Economic crash


There is widespread panic in the banking system internationally. One of the supposed bedrocks of capitalism has been shown to vulnerable and unstable. A global crisis of capitalism is unfolding before our eyes.


Jim MacFarlane


£24 billion was pumped into Northern Rock in an attempt to restore confidence and the bank was eventually nationalised as the private sector would not come to its rescue.

The 5th largest investment bank in the US, Bear Stearns, collapsed and was effectively nationalised by the back door through an emergency takeover by JP Morgan underwritten by the US Federal Reserve backed by taxpayers money to the tune of $30 billion. The Federal Reserve has also made $200 billion available in the form of crisis loans to other banks.

The Northern Rock and now Bear Stearns fiascos have exposed the scandal of these banks lending money that they did not have and often to people who had little chance of paying it back. Shareholders and the top managers of those companies benefited from this for years before this came crashing down around them.

These emergency actions are exposing the instability of the whole financial system globally. Many serious financial commentators are making reference to the stock market crash of 1929. Interest rates are being cut in an attempt to restore confidence and to try and prevent the collapse of other banks and of the entire financial system itself.

The US economy is in recession and it will be the working class and poor who will bear the brunt. There will be increased attacks on pay, jobs, public spending and services as well as house repossessions. It is always the working class who pay for the failures of the capitalist system.

The claims of Gordon Brown that New Labour would end the boom and bust of the capitalist economic cycle have more than a hollow ring to it now. These periods of instability and crisis are inevitable under capitalism.

The super-rich have had massive increases in their wealth over the last few years while the majority of people have continued to struggle to pay their housing, food and other daily living costs.

Incredibly the Labour Government want to see more millionaires created. The gap between the rich and poor continues to grow and the numbers living in poverty continues to be capitalism's hidden scandal. Last December billions was paid out in bonuses to bankers and others in the financial sector yet within months their true value to society is being exposed as a sham.

Increasing numbers of people are asking the question "why should we pay for their mess?" It is important that this mood of anger is provided with answers and a genuine alternative.

Workers must build their trade unions into democratic fighting organisations to defend jobs and pay. Socialism, as the only alternative to capitalism's greed and inequality, will be back on the agenda for the first time in a couple of decades. One of the first steps taken should be the nationalisation of the entire banking and financial sector.

A democratically planned socialist society based on the nationalisation of the big multi-nationals that dominate the economy would end the chaos that is inherent in capitalism. It would also put an end to the attempts of big business to off-load this crisis onto the backs of ordinary working people and their families.

Join the socialists.