Make Greed History by Making Capitalism History
By Raphie de Santos
The unacceptable face of capitalism was a phrase coined by the Conservative leader Edward Heath in the 1970s to describe the bribing of African leaders by the “entrepreneur” Tiny Rowland. It became a phrase to describe the worst excesses of the 1970s property boom and bust. Today is greed the unacceptable face of capitalism or is it inherent in the capitalist system rather than in people themselves?
At end of 2006 there were 946 billionaires with a combined wealth of 3.5 trillion dollars that’s $US 3,500,000,000,000! The world’s population is around 6.6 billion
The majority of who live in varying degrees of poverty and squalor. It would take $80 billion a year for ten years to meets the entire planet’s population’s basic needs: safe housing, nutritious food, clean drinking water, primary education and healthcare.
Put another way 0.000014% of the world’s population has enough money to provide the planet’s entire population with a sustainable and enriching way of life for 44 years! Is that an acceptable face of capitalism or pure obscene greed?
This increasing inequality has manifested itself in the UK. Since 1976 the liquid wealth of the bottom half of the population has fallen from 12% to 1% in 2003. At the same time the richest 0.01% of the UK’s population has seen their incomes increase by 500% over the same period.
In a similar vein the International Monetary Fund have estimated that global banks will have written off over 4 trillion US dollars by the end of 2010. A credit think tank KKW have estimated that US banks alone need one trillion US dollars of capital in the next few months to act as a buffer against further losses. In 2005 during the make history campaign we were asking the world’s banks to write off the 182 billion US dollars owed to them by the planet’s poor countries. So far they have written off nothing. Is this the acceptable face of capitalism or sheer greed?
In the UK Darling and co are looking to borrow over 700 billion pounds to cover the money, our money, that was given to bailout the banks. This is a large underestimation of what he needs as there will be further bank losses – we are liable or another one trillion pounds through the toxic asset insurance scheme alone. His view of the state of the UK economy is dishonestly optimistic – he’s predicting a shrinkage of 3.6% in 2009 but as was announced last week the UK economy shrank by 1.9% in the first quarter of 2009. This means that tax revenues will be lower and social security payments higher. In other words a larger deficit than predicted by the government.
How will he find the money? One route is through issuing government bonds (gilts) – a sort of government IOU. But no one wants to touch these IOUs – as a borrower we are now rated alongside Portugal and Greece. He will then be forced to make huge cuts in public expenditure – much larger than he was forecasting in the budget.
He will use his local henchman like Steven Purcell and lackeys such as the SNP and the Liberal Democrats who will say there is nothing we can do about the global crisis and its London’s fault. The £3.5 million that the Glasgow council hope to save by closing schools and nurseries will be the shape of things to come right across Scotland as central government cuts back on block grants. These public sector cuts will be put through under the guises of efficiency savings. But they are effectively taking our money and throwing it at the rich bankers to bail them out whom they encouraged in the first place on this mad binge of greedy speculation.
The second place they are going to pay for this bailout is through increased taxation. But it will be us who face a heavier tax bill and not the rich bankers. Darlings’ proposal to tax earnings above £150,000 at 50% has caused the City and Fleet Street to squeal with horror. But as most tax experts have said this gang of spongers do not pay tax on their total incomes. They are paid a basic salary below £150,000 and receive a bonus on top which is paid in such a way as to avoid paying tax.
These people are parasites in a parasitic system. Most of the capital raised by corporations comes from our pensions and insurance funds – over 70% of the world’s shares and bonds are owned by us through these funds. The money is invested through financial markets and these bankers hang around like vultures to speculate and pick up the crumbs from our cake.
The time has come to squeeze them until they squeak and howl and make all this capitalist greed history by making capitalism itself history.
Raphie de Santos is the co-author of the just published book “Socialists and the Capitalist Recession” which is available from the Wee Red Book Shop, Wordpower or Amazon.com
Raphie has drafted a brief summary of Darling's Budget...
• Budget is to pay for bail out of banks
• Unable to raise money on financial markets because our IOUs (Gilts) are worth nothing – in line with Portugal and Greece
• Deficit for 2009 at over 12% biggest of the G20 countries
• Big cut in public spending and over the near term and medium and long term
• Tax rises after next election for the poor and middle incomes
• Darling’s growth expectations laughed at by all – IMF reckon economy will shrink by 4.3% this year while Darling has us at 3,5% and IMF been behind the curve
• Darling expects recovery to start at end of 2009 – likely that economy will bottom out in mid 2010 with no recovery because of lack of credit from banks for individuals and corporations
• Budget assumes recovery and no more bailouts for banks – likely to be more money for bailouts and no recovery
• Global economy from Europe too US to Japan shows that the recession continuing at same pace and quickening up after a lull in February
• World ex China will effectively be in depression by end of 2010
• We are liable for another trillion pounds because of insurance of toxic assets
• Britain effectively bankrupt
• No money for stimulus programmes
• In summary we are going to pay a huge price for speculation and greed of the bankers and the neo-liberal dream
• Huge battles lie ahead over jobs, homes and public services around the world
Q1 GDP Numbers Show the Hollowness of Darling's Forecast
The quarter one GDP figures released today showed the UK economy shrank by 1.9% just two day after Darling had predicted a 3.6% decline for the whole year. This shows how far off the market he was and was generally trying to deceive the mass of the population. This means that the public cuts will have to be much larger than announced in the Budget. The GDP number was much worse than consensus expectations and the UK now has had the largest two successive declines in GDP since the days of Thatcher in 1980.
The UK is on track for a decline of at least 6% in GDP for 2009 with it technically entering a depression sometime in 2010. The Q1 decline shows that the IMF’s prediction of a 4.2% decline for the UK in 2009 is well short of the mark. This has been par for the course for the IMF which has consistently underestimated the scale of the recession.
The news from Germany was even bleaker where Axle Weber the Bundesbank (equivalent of the Bank of England) president said that German GDP shrinkage would be over 3% in Q1. This stands in sharp contrast to a prediction by the IMF of 4.1% for the whole year. Germany is being particularly hard hit by being heavily dependent on exports to the US and the UK.
In the US previously owned homes sales fell in February and half off these were the sales of distressed mortgages and house prices fell 12% in the calendar year. Credit experts KKW have estimated that US banks alone need another $1 Trillion to stay afloat.
Outside of the US, governments will be unable to cover deficits and the cost of bailouts from the issue of government bonds as international investors downgrade the credit worthiness of major economies – Britain is now rated on a par with Portugal and Greece.
This will mean they will have to make massive public sector cuts and raise taxes for the low and middle incomes. This will only deepen the recession and prolong it.
We are all going to pay a very high price for capitalism’ reckless follies.