THE new Deputy Governor of the Bank of England (BoE), Charles Bean said yesterday that when the so-called ‘credit crunch’ began last August central bankers had expected the crisis to be over by Christmas 2007.
He added that, however, it had carried on for a year and every time the markets looked like they were stabilising ‘another grenade’ exploded as bouts of fear over sustainability hit financial institutions.
Significantly the Deputy Governor was speaking at a conference of central bankers in Jackson Hole, Wyoming, hosted by the United States Federal Reserve Board. He said the mood at the conference was one of ‘considerable caution for the next year’.
The BoE deputy chief said that the global financial climate was ‘as challenging a time as the 1970s’ and that it would be ‘foolish to believe’ it could be prevented from happening again.
He was referring to so-called ‘stagflation’ in the 1970s when inflation in countries like Britain went up to 20 per cent and there were four million unemployed by the end of the decade.
Drawing on all the experience of the world’s top bankers, Bean concluded: ‘We’ve got our fingers crossed that things will improve. But there is still a long way to go yet.’
This statement would be more appropriate coming from the fictional ‘Mr Bean’ than from a top figure at the Bank of England!
But his remarks were similar to others coming out of Jackson Hole. The Financial Times reported them under the headline: ‘Bankers torn between hope and fear’.
Alan Blinder, a former Vice Chairman of the US Federal Reserve Board said: ‘It is amazing a year later how much (the crisis) is still unresolved.’
While the central bankers of the world’s richest countries contemplate ‘the worst financial crisis since World War II’, the objective laws of capitalism in its death agony are ripping through economies in the US, Europe, Japan and every other capitalist country.
In the US, the country’s largest mortgage lenders, Fannie Mae and Freddie Mac, saw their share prices plummet by 36 per cent and 46 per cent respectively last week. Treasury Secretary Hank Paulson confronts formulating a rescue plan for these mammoths of the American housing market costing billions.
In Britain, which is most exposed to the world financial crisis because of the role of the City of London in international dealing and the weakness of the country’s meagre manufacturing sector, the exchange rate of the pound is dropping dramatically, the economy is already in recession and inflation has taken off.
The insurance group Allianz has just revealed that more employers than ever are looking for legal advice on how they can sack workers.
Alongside this the price comparison website uSwitch reported that people’s disposable income dropped by 15 per cent over the past year. It said that average pay had risen by 3.4 per cent over the year, but the cost of living had gone up by eight per cent, with gas up 28 per cent, petrol up 28 per cent and food and drink up 25 per cent.
In Britain about five million workers in the public services are either committed to taking strike action against pay cuts, or preparing to do so – council workers, NHS staff, civil servants, teachers, etc.
They must insist that their trade unions fight for index-linked pay agreements, form a public sector alliance to organise a general strike to defend their living standards, and defeat the Brown government, which is giving billions to the bankers while cutting their pay.
This is a world capitalist crisis. Only a workers’ government, that expropriates the banks and monopolies and carries out socialist policies, can protect the working class from a catastrophe.
These are the issues that confront workers worldwide and they require a socialist strategy and revolutionary organisation to lead the struggle to overthrow capitalism and complete the World Socialist Revolution.
Workers and youth must build parties of the International Committee of the Fourth International in every country, including the Workers Revolutionary Party in Britain, to carry out this task. Join the WRP today!
