Fresh bank crash looms

Interest rate cut shows bosses are out of ideas

Northern Rock was the first UK bank to suffer a run in 150 years during the last financial crash which started in 2007, photo by Dominic Alves (Creative Commons) (Click to enlarge)

Tom Baldwin

The banksters are at it again. Despite huge public anger at their role in the financial crisis of 2007-8 it seems no lessons have been learned. A new report warns that "we're sailing blindly into a second global financial crisis."

It comes from right-wing think-tank The Adam Smith Institute, yet pulls no punches in criticising the finance industry and its regulators. "The Bank of England is asleep at the wheel." Its 'stress tests', which supposedly ensure the strength of banks, are "worse than useless" and "disguise the chronic weakness of the UK banking system."

The Bank of England has cut interest rates to a historic low of 0.25%, aimed at stimulating a faltering economy.

However, the benefit of previous rate cuts and quantitative easing (QE) hasn't fully been felt in the real economy and certainly hasn't reached the pockets of ordinary people. In fact, it has helped fuel further speculation and inflate dangerous bubbles in the economy. Rock-bottom rates leave no room for manoeuvre when there is another crash.

The working class would suffer most if banks collapsed. The report warns of "beleaguered banksters begging for bailouts" and that "the taxpayer will be ripped off yet again - but bigger this time."

Despite the Tories claiming their austerity programme put Britain on the road to recovery, none of the underlying problems that caused the last crash have been solved. This would be impossible on the basis of capitalism. Financial gambling has grown as bosses seek ever greater profits.

Only socialist solutions can prevent a new crisis. That means the banks and big businesses that dominate the economy should be taken into public ownership and run democratically by workers and service users. Only then can the economy be made to serve the needs of society - and not a mad dash for profits by a wealthy few, regardless of the consequences.

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Finance appeal

The coronavirus crisis has laid bare the class character of society in numerous ways. It is making clear to many that it is the working class that keeps society running, not the CEOs of major corporations.

The results of austerity have been graphically demonstrated as public services strain to cope with the crisis.

The government has now ripped up its 'austerity' mantra and turned to policies that not long ago were denounced as socialist. But after the corona crisis, it will try to make the working class pay for it, by trying to claw back what has been given.

The Socialist Party's material is more vital than ever, so we can continue to report from workers who are fighting for better health and safety measures, against layoffs, for adequate staffing levels, etc.
When the health crisis subsides, we must be ready for the stormy events ahead and the need to arm workers' movements with a socialist programme - one which puts the health and needs of humanity before the profits of a few.