The chaos of the financial system has hit new levels with the collapse of Bear Stearns, the US’s fifth largest investment bank. Now commentators fear the entire banking system is on the brink of a 1930s style collapse.
The wild fluctuation of the stock markets is just one sign of an economy that is out of control – and every “solution” the bosses offer serves only to temporarily abate one problem by creating another.
Alan Greenspan, the former head of the US Federal Reserve Bank, wrote in the Financial Times this week, “The current financial crisis in the US is likely to be judged in retrospect as the most wrenching since the end of the Second World War.”
Few would deny the global nature of this crisis, with several British banks being thought particularly vulnerable.
Yet last week chancellor Alistair Darling claimed, “Britain is better placed
than other economies to withstand the slowdown in the global economy.”
He claimed that this “slowdown” would be mild and short-lived, and that the free market, left to its own devices, will soon recover.
But New Labour’s commitment to neoliberal economics and its worship of the financial sector means we continue to suffer from the chaos that the markets are creating.
Our pensions have been gambled away and many of our public services have been sold off to the very hedge funds and private equity vultures that are now in freefall.
As signs of recession grew, Labour encouraged ever more personal debt to keep profits going. The average interest paid by each household on their debt now stands at about £3,775 a year.
Debt continues to rise as the real cost of living spirals out of control. The government’s CPI measure of inflation as just 2.5 percent is pure fantasy, and an attempt to disguise the real rise in the cost of living.
The price of milk, cheese and eggs rose by 17.6 percent last month. A family spending £70 on weekly groceries will now pay £400 more a year than 12 months ago.
In response Gordon Brown can only repeat his mantra of holding down wages and public spending in order to “create stability”. At the same time his government ministers delight in praising millionaires while handing tax cuts to the super-rich.
The free market threatens millions who are now forced to worry about poverty, unemployment and homelessness.
None of this mess is of our making, yet the rich are determined that we will pay. Now more than ever, we need to present a different vision of how the world could be run – one in which the needs of the many come before the greed of the few.