We need an urgent debate among our class to win acceptance for the position that banks must pay the bill, not workers. The banks’ debts are not our debts.
Why wreck the real economy to save dead banks? Insisting there will be no defaults is only protecting a reckless financial sector from assuming its responsibility.
We say clearly, let the banks default. To those who say we can’t let the banks go, we say why can’t we? They are the problem, and not part of the solution. We must refuse to play to the bankers’ rules and respond to our own interests.
It is not as though defaults never happen in history. It is just that nowadays they are rarely referred to; there is a veil of silence.
Yet defaults by sovereigns following debt-crises, whether they are city-states or kingdoms or empires or revolutionary states, are as old as sovereign borrowing and stretch back not just centuries but over two thousand years.
In the modern world there is the recent example of Argentina. In the 1990s it ran up huge debts. Its creditors, including the IMF, were demanding draconian anti-worker measures. Then, in 2002, Argentina defaulted on its debt repayments as its problems mounted, with 25 per cent unemployment, the economy grinding to a halt and signs of money circulation stopping.
The IMF, the USA and the EU were all demanding austerity measures. Argentina refused to accept any conditions imposed by outside bodies. It defaulted. Argentina decided to rebuild its economy. It worked with workers and trades unions, not against them. Times were very hard, but the economy recovered and eventually they even repaid their debts (very generous of them). Its economy has grown by 50 per cent since 2003.
Rather than accept the debt created by pouring money into the banks to save the capitalists’ bacon, rather than accept years of cuts in pay and services, privatisation, tax rises and huge hikes in unemployment, let us disown their debt and take alternative measures to support our real economy.
The City is characterised by bumper bonus payments, risky investments, lack of regulation and greed – and they are back into their old ways already while lecturing us to do without. It is time to act, as the banks are not popular.
The Financial Ombudsman Service has revealed that tens of thousands of complaints are being launched against them, with the big banks topping the list (Lloyds, Barclays, HSBC.) The most common complaints were to do with PPI, credit cards and mis-sold policies. In the decade before the crisis hit, only 3 per cent of bank lending went to manufacturing industry. Some people think the City must be saved at any cost. We don’t – it’s a parasite.
Bailing out the banks is pouring our money into their black hole – it will go on and on, just as it is in Ireland. Now we too are to bail out Ireland’s banks. Who is next?
The logic of bailout means this commitment is open-ended. In the long run, even sooner, it will beggar us all.