CHANCELLOR Darling flew to the US yesterday to meet with fellow finance ministers, and Federal Treasury Secretary Paulson, for the IMF-World Bank Annual Meeting.
Yesterday morning Paulson predicted that the way ahead was very tough and would include a number of US banks going bust.
On Wednesday the IMF issued a statement that ‘The world economy is decelerating quickly – buffeted by an extraordinary financial shock and by still-high energy and commodity prices – and many advanced economies are close to or moving into recession.’
Leaders of a number of UK councils saw Darling, just before he left the UK, about one of these shocks.
They complained that they had followed the advice of the Treasury and invested their considerable council funds in the now bankrupted Iceland banking system, and that their total losses were some £500 million.
They had gambled, after taking the advice of the Treasury, and had lost.
Council workers and council residents will now pay the price with mass sackings, the handing over of basic services to charities, and through big increases in the council tax.
The Treasury run by Gordon Brown, when it gave this advice, was in the middle of a massive inflationary binge.
Brown, early in office, had sold off almost half of Britain’s gold reserves for a relative pittance, boasting that gold was just a symbol and had no intrinsic value. He said that it was much better to have paper notes instead.
He had adopted the policy of encouraging the British middle class to spend, spend and spend after massive borrowing to keep the one-sided British economy, now bereft of industry thanks to Thatcher, going. The amount borrowed under Labour has reached £1.4 trillion and is greater than the British Gross Domestic Product. This is one of the reasons why the world crisis has hit so savagely at Britain.
It was the inflationary boom that led to the present devastating bust.
The laws of the capitalist crisis, and specifically the law of value dominated. Brown proved to be inferior to King Canute. At least he knew that he could not stop the tide coming in.
However, the crisis of capitalism has not yet finished with Brown and his apprentice Darling.
Under the camouflage of ‘prudence’ Brown encouraged a massive debt inflation in the UK.
Now, following his declarations that he intends to keep ‘doing everything necessary to save the banking system’, he has taken another massive gamble. In just 24 hours he has handed to the bankers, to prop up the absolutely bankrupt capitalist system, £500 bn, an amount which is over one third of the British GDP, and brought in a 0.5 per cent rate cut.
His answer to the debt crisis is to increase the debt, to declare that he is ready for even more debt, and to make the state take responsibility for it.
The state has now become the lender of last resort and as the crisis deepens, and the bankers demand billions more of state aid, it will be bankrupted by a massive run on the pound sterling. British capitalism will be ruined.
The working class and the middle class will have to pay a truly massive price for this effort to maintain a system that was historically out of date at the time of the First World War and the Russian revolution.
Private ownership of the means of production, where millions work to create profits for the chosen few of the bankers and the capitalists, is historically as out of date as the stone age.
Their class wars to maintain the rule of the capitalists by force, their wars to divide and redivide the world, such as in Iraq, and their crisis-ridden system are an obscenity, in a situation where a worldwide planned socialist economy will transform the living standards and the living conditions of all human beings for the better.
The Brown government’s position is that it will do everything that is necessary to safeguard the capitalist system – nothing is ruled out.
The reply of the masses, led by the working class will be unanimous. It will be that capitalism must and will be overthrown, and replaced by a socialist society, and that those who rule nothing out to defend it, will go down with it.
Forward to the British and world socialist revolution.