PRIME Minister Brown has made an appeal to the Wall Street bankers to be honest, surely a contradiction in terms.
He wants them to publicly disclose that they are really bankrupt, as the sub-prime mortgage crisis suggests.
Of course, they are never going to make such a declaration, since the response would be an unstoppable run on their banks.
They are keeping to their oath of silence, with very good reason, just as the Merryll Lynch bank has had to declare losses of $2.1 billion for the first two months of 2008!
The US banks are more than satisfied with the deal that they have wrung out of the Federal Reserve bank. This has extended them unlimited liquidity and accepted their rubbish mortgage portfolios as collateral, meaning that the working class of the US is going to pay the full cost of their crisis, out of its wages, jobs and pensions, as the crisis deepens.
Meanwhile, the US banks are screwing up their interest rates as they feverishly try to rebuild their cash base by a further looting of their customers.
The hapless Brown before he left for Wall Street urged the British banks to follow up the Bank of England’s rate cut by cutting their interest rates.
This the bankers have refused to do. In fact, the biggest mortgage lender, the Halifax, increased the rate on its two-year deals by half a percentage point – one of the biggest single increases since the start of the financial crisis – adding £1,000 a year to a £200,000 home loan.
This is on top of the banks collapsing the market for buy-to-let mortgages. Sixteen banks led by the Nat West have pulled out of the market.
This has left a position where the latest figures suggest that 150,000 home-owners could have their properties repossessed this year.
Now, Brown, Chancellor Darling and the B of E have provisionally agreed to the Bank taking over the dodgy mortgage loans that are on banks’ balance sheets as collateral, after handing over up to £100bn to the same banks.
The Bank will grant government-backed bonds in exchange for assets secured against British-based mortgages.
The Treasury apparently has what are called reservations, since a deepening of the financial crisis and a collapse of the housing market will leave the state bankrupt, and having to make good its debts by imposing a crisis programme of draconian cuts, much bigger than those imposed in 1931 on the working class and the middle class.
Ex-Labour right winger, Vince Cable, now the Liberal Democrats’ shadow chancellor, accused Brown of risking taxpayers’ money with the new scheme.
He said: ‘We cannot have a situation where the banks are able to privatise their profits and nationalise their losses.’
The nationalisation of the bankers’ losses equals state bankruptcy, and a hell for the working class and the middle class.
This is the catastrophe that is threatening millions of people. The fact that capitalism is so clearly collapsing has badly rattled the ruling class and its paid propagandists.
The Daily Telegraph, simulating surprise, declared in its Wednesday editorial that: ‘Some are depicting this as a crisis of capitalism, a catastrophic failure of the free market system.’
This is, of course, exactly what it is, a crisis of the capitalist system, all the deeper, after the rule of the arch champions of de-regulation, globalisation, and privatisation, Thatcher, Blair, and Brown for the last 29 years, with the Clinton dynasty and the Bush family playing the same role in the US.
Capitalism is in its death agony. The ruling class is planning to impose the entire burden of this crisis onto the working class and the middle class. There is only one way out of this crisis, and that is through a socialist revolution that will expropriate the bosses and the bankers, and place the working class in power.