Bank of England warns over £1 trillion of domestic debt


WITH Coral Eurobet the bookmakers now the most successful British company, with a turnover of £5.4 billion, and with manufacturing industry being slaughtered, no wonder the Bank of England is desperately worried about the developing economic crisis.

This forced it to break cover on Monday to warn that the combination of massive domestic indebtedness, to the tune £1 trillion, and a slowdown of the world economy could bring catastrophe to Britain.

The Bank warned that massive personal and company debts ‘could prove difficult to pay off’ if the economy ‘stutters’.

It warned that banks could cause a long-term ‘domino effect’ by calling in loans if they became jittery about the economy, meaning that the entire pack of cards that makes up British capitalism could collapse.

The fact that the most successful British company is a bookmaker sums up the ‘virtual’ state of the British economy. The Brown, Blair government has been allowing manufacturing industry to collapse, and encouraging the export of jobs, seeing the future lying with bookmakers and casinos.

‘Prudence’ Brown has been a not so secret gambler of massive proportions.

He has encouraged the biggest trade deficits that British capitalism has ever seen by supplying the middle class with cheap credit, and telling it to spend, spend and spend, to keep the capitalist economy going. To do so the middle class has put itself wholly under the thumb of the banks.

Brown was gambling that a further growth of the world capitalist economy would allow the tight rope walker to remain on the high wire, but now he faces some very turbulent winds indeed.

The Bank of England is worried that the banks are going to call in their billions of loans because of their growing conviction that if they don’t get it back now they never will.

The situation of the price of basic raw materials shows just why they are scared. They are all now rising rapidly, with the price of oil taking the lead. It has now tripled to $60 dollars a barrel.

The oil price is a real hostage to the class struggle, with the IFW World Economic Institute warning that the price of oil could rocket to over $100 a barrel. This could see petrol at £10 a gallon and going upwards.

These warnings have a rock solid basis. There is the war in Iraq. The US estimates that it could last another 12 years, locking Iraqi oil out of the world market for that period.

Then there is the situation in Saudi Arabia where at any moment Al-Qaeda insurgents could deal a body blow by destroying a section of the oil fields.

Then there is the situation in Iran where the new president is calling for a restoration of the ideals of the 1979 revolution, and for the millions of the Iranian poor to receive a share of the oil wealth.

Then there are the worries about the situation in Russia, and in Afghanistan where the upsurge in fighting endangers oil pipelines from the Caspian Sea to the west.

In early 1973 under the Heath government a massive increase in oil prices led to a three day week in Britain.

That was just an anticipation of the crisis that is emerging today, which is now threatening millions of jobs.

There is only one way out of this crisis. That is for the trade unions to take action to bring down the Blair government and to bring in a workers’ government.

That government must then nationalise the banks, abolish the £1 trillion of debt, and organise a planned socialist economy based on satisfying people’s needs. Part of the establishment of this economy will see the nationalisation of the gas and oil companies under workers’ control.

A workers’ government will also establish a fraternal relationship with the Arab and Iranian peoples, by withdrawing all troops from Iraq and helping to establish the state of Palestine. This fraternal relationship will replace the threats, the wars and the oil stealing occupations of the imperialist powers, and create the conditions for resolving all of the issues concerning the supply of oil.

This is the only way out of the crisis.