The Rich Get Richer while we pay for the Crisis

The Sunday Times Rich List

by Raphie de Santos

The publication of the Sunday Times Rich List today was a very striking event. What struck us was how much wealth the richest 1000 people in the UK had. A staggering £335 billion which was just under half our national debt and about the same amount of money that we have given the banking system to bail them out of the crisis.

The second striking fact is their obscene fortunes have increased by £77 billion in 2009 while the majority of us have faced job losses, wage cuts and cuts in public services. This in a year when the economy was in recession for nine months and has only just limped out of it.

The third striking fact is where this wealth comes from. It’s come from us. The vast majority of the rich list run companies or have sold companies that they have owned. And they have made this wealth by giving us even less of the wealth we make for them. This has been a trend that has been happening over the last forty years. In 1976 the bottom 50% of the UK population had 12% of the liquid wealth in the UK. By 2003 this had fallen to 1%. Over the same period the wealthiest 0.01% of the UK population, the rich, have seen their income rise by 500%. No wonder they had to create so much debt otherwise we would not have been able to buy the products we make for the rich companies.

The fourth striking fact about this report is that wealth has gown only because of a more than 50% rise in the stock market in 2009 from lit low point in March of that year. Over the last thirty years the rich have increasingly paid themselves in shares in the companies which they run or sold on the stock market. Ironically around 75% of these shares are bought by us indirectly through our pension and insurance policies.
The dramatic stock market rise would not have happened without the massive bailouts of the banks and the governments’ stimulus programmes that stopped the world economy from going into global depression. Of course the money to do that came from us. Now the governments are asking us to pay for it through cuts in services, pay and jobs.

Taxing the rich would be a good starting point as an alternative. An annual 10% tax on the rich 1000 would fund 2 million apprenticeships a year for example. But dealing with the super rich is just the tip of the iceberg.

The UK is more unequal at any time since records started to be collected on inequality over 50 years ago. Under New Labour the shift from poor to wealthy has continued to increase. In financial year 2007/2008 the Office of National Statistics calculated that the bottom 20% of households brought in on average £4,600 per year in income – before taxes and benefits. The top 20% of households took an equivalent of £72,500 per year. Since the Tories came to power the top rate of tax has been cut from 83% to 40%. Restoring a progressive taxation system would raise an extra £75billion a year.
Corporations are amongst the rich and they have seen there tax rates on profits cut from around 50% to 28%. They also avoid tax by using offshore tax havens which are estimated to loose the UK £130 billion a year in revenues. Increasing their taxes back to 50% and closing down the tax havens would raise another £200 billion pounds year.

UK Banks are the richest of all the corporations yet we have given them £375 billion pounds to bail them out. Taking them under common ownership and control would release immediately £560 bn of what is really our cash and put at our disposal £5 trillion of their assets. The socially useful jobs and projects that could be created in a national Peoples Bank that could result from such an approach would wipe out the public sector deficit, unemployment and social hardship at a stroke.
Yes the rich and wealthy have got richer and wealthier at out expense and the final striking feature of all this is how easy and rational it would be to share the wealth out and create a just and fair society without any suffering that meets all human needs.

Henchmen Purcell and the reason why he puts Profit before Glasgow + how the budget affects YOU

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...

Alistair Darling

• 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.