ON Wednesday night, the outgoing governor of the Bank of England, Mervyn King, delivered a speech that amounted to little more than an extensive exercise in re-writing history to try to excuse himself from any responsibility for not noticing that the capitalist system was about to collapse.
King did admit a small failing saying ‘we should have shouted from the rooftops’ about the dangers ‘that a system had been built in which the banks were too important to fail, that banks had grown too quickly and borrowing too much, and that so-called “light touch” regulation hadn’t prevented any of this’. They did not shout this from the rooftops because they were convinced that the system was immune from collapse.
Neither did they protest when Brown sold off the gold reserves. They believed that there was no such thing as value and that pieces of paper masquerading as value were as good as gold!
The main fault, King insisted, lay with the then Labour chancellor, Gordon Brown. However, in 1997 Brown and Blair granted the Bank its long-held ambition of becoming totally independent of government. It was put in charge of setting the interest rate for the whole of the economy!
He went along with Brown’s policy, as did the Tory opposition, that the way for Britain to advance was to have unregulated banks (light touch regulation) and that this – allied to giving every member of the middle classes a limitless number of credit cards, with encouragement to spend and spend and get into super-indebtedness – was the way forward for the UK economy.
King was a party to this, as were the Tories, with up-and-coming whippersnappers such as Cameron aping Tony Blair.
The common cry was that wealth was created solely by the banking and financial system – no one needed gold or a manufacturing industry any more!
King now claims that he did see the dangers of the banks ‘over extending themselves’ and lending too much – lending that he admits was mainly to other banks and which necessitated the banks having to borrow vast sums themselves in order that they could continue lending to each other – but he couldn’t do anything about it. In his words, he was reduced to ‘publishing reports and preaching sermons’ about the dangers.
If King was preaching it must have been to an empty church at midnight. As far as anyone can remember he was entirely relaxed with the whole insane merry-go-round of debt creation on a massive scale going on internationally.
King manages to contradict himself more than once during the course of this lecture, most notably when he admits that despite his assertions that he saw the dangers ahead ‘no one believed it could happen’ – the ‘it’ being the collapse of the Northern Rock bank.
King finished his speech with his three remedies to stave off the complete collapse of the banking system which can be summed up as: tighter regulation of the banks, making the banks and their shareholders liable for losses (i.e. no more taxpayer bail-outs) and restructuring the banks so that high street banks are separated from the risky speculations of investment banking. This is sheer nonsense that exceeds even the fictions that preceded it.
The key to this ‘new’ policy he said is ‘to step in and prevent a hangover by taking away the punchbowl just as the party in the financial system is getting going’. He now concedes that capitalism is a system of crisis, and that a deeper crisis is on the way, emerging out of the EU debacle, and the key thing is to veto the banks to prevent the drunkard getting completely plastered. This is just tripe.
The truth of the matter is that the banks and finance capital today are the masters, they dictate to governments not the other way around.
There can be only one resolution to the contradictions of the capitalist system that have manifested themselves today in its historic banking crisis, and that is through the expropriation of the bankers and bosses through the socialist revolution, and the replacement of capitalism with socialism.