CITY trader Tom Hayes has been found guilty of rigging global Libor interest rates. He has been sentenced to 14 years in prison. His defence was that everybody was doing it!
The Libor rate is a global benchmark interest rate used to set a range of financial deals worth an estimated $450,000,000,000,000 (£450 trillion). Hayes rigged the Libor rates daily for nearly four years while working in Tokyo for UBS, then Citigroup from 2006 until 2010.
As he was sentenced, the government began its sell-off of shares in the Royal Bank of Scotland, raising £2.1bn, a third below the price it paid. The UK government bailed out RBS in 2008 and 2009 during the financial crash by buying all its shares for £45bn and supplying it with cheap funds. Now taxpayers are being short-changed, to keep the bankers happy!
The reason for the trial and the conviction is, not the thirst for justice, but the hostility of UK workers who know that the bankers caused the crash that has wrecked their lives since 2007, and which they have been paying for every day since. While they have suffered, the state stepped in to rescue the bankers, adding gigantic amounts to the state debt, which the working class is now being forced to pay by the Cameron government’s austerity programmes, and its drive to abolish the Welfare State and privatise the NHS.
In fact, the role of the banks is central to the imperialist epoch that we are living in. Lenin wrote that the development of imperialism saw: ‘The merging of bank capital with industrial capital, and the creation, on the basis of “finance capital” of a financial oligarchy.’ He added: ‘The export of capital, has become extremely important, as distinguished from the export of commodities.’
Lenin in his 1916 work, Imperialism, quoted approvingly a remark about Britain, ‘becoming gradually transformed from an industrial state into a creditor state’. With the destruction of Britain’s industrial base at the hands of its rivals, and its loss of empire, the role of the UK banks became crucial to UK capitalism.
Thatcher held that Britain did not need great industries any more, and that its banks would dominate the globe, the world would be their oyster, with a portion of their wealth trickling down to a working class that manned ‘service industries’.
The banks were elevated to being the backbone of Britain. Blair and Brown, with their 1997 New Labour ‘businessman’s government’, took over Thatcher’s position, and praised bosses that quit the UK to site their industries in cheap labour states, while developing the Private Finance Initiative, so that the banks could make billions out of the NHS, while they began to privatise the NHS with the introduction of Foundation Trusts and the NHS market.
Brown was so confident that the banks, with their huge paper deposits, were in full control that he sold off a huge chunk of the UK’s gold reserves for euros! He even boasted that he and the banks had resolved the crisis of capitalism, and that gold had no intrinsic value – it was history!
Then came the 2008 collapse, the greatest banking crash in history. Brown rushed to ‘save the world’ by insisting that the state must take on board the debts of the banks. He rescued them with a policy of temporary nationalisation. Brown’s policy was adopted by Obama who bailed out US banks and even nationalised GM, before rationalising it and handing it back to its owners.
Both the UK and the US brought in multi-billion Quantitative Easing schemes handing the banks billions of free money to buy shares all over the world, also adding enormously to the state debt of the UK and the US and deepening the crisis. That the UK working class must pay off this debt is the essence of the Cameron government’s austerity policies. It has sought to reduce the working class to being slave labour for the bankers, who have meanwhile filled their pockets with QE money.
The banks were saved at the expense of the workers, and capitalism is now so indebted that it fears a new crash. This time there will be no rescue. The jailing of one crooked banker will not appease the anger that workers are feeling. Facing massive new Tory attacks, the working class will rise up to expropriate the bankers and the bosses – a fate that they richly deserve – and bring in socialism!