Tories mired in scandal over Cameron and Greensill as financial collapse the ‘canary in the mine’ for world banking crisis

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THE MOST recent development in the collapse of Greensill Capital has been the revelations of all the lobbying for government bail-outs by ex-Tory prime minister David Cameron.

Cameron was employed by Greensill – the finance company that acted as a massive lender to companies including the UK steel company GFC alliance owned by Sanjeev Gupta – as an ‘advisor’ after he bailed out of parliament following the Brexit referendum.

It turns out that as Greensill became more and more drowned by debt, and unable to pay off massive loans from the banks, Cameron was phoning and texting to Tory Chancellor Rishi Sunak, government ministers and senior Treasury officials for Greensill to be given access to the Bank of England’s Covid Corporate Financing Facility (CCFF) to bail the company out.

When this lobbying by Cameron was first revealed, after Greensill went bankrupt in March, the Tories defended themselves by pointing out that he had been unsuccessful in getting taxpayers’ money implying that Sunak had given him the cold shoulder and rebuffed these attempts.

However, texts released last week show that Sunak in fact told Cameron that he had ‘pushed the team to explore an alternative with the Bank that might work.’

It turns out that Greensill was later accredited to the Coronavirus Large Business Interruption Loan Scheme (CLBILS) giving it the ability to get its hands on government-backed loans of up to £50 million.

Under this scheme Greensill, which was teetering on the verge of bankruptcy, became one of just three non-bank lenders allowed to hand out loans to struggling firms under CLBILS – loans that were 80% backed by taxpayers’ money.

According to the Mail on Sunday newspaper, it is being alleged that Treasury officials even considered changing the rules so that Greensill could avoid any losses from loans that didn’t get repaid. The collapse of Greensill has brought to light a scandal that embroils not just Cameron but the entire Tory government.

Thousands of steelworkers face their jobs being destroyed in the UK and thousands more throughout Europe in paying for the collapse of Greensill which has precipitated the crash of the Gupta steel empire.

The bankruptcy of Greensill is just a part of the wave of major corporate and financial collapses and scandals that are fast developing internationally for capitalism.

At the end of March, multi-billion dollar hedge fund Archegos spectacularly crashed, adding to the threat of a major collapse of the capitalist banking and financial system – greater than the collapse of Lehman Brothers that caused the banking crisis of 2008. Archegos was a ‘family run’ fund owned entirely by a secretive US financier Bill Hwang.

Archegos, like Greensill, operated entirely through debt – borrowing vast amounts of cheap money handed out by the US Central Bank which was then used to bet on the stock market. Hwang concentrated on a small number of stocks, mainly in media companies, betting billions that their share price would continue to grow forever.

When these stocks fell dramatically Archegos simply went bust overnight – in the course of two days Bill Hwang lost $20 billion. The giant bank Credit Suisse Group AG lost $4.7 billion while the major Japanese investment bank Nomura Holdings Inc lost $2 billion.

The collapse of Greensill sent shock waves throughout the international finance system with Credit Suisse suffering a massive loss along with another giant the Japanese SoftBank.

The collapse of these two financial companies and the massive damage inflicted on the world banks has yet to cause a complete banking meltdown but they represent the start of a huge tidal wave of bankruptcies and corporate meltdowns. As a report in the Daily Telegraph said: ‘They may be just the canaries in the mine shaft’.

With capitalism collapsing under the weight of debt political scandals, like that engulfing Cameron and the Tories, will become widespread, enraging workers who face unemployment and wage cutting from a capitalist system that is mired in corruption and holds no future for the working class.

Capitalism is bankrupt and the only way forward is for the working class to put an end to it through the victory of the socialist revolution.