The working class will refuse to bail out the banks – only socialist revolution can resolve capitalist crisis

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LLOYDS Bank, Britain’s biggest high street lender, yesterday announced that its profits for the first half of 2020 had been wiped out and that the UK economy was in for a greater economic shock than had been expected.

Lloyds (which concentrates almost exclusively on UK banking and investment and is regarded as the main barometer of the health of the UK economy) reported a loss of £676 million for the three months to June. Last year the bank made a pre-tax profit of £2.9 billion.

In a move to try and shore up its precarious position Lloyds has put aside another £2.4 billion making the total set aside by the bank £3.8 billion, with the bank admitting that even this would not be enough to cover the massive losses it faced from companies defaulting on their loans.

Lloyds alone has lent out over £9 billion to companies through the Tory-backed Coronavirus Business Interruption Loan schemes and the Bounce Back Loan.

In addition, Lloyds has given 1.1 million payment holidays to retailers along with 33,000 repayment holidays to small businesses and corporations in order ‘to alleviate temporary financial pressures’ due to lockdown.

Far from being a temporary financial pressure these companies that have grabbed all the handouts are not going to survive but will simply go bust, leaving behind bank vaults stuffed with toxic un-repayable debt.

On top of the wholesale collapse of the zombie companies, Lloyds is bracing itself for the inevitable mass unemployment resulting from it with the bank predicting that unemployment will reach 12.5% next year, inevitably leading to defaults on credit cards and loans taken out to survive during lockdown.

Lloyds is not alone. This week, Barclays announced that its profits had crashed by 75% to £359 million as a result of having to put aside £1.6 billion to cover its own toxic debts.

The Spanish-owned UK high street bank, Santander, recorded a loss of £9.8 billion, the biggest in its 163 year history, in the past six months.

In March, the Bank of England boasted that the banks should be strong enough to weather a 30% contraction in the UK economy. This claim was based on the belief that the ‘assets’ of the banks were far above any liabilities caused by default.

The problem is that the majority of these assets are in fact the very loans that the banks have made to individuals and companies. It has been calculated that every £100 of bank assets, such as loans, is supported by just £2.73 of real capital.

When the loans are transformed from assets into toxic debts the banks either have to get massive investment from the financial system, be bailed out by the government, or go bankrupt.

Investors are not rushing in to support the banks; instead they are running – with the share price of Lloyds plummeting after its announcement while RBS, Barclays and HSBC have seen their share price fall to levels not seen since the 2008 financial crisis.

This leaves their only option being to demand the government bail them out as they did after the 2008 crash but on a scale vastly greater.

Bailing out the banks under conditions where the entire capitalist economy is entering a massive recession can only be done by imposing austerity on the working class that will rival and exceed anything seen before.

Trade union and Labour leaders, whose only solution to the crisis facing the working class is to beg the Tories to continue running up huge debts to ‘save’ capitalism, wilfully ignore the fact that this debt must be repaid and the bankers and bosses are determined that it is the working class that will pay.

The working class will refuse to be driven into the ground to save this bankrupt system and consider that the time has come to throw out these leaders and build a new leadership that will organise a general strike to kick out the Tories and bring in a workers government that will expropriate the bankers and bosses and go forward to socialism.

Only the WRP is building the revolutionary leadership required – join today.

LLOYDS Bank, Britain’s biggest high street lender, yesterday announced that its profits for the first half of 2020 had been wiped out and that the UK economy was in for a greater economic shock than had been expected.

Lloyds (which concentrates almost exclusively on UK banking and investment and is regarded as the main barometer of the health of the UK economy) reported a loss of £676 million for the three months to June. Last year the bank made a pre-tax profit of £2.9 billion.

In a move to try and shore up its precarious position Lloyds has put aside another £2.4 billion making the total set aside by the bank £3.8 billion, with the bank admitting that even this would not be enough to cover the massive losses it faced from companies defaulting on their loans.

Lloyds alone has lent out over £9 billion to companies through the Tory-backed Coronavirus Business Interruption Loan schemes and the Bounce Back Loan.

In addition, Lloyds has given 1.1 million payment holidays to retailers along with 33,000 repayment holidays to small businesses and corporations in order ‘to alleviate temporary financial pressures’ due to lockdown.

Far from being a temporary financial pressure these companies that have grabbed all the handouts are not going to survive but will simply go bust, leaving behind bank vaults stuffed with toxic un-repayable debt.

On top of the wholesale collapse of the zombie companies, Lloyds is bracing itself for the inevitable mass unemployment resulting from it with the bank predicting that unemployment will reach 12.5% next year, inevitably leading to defaults on credit cards and loans taken out to survive during lockdown.

Lloyds is not alone. This week, Barclays announced that its profits had crashed by 75% to £359 million as a result of having to put aside £1.6 billion to cover its own toxic debts.

The Spanish-owned UK high street bank, Santander, recorded a loss of £9.8 billion, the biggest in its 163 year history, in the past six months.

In March, the Bank of England boasted that the banks should be strong enough to weather a 30% contraction in the UK economy. This claim was based on the belief that the ‘assets’ of the banks were far above any liabilities caused by default.

The problem is that the majority of these assets are in fact the very loans that the banks have made to individuals and companies. It has been calculated that every £100 of bank assets, such as loans, is supported by just £2.73 of real capital.

When the loans are transformed from assets into toxic debts the banks either have to get massive investment from the financial system, be bailed out by the government, or go bankrupt.

Investors are not rushing in to support the banks; instead they are running – with the share price of Lloyds plummeting after its announcement while RBS, Barclays and HSBC have seen their share price fall to levels not seen since the 2008 financial crisis.

This leaves their only option being to demand the government bail them out as they did after the 2008 crash but on a scale vastly greater.

Bailing out the banks under conditions where the entire capitalist economy is entering a massive recession can only be done by imposing austerity on the working class that will rival and exceed anything seen before.

Trade union and Labour leaders, whose only solution to the crisis facing the working class is to beg the Tories to continue running up huge debts to ‘save’ capitalism, wilfully ignore the fact that this debt must be repaid and the bankers and bosses are determined that it is the working class that will pay.

The working class will refuse to be driven into the ground to save this bankrupt system and consider that the time has come to throw out these leaders and build a new leadership that will organise a general strike to kick out the Tories and bring in a workers government that will expropriate the bankers and bosses and go forward to socialism.

Only the WRP is building the revolutionary leadership required – join today.