Socialist Worker

Mortgage crisis hits workers, not bosses

Issue No. 2091

Signs of a growing economic panic in Britain were clearly visible last week as British hedge fund Peloton collapsed.

Just weeks ago they were declared “New Fund of the Year” at industry awards.

Peloton had made a fortune betting that subprime mortgages in the US would collapse, and when crisis did hit the mortgage market the company initially saw profits rise by 87 percent.

However the credit crunch did not stop at subprime mortgages. Instead it spread to hit the “secure” mortgage debts that Peloton had also invested heavily in.

Britain has seen a huge growth in financial services, which now make up a third of the economy.

But despite the growing crisis, and the increased number of home repossessions and job losses, many of the richest companies are still making big profits.

For instance, the huge HSBC bank has admitted having to write off £8.5 billion as a result of the collapse of the US mortgage market, but still managed to report record profits of £12.1 billion.

The rich are determined that workers, not themselves, will pay for the crisis.

Average total earnings of FTSE 100 company chief executives have doubled over the last five years to £3.2 million, according to a report from pay monitoring firm IDS.

In FTSE 250 companies chief executives’ average total earnings have gone up by more than 90 percent since 2001-02 to £1.4 million.

The report shows that directors’ salary increases in FTSE 350 companies also rose steeply.

Over the last year, they went up by an average 9.3 percent, while IDS figures show workers’ wage settlements across the economy as a whole were running at 3.5 percent over a similar period.

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Tue 4 Mar 2008, 19:06 GMT
Issue No. 2091
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