Banks are crashing while 140,000 repossessions loom at Northern Rock

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THE HSBC bank has just declared a 28 per cent, $3.9bn fall in half year profits. It has written off another $3.7 billion of its dodgy mortgages, and its US arm has made a $2.8 bn loss.

The HSBC has issued a warning that the outlook for the banks remains ‘highly challenging’.

It is Europe’s largest bank and saw profits drop by $3.9bn to $10.2bn (£5.2bn).

HSBC had already announced write downs in the price of its assets – linked to the slump in the US housing market – of more than $15bn.

Its verdict on the situation is: ‘Ultimately the real economy will recover from the crisis although it may get worse before it gets better.’

The Belgian-Dutch bank Fortis also yesterday admitted that it is facing ‘difficult’ times when its half-yearly profits fell by 40%.

The banking collapse has deepened the developing industrial slump.

The CBI revealed yesterday that UK manufacturers are facing sharply rising cost pressures and are expecting output to fall in the coming months, and unemployment to rise.

According to a survey by the CBI the West Midlands and Scotland are likely to be worst hit.

The survey said that output is set to decline across the majority of regions over the three months to October with ‘significant job losses’, because ‘The climb in oil and other raw material prices over recent months has driven costs up significantly’.

Lloyds TSB has pointed out that two thirds of the people it recently surveyed said that general employment prospects were worse than a year ago, while more than a third said their own job was less secure now than 12 months ago.

Lloyds TSB deduces: ‘If people don’t feel safe in their job and high prices are putting incomes under pressure then demand for discretionary purchases will naturally slow.’

Faced with this deepening crisis the Brown government is reeling.

The Financial Times reports that Brown is set to ignore the demands of the trade union leaders that he bring in a windfall tax so as to cut petrol prices and energy prices to prevent the poor freezing to death next winter.

He is concentrating on satisfying the needs of the bankers, who are sinking fast.

The situation of the ‘temporarily nationalised’ Northern Rock bank is once again concentrating the minds of the government.

The massive increase in fuel and food prices and the increases in mortgage interest rates has led to a situation where the bank has made a six month loss in the period up to June.

Not only that, but the bank is due to admit that next year up to 20 per cent of its mortgage holders, some 140,000 people, will be in negative equity with their mortgage debt greater than the price they could get from selling their home.

This means that 140,000 families, many of them living in formerly safe Labour areas in the North East will face being repossessed by a bank that the Brown government has refinanced without any collateral, and nationalised.

Their homes are going to be repossessed by the government!

This is a government that is already backing 2000 Northern Rock sackings, 800 of them compulsory!

The policy of the bank in relation to non-payment is now a ‘rapid movement towards recovery where it is clear that the borrower will not maintain payments and where we have higher risk’, in other words rapid repossession.

The trade unions must not fiddle while the capitalist system collapses and drags millions of workers over the edge of the abyss with it.

The trade unions must be made to carry out the only policy that can defend the interests of their members.

This is to call an indefinite general strike to bring down the Brown government.4

A workers government must then be brought in that will expropriate the bosses and the bankers, and carry out socialist policies, the first among which will be to guarantee workers their jobs, and their homes and to slash food and fuel prices.