AFTER the Abu Dhabi stockmarket experienced a record one-day fall of 8.3 per cent, and Dubai’s Financial Market Index fell 7.3 per cent yesterday, Dubai’s finance minister, Abdulrahman al-Saleh, shocked the capitalist world by saying that the Dubai government was not responsible for the state-owned Dubai World’s £50bn of debt.
This Dubai statement was taken as confirming that Dubai did not have the cash to cover Dubai World’s defaulted £2.1bn payment. Dubai is bankrupt.
Al-Saleh continued that it was the creditors who must take responsibility. The ‘Creditors needed to take part of the responsibility for their decision to lend to the companies,’ he said.
The creditor banks have no hope of getting their money back, and they are, in fact, already bankrupt in many cases.
Neighbouring oil-rich Abu Dhabi also declined to become the lender of last resort.
Its spokesman said that it will ‘pick and choose’ how to assist Dubai.
This only increased the nervousness of Dubai’s creditors and the world financial system.
The impact of the Dubai crash on the British banks, who have loaned £50bn to the United Arab Emirates (UAE), was immediate.
Most of the UK banks have already been rescued from bankruptcy by the state more than once, with the Royal Bank of Scotland receiving, on top of all its other loans and guarantees, a secret £36,6bn loan in October 2008 from the Bank of England.
Yesterday the Royal Bank of Scotland, and Lloyds, saw their shares fall by 4.6 per cent and 5.7 per cent.
No doubt the Bank of England and the Brown government are planning to slip them £20bn or so to cover the new black hole in their finances, adding to the UK National Debt.
The Bank of International Settlements has meanwhile reported that foreign banks have lent a total of £123bn to the UAE, of which Dubai is a part.
The British banks have the most exposure to this debt with £50.2bn, followed by France on £11.3bn and the US and Germany with £10bn each.
This deepening of the financial crisis was compounded by more bad news on the home front.
The Bank of England has reported that nobody is getting ready to spend, spend and spend for Xmas in the UK.
It revealed consumer borrowing – excluding mortgages – recorded its biggest month-on-month fall since Bank of England records began in 1993.
Borrowing on credit cards rose by £134m in October compared with September, but was more than offset by the record fall of £713m in other forms of consumer credit such as bank loans, loans for cars, and hire purchase agreements.
In this dire situation of capitalist crisis, not a penny more must be spent on trying to rescue bankers from their crisis.
Workers have had more than enough of propping up the failed bankers’ and bosses’ capitalist system, which is putting millions out of work.
An end must be made to the current banking farce. The capitalist banking system, which is at the centre of the death agony of capitalism, must be buried.
The banks and the major industries must be nationalised properly, with their boards of directors sacked, the industries put under workers control, and mortgage debt abolished.
The anarchy of the capitalist crisis must be replaced by a planned socialist economy where satisfying the needs of the people is the priority.
To achieve this the trade unions must call a general strike to bring down the Brown government, and bring in a workers government that will carry out socialist policies.
This is the way forward – to put an end to capitalism before it has the chance to reveal its full brutality as it did in the first half of the 20th century, with two world wars and a massive depression.