www.michaelmeacher.info HOW THE BANKING COLLAPSE IS BEING SPUN
As usual, today’s disasters come fully equipped with their own myths to service the naïve.
We are told that this is a global problem, nothing to do with the UK – it simply blew in unexpectedly from the US. Nonsense. The sub-prime housing market crisis certainly blew up first in the US, but all the makings of the crisis were already deeply embedded in UK and European financial markets and would have blown up here without any promptings from the US. The de-regulatory, free-wheeling market agenda was already as strongly installed in the City of London as in the US, securitisation was as rampant in the City as on Wall Street, and UK mortgages were increasingly being marketed in the UK on a 6-1, even 10-1, debt to income ratio. The US has nothing to teach the City about sub-prime or about arcane derivatives.
Second, the Left cannot contain itself with glee over Hank Paulson’s ‘nationalisation’ of Freddie Mac and Fannie Mae, AIG, and the State-run Resolution Trust Corporation which is designed to sweep up the crippled Wall Street failures under the protective wing of the State. Private market Armageddon, and State control triumphant. It is nothing of the kind.
Actually it reveals the reverse. Once the finance catastrophe is past (which may take a year or two) and all the colossal banking losses have been safely socialised with the taxpayer, the private market will re-present itself – slightly reconfigured no doubt by some minimalist re-regulation – as the natural delivery mechanism for the next splurge of global capitalist growth. Whatever limitations have been placed by Gordon Brown’s “cleaning up the City”, the race will then be on to find a way round them and to renew the culture of mega-bonuses for the few at the expense of the many. After 1929 and the Second World War, it happened in the 1950-60s till it was stopped in its tracks by the oil shocks of 1971-3, then it happened again in the 1980s till the US savings and loans associations crumbled between 1989-95, and then it took off again with the securitisation scam till the Northern Rock collapse on 9 August 2007.
It will start yet again within the next five years because the culture has not changed one jot and the driving force remains maximum enrichment by the largest amalgamations of capital (increasingly in the hands of secretive private equity and hedge funds uninhibited by even the limited transparency of public companies), shielded by their close harmony with political leaders. All the US nationalised companies with be returned to the private sector as quickly as feasible, as will Northern Rock. Public ownership is seen as a despised necessity, an unfortunate interregnum in the endless drive for private profit, and a temporary refuge to be milked for all it’s worth for as little time as it’s required. Hardly a triumph for those who believe in it.
Instead of the Left preening itself that this capitalist debacle leaves events falling into its lap, it need to realise that there is still a mountain to climb before the culture is transformed. The intellectual conspirators of St Pelerin in Geneva in 1947 took over 30 years to get their neo-liberal philosophy to take root. The Left today have hardly started. The need for a profound, wide-ranging, persisting, in-depth intellectual and political debate on the realities of an alternative world economic order has never been greater.
This was first published by the Guardian on Commentisfree on 21 September 2008