Fat-cat bankers across the world are reeling from the white-knuckle ride of the recent financial crisis. Capitalism has taken an almighty battering. In order to calm global markets, governments and financiers tried bail-outs, shotgun takeovers, and even letting a bank fail.
Trying to answer the question “Is the panic over?” one capitalist economist said: “For now, yes, if only because we’re running out of banks to trash.” Alan Greenspan, the former chair of the US Federal Reserve, commented that the demise of an institution such as Lehman Brothers was “probably a once-in-a-century type of event”.
However, in one volatile week alongside the Lehman crash, we saw the US Government being forced into nationalising AIG. Merrill Lynch was hastily taken over by the Bank of America and there was a take-over of HBOS, Britain’s largest mortgage lender. As a result millions of dollars were wiped off Australian superannuation funds.
All this followed hard on the heels of the bail-out of mortgage giants Freddie Mac and Fannie Mae – the US federal Government was forced to nationalise them to rescue the US mortgage system and to try to stop further domino-effect banking failures.
These events are a huge ideological blow for fans of neo-liberalism. One journalist said that the chair of the US federal reserve and the US treasury secretary, “have done more for socialism in the past seven days than anybody since Marx and Engels”!
It will be ordinary people who will suffer the most from this crisis through cuts and job losses. But as workers struggle to keep their heads above water, city bankers strut around, their wallets bulging with huge bonuses, still thinking themselves ‘masters of the universe’.
These odious individuals used to whinge that the welfare state is too costly and should be totally dismantled. Suddenly they have had a change of heart and want us to bail out their failing enterprises. This about-turn has been dubbed “socialism for the rich”.
Socialists want the nationalisation of all major banks and financial institutions, not just those which are floundering. However, we don’t just want short-term nationalisation that pumps workers’ taxes into failing banks, only to privatise them when the economy looks healthier again.
We want these institutions permanently taken into democratically run public ownership. This move could guarantee affordable mortgages, and ensure workers’ homes are not repossessed because of free market failings.
Across the world thousands of jobs will be lost in the financial sector, not to mention the many other sectors who have survived in recent years on the lifeline of cheap credit. Australia will not be immune from job losses. Already we have seen thousands of jobs go in the manufacturing and retail sectors. There will be no golden goodbyes for the ordinary workers, only unemployment, a mountain of debt and the fear of losing their homes.
Capitalism’s boom has come to an abrupt end. More and more workers and young people are already looking towards socialist ideas. If you want to be part of the fight back join the Socialist Party and help us build an alternative to the madness of the capitalist system.
By SP reporters