Link to this page: http://www.socialistparty.org.uk/issue/669/11963
Smoke and mirrors
City of London fat cats saw their 2010-11 bonus pot shrink 8%, compared to a year earlier, to £6.7 billion. However the masters of the universe were handsomely compensated by an average 7% rise in their salaries. This inflation busting pay hike compares to an average of just 2% rise across the economy for mere mortals.
These financial swings and roundabouts make a mockery of the government's Project Merlin deal with the City which was meant to voluntarily deliver financial restraint from the fat cats. By continuing to stuff their pockets with wads of cash they add a further insult to ordinary workers, many of whom continue to suffer from employer-imposed pay cuts at the same time as tax increases and government cuts in public services.
The latest figures from the Office for National Statistics showed that the UK economy continues to flat-line with zero growth over the last six months. Tory Chancellor George Osborne attempted to be upbeat about growth, despite the evidence that his multi-billion pound austerity programme of spending cuts was acting like a massive drag on the economy. As a spokesperson from the Institute for Public Policy Research think tank put it: "The UK has just come as close as it is possible to come to a recession without actually being in one."
Global capitalism has racked up a £3 trillion overdraft - the sum that the world's central banks pumped into the global economy to prevent a financial meltdown.
The £3 trillion figure (which includes a mere £200 billion, so far, from the Bank of England) represents a staggering 8% of the world economy. However, this massive stimulus appears to have had only a short-term effect. According to Fathom Consulting, who compiled the global 'quantitative easing' figure: "It remains unclear how much of the equity market rally has been 'genuine', rather than simply a 'mopping up' of that extraordinary injection of liquidity." Fathom warns: "As that stimulus is gradually withdrawn, further gains in equity markets will be harder to achieve."
Meanwhile, the US government will hit its $14.3 trillion borrowing limit by 16 May.
The reasons for the multi-trillion debt is government bailouts to the banks and big business, funding costly overseas wars, capitalist recession, and a decade of tax cuts for the wealthy and big corporations.
Meanwhile real wages actually fell by 8% during the last decade and median household income in the US fell from over $52,000 in 1999 to $49,777 in 2010.
Despite recently pushing huge spending cuts through the House of Representatives (with Democrat agreement), the Republicans are demanding deeper cuts in welfare and social services and yet more tax cuts for the rich.
In The Socialist 4 May 2011:
Socialist Party NHS campaign
Youth fight for jobs
Socialist Party editorial
Socialist Party feature
Socialist Party news and analysis
Socialist Party workplace news
Socialist Party feature
Already posted on the Socialist Party website