IT IS becoming clear that the Governor of the Bank of England, Mark Carney, is very scared about the effects of the expected rise in interest rates.
Carney has been writing to 135 managers of Britain’s largest investment funds demanding to know if they have enough cash to pay out investors selling out and clamouring for their money when a rise in the near zero interest rate is brought in.
Carney is worried that homeowners will flog off their shares in order to cover the sharp increase in mortgages that will result from even a modest rise. If Carney is worried about the effect of an inevitable interest rate increase on comparatively wealthy homeowners with investments in stocks and shares, what does this tell us about the prospects for millions of working class families struggling with mortgages and household debts that are at record levels?
Without the luxury of investments to fall back on, these families face the immediate prospect of losing their homes and being flung onto the streets. The gigantic scale of personal debt was highlighted in a report commissioned by the TUC and Unison and published on Tuesday.
This report, Britain in the Red, reveals that 3.2 million households are ‘over-indebted’ – with young people, the self-employed and low-income families being hardest hit by unrepayable debt. 1.6 million are forced to spend over 40% of their income on debt repayment and this figure does not include repayments on house mortgages.
In fact, the debt crisis is much worse than this report indicates and much greater than reports in the press yesterday which put the figure for household debt at £173 billion. In June, the right-wing think tank, the Centre for Social Justice, calculated from official statistics that household and personal debt in Britain totals a staggering £1.43 trillion, about the same size as the total national debt!
No wonder Carney is a worried man – the inevitable rise in interest rates will lead to house repossession on a mass scale, while in the private rented sector tenant evictions have already reached a six-year high with more than 11,000 families being evicted in the first three months of 2015 due to benefit cuts.
What is clear from all these reports, is that a bankrupt British capitalist system has only been kept staggering on through a massive explosion in debt. This debt has been fuelled by the very policies of pumping out free money in the form of Quantitative Easing and zero-level interest rates creating an economic time bomb set to explode any day.
Far from any recovery from the world economic crash of 2008, capitalism has only built up a bigger debt crisis that will bring the whole system crashing down and place the revolutionary transformation to a socialist society on the immediate agenda for the working class.
The capitalist class are acutely aware of their own bankruptcy and have embarked on all-out class war to illegalise the inevitable strikes and mass struggles of workers determined not to see their lives smashed up to save the banks and bosses. While the capitalist state is gearing up for war, the leadership of the TUC is completely on its knees.
Commenting on their own report, TUC general secretary Frances O’Grady could only say that debt is ‘particularly worrying’, before adding ‘we need a wages-led recovery that works for everyone not another debt-fuelled bubble’; while Unison general secretary, Dave Prentis, could only lament that: ‘It is going to take many years for families to get back on an even keel.’ The working class is never going to get back on an ‘even keel’ and bankrupt capitalism certainly isn’t going to offer any ‘wages-led recovery’.
All capitalism has to offer is a future of austerity, wage cutting and the destruction of the welfare state. The only way forward for workers is to demand that the TUC leadership call a general strike to kick out the government and bring in a workers government and socialism, under which all debt will be cancelled, or face being removed and replaced by a leadership that will fight.
