Members of the GMB union, striking for union recognition at National Car Parks (NCP) in Enfield, north London, last week protested outside the offices of private equity firm 3i - NCP’s owners. For a full report on the strike, go to page 15Editorial, 17 February) and the T&G and GMB trade unions criticising New Labour’s love affair with private equity.
Even the government’s own notoriously toothless financial regulator, the Financial Services Authority (FSA), thinks the fat cat bonanza may have gone too far.
Private equity depends on borrowing colossal amounts of money to buy up whole companies from the stock exchange.
Once off the stock market, the company pays even less tax and has even less regulation than before. Private equity fat cats gamble on being able to quickly cut costs (through asset-stripping and sacking workers), before selling the company back onto a rising stock exchange for a juicy profit.
The FSA said this shady scheme poses a “risk to orderly markets”. They think that because so much money is tied up in private equity, it presents a “high risk” of “conflicts of interest” and “market abuse”.
They are concerned capitalism is breaking its own rules.
Just like Enron and WorldCom, a dubious scheme to artificially inflate company values on borrowed money is turning into a dangerous bubble.
Over £27 billion was invested in British private equity in 2005, up 400 percent on the previous year.
The FSA expects the 2006 figure to be even higher. This bubble is unsustainable because it depends on the combination of low interest rates and high share price growth never ending.
A few people become very rich out of this. But when the bubble bursts, it is ordinary workers who will pay the price. Company pension schemes and high street banks are falling over themselves to throw workers’ money into private equity.
HSBC bank has just announced its first ever profits warning after one relatively small private equity investment fell through.
A major collapse, which the FSA views as “inevitable”, would effect the entire economy.
Yet Gordon Brown is so desperate to suck up to the City of London that he is doing nothing to remove the tax privileges private equity enjoys. In fact, the treasury is encouraging private equity, apparently blind to the dangers.
Des Browne, Gordon’s ministerial sidekick, told a gathering of financial speculators that “we should celebrate” the growth of British private equity.
At a minimum, socialists should be calling for an end to this obscene casino by cutting the fat cats’ tax loopholes. But we also need to demand that the billions invested in pension funds and banks be used for public need, not private gain.
Jacob Middleton, East London
Violence & the family
Much of the debate about gun crime has centred on the supposed benefits of having male role models and encouraging families to stick together.
Of course many families are broken up by the tensions and pressures of life today, and we should all support measures for a shorter working week, better pay, improved housing, better childcare and so on.
These would all lessen the stress on people and might indeed lead to fewer break-ups.
They are not, however, the measures advanced by politicans.
Instead they simply want a cultural shift towards people feeling obliged to stay in relationships which have collapsed.
There could be few more dangerous ideas.
In Hackney in east London there has been much publicity given to the tragic deaths from shootings.
There is much less attention given to the fact that two thirds of murders are linked to domestic violence – a number that would surely soar if more pressure is exerted on people to stay together.
Helen Shaw, East London
Take the initiative
I agree with much of what Socialist Worker said about the gun crime debate (Stop blaming victims, 24 February).
But we have to develop community based solutions and not simply blame the government and the police.
Our young people need to have positive alternatives to a life of drugs, crime and despair. And if the authorities will not organise such projects then we must organise them ourselves and then demand state funding.
Faith communities, women’s groups and others should take the lead in such initiatives.
We should tell the police what we want and, if they target the thugs who mislead our young people, we should support them.
Mary Bujra, South London
The battle in France
Less than two months before the first round of the French presidential elections, it is impossible to predict a winner.
As the right has experienced a series of defeats and crisis – the European referendum, the revolt in the suburbs and the opposition to the CPE – the centre left Socialist Party candidate, Ségolène Royal, is far from channelling the population’s anger.
Nicolas Sarkozy, the French Thatcher, is widely despised.But in the absence of a credible left wing alternative many people don’t relate to the Socialists.
Royal is just repeating the right wing’s agenda. In 2003 Sarkozy cynically declared that “what is needed in France is a Tony Blair, someone on the left doing right wing politics.”
With her poll ratings falling, Royal has decided to “talk left”. She declared that if the nation is able to afford a second aircraft carrier, she would divert this money to education.
But a Socialist MEP quickly pointed out that this didn’t mean being against building a new carrier.
The left is struggling to offer an alternative to the Socialists because of the electoral fragmentation of the campaign which produced the no vote in the European Constitution referendum in 2005.
Anti-neoliberal left unity was an important part of that victory. Now three left candidates – Besancenot, Buffet and Bové – are competing electorally.
We know that the election winner will be a neoliberal, Ségo-Blair or Sarko-Bush, but the opposition continues.
Antoine Boulange, Paris
Arms length is a bad housing option
It is not true that councils setting up arms length management organisations (Almos) are “given huge sums of money when the stock is transferred” (Almo plans in disarray, 24 February).
First, the money is not “given” to anyone – it is in the form of borrowing permissions.
Second, the Almos must reach a “two star” (good) performance rating before any money is released.
Some Almos never make the grade.
Third, councils have to apply in a bidding round that is heavily oversubscribed.
New Labour is reluctant to bring forward the promised funding, because it no longer believes that council housing deserves much of a priority.
It also believes that council tenants are politically disengaged, whereas the key “swing voters” are always seen as owner-occupiers.
These are some of the reasons why Almos are such a lousy investment option for council housing.
We need to fight for the “fourth option” – investment in council housing without strings – that will be much quicker, and without any threat of privatisation.
Paul Burnham, North London
Art show at Marxism 2007
Marxism 2007 will feature an exhibition of visual art called Left in Vision.
Work is invited from anyone on the left, and art with or without overt political content will be equally welcome.
The show will be curated by myself and Chanie Rosenberg. Anyone wishing to exhibit should contact me on [email protected] or 07801 290 411.
John Molyneux, Portsmouth
Iraqi refugees are welcome
Tony Blair’s government is using Iraqi asylum seekers as political footballs.
Before the invasion – despite an absence of US planes dropping bombs or a civil war – Iraq was deemed “unsafe” and refugees from there were welcome.
Now the home office says that Iraq is “safe” and last week 38 Kurdish refugees were forcibly repatriated.
Many of them have children and British partners, but back they must go.
Iraq is the most dangerous place on the planet with the deaths of 655,000 innocent civilians in just four years and a massive refugee crisis running to nearly four million.
Is it not time that the government ceases its utterly shameless propaganda about Iraq being safe?
Mark Holt, Chair, Merseyside Stop the War Coalition
Solidarity from Kenya
It was good to meet members of the Socialist Workers Party in Nairobi during the World Social Forum (Africa's anger, 3 February).
I have been watching events unfolding in Kenya and the entire world and wondered if the world can really survive the capitalist onslaught. My conclusion is that it cannot.
However mere words provide no panacea. Solidarity of action is needed. In Kenya capitalistic bestiality is unbridled.
Activist, Nairobi, Kenya
What can Ken teach Chavez?
Last week London mayor Ken Livingstone announced a deal with the Venezuelan state oil company.
London will receive cheap oil, and in return Venezuelan cities will receive “technical assistance” in areas such as transport and planning.
Venezuela will be subsidising cheap transport in the capital of the fourth richest country on earth.
What technical assistance will London offer Venezuela?
The tube has been partially privatised and fares have shot up.
Livingstone has called for tube workers to scab on strikes and has supported police “anti-terror” operations.
Londoners should be forging links with Venezuelans in another way – by drawing inspiration from the wave of struggle that has fought off efforts to overthrow Hugo Chavez.
Christine Lasenby, South London
A lesson for the unions?
I note that following a court victory last week, people who lost their pensions when their firms collapsed are stepping up the pressure on the government to provide compensation.
The high court ruled in favour of four pensioners who brought a case against the government for rejecting the findings of the report produced by the parliamentary ombudsman last March.
The court found the government guilty of maladministration by providing inaccurate information about final salary pensions. This misled people into believing pensions were safe when they weren’t.
This campaign has shown far more determination than many trade union ones (although some unions have supported these pensioners). It has also been far more successful.
Jack Reilly, Birmingham