THE Northern Rock bank, recently nationalised by the government has made a £585m loss for the first six months of the year, but the Labour government is to reward it with a further gift of £3bn from the taxpayer to provide it with working capital.
This government-owned bank has meanwhile announced that it is to sack 1,300 of its workers, with at least 800 of them being compulsorily sacked.
The Unite trade union is on record as pledging that it would fight any compulsory sackings at Northern Rock, but it has kept as silent as the grave now that the government has OKd these compulsory sackings of workers from a huge Labour controlled area.
Labour smiles on capitalism and the bankers but beats the workers!
Meanwhile, the banking crisis is continuing to deepen with the HSBC, The Royal Bank of Scotland, Fortis, the Alliance and Leicester and many others announcing crashes in profits.
Alan Greenspan, the former chairman of the US Federal Reserve bank, has warned that there is much more to come.
He said: ‘There may be numbers of banks and other financial institutions that, at the edge of defaulting, will end up being bailed out by governments.’
He cautions that the government’s role must be to bail them out, at the expense of the working class, of course.
He councels that governments must not adopt a heavy-handed regulatory response to the crisis since this would do more harm than good because it would depress global share prices. He worries that governments might try to get a grip on economic affairs, instead of just bailing out the bankrupts.
He warns that: ‘If that becomes widespread, globalisation could reverse, at awesome cost,’ to the banks and the bosses.
Greenspan says this ‘insolvency crisis’ will end only when home prices in the US begin to stabilise, ie when there is a complete housing crash allowing for a ‘rapid rate of liquidation of the inventory glut’.
Greenspan is spelling it out, as much as a banker can, that once the housing market in the US has crashed, and the homes of millions have been repossessed then the inventories can be re-written, and business can begin again.
The job of governments is to supply the banks with working capital until after this moment has been reached.
This is the treatment that the Labour government and Prime Minister Brown are pledged to provide for the Northern Rock and for all of the other banks who cannot survive without the same kind of life support.
In the case of Northern Rock alone there is much worse to come.
Even the Liberal Democrat Treasury spokesman Vince Cable has had to point out that: ‘Alistair Darling assured Parliament that taxpayer loans to Northern Rock would be fully secured on mortgage assets. This is clearly not true.’
Northern Rock revealed that the total percentage of its residential mortgage customers in arrears and being repossessed had risen sharply from last year, and that in the last six months 3,700 homeowners were repossessed by Northern Rock and the Labour government.
While it is sacking workers, the bank has increased staff numbers in debt management from 185 to around 500.
In the easy credit days Northern Rock advanced loans worth as much as 125% of home prices to its customers.
It has now reduced the number of its mortgage accounts to 662,000 at the end of June, from 777,000 at the end of 2007.
Next year, 140,000 of these will be in negative equity where the selling price is far less than the mortgage, opening up the prospect of mass repossessions of workers’ homes by a Labour government.
The trade unions must put an end to the Brown government’s attempt to bail out capitalism. They must call a general strike, bring down the Brown government and bring in a workers government that will carry out socialist policies.