Would any sane person bail out a bank in order to take control of its debts but not its profits? No. Yet that’s exactly what George Bush, Gordon Brown and governments across the world are currently doing.
There was widespread opposition to the $700 billion bailout plan proposed by the US administration.
The media focused on the reaction of die-hard Republican conservatives, quoting the likes of Congressman Jim Bunning of Kentucky who claimed, “This massive bailout is not the solution, it is financial socialism, it is un-American.”
But the reaction of Paul Clancy, a window cleaner for 15 years in Boston’s financial district was rather different. “This thing they’re talking about is only going to make the rich richer,” he said. “Leave them be and they’ll get what they deserve. Nobody helps me if I’m in trouble.”
Millions of Americans are seething that the Bush regime, backed by the Democrats, is prepared to hand over $700 billion to rescue the banks.
This welfare for Wall Street stands in stark contrast to the daily reality for working people – who face their homes being repossessed, have to buy clothes from charity stores and often rely on the local church for a square meal.
The fact that the bailout was backed by Bush, Barack Obama and the rest of the political establishment leaves an even sourer taste.
This rush to save the bankers is happening across the world – even in Iceland, which bailed out its third biggest bank last week.
Rushing to back Bush’s $700 billion bail out of Wall Street, Gordon Brown argued, “It is necessary to get these bad assets out of the system as quickly as possible.”
The bad debts might be taken off some corporate account book, but they are left in government hands like nuclear waste, to fester for decades to come.
Some on the left seem confused by the state rescue of the banks, believing this marks a shift left by Brown and chancellor Alistair Darling.
Yet Darling has made his solution to a soaring budget deficit clear – to cut state spending.
Treasury chief secretary Yvette Cooper was quite brazen in saying the nationalisation of the Bradford & Bingley bank was carried out to “support the stability of the banking system as a whole”.
In plain language, it’s nationalisation to save the bankers, not the people who face losing their homes because they can’t pay their mortgage.
This is not some abstract statement. In the first quarter of this year, shortly after the Labour government took over Northern Rock, 134 of its borrowers faced repossession. That figure increased to 355 in the second quarter.
Nationalisation in itself is not sufficient. Many institutions, from the Bank of England to Royal Mail, are state owned but operate in the interests of big business.
The real question is who controls Northern Rock or Bradford & Bingley.
Some 85 percent of the £41 billion debt which sunk Bradford & Bingley was to private landlords who “bought to let”, seeking to make a killing from the property boom. Bradford & Bingley was the country’s biggest buy-to-let mortgage lender.
Now that the state has taken over Northern Rock and Bradford & Bingley, we should demand that no one with a mortgage there should face repossession.
But those properties bought up to rent on the private market should be allocated to people on the housing waiting list and to families suffering from overcrowding.
Nationalisation for the public good would involve nationalising to protect jobs and to stop repossessions. It would involve using the huge amounts of cash held in the banks to build affordable council homes.
Above all it would centre on taking back the companies that make profits – such as the railways, water and energy industries and all the public utilities sold off by the Tories and New Labour.
These demands can form the core of a real alternative to the free market policies of Brown and David Cameron.
For three decades we’ve been told by politicians that the way of the market was the only way. Socialism was simply off the agenda.
But as banks crash and shares collapse it becomes clear that the way of the market is to make ordinary people pick up the bill. We should refuse to pay.
We should organise around immediate demands – to save our homes, jobs and pensions. The immediate battle is to beat Brown’s attempts to impose below-inflation pay limits on public sector workers.
We also need to argue that a system based on the working class deciding what is spent and what is invested – real socialism – is the only solution to this mess.
Above all our class, those who produce wealth but don’t profit from it, needs to start fighting back.