‘THOSE of us in the economic realm must navigate blindly through the fog. We face a plausible spectrum ranging from V-shaped relief to L-shaped awfulness at the other extreme. Perhaps it is superstition but Boris’ fate somehow seems symbolic.’
This is the deadly conclusion as far as capitalism is concerned of an article by leading economics writer Ambrose Evans-Pritchard in Wednesday’s Daily Telegraph.
In his article he declares the unthinkable: ‘Public ownership of banks may be the only way to escape self-induced economic coma.’ He is expressing the desperation and demoralisation that has begun to grip the bourgeoisie and its intellectuals in the face of the economic and social meltdown of the capitalist system.
The article notes that:
‘Banks were the villains of the 2008 crisis. This time they are the designated saviours, deemed strong enough to hold the line against Covid-19. They are to be the conduit for disaster relief, the backstop lenders for drowning firms and households.’
In order to fulfil this role as capitalism’s saviours, governments and central banks removed the restrictions placed on the banks after the 2008 banking crash, restrictions designed to ensure that they would no longer engage in the massive uncontrolled lending that led to their vaults containing nothing but bad debts.
Governments have ‘freed up’ banks from restrictions on lending to make available $5 trillion in loans to shore up companies and keep capitalism on life support but, as Evans-Pritchard warns, this has led to the banks being completely exposed as the Covid -19 pandemic continues to rage – with workers’ wages collapsing, industries closing down and unemployment reaching levels not seen since the Great Depression. Their loans are turning into bad debts that will crash the banks and the system.
According to the article, the international ratings agency has already placed the entire European banking system on ‘negative alert’, meaning it doesn’t rate European banks as capable of surviving. An ex-member of the European Central Bank, Ignazio Angeloni, summed up the desperation when he warned that European banks could ‘cease to function or fail on a massive scale’ as the unrepayable debts pile up.
The only way out to prevent the total annihilation of the banks in Europe and the US is for governments to nationalise them, Angeloni states, noting that ‘While free market diehards may turn up their nose, this is probably a lesser evil.’
Bank nationalisation is nothing new. In the immediate aftermath of the 2008 crash, banks were deemed to be too big to fail and in the US, Britain and Europe governments stepped in and bailed them out while in some cases they bought shares in failed banks to keep them going, in effect partial nationalisation.
Government may have owned shares but the bankers still run the banks and they made sure the profits remained in their hands. When the immediate danger of collapse was averted these shares were quickly sold off cheaply and the banks returned to private ownership and were allowed to carry on as if nothing had really happened.
Meanwhile the working class was forced to pay through austerity cuts that slashed wages and reduced the NHS to the state where it is being overwhelmed by Covid-19.
Capitalism in times of acute crisis has often resorted to temporary nationalisation in order to save itself and every time it is the working class that pays to save the bosses’ and bankers’ profits. The world crisis of capitalism today is far worse than that of 2008 and is rapidly emerging as greater than the Great Depression of the 1930s.
For the working class of the world, the question is not to ‘take over’ the banks and then hand them back later, but to put an end to this bankrupt capitalist system by seizing power and bringing in a socialist planned economy under which the banks and major industries will be expropriated and placed under the ownership and management of the working class, working for the benefit of all of the people.
Only the victory of the socialist revolution can end capitalist crisis and assure a future for humanity.
Now is the time to join and build the WRP and sections of the Fourth International in every country to put capitalism out of its demoralised misery.