Sad tale of capitalist spivs and speculators

John Haylett - Editor, Morning Star

Despite the eagerness of some newspapers and commentators to pronounce US President George W. Bush's billions of dollars banking system rescue as a done deal, the haggling continues in Washington. And, true to type, the British prime prime minister has travelled to Washington to place himself if not centre stage at least within camera shot of the decision makers.

It is difficult to see what benefit his presence there will bring to people in Britain, although it may assist his assiduously constructed self-image as an economic wizard.

The only problem standing in the way of such an image is that his policies have mirrored the minimal regulation of financial markets favoured by the Bush administration.

Gordon Brown, like President Bush, now advocates greater regulation of the banking industry, but neither man accepts that they bear prime responsibility for the international financial crisis.

The "Labour means business" slogan and ritual eulogies of enterprise and risk taking have been the ideological window dressing behind which global financial institutions were allowed to speculate and to overextend themselves in the search for super-profits.

The writing had been on the wall at least since the Nick Leeson scandal that did for Barings.

He ended up in jail for covering up the losses that his speculation was attracting, but, apart from that, his gambling itch was no different from operations in other US and British banking transnational corporations.

We were asked to believe two fairy stories, namely that Mr Brown had stood capitalism's basic law on its head by abolishing boom and bust cycles and that the billions of dollars expressed as profits, dividends and boardroom bonuses by banking houses represented wealth creation.

In reality, capitalism cannot exist without periodic crises, even if some people refer to them as market readjustments.

And there was little of substance behind the financial profits bonanza because it was built on a modern-day South Sea bubble with banks loaning money that they didn't have to people who wouldn't be able to pay back the loans when initial low interest rates evaporated.

What divides the squabbling politicians in Washington is how to channel public funds to their Wall Street benefactors without any consequent public ownership of their institutions and without losing the support of their voters who don't relish their taxes being used to bail out the arrogant fat cats who precipitated this crisis.

We have already seen the future with Northern Rock and it doesn't work.

The Brown government has thrown tens of billions of pounds at the new government-installed Rock management, which is charged with getting it back on its feet and then handing it back to the same breed of City slicker that dragged it into the mire in the first place.

British taxpayers are no more guaranteed to get back their money from Northern Rock than their US equivalents are and the price of the crisis will continue to be paid by those losing their homes, their jobs and their ability to borrow at reasonable rates.

This crisis confirms the inherent instability of capitalism and emphasises the need for a socialist alternative, which will put working people before the spivs and speculators.