
The Socialist 9 August 2017
Striking back against poverty pay

Venezuela shows battle Corbyn would face
Striking back against poverty pay
Rashan Charles death: End police racism and austerity
Coventry: march following racist police killing
Government's tribunal fees defeat
40% of England's psychiatric wards are 'unsafe'
Marx's Capital at 150: an unequalled analysis
Angry Birmingham bin workers enter fifth week of strike action
Barts strike: Keep up the pressure on Serco and the trust!
Steel workers at Rom Ltd strike for a pay rise
Coordinated action needed to break pay restraint
End poverty pay for sleep-in care workers
RMT condemns Welsh government rail privatisation
Young, angry and fighting back
Young Socialists off to a flying start in Cardiff
Campaign fights closure of Chatsworth rehab ward
Support for Socialist Party campaigns at biggest ever Leeds Pride
Housing safety campaign kicks off in Coventry
Far-right thrown out of Newcastle
Venezuela: Capitalist offensive sharpens after assembly elections
Workers' struggles in Peru: eyewitness report
How much reserves have councils got?
Global finance: Are those storm clouds ahead?
Crunchy guitar and poignant dialogue in alt-rock homage to south Wales miners
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Global finance: Are those storm clouds ahead?
Is capitalism reproducing the same conditions that led to the 2007-08 financial crash? In two introductory articles, Ross Saunders looks at the rickety global financial order and Ian Groeber points to the recent Italian bank bailouts to show how the working class continues to pick up the tab for the capitalists' failures.
Ross Saunders, Socialist Party Wales
The world's banks are betting that the economic recovery has begun, but every day there is more evidence that none of the fundamental problems in capitalism have been solved.
The Federal Reserve, the USA's central bank, has raised interest rates, beginning to turn off the tap of cheap money which has supported the American economy since the 2008 financial meltdown.
Last month, the Fed backed the plans of all 34 major American banks to give big payouts to their shareholders, judging that there is less need for banks to hoard cash in case of a new economic crisis.
Recovery?
Mario Draghi of the European Central Bank said at the end of June that "deflationary forces have been replaced by reflationary ones" in the European economy. The capitalists think that after a decade of painful austerity, the recovery is finally underway.
They are gambling that the economy is robust enough for them to begin clearing out the bad loans that have lain on the books of the banks for the last decade.
In early June, the European Union's bank rescue fund, the Single Resolution Board, stepped in to rescue Banco Popular, handing it to Spain's biggest bank, Santander.
This was followed by the Italian government's bailout of two Venetian banks (see adjacent article), which swallowed €17 billion of public money. But it is not clear how the mountain of bad debts in economies like Italy can be unwound without triggering a new round of crisis.
Trouble
France, too, is in trouble: Prime Minister Edouard Philippe said the country is "dancing on a volcano" of €2.1 trillion of debt - equal to its total GDP.
According to US financial consultants Standard & Poor's, the UK's 1.8% growth rate last year was pumped up by an increase in consumer debt which will continue to rise, particularly because wages have been held down.
Global debt now makes up a larger proportion of GDP now than it did before the beginning of the financial crisis a decade ago.
The stimulus has failed to rebuild the economy because returns on investments aren't profitable enough for the private investors which dominate the world economy to judge them worth the risk.
The worst example is the UK, where exporters have used the weakness of the pound not to invest and take over more market share but merely to raise prices.
No solution
There are signs now that the mechanisms used to rescue the economy could now be putting it at risk. Capitalism has found no solutions to the devastating effects of the last economic crisis, and the next is already ripening.
The banks and big finance companies along with the major corporations which dominate the UK economy should be nationalised and investment decisions made by democratically elected bodies made up of workers in the industry and from wider society.
Italy's failed banks
Ian S Groeber, Plymouth Socialist Party
The Italian government has recently bailed out two failed Venetian banks; Veneto Banca and Banca Popolare di Vicenza.
These two lenders have faltered on the back of bad loans and a mis-selling scandal - problems of their own doing, and yet the Italian public will spend €17 billion to clean up the mess.
The banks' assets are being divided into 'good' and 'bad' assets. The 'good' ones will go to Italy's biggest retail bank, Intesa Sanpaolo, and the 'bad' taken by the government, and therefore the Italian public.
€12 billion of the €17 billion total will be spent by the government on guarantees to cover losses from the 'bad' assets, with the remaining €5 billion being kindly taken by Intesa for the privilege of acquiring the 'good' assets! A clear example of privatisation of profits while the public is burdened with 'bad' assets.
Also of note is the European Union (EU) Commission's response to this bailout. Following the 2008 financial crisis, the EU proposed rules with the intention that the public would no longer expect to fund bank bailouts unless other attempts have failed. Not all of these rules have been followed in this Italian case, yet the EU Commission fully condoned the bailout.
It shows again that the EU is a bosses' club, putting the rich above the poor by diverting public funds into the pockets of the bankers. In addition, we are yet to see if Intesa decides to close any of its newly acquired branches and how many jobs will be lost following this bailout.
We see in the example of Banca Popolare di Vicenza's scandal how the interests of a privately owned bank conflicts with the interests of societal welfare.
The bank purposely misled regulators and investors about its capital strength after lending money to customers so they would purchase the bank's shares; a move that not only manipulates market strength but is also potentially illegal in Italy.
There is a resemblance in Banca Popolare's actions to the London Interbank Offered Rate (Libor) scandal in which UK banks fraudulently altered their rates in order to profit from trades, and appeared more creditworthy than they actually were.
In this issue
What we think
Venezuela shows battle Corbyn would face
Socialist Party news and analysis
Striking back against poverty pay
Rashan Charles death: End police racism and austerity
Coventry: march following racist police killing
Government's tribunal fees defeat
40% of England's psychiatric wards are 'unsafe'
Marx's Capital at 150
Marx's Capital at 150: an unequalled analysis
Socialist Party workplace news
Angry Birmingham bin workers enter fifth week of strike action
Barts strike: Keep up the pressure on Serco and the trust!
Steel workers at Rom Ltd strike for a pay rise
Coordinated action needed to break pay restraint
End poverty pay for sleep-in care workers
RMT condemns Welsh government rail privatisation
Socialist Party reports and campaigns
Young, angry and fighting back
Young Socialists off to a flying start in Cardiff
Campaign fights closure of Chatsworth rehab ward
Support for Socialist Party campaigns at biggest ever Leeds Pride
Housing safety campaign kicks off in Coventry
Far-right thrown out of Newcastle
International socialist news and analysis
Venezuela: Capitalist offensive sharpens after assembly elections
Workers' struggles in Peru: eyewitness report
Trade Unionist and Socialist Coalition
How much reserves have councils got?
Global finance
Global finance: Are those storm clouds ahead?
Music review
Crunchy guitar and poignant dialogue in alt-rock homage to south Wales miners
Home | The Socialist 9 August 2017 | Join the Socialist Party
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