Michael Meacher MP

There are 3 issues which should dominate tonight’s debate on the economy, but probably won’t:

1. Fundamental banking reform is now urgently needed if another, and possibly lethal, financial-economic collapse is to avoided.   We now know that the meltdown in 2008-9 was caused, not just by greed and recklessness, but by deliberate fraud, as the current Goldman Sachs prosecution in the US now shows.   But it wasn’t just the US – fraud is now being revealed in Ireland, Iceland, Switzerland, as well as in the UK.   The charge in the US is that a Goldman Vice-President created a dud financial instrumentspacked by valueless sub-prime mortgages at the instruction of a hedge fund client Paulson, sold it to investors knowing it was worthless, and then allowed their own hedge fund client to move in for a killing.   Goldham says the buyers were sophisticated mortgage investors – it’s more like a used car salesmanflogging a broken car he’s got from some up-market barrow boy to some driver who can’t access the log-book.   The moral of all this is that the banks need breaking up, the hedge funds very tightly regulated, and the more arcane and exotic derivatives prohibited.
2. Then there’s inequality – the rich/poor divide which has now reached the proportions of Victorian society a century ago.   The Tories would of course let this explode further, not only weakening Sure Start and the 3,500 children centres in deprived areas and cutting the invaluable working family tax credits, but cutting inheritance tax on the rich and ending the very modest 50% rate on the bankers and top executives.   We need a much more progressive income tax, much more vigorous action against those who cheat by tax avoidance/evasion, and an end to the outrageious non dom privileges for the ultra-rich.
3. The other really big issue is funding for businesses, jobs and homes.   The Tory priority for major premature public spending cuts will stife the precarious recovery at birth and could well precipitate the deadly double-dip recession that most economists fear.   Banks contiue to starve deserving businesses of credit.   Families concentrate on paying off debt rather than spending, which is understandable but robs the economy of momentum.   The major support for the recovery – 0.6% over the last 6 months – has been public spending, and any government cuts it at the country’s peril.