Capitalist crash drives HBOS into the arms of Lloyds TSB

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THE Federal Reserve Bank’s $85bn ‘rescue’ of AIG was carried out to stave off an immediate international financial and business collapse.

It has turned the USA itself into the lender of last resort, the financial guarantor of US, and behind it world capitalism, and is creating the conditions, as the world financial crisis deepens, for the USA itself to be bankrupted.

The US is already heading for a $500 billion-plus federal state deficit for this year.

On top of this will go the massive costs of the Freddy Mac and Fannie Mae bailouts, and also the costs of the AIG ‘rescue’.

In due course, the bankers will be presenting other bills to the US federal and other governments,

making them offers that they cannot refuse, to either bail them out or see the world capitalist economy brought down with all of its consequences, which in the main are of a most revolutionary nature.

With the US contagion stemmed momentarily, the sharp cutting edge of the world crisis moved rapidly on to the UK, where the HBOS bank – with its major mortgage assets declining in price on a daily basis – was the chief target.

On Monday and Tuesday the HBOS share price collapsed by over 50%, and on Wednesday morning, the morning after the AIG ‘rescue’, its share price was again forced down by 50%.

A run on the bank with massive Northern Rock-type queues outside was seen to be just a matter of hours away, as was the fact that the queues would spread to other banks.

This prospect forced a near hysterical HBOS into the arms of Lloyds TSB, for a massive amalgamation or shotgun wedding, that would have previously been ruled out by regulators and the government.

A new bank is now under discussion. This will have 38 million customers, 27 per cent of the country’s mortgages, and each employs over 70,000 people, making for a joint labour force of 150,000 workers.

The advanced merger talks are being encouraged by both the Treasury and Financial Services Authority (FSA), as any deal, whatever the consequences, is viewed as better than the bringing down of the HBOS.

An amalgamation will bring with it not just a bigger mass, but also massive rationalisations, with as many as 40,000 sackings, hundreds of branch closures, as well as the closure of numbers of call centres.

However, the full force of the crisis has yet to emerge, and may well blow apart the merger moves, putting the ‘rescue’ pistol once again at the head of the Brown government.

What is however very clear is that all of the bourgeois solutions to this crisis will bring nothing but pain and severe hardship to the mass of the working class and its families.

In fact, the frantic activities around AIG and HBOS did not bring any real relief to share prices, as the crisis of capitalism continued to let rip.

The Wall Street Dow Jones index opened yesterday at 2.30pm 203.22 points down, while the FTSE 100 index was below 5,000 points, at 4,997 at the same time.

HBOS, which had shed 50% of its share price in early morning trading, but recovered when the merger talks became public, faltered in the afternoon and started to fall again.

Meanwhile another aspect of the capitalist crisis, the growth of mass unemployment, emerged with full force yesterday.

The number of people out of work in the UK rose by another 81,000 between May and July, to 1.72 million, according to government and ILO figures.

That took the official unemployment rate up from 5.3% to 5.5%.

The number of people claiming jobseeker’s allowance also rose, by 32,500 to 904,900 in August, the Office for National Statistics (ONS) said, the sharpest monthly rise in unemployment since 1992.

Capitalist production is collapsing. The productive forces are being destroyed and with them the lives of many millions of ordinary people and their families.

It is a matter of life and death that the capitalist crisis is resolved by a socialist revolution that will replace the anarchy of capitalist production with a socialist planned economy producing not for profits, but for people’s needs.