|The News Line: Editorial
Tuesday, 16 September 2008
Wall Street crashes. Capitalism goes over the brink!
LEHMAN Brothers and Merrill Lynch, two pillars of the capitalist world’s banking system, have gone.
The first declared bankruptcy, after the US Federal Reserve Bank and administration refused to mount a rescue operation to bail it out.
The second avoided bankruptcy by the Bank of America agreeing to merge with it. This was out of fear that if Merrill Lynch declared bankruptcy, the Bank of America would be next. This was a merger born of fear.
The Bank of America merger means that three of the top five US investment banks have collapsed due to the sub-prime mortgage crisis within six months.
Stock markets worldwide banks and currencies have tumbled in response, with banking shares hard hit.
UK bank HBOS saw its shares plummet 30%, Barclays fell by 10% and AIG, the world’s main insurer, fell by some 40%, with it seeking a $40bn emergency loan from the Fed.
This loan will never be made, after the Bush administration decided that, while it had been forced to rescue Fannie Mae and Freddie Mac, out of fear that China would be forced to withdraw its funding of the US deficit if it didn’t, it could not and would not attempt to bale out the whole of US capitalism.
By mid-morning the FTSE 100 index of leading UK shares was down 271 points, and 5%, at 5145.3 points, with £60 bn lopped off share prices.
Wall Street opened over 250 points down, with the world waiting with baited breath for the next bank to fall.
Reflecting the refusal of the US administration to bail out Lehman’s, Merrill Lynch or AIG, in Britain, the ex-Tory Minister and Thatcherite Michael Portillo, allegedly out of politics, was brought back from the dead.
He explained to the media that if capitalism is to function it has to bury its dead and then move on, and could not seek to put its corpses onto some form of permanent life support.
He said that banks that had considered that credit and money were the same thing and had extended their credit to unmanageable and completely adventuristic proportions should be allowed to go bust.
Portillo was quite cheery about the subject, stressing that bankruptcy was ‘not so bad’, that there was light at the end of the tunnel, and that after the weak were allowed to perish, business could start up once again.
Lib Dem spokesman Vince Cable put the matter another way.
He said: ‘Effectively the Bush administration, which is probably the most right-wing government in modern history, was forced to nationalise the whole of the mortgage lending sector and now we have one of the big investment banks on the brink of collapse – I think they’ve filed for bankruptcy today.
‘Now the importance of this is that they hold the security – what’s called the counter-parties – to trillions of dollars worth of derivatives – swaps, futures, options – and if this pack of cards collapses then the whole of the international financial system goes down with it.’
But Bush has refused to nationalise!
The pack of cards is now collapsing and the working class and the poor of the world are facing a holocaust as great as the 1930s collapse as far as jobs, wages, families, homes and basic rights are concerned.
Capitalism only knows one way out of this crisis, and that is through slump and mass unemployment at home, and trade wars and oil and gas wars abroad, to reorder the planet.
It is a system that decades ago reached the limits of any positive contribution to humanity, and became a massive barrier to human development with its destruction of the productive forces on a massive scale, and its reduction of the planet to mass hunger and war.
All its apologists can say is that humanity must grin and bear it, whatever, since there is no other way.
There is another way, that of the socialist revolution to overthrow the capitalist ruling classes and replace the law of the jungle, and the survival of the fittest that goes along with the anarchy of capitalist production, with a socialist planned economy based on production to satisfy people’s needs.
The working class and the poor are now being given no alternative by the capitalist crisis but to take this road.
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