Socialist Worker

Betting a trillion on the bankers

Issue No. 2144

The US government this week agreed to hand over another $1 trillion to the banks as part of an effort to “unblock” the financial system.

The plan is to buy up debts that have gone “toxic” as a result of the collapse of the housing market.

As the global cash bonanza spirals out of control it’s hard to get a grip on the enormous sums involved.

Between October 2007 and October 2008 some $26 trillion was wiped off the world’s stock markets. That is equivalent to the value of six months’ work by every person in the world.

This week’s trillion-dollar deal is the equivalent of a week’s work by the entire population of the planet.

The hope behind the plan is that the cash will mean that banks will now lend money to businesses and each other.

So, bizarrely, the mess the banks got into after encouraging debt is seen as the solution to the crisis.

Yet nobody knows whether even these incredible sums can begin to solve the crisis because it is not known how much bad debt the banks actually hold.

The US government is gambling in the same way as Gordon Brown—if the bet goes wrong, they will expect working class people to pick up the bill.

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Tue 24 Mar 2009, 17:56 GMT
Issue No. 2144
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