SPECULATIVE casino banking, without risk for the bankers, thanks to the Brown government’s pledge to never let a big bank fail, is the way forward, has been spelled out in practice at Barclays, in the first six months of the year.
Barclays has just made a £2.98bn profit for the first six months, as its investment bank Barclays Capital doubled its profits, while they halved at its retail banking arm.
Average pay at its investment bank for the first six months of the speculative year was £100,000. Its practitioners are looking forward to another £100,000 in the next six months, plus a hefty bonus, if the luck of the gamblers holds.
Meanwhile, the mass of workers have sleepless nights about how long their jobs will last, after many have been blackmailed into accepting huge wage cuts, pension cuts and even wage free weeks, on the basis that this is the only way to keep their jobs.
These are the ‘mugs’ as far as the speculators are concerned, the people who are paying the bill for them, while they bask in the £1.2 trillion of gifts, loans and guarantees that the government has advanced to secure the banks.
Nevertheless, while the speculators prospered for the moment, Barclays total bad debts rose to £4.56 bn from £2.45bn.
Barclays High Street banks have recorded a 63 per cent rise in bad debts, from £288m in the first half of last year to £469m in the first half of 2009.
The contrast with the nationalised Northern Rock bank, with its massive book of mortgages, could not be greater.
It has made a £724m loss in the six months to June.
Its bad debt soared to £602m, as its mortgage holders suffered under the capitalist crisis with thousands being repossessed by the Labour government-run bank, while 39 per cent of them went into negative equity, where their house is worth less than their loan. The figure at the end of 2008 was 33 per cent.
The Northern Rock Bank core capital is now minus £794m. It would need core capital of £2bn to be in line with the Financial Services Authority’s (FSA’s) current requirement for a ratio of about 8 per cent of capital to loans.
Its activities should therefore be restricted or wound up.
The FSA commented that it ‘does not currently intend to restrict the activities of the Company while the legal and capital restructuring is completed’.
In other words, the government and the taxpayers will have to continue to bail this bank out, which the Brown government confidently predicted would shortly be able to pay back all of the taxpayers cash that has been poured into it.
Meanwhile, the steel industry, the motor car industry, and the rest of what was once a massive industrial base is being shut down, with the Corus steel plant at Redcar set to close, while the same danger faces GM Ellesmere Port and GMM Luton, Honda in Swindon (the former boom town now with the fastest growing rate of unemployment in the country) and the Jaguar Land Rover plants.
The Brown government stands for the bankers and capitalists. Its policy is to allow the working class and the middle class to take the big hits from the capitalist crisis.
Brown will not even nationalise the Vestas plant in the Isle of Wight, even though he speaks about wind turbine power being the future of this country.
The policy of the working class must be that the ruling class which caused the crisis must be made to pay for it, through their banks and industries being nationalised under workers’ control.
Capitalism is bankrupt. It must be buried and replaced by a socialist planned economy based on satisfying the needs of the people, not providing billions for speculators.