progress is not the elimination of struggle, but rather a change in its terms’ - Aneurin Bevan

cutting our way to another bank bailout?

The New Economics Foundation have produced a timely report into the bank-bailouts of 2008, asking "Where did our money go?"

The most worrying conclusion reached is this: "We believe the public sector is likely, once again, to be asked to bail out the banks for the emerging funding gap." (p.2)

There's a lack of freely-available information as to the terms and conditions of public support for the banking system - what has been done with public funds? The banks are back in profit. But having shut branches, sacked employees, increased fees and the size of deposits, they face a "funding cliff":

"In order to support a banking system that is in aggregate withdrawing lending from the private sector, UK banks currently have to borrow £12 billion a month. In 2011, they will have to borrow an additional £13 billion a month. It seems unlikely that under such circumstances the economy will see an improved service from the banking system over this period. Indeed the taxpayers should be bracing themselves to provide the additional loans." (p. 52)

This feeds into the current debate about spending cuts - reducing the public stimulus to the private sector. Could it be because the government will need to give more support to the banks? In which case, the productive parts of our economy will be suffering to rescue the destructive.

As Arthur Bough wrote a few days ago:

"Once you have a bike up to speed it takes less effort to keep it there than if you let it slow down, and have to get the speed back. Capitalist States poured huge amounts of Surplus Value into stopping the system collapsing after 2008. They largely succeeded, but those economies hadn't speeded up enough for momentum to take over. Stopping the stimulus would be like stopping pedalling just before you could get into top gear."

There was no defeat at the election for the policy of securing the recovery. Members of Parliament from Labour, the Lib-Dems, and the nationalist parties were elected on the basis of a gradual and fair reduction of the deficit - not another round of bank-bailouts paid for by cutting jobs and services.

The current Tory/Lib-Dem government, its cabinet packed with multi-millionaires, has more interest in eroding the living standards and attacking the economic rights of working people than in restructuring the banking sector. There's a good reason for this, and it isn't about ideology, it's about interests. Not the "national interest" as the Tories claim, but that of capitalists.

Our response to the government's agenda, which is backed to the hilt by the ruling class, could easily be deferential and grudging. However, the current situation in the Republic of Ireland shows the chaos caused by cutting spending in a slump and bowing to the bankers.

Labour's new generation must have more than a thirst for change, it must have a hunger for the truth. And we need to offer people on modest and middle incomes a co-operative alternative to the failure of capitalism.

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