News and information about Oxford Left Alternative
Saturday, 4 October 2008
The Economic Crisis
Champion of free enterprise in the US and around the world, George Bush said last week that "the market is not functioning properly," arguing for the $700 billion bail-out of the banking system. The controversial deal looks set to go through in the next couple of days, amidst protests among ordinary Americans.
Closer to home, the £40 billion mortgage lending portfolio of Bradford and Bingley has been nationalised, while its other assets are to be sold off to Spanish company Santander. Last week HSBC said it was cutting 1,100 jobs, most of which are in London, because of "market conditions" and a cautious outlook for next year.
Neither the government nor the bankers know what will happen, or what the solution is. The figure of $700 billion was not based on a complex calculation designed to put the markets back on track. A US Treasury spokeswoman said last week that "we just wanted to choose a really large number." The bail-out could be up to a trillion dollars.
As confidence in the market declines and the banks still do not know exactly how much bad debt they hold, and are therefore reluctant to lend to businesses, consumers and each other, the global economy looks set to get worse.
There are, however, a few things we do know. The first is that working people are being asked to pay, through higher taxes, for the mess created by the bankers, who have made many millions in salaries and bonuses. Working people should not pay for this crisis.
The second is that the idea of the free market as the way forward has been thrown into question. It has become clear that unregulated market forces are not able to provide general economic stability and more fundamentally, employment for all and social provision for those who need it. State control in some sectors, like public services such as health, education and transport, is necessary.
With the anxiety over the economy combined with rising costs in food, fuel, gas and electricity, many people are acutely aware that life will become more difficult in the coming months and years. And who knows how long this crisis will last?
But there are things we can do. We can respond to the economic crisis by insisting that energy companies pay a windfall tax; that companies that provide public services be nationalised; and that public sector workers should have pay offers at least at the level of inflation. This is an opportunity to reassess how we want to run our society. Left Alternative says put people before profit, and instead of socialism for the rich, let's have socialist policies for working people.