

Mr Cameron also declared that the Tories will drop their opposition to government plans to allow the Bank of England to bail out failing banks more easily.

Finance union Unite general secretary Derek Simpson responded angrily, tearing into Mr Cameron's declaration that he still "believed in the free enterprise system."

As the heir to Margaret Thatcher tried to claim that "the Conservatives are not a wholly owned subsidiary of the CBI or City," Mr Simpson declared: "The Tories cannot be trusted. They are inextricably linked to the City and the culture of the City is the culture of the Tories.

"They went to school with the City, they dine with the City and many of them married into the City, so you can't rely on them to regulate the City."
See reference:
Tackle it head on

[Thinking Man's Idiot]

Tackle it head on

(Tuesday 30 September 2008)

WHO does Downing Street expect to believe that Tuesday's breakfast talks between Gordon Brown and Bank of England governor Mervyn King were simply "routine?"


If they were, then the government is not treating the current financial crisis as seriously as it should.

It's not just a matter of building societies that became banks having to be rescued from the consequences of their own greed and adventurism.
Nor is the issue of trading in second-hand shares on the stock market the most important factor.

Not everyone has private pensions invested in shares.

Nor are most people, despite the obsession of TV business reporters, excited about "bargain hunters" being able to glean unearned income from gambling in the currently depressed market.

There is a real economy that affects working people and those living on pensions or benefits.

Were it not for the Campaign to End Child Poverty, most people would be unaware of the gross disparities in income and living standards in a society routinely described as prosperous but which includes widespread poverty.

The Prime Minister told last week's Labour Party conference that child poverty would be eliminated by 2020, but this is unlikely to be achieved.
The government is already adrift on Tony Blair's 1999 pledge to halve child poverty by 2010, as many former industrial areas have been left to rot.

It is a scandal that corporate bosses and major shareholders have been able to shovel up millions of pounds in salaries, pension contributions, bonuses and shares every year while more than a third of children live in absolute poverty or close to it.

Nor is it simply the youngest in society who are suffering. Old people, especially those with just the state pension to survive on, are seeing their living standards tumble.

Winter is always a difficult time for the elderly poor, deciding whether to eat or to heat their homes.

This year will be worse than normal, with many energy companies sending out letters notifying consumers that gas prices are going up by about 30 per cent and electricity by 20 per cent.

How many unnecessary pensioner deaths will be recorded this winter because of government failure to deal with the greed of the energy transnational corporations?

And the situation is getting worse. The credit crunch is hitting hard, with many companies shedding staff in order to maintain profit levels, which will reduce more families to lives of poverty.

Mr Brown has directed tens of billions of pounds to the banking sector in order to revive and sustain the housing market, but the housing market, like all markets, is just a way to make money.

John McDonnell's proposal to take control of the home loans industry so that it serves homeowners and those seeking to buy rather than the profiteers is eminently sensible.

What matters most is providing homes for the homeless and overcrowded, which is best achieved by a government-financed campaign to build council houses, owned and controlled by democratically elected local authorities.

Poverty will only be ended by measures to tackle it head on, not by sitting back and expecting the lavish rewards of the rich to trickle down to the poor.

[Thinking Man's Idiot]

Time to take control

(Tuesday 30 September 2008)

JEREMY CORBYN warns the government that it must act in the best interests of ordinary people.


Monday saw a classic political pincer movement in the United States.
The ultra-neoconservative right opposed George W Bush's plan for saving Wall Street on the grounds that it was interfering with the free market.

The more radical Democrat members of the House of Representatives voted it down because it would bail out Wall Street, which has fallen victim of its own greed and excesses.


The plan's defeat was a product of the revulsion felt by large numbers of people at risk of losing their homes, their pensions and their jobs. They were appalled at the prospect of the US Congress handing $700bn with few strings attached to the very people who had created this mess in the first place.


Across the Atlantic, in one dizzying day, banks in Britain, the Netherlands, Belgium, Luxembourg and Iceland were taken into public ownership in whole or part. Every central bank - what remains of them, at least - was pumping money into the system to try to shore up share prices.


Twenty-eight years ago, power was in the hands of Margaret Thatcher, Ronald Reagan and the monetarists. Deregulation, the sale of council houses, "freedom" for City traders and building society demutualisation were the order of the day.


This process ran its course. Later, the Clinton and Blair governments rode on the back of huge levels of personal debts, cheap Chinese imports and a galloping financial market that resembled the South Sea bubble on a global scale.


We are now witnessing the wreckage.


In Britain, it has created a perpetual housing crisis with high prices, high rents and overcrowding. People are locked into the system and want prices to remain high.


Every single building society that was driven by greed into accepting demutualisation has either been swallowed up, disappeared or nationalised. The safest banks are the mutuals like Nationwide and Britannia, which extol their mutuality as their unique selling point.


Last weekend, the broadsheet papers were full of dramatic blow-by-blow accounts of events.


But they were written in the confident expectation that it would all be over once Congress had approved the Bush plan.
But Congress did not.


Now, we are in for a few more days of debate about the ins and outs of the process. US presidential candidates John McCain and Barack Obama, both desperate to appear "responsible," rolled up, backed the plan and then left town.


What happened to the rhetoric in the primaries about "change?"
Nationalisation does not necessarily mean socialism, as Rob Griffiths correctly pointed out in Monday's Morning Star.


Taking a bank into public ownership is a good and necessary first step to protect savers and jobs, but it does not fundamentally change a system unless the process develops from there.


The media tells us that experts and gurus with special deity-like qualities of perception such as Warren Buffet can understand what is happening at the moment. We will get through it and all will ultimately be well.
We need to be far more assertive on the left.





The government has been pursuing a totally unfair pay policy in the public sector for a while. The burden of private finance initiative payments looms large.







Deregulation and the active pursuit of inequality and appeal to greed plunged us into crisis.


The victims will be the people who are excluded from the world of hedge funds, offshore accounts and City bonuses and now face job losses, the effects of public spending cuts and lost pensions.
There are things that the left could be doing.


We need to demand very strong regulation of the banking and credit system, protection for pensions and for people whose homes are threatened by foreclosure.


The case for public ownership of the major banks is irrefutable.


When the Chancellor and the Prime Minister sit down and become midwives of mergers such as the one between HBOS and Lloyds TSB or part sales such as Bradford and Bingley to Santander, we need to ask who is accountable and what policies will be followed in future.


Tax revenues are already falling. They will fall further. This raises huge question marks over the maintenance of public services.


The government has been pursuing a totally unfair pay policy in the public sector for a while. The burden of private finance initiative payments looms large.


We are in a new period when protecting public spending to meet social need should become the top priority.


The housing crisis is already a reality for tens of thousands of families forced to live in grossly overcrowded rented flats or people with mortgage burdens that rob a huge proportion of their salary.


This is the price of nearly 30 years of right-to-buy policies and lack of investment in new council housing. Any "social housing" that has been built has usually been tacked onto private-sector developments.


It is time to invest in council housing, to allow councils to buy unsold private developments and to enact powers to buy properties at risk of repossession and convert them into council tenancies.


The UK spends over £30 billion on "defence" every year. The war in Iraq has cost at least £9 billion in the last three years. Afghanistan is becoming more expensive and ever more bloody.


Extracting ourselves from these wars and pursuing peaceful investments instead makes financial sense.


The day before the US convulsions, while the Western media was full of market crystal ball-gazing, an altogether different agenda was taking shape over the border in Mexico.


There, an enormous demonstration was held in the capital led by Democratic Revolutionary Party leader Andrés Manuel López Obrador.


Hundreds of thousands of Mexicans poured onto the streets to oppose the privatisation of publicly owned oil company PEMEX.


The right-wing government argues that the firm needs investment and that foreign capital is the only answer.


This is exactly the same argument that has been used in Iraq and for public services all over the world. But Obrador and his supporters are instead demanding social justice and the protection of strategic resources vital to eliminate poverty.


Further south in Bolivia, the defeat of water privatisation in Cochabamba gave birth to the movement that propelled Evo Morales to the presidency and the Movement Towards Socialism into government.


The self-satisfied Western media seem to forget that millions who lose at the hands of the free market see no need to protect it.


None of the social movements in Latin America sees salvation in market forces. All regard the elimination of poverty, a society based on the needs of all and a planned economy as the way forward.


At the Tory conference in Birmingham, shadow chancellor George Osborne chose not to deliver a mea culpa for the Thatcher years. Instead, he declared that his party was there to defend the free market. He was cheered by the assembled rightwingers.


But deeply worried people all over the country want to see government action to protect them from market forces and speculators' greed.
After all, we do not have to be ruled by markets.


Jeremy Corbyn is Labour MP for Islington North. He can be contacted at corbynj@parliament.uk