Darling ignored over short selling


BRITISH capitalism is staring disaster straight in the face.

Motor car sales in December 2008 were 47.5 per cent lower than in December 2007.

Yesterday, Ian McCafferty, the CBI’s Chief Economic Adviser, said ‘Demand for goods in the manufacturing sector has plummeted dramatically in the last three months. . . .

‘Most firms expect conditions to get even worse, with further falls in orders expected, leading to more job cuts. Companies unsurprisingly plan to cut back investment sharply over the next year.’

In fact, export orders fell despite the gigantic fall in sterling against other leading currencies during the last quarter.

Based on a survey findings, the CBI forecast that official manufacturing output will fall by 4.5 per cent in the first quarter of 2009.

Lord Turner, the ex-CBI chief, currently the chairman of the FSA financial regulatory body, and formerly chairman of the Labour government’s Pensions Commission has castigated the conduct of the big banks, which he has served faithfully over the years.

He said that during the inflationary boom they embraced financial instruments that were the means of speculating on mountains of debt, while they awarded themselves huge bonuses.

He now says that banks will have to have ‘a certain level of liquid assets’ and that they must increase ‘capital requirements, not just marginally, but by several times.’ These would be big capital buffers that would result, he admits, in ‘a significant contraction in trading books’.

He added: ‘We need to control the extent to which large universal banks can take the benefits of too-big-to-fail status and use them to fund unnecessary large proprietary trading.’

The banks have gone from constructing South Sea Bubbles to a refusal to lend, from inflation to deflation to build their liquid assets.

They are retrenching and helping to bury industry.

Nevertheless, old habits die hard.

The same FSA regulators, who ignored the South Sea Bubble as it developed, gave Chancellor Darling just one hour’s notice that hedge funds would be allowed to re-start their short selling activities. This contributed to the recent stampede to sell bank shares, with hedge funds making big killings.

Since the regulators removed the ban two weeks ago Barclays has lost 35 per cent of its share price, while the Royal Bank of Scotland has lost 70 per cent.

These losses spurred on the continuing collapse of sterling, which is now 35 per cent down from its peak of $2.11 of last July, and is currently at $1.36.

Jim Rogers, chairman of Rogers Holdings and co-founder of the Quantum Fund with George Soros (the latter’s short selling of sterling drove Britain out of the ERM in 1993) said: ‘I don’t think there is a sound UK bank now. The City of London is finished, and North Sea oil is coming to an end.’

His advice to holders of sterling was sell, sell, sell! No doubt this is just what the hedge funds are doing.

Capitalism, capital and capitalists are profit orientated. They do patriotism only when it makes a profit. They believe, that like religion, it is for keeping the working classes quiet.

Capitalism’s history is a series of booms and slumps, each one becoming more explosive as the historical crisis of the system deepens to the point where its continued existence threatens the future of humanity. The laws of capitalism and its crisis are stronger than the plans of bankers, governments or regulators.

The private ownership of the means of production and the nation state are like gigantic roadblocks across the future of humanity, that must be blasted out of the way.

It was Marx and Engels who first identified the working class as the gravedigger of capitalism, that the system itself produced as its opposite.

The working class of the world must build revolutionary parties to overthrow the capitalist ruling classes, and bring in planned socialist economies that will be the basis for world socialism.

This is the only way out of the crisis.