Capitalism in crisis: more banks on the way out
This was all obvious in February, may be before....finance capitalism is about ever more esoteric forms of gambling...the UK under Gordon Brown has been about the primacy of banking....now the debts are being called in.
These were my thoughts in the spring still current today...
The global economy is on the edge of a cliff. Recession is on its way, which could mean a return to millions of unemployed, widespread house repossessions and growing poverty. The reasons for this crisis are complex in some ways, simple in others but the jargon of the economists mystifies.
I will try and cut through misleading appearances and get to the essence of the matter.
1% of American families were involved in some stage of home repossession in 2007. That's 2,203,295 individual cases.
9.5 million Britons currently have debt problems.
As we know, a French trader lost $3.6 bn a couple of weeks ago, enough to have paid off the credit card bills over here.
Northern Rock collapsed, in the first run on a bank in decades.
The British government has spent £40bn bailing out Northern Rock and has acquired liabilities of £100bn. This has pushed government debt beyond his golden rule sum of 40% of GDP limit set by Gordon Brown.
It started with the sub prime market, and free market globalisation is pushing it in our direction. Sub prime is jargon, and economics is all about jargon which hides simple truths.
Sub prime mortgages are simply high interest rate mortgages for the poorest American homeowners - those who risk not being able to pay.
Loan shark finance for the post-modern age.
Northern Rock went under partly because of securitisation - more jargon - it means debt that has been split up into bits and sold on. In this case sub prime debt.
Increasingly, everything is financialised. Private pensions, endowment mortgages, insurance policies - you name it - is based on shares, bonds, bills, options, derivatives and securitisation.
Who's heard of credit-default swaps? You will soon.
One commentator noted, "Credit-default swaps are a kind of insurance against default, arranged between two parties. One party, the seller, agrees to pay the face value of the policy in case of a default by a specific company. The buyer pays a premium, a fee, to the seller for that protection.
"This has grown to be a huge market: the total value of all CDS contracts is about $450 trillion. Some studies have put the real credit risk at just 6% of the total, or about $27 trillion. That puts the CDS market at somewhere between two and six times the size of the U.S. economy."
To survive economically, all of us are, although most of the time unaware, caught up in an increasingly mysterious and esoteric financial web. With privatisation and an increasingly economically insecure society, financialisation is likely to accelerate. If you put money into Northern Rock as a saver did you expect it to be tied up with mortgages in Florida?
George Soros, the billionaire financier, a man often more critical of capitalism than myself, believes that there is a 50/50 chance of the British economy moving into recession. Soros is also saying that the present crisis is the worst since the 1930's.
To keep the increasingly risky and unreal economy afloat we have to keep on consuming. If we spend less then unemployment rises, homeowners who lose their jobs can no longer keep up with mortgage payments, houses are repossed, credit card debt cannot be paid, and the vicious spiral of negative economic growth leads to poverty and mass unemployment. The system eventually rebounds but with a huge cost in insecurity and human misery.
To keep the system afloat we have to exploit each other and our environment.
A healthy modern capitalist economy is like a system of hard drug addiction. We have to work harder and consume more, to avoid the pain of economic cold turkey. The only solution, it seems, is to increase the dose. But increasing doses only brings relief in the short term. Long term it increases tolerance, which can only be met with larger doses.
The economic approach of Gordon Brown is to simply up the dose with more privatisation, more insecurity, more consumption and more free market globalisation. New Labour's approach- inherited from the Tories - is to make the interests of the City pre-eminent.
It isn't just human beings who feel the pain, its the rest of nature, as well.
Which is where rainforests come in.
More consumption, more free trade and fewer barriers to corporations means the forests come tumbling down - cut for palm oil for biofuels and processed food.
Every time you eat margarine you risk killing a monkey, and all in the name of oil exploration and mines for new minerals and metals.
Oil addiction means that our leaders are going to be tempted to the likes will Iraq and, increasingly, Iran, causing more chaos.
But hey, the arms industry likes to have their products tested!
We have an economy which is irrational and unecological, which increasingly no one understands and is, increasingly, no fun.
The psychologist Oliver James shows that with higher GNP, mental illness rises, and we catch a disease called Affluenza.
We have to create an economy that gives access to things we all need, from warm homes to healthy food to secure pensions, and creative good work in secure posts without the ever increasing overuse of resources.
At this conference, we are going to debate recession and policies to deal with it. Yes, you can pump up the economy with spending on good things like renewables, but we also have to make our economy more stable.
We need to reduce the dose, improve security and put people and nature in charge of society. At the moment we act as if were part of some insane religion that makes us sacrifice our children for a golden idol covered in dollar signs.
We need to tackle housing, and stop the attack on social housing. We ceased building council houses in the 1980's, and that has created speculation in the housing market and a new sub prime rental sector where landlords prey on homelessness. The British economy is fueled by housing insecurity - homes are no longer primarily considered places to live in, but now thought as financial instruments.
From cutting super-bonuses that inflate house prices in London, to dealing with empty homes - 870,000 last time I looked - to building low impact homes that don't sacrifice the environment, we need to creating greater council housing capacity. We can take the pressure out of the housing market,give people security and make the economy more stable.
Not easy but essential.
And we have the policies.
We need proper pensions and welfare so people feel secure.
Our revolutionary basic income scheme would help massively. Well where would the money come from?
Trident is £70bn.
The billions spent on nuclear power.
The billions spent on war in Iraq.
Then there is all the waste, from ministerial limos to lack of insulation.
£40bn on Northern Rock was money down the toilet but there was no question the government simply paid it. New priorities are necessary.
We need an economy that is based on what is good and useful, and not on simply piling up piles of money.
Why not make goods to last longer? Why not cut advertising? Why not create sustainable energy? Why not have local economies? Less is more.
We need work-sharing and democratic control of the economy. Democracy used to be dismissed as mob rule and was condemned by the 18th century equivalents of the Daily Mail and Express as a recipe for chaos.
We need a democratic economy.
Companies can instead of issuing shares and having by law to maximise profit, whatever the consequences, can be run by mutuals with the cash going to workers. The best example of this is the staff policies of the John Lewis Group, who own Waitrose.
What about ZOPA - a peer to peer bank, where borrowers and lenders pick their own interest rates? How far away is that from sub prime.
In Venezuela I met workers who run their own factories and saw massive permaculture city farms. We need to put ordinary people in control of the economy, we need to think rationally about what to produce. The economics of free software and social sharing is sweeping the world.
In the 1970s the visionary trade unionist Mike Cooley, together with fellow workers from Lucas Aerospace, produced detailed plans to build road rail buses, kidney machines and renewable energy systems instead of weapons. We need such green plans for people-orientated production.
You know this. Its all in the Manifesto for a Sustainable Society.
The 1980s could have been about this kind of grassroots economics Instead we had Thatcher who, fueled by oil wealth, embarked on an economic experiment that has made Britain technically richer but socially poor, more unequal, less democratic and more insecure.
I am, as you know, an out-of-the-closet socialist, but if socialism means central-control then count me out. Its inefficient and undemocratic.
Whatever you call it, we can have an economy that meets human need and not the greed of a few. It's about being on the side of ordinary people, and not about making the economy more market-based that ultimately only benefits the super rich.
And I suppose, unless they go into space with Richard Branson in his biofuel tourist rockets, will even destroy their future.
It is about a different kind of property rights. Property rights are the long DNA of any social system. We need property rights that preserve ecology and local control.
So, there is much to do, but to achieve what we want we can't simply dream.
We need to win. As I constantly say, it's a battle of ideas - to show that radical green politics is asking the right questions and coming up with solutions.
We need to use direct action to slow and reverse the damage.
We need to elect greens.
It's about reclaiming space, ideas, direct action, and elections.
I am going to be working to elect our first Green MP Caroline Lucas in Brighton. This year I will be at the climate camp again. I am going to be opposing the Lisbon treaty which will impose a more neo-liberal Europe, and I am going to be fighting biofuels and climate change.
Time is very, very short. We need to be working with others, to take the wider view.
I have been talking to John McDonnell, the Labour MP. He's going to the climate camp and supports direct action, and that's good. I have been asking Trade Union leaders like Matt Wrack and people like the Venezuelan Ambassador, Samuel Moncada, to speak to us. And they tend to say yes.
We need dialogue and the big vision to save planet earth. We all need to get stuck in and build a bigger, stronger, more realistic but more radical Green Party.