Gordon Brown and his ventriloquist's dummy Chancellor Alistair Darling

[Thinking Man's Idiot]

Rescue for City beasts

(Wednesday 08 October 2008)

YET again, Prime Minister Gordon Brown and his ventriloquist's dummy Chancellor Alistair Darling have displayed how far they have strayed from the labour movement.


Their much-trumpeted rescue plan for the financial economy of the country - more accurately called a rescue for City big beasts - reveals more about their commitment to the capitalist system than their pledges to the working people who elected them.

To participate in the latest £500 billion bail-out scheme, banks will apparently have to sign up to a Financial Services Authority agreement on executive pay and dividends.

All well and good, except that this is the same FSA that presided over the outrageous boom in pay and bonuses which has been partially responsible for leaching cash out of the system and the same FSA that sat impotently by while the banks worked themselves into this corner in the first place.

And the Royal Bank of Scotland, which is set to be one of the bigger recipients of this handout from the public purse, has already put its foot down.

It insists that a management overhaul in return for these potentially huge sums is not on the cards, declaring that management changes did not feature in discussions with government, even though its executives have been criticised for the huge losses run up over the past year.

Let's be in no doubt about this, the government has said that it will not seek any control of the banks and Mr Darling insists that it is not about the government running the banks.

He has made that clear by choosing to slap the second £25 billion tranche into the banks by means of the purchase of preference shares.

These shares have the virtue of having a fixed rate of interest instead of a dividend, which has to be paid before other shareholders receive anything, but they do not carry voting rights of any kind and Mr Darling has made no provision for any other sort of control.

The first £25 billion of increased liquidity is supposed to come from within the banks themselves, but the government, all heart as ever, is willing to loan them their share of the deal.

And, of course, the banks can choose how much they wish to take up the government's pre-Christmas present to them, although, with the soft nature of the attached strings, it would be surprising if they didn't bite the Chancellor's hand off in their eagerness.

However, you can bet that they will not allow themselves to be pushed into lending to other institutions at rates that they don't approve of and the government is not looking for the powers to force them to.

All in all, the government has merely handed the City £50 billion of taxpayers' money to play with and committed a total of £500 billion to allow them to recuperate in preparation to return to their old habits.

This may be labelled partial nationalisation, but it is not a form of nationalisation that gives the government any real control of the banks.
Where will the government get the cash to finance this scheme? Borrow it, of course.

So, the only change is that it is the government footing the borrowing bill with taxpayers' money rather than it being done by the City, whose refusal to pay current borrowing rates with shareholders' cash started all this off in the first place.

[Thinking Man's Idiot]

Time for a real change

(Tuesday 07 October 2008)

GORDON Brown's reticence in coming forward with a comprehensive plan to deal with the ever-deepening financial crisis is understandable because he must know that tinkering is worthless.



But he will also be aware that the conventional wisdom favoured by him throughout the past 11 years has proven to be nonsense.

Leave aside the economically illiterate boast that Mr Brown, as chancellor, had eradicated a basic law of capitalism by dispensing with boom-bust cycles.

That boast is dropped now, but equally risible has been the entire leave-it-all-to-the-markets doctrine declaimed by new Labour.
We were told that economic regulation had to be light so as not to burden entrepreneurs with red tape and that economic priorities were best left to market forces.

And today we are reaping the benefits of that neoliberal approach.
Mr Brown and his woebegone Chancellor Alistair Darling insist that the blame should be placed on global forces beyond their control, most particularly on the problems that arose in the US housing market.

Global factors do have an effect, but it must be remembered that new Labour was foremost, alongside Washington, in pushing this global agenda and in divesting national governments of responsibility for monitoring or regulating transnational corporations.

In that sense, the crisis besetting our banks is entirely made in Britain.
But what matters now is what the government is going to do about it.

Simply pumping in more money on top of the £200 billion that it has injected into the banking system over the past year is pointless.

Year after year, the government has told us that we can't use public money to build hospitals, schools and prisons, we can't provide decent pensions and we can't afford to pay civil and public servants a living wage because doing so would increase public indebtedness.

Yet that argument goes out of the window when the bankers, who have never been shy of lecturing the rest of us to live within our means and to accept the consequences of our profligacy, start demanding further handouts.

"We want the money and we want it now to establish confidence in the markets," they declare, without accepting any blame for the crisis that their greed and recklessness have created.

It's as if a claimant had put their entire benefit on a horse that fell at the first and then demanded further funds to re-establish confidence in the welfare system.

The strategy of reliance on market forces and the wisdom of financial institution bosses to run the economy has run its course. It has failed. A new direction is needed

And that new direction has to be based on meeting the needs of working people, not on allowing the rich and powerful to run riot in their own interest and to then come whingeing to the taxpayer when things end in tears.

Government has to return to the centre of the economy, taking banks, the utilities and railways into public ownership, supporting public services, investing in the manufacturing sector, ending privatisation and financing council housing instead of allowing property speculators to abuse struggling tenants.
Those who have lived off the fat of the land will squeal, but it's time for a real change.

[Thinking Man's Idiot]

Just for fun - what other bits of that infamous/iconic 1983 manifesto should be ressurected?

snowflake5 Wed Oct 08, 2008 at 06:13:29 PM GMT Facebook
That 1983 manifesto was dubbed the "longest suicide note in history" by Gerald Kaufman - but it may have merely been a document 25 years ahead of it's time. This post is prompted by Channel 4 mentioning last night that nationalising banks was in that 1983 manifesto. I thought it would be fun to look it up to try to forsee the future as it were, and perhaps wind up our visiting Tories at the same time.


Here's a link to the 1983 manifesto. I suggest readers skip through the intro by Michael Foot, which seems a little longwinded, and skip straight to the manifesto proper.

One thing they promised was the nationalisation of the banks. Of course we arn't seeing full nationalisation now, only a government stake in the banks, but this is as near as we are going to get in our lifetimes!

Other promises in that manifesto:

1. Introduction of minimum wage (Acheived by New labour in 1997)

2. Introduction of Freedom of information bill (achieved by New labour in 2000)

3. Reform of the house of lords (well, it's partly been done, the hereditary peers have gone)

4. Devolution to Scotland (New Labour delivered devolution to Scotland and Wales and London in 1998)

5. "Encourage the development of effective traffic management schemes to alleviate the problems of traffic congestion" (Ken Livingston managed to deliver congestion charge to London in 2003)

6. Program of works to help the Construction industry (er.. delivered by Blair in bringing the Olympics festival of construction to London)

7. Raise pension payments in line with earnings rather than inflation (Labour's Pensions Bill of 2007 brings this in with effect from 2012)

8. Phase out TV licences for pensioners (well, Labour has abolished licences for the over 75s)

9. Reduce VAT (well Labour have managed to reduce VAT on domestic fuel from 8% to 5%)

10. "Establish an integrated system of child care with priority for children in the most deprived areas" (Labour have brought in Sure Start)

11. Increase child benefit in real terms (Labour have increased child benefit by over 55% since 1997, from £11.05 to £18.80 a week for the first child and from £9 to £12.55 for other children)

12. phase out married man's tax allowance (Labour has done that)

13. Increase Health spending by 3% per anum in real terms (we were spending 4.976% of GDP on health in 97, it's now 7.515% of GDP - not quite 3%, but not bad)

14. Abolish corporal punishment in schools (it was the Tories who achieved that in 1986)

15. Increase aid to the developing world to 0.7 per cent of Gross National Product (achieved by new Labour)

16. Reverse Tory cuts in maternity rights and increase the maternity grant (Labour increased maternity leave to 39 weeks at £117.18 per week, and this will increase to 52 weeks)

17. Urgent repair of run-down council estates (labour have upgraded 1 million council houses and built another 336937 affordable new homes.)


What hasn't happened of course is

1. withdrawal from EU (Labour is now opposed to this)

2. stop nuclear power stations (Labour is now committed to nuclear power)

3. introduce a new wealth tax (labour has no plans for this)

4. remove the ceiling on NI contributions (Labour has no plans for doing this, though we did introduce a 1% charge for earnings over the upper limit)

5. Build coal-powered stations (Labour is considering a station, but depends on CO2 emmissions, may not happen because of that)

6. Increase North Sea levy to 50% (we've increased it from 10% to 20% and there are no plans for further increases)

7. Repeal the Thatcher union legislation (not going to happen)

I was also interested to read about gas prices in the manifesto. Gas prices in 1983 (and in 1983 gas was still publicly owned) had been increased by by 116 per cent since 1979 - and it was done by the Thatcher government, not private sector. Which is staggering for just four years. Puts the current situation in perspective (especially as from 1997 to 2007 prices were stable).

Obviously it's a very long manifesto - so what other things in there do people find relevant for the modern world?

[Thinking Man's Idiot]

Government Set to Nationalise Banks

October 7, 2008 · 1 Comment




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[Thinking Man's Idiot]

Communists denounce Darling's £500 billion bail-out of British banks

(Thursday 09 October 2008)

"THE government's £500 billion bank rescue plan will do nothing to halt the economy's slide into recession," the Communist Party of Britain declared on Thursday.


"Nor will it resolve the banking crisis, since recession is shrinking bank assets faster than government subsidisation."

CPB international secretary John Foster told the party's political committee on Wednesday night that the government had to take immediate steps to stabilise the real economy by intervening in house construction, the energy industry and strategic investment in developing renewable and energy conservation industries.

He pointed out that £10 billion alone would build 100,000 new council homes and £30 billion would salvage the failing energy industry.

"Of all the major economies, Britain's has been made the most vulnerable by the hyper-development of financial services," Mr Foster reported.

"Many firms are likely to fail. Much of our fragile manufacturing sector is at risk. The government must fully nationalise the banking system so it can refinance industry in return for ownership stakes and overall planning for strategic redevelopment.

"Capitalism has failed. The Communist Party's left-wing programme is now relevant as never before."

The committee warned that government capitulation to the banks' demands would impose massive tax burdens on the British people, force cuts in all public services and, in the longer run, impose serious inflationary cuts in living standards.

It denounced government proposals to ask teachers to act as police informers and demanded abandonment of the 42-day detention legislation in face of condemnation by the Council of Europe's human rights watchdog.

The committee reiterated its backing for the October 25 rally in Glasgow for the scrapping of Trident and for the immediate withdrawal of troops from Afghanistan and Iraq.

"Britain has to unshackle itself from Bush's irresponsible and immensely dangerous military policies, which are now even more financially unsustainable.

"In the current crisis, the trade union and labour movement has an urgent duty to intervene decisively to end the Labour government's subservience to big business, as underlined by the return of Peter Mandelson.

"The Tory conference has made it crystal clear that it has no solutions apart from even greater cuts in public services, living standards and workers' rights.

"New economic and social policies are now essential if the threat from the right and the far right is to be defeated."