The buck stops with you, Brown

[Thinking Man's Idiot]

The buck stops with you, Brown

(Friday 10 October 2008)

by PAUL HASTE




STUMPED: Gordon Brown has used anti-terrorist laws to seize the British assets of Iceland's largest bank.


UNIONS and left-wing economists laid the blame on Friday at Downing Street for encouraging "irresponsible financial dealings" that could see public services slashed and council taxes go through the roof.


More than 120 local authorities have now revealed that almost £1 billion of public money was placed in bank accounts in Iceland, money that has now been frozen after the country's crisis-hit government seized the banks.

Local Government Association spokesman Ed Walsh said that the councils had merely been following the government's advice to spread their investments, claiming that the cash was in Icelandic banks "to earn interest rather than be used for front-line expenditure."

But he could only add that council bosses were "hoping" that the frozen accounts would not lead to the complete loss of the cash, which he said would "clearly have an averse impact on public services."

Left Economics Advisory Panel chairman John McDonnell MP insisted that the government "is responsible for this situation - full stop."

He explained that councils had "followed investment advice laid down by the central government and, as a result, their financial position in the long term has been undermined.

"Their accountants will now be telling them to cut services and what we are also likely to see is councils refusing to place their money in any bank, undermining the government's multibillion-pound bail-out plan," he said.

An emergency statement from local government union UNISON executive council called on the government to protect public services and workers from the fallout of the council's "irresponsibility."

The union's leaders stated: "This crisis threatens to squeeze local government budgets, adding pressure for further pay cuts and increasing redundancies.

"UNISON calls for bold action to protect the public interest. Working people, particularly the lower-paid, must be protected from the worst effects of the crisis."

Iceland's "grand coalition" government dispensed with its free-market principles to seize the island's three largest banks this week after it was revealed that their debts were larger than the country's entire net worth.
But its failure to guarantee the money in people's accounts was effectively declared a "terrorist crime" as Mr Brown retaliated, using the Anti-Terrorism Act to seize the British assets of Iceland's largest bank.

Icelandic Prime Minister Geir Haarde blasted the escalation as an "unfriendly act" and complained: "Britain cannot possibly regard us as terrorists."

Communist Party of Britain leader Robert Griffiths demanded that the government "stop taking such a belligerent line towards Iceland and instead act to protect public services with the same urgency that they protect the interests of banks and wealthy shareholders.

"The responsibility for this crisis does not lie in Reykjavik but in Wall Street, the City and Numbers 10 and 11 Downing Street," he said.


See reference:
The left's opportunity

[Thinking Man's Idiot]

The left's opportunity

(Friday 10 October 2008)

ONLY veteran readers of this paper will be able to recall more favourable conditions for challenging the fundamentals of capitalism than the opportunity presenting itself to the left today.


At no time since the 1930s has the phrase "capitalist crisis" featured so prominently in public discussion and in the mass media.

Despite all the efforts to blame a handful of "rogue" bankers and speculators, low-waged mortgage holders in the United States and now - heaven help them - the people of Iceland, most workers know where the blame really lies.

The whole ruling political and business establishment is responsible for this financial and economic crisis.

The politicians and the City slickers conspired to hold down wages, benefits and pensions, forcing people into debt in a desperate effort to maintain or improve their living standards.

At the same time, the big corporate directors and shareholders went on a profits spree, driving up prices and scooping lavish proceeds in the form of salaries, fees, bonuses, share options and personal pension pots.

To help the rich still further, successive Labour governments cut the taxes on big business profits and refused to increase the higher rate of taxation.

Instead, more than £200 billion in public spending has been financed through the private finance initiative, leaving this generation and the next of ordinary taxpayers to repay four or five times that sum to the government's business "partners."

Now, as the fictitious capital generated by financial wheeling and dealing turns to dust, more than £500 billion of public money is made available to prop up the whole rotten system.

This, remember, from a government which, less than two years ago, refused to find just £1 billion to fund the total deficit of NHS hospital trusts.

We had NHS staff redundancies, ward closures, mothballed equipment and cancelled operations instead.

With the IMF predicting that the British economy will slip into deeper recession than almost every other, capitalism's crisis cries out for a powerful, united response from the left.

We cannot expect the millionaire mass media to help socialists, whether inside or outside the Labour Party, by publicising that response, although the Morning Star can be relied upon to do so.

This makes left unity and coherence around a left-wing programme all the more essential.

But it also requires the different sections of the left to put old enmities aside and keep their tactical and strategic differences in proportion.

Most socialists and communists agree that we need campaigning and legislation to bring the banks, energy utilities and railways into full public ownership.

They know that we need higher rates of taxation, perhaps including a wealth tax, on the super-rich and that windfall profits, whether in the oil industry or the supermarkets, should be subject to windfall taxes.

They understand that price controls should be imposed on essential services and that the working class and progressive movements must lead mass united battles for higher pay, benefits and pensions.

Differences on electoral strategy, let alone about how we go from capitalist crisis to socialist revolution, cannot be allowed to prevent unity in action where and when it counts and that is here and now.

[Thinking Man's Idiot]

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Martha Kearney writes…

"Gordon is a technocratic, highly qualified bully…and there is no one better to be in charge during this crisis". Those were the words of one reshuffled minister who has often been critical of the Prime Minister in the past.

"In fact he could be on his own in COBRA", referring to Cabinet Office Briefing Room A which is Downing Street's answer to the West Wing's Incident Room. Home to meetings in the past about terrorist attacks, floods and outbreaks of foot and mouth disease, this was where the new National Economic Council met for the first time on Monday. Gordon Brown thinks that COBRA is the best place for dealing with crises and puts people psychologically in the right place. He sat at the head of the table with the Cabinet Secretary Gus O'Donnell on his left. Ed Balls and Peter Mandelson were placed at opposite ends of the table for obvious reasons. The room is fitted out with screens which can have any information piped in. On Monday this was Bloomberg and Reuters financial wires so that ministers could check the latest indices.

At the moment they don't make for pleasant viewing. "Carnage" was the word used by the veteran City figure David Buik to describe the markets on Friday's programme. Earlier in the week a banking economist told us that we are on the edge of a precipice. So the stakes couldn't be higher for Gordon Brown both in terms of the country's future and his own political position. If the government's rescue package works and the banks begin lending to each other again, then he really will have changed the political dynamic. One of his closest allies was on buoyant mood on Wednesday when the rescue package all announced. "We're back in the game", he said, cockahoop after Prime Minister's Questions when, for probably the first time, Gordon Brown scored a decisive victory over David Cameron.

But I can't help wondering if there is a touch of hubris in headlines like "World Must Follow My Example, Says Brown" before there is evidence that the plan is actually working. There is a lot which remains unclear about the package too in particular over the issue of executive remuneration. That really is a burning political issue as many taxpayers would be outraged to see their money being passed on in huge bonuses.

At Wednesday's press conference the Chancellor Alistair Darling said that he had asked the Financial Services Authority to look at the issue. Gordon Brown maintained that it was one of the conditions of the negotiations with the bank. When I interviewed Adair Turner from the FSA, at first he said he was far more concerned with the capitalisation of the banks. When I pressed him, Lord Turner then said that there was an issue with executive remuneration but that it would be dealt with as part of an international programme looking at guidelines. That sounds much longer term than Gordon Brown was suggesting.

Can restrictions on pay work anyway? On Friday's programme a City lawyer told Brian that setting out principles hadn't worked in the past but regulating each individual executive would be unworkable. He concluded by saying that if there were real restrictions, talented executives would move away from London anyway. But if the rescue package doesn't work, then the issue of executive remuneration will be redundant as there may not be many bankers left to pay.

Best wishes

Martha


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