YESTERDAY two major banks had to be nationalised to prevent a run on the UK and EU banking system.
They were the Bradford and Bingley and the Fortis Bank.
The Brown government moved to sell off the B&B’s deposits to the Santander bank while the debts are to be taken over by the taxpayer and transferred to the Northern Rock Bank.
The Belgium, Netherlands and Luxembourg governments rushed into action to terminate the crisis of the Fortis ‘insurance and banking’ giant by nationalising it.
Ministers from the three countries agreed to put 11.2bn euros ($16.1bn; £8.9bn) into Fortis to save the bank.
In Belgium the bank is the country’s biggest private sector employer, while more than 1.5 million households or about half the country banks with the group. It employs 85,000 staff worldwide.
European bank shares then fell sharply on worries that other banks were in the same position as Fortis, and on concerns over the US $700bn bail-out plan, while the FTSE100 index collapsed by 200 points, as the US stock markets waited to see whether the House of Representatives would approve Bush’s bail out bill.
In the EU, almost immediately, Fortis’ rival Dexia’s share price plunged by almost a third, after a newspaper report said that it was seeking extra funding.
Dexia is the banker for French local government.
The French and Belgian governments have already announced they will step in to support Dexia. However, the crisis is now visibly spreading throughout the whole of the world’s capitalist banking system.
Even Iceland nationalised the Glitnir bank.
In the US, meanwhile, the Citygroup moved to take over the Wachovia bank which suffered an 80% share collapse, as bankers worked out that even if the $700bn was approved by both houses of Congress, it just was not enough to deal with the oceans of debt. The Dow Jones index opened 300 points down, stating that the Bush plan was too little, too late.
The House of Representatives was expected to vote on the Bush package yesterday evening, while the US Senate is due to vote on Wednesday.
Meanwhile, the pound fell sharply against the dollar as speculators banked on the Federal Reserve Bank increasing interest rates to defend the debt-backed US currency.
The depth of the world crisis of the capitalist system, where starvation, war and famine are rife and whose productive forces are staring depression, and mass unemployment in the face, demands a socialist reorganisation of society.
Labour Party Premier Gordon Brown responded to this historic crisis of capitalism by stating that he would do ‘whatever it takes to defend the British financial system’. Further, he added: ‘The stability of the system comes first’, and ‘My job is night and day to work for the stability of the system.’
In fact, capitalism is completely unstable. At its centre is the conflict between the needs of the productive forces to develop and the private ownership of the means of production.
This conflict produces anarchy, the cyclical crises of overproduction, turning booms into slumps and vice versa, and financial crashes when the ruling class has been unable to screw enough surplus value out of the working class to give value to all of the credit notes in their possession, that in themselves have no value at all.
The sharpest form of this conflict between the development of the productive forces and the private ownership of the means of production is the socialist revolution, when the working class, the gravedigger of capitalism, is forced forwards by the crisis to carry out its historically appointed duty to bury the bourgeoisie and its system.
Brown, to save the system, is working night and day to make the working class pay the full price for the crisis through mass unemployment, wage cuts, job cuts, home repossessions and loss of pensions.
The working class in the trade unions must bring down the Brown government to go forwards to a workers government and a socialist revolution. This will expropriate the bosses and the bankers and bring in socialism. This is the only way forwards.
