The financial storm which broke out in the US this Summer has finally crossed the Atlantic. Last Thursday, queues began to build up outside Northern Rock's branches as people sought to salvage their savings. Since then, the bank has had to refund deposits worth over £2bn, while its shares lost nearly 2/3 of their value.
And what did Alistair Darling, say about this? Nothing much, except that, according to him, the economy was "solid" and there was no cause for alarm. But just as he was saying this, more bank shares were going sharply down in the City, including those of big banks like HBOS and Alliance and Leicester. Nothing to worry about, said the bosses' Darling? Depends for whom!
Blaming the poor
Officially, this is all about the so-called "US sub-prime problem" - i.e. home buyers on low incomes who ran into deep trouble due to ballooning house prices (and extortionate mortgage rates). As a result the mortgage companies which had so "generously" lent money to these defaulting households ran into financial problems. Some of them went bust and this was enough to shake the whole US credit system. This is what we were told when things started to go wrong in the US, this August.
Except that if house prices developed into a speculative bubble and went through the roof in the US, the poorest US households can certainly not be blamed for it. The reasons, rather, are the same which have generated a similar bubble here over the past years.
These reasons have to do with the shameless profiteering of private developers, surveyors, lawyers, bankers, mortgage lenders, etc., - a whole galaxy of parasites who make a rich and comfortable living out of the need we have for a roof over our heads. Not only did these parasites push prices up as much as they could, but they got their men in government to help them to do just that. Because, without the criminal policy of this government and its predecessors, which stopped building any kind of affordable housing whatsoever, for over 2 decades, there would be no speculative housing bubble today!
So if Northern Rock got into trouble, it was not because of defaulting households (in the US or here). But nor was it due to the speculation on housing, which was going on here, either.
In fact, the opposite is true. Northern Rock's troubles, just as the housing speculative bubble, are the expression of one and the same thing - of a system which has long gone out of control.
Their crisis, not ours!
By now, judging from the fall in banks' share prices in the City, it is clear that the present crisis is still developing and that, in any case, it goes much further than Northern Rock alone.
But the fact that it began with Northern Rock is not difficult to understand: this was a mortgage provider which used 20% of the money it lent for mortgages from its own savers, and borrowed the remaining 80%, on a day-to-day basis, from the financial markets. Is it any wonder that, one day or another, someone would put into question the reality of the bank's assets? This is precisely what really happened.
This way of operating may sound crazy. But under this system, it is "normal", not only in the financial sphere, but in fact, in every industry. Because the only concern of the capitalist class, the main objective of whatever technology it has at hand, is to make always more profits, regardless of the cost for society.
Today, the media quotes Alistair Darling trying to reassure savers. He says that they have nothing to fear and that his government will guarantee savings for Northern Rock customers.
But what if the crisis spreads further? Most banks will be able to rely on the Bank of England. The wealthy will use their "super-prime" status, allowing them to transfer their money to any destination they want, using the most modern technology and many of them will even probably manage to make a quick buck, in passing, out of the meltdown.
As to the rest of us, who depend on the post office, branch counters and cash points for our pounds and pennies, we have no such privilege. And, unless we organise to stop the greed of the capitalists and politicians, they will make us foot the bill for their crisis.