There is a real alternative plan for the economy and RBS

Today I came across two news items which struck me as absurd. In the first David Cameron was making a speech in which he defended the government's economic 'policy of deficit reduction', which is better known as austerity. In his speech he came out with all the usual stuff, including the fact that reducing government spending was the only way to cut the deficit, and that there was no alternative. But clearly he is wrong. As others, including even Vince Cable have stated, there are very real alternatives. In a shrinking or stagnant economy its more difficult to reduce a deficit, and that, after three years of austerity is where we are now. 

The problem in our economy is lack of demand caused by high levels of unemployment, and falling living standards for the 99%. In those conditions people can't afford to buy, and tax revenues fall, especially when commodity prices are rising. If governments increase spending on much needed infrastructure projects such as social housing that stimulus creates jobs, raises tax revenues and revives the economy. You don't have to be a Keynesian to subscribe to this view. The key point though, is that it has never been cheaper to borrow money, so this is the time for governments to spend. Furthermore, there is really no need for our government to borrow, it can create money through quantitative easing (QE). The Bank of England (BoE) has created £375 billion of dosh through QE without any beneficial outcome because it has been wasted on buying bonds. In effect all this has done is benefit the very banks which caused the crisis in the first place by increasing their profits! What we really need is green QE, which means spending money created by the BoE on building environmentally friendly homes, investing in renewables and creating a million green jobs. This will revive our economy, help end the misery of unemployment, create the renewable energy we so desperately need, and move us towards  a green economy for the future.

The second bit of news was as priceless as Cameron's failed analysis of the 'need' for austerity; Mervyn King who is still governor of the BoE today put forward a cunning plan to sell off the infamous Royal Bank of Scotland (RBS). This consisted of splitting RBS into a 'good bank', with all the profitable bits, and a 'bad bank' containing loads of nasty debt. There is a huge problem with this plan because the private sector gets the good bits and we, i.e. muggins the taxpayer, gets to pick up the bill for all the nasty stuff, which we will no doubt be paying off for the next generation or so. But there is a much better plan. Split RBS and give the 'good' parts to the taxpayer to create a green national investment bank, and give the 'bad' bits back to the people who created the problem in the first place -  the bankers and their shareholders.

These two news items speak volumes about the people who run our country. They live in the past. They have no idea of what is good for the UK and the people who live here. They serve the interests of a narrow and privileged elite. These are the real benefit scroungers - to use their own terminology. They leach off the state to the tune of £billions whilst seeking to deny the poorest and most disadvantaged people in our country the tiny amounts of money needed to keep them going. They also haven't a clue about the restructuring our economy needs to undergo if we are going to create a green economy to deal with climate change. We deserve much better than his, and the only way to achieve real change is to campaign, agitate, and ultimately vote for a positive alternative. That alternative is the Green Party. Join us and help make that change happen. There is no time to lose.

Now the banks must be brought under democratic control

Its not that long ago that UK taxpayers bailed-out UK banks to the tune of £1.2 trillion. This, in the UK alone, is a sum which dwarfs the amounts being spent on the bailouts of five Eurozone countries - Greece, Ireland, Portugal, Spain and now Cyprus. It was a scandal that this happened and banks such as Northern Rock, RBS and HBOS (which was merged with Lloyds TSB) were allowed to remain under private management and the senior managers continued to award themselves, and traders, vast bonuses. Nobody was really held to account. Nobody went to gaol, despite the damage done to the UK economy, which has lead to savage cuts in jobs and benefits, affecting the very taxpayers who funded the bailout - though Tory chancellor George Osborne couldn't find £81 billion to help them. As I have said before, this is pretty much the biggest heist in history.

But now we find out that Barclays Bank has been fined £290 million by the FSA for fiddling the LIBOR interbank lending rate. Not just Barclays though, apparently they were in cahoots with other banks. This kind of stuff, coming on top of the bailout, beggars belief. Barclays boss Bob Diamond earned £20.9 million in 2011 as chief executive. Did he know what was going on? One thing we have learned from the News International scandal is that top people just can't remember whether they knew anything or not, so perhaps Bob won't.

Bob Diamond: earned £20.9 million in 2011

This is an unfolding scandal so we don't know what the outcome will be but it seems incredible that nobody will face criminal charges. It has to be some sort of fraudulent activity surely? Those affected, and there are bound to be many companies and individuals who lost money, will be asking these questions and expecting compensation. And all this comes on top of the recent RBS IT debacle.

For me, the case for breaking up and nationalising the banks has become unanswerable. There will never be a better opportunity because most of them are bust anyway. For a start, RBS and Lloyds must be brought under national democratic control. They should be broken up. We need smaller, regionally-based banks which can help to grow jobs by investing in local communities, and we need mutuals and credit unions to support and democratise finance in our economy. Finally, can anyone really understand that a UK government can give such support to the banks but can't find £69 million to bailout a hospital trust?

Banker's bonuses: why we are being screwed

In September 2008 after the collapse of Lehman Bros bank it became obvious to economists and senior government officials that the world financial system was in danger of collapse, and that banks would be wiped out in the process. In the UK Gordon Brown's Labour government took action and bailed out Royal Bank of Scotland (RBS) and Halifax Bank of Scotland and pushed through a merger between HBoS and Lloyds TSB. In the process the taxpayer acquired 84% of RBS and 47% of Lloyds TSB. The full cost of the UK bailout taking into account Northern Rock and other banks was a whopping £1.2 trillion. The bailout was repeated in other countries, with the TARP, for example, in the USA, and lead to the stabilisation of the global banking system.

What is critical about this is that if the bailout hadn't happened all the banks would have gone bust - not just those who were directly bailed out by the taxpayer. Since 2008 'free' market apologists have tried to claim that banks such as Barclays and HSBC were always OK, as if they would not have crashed, but this is not the case, the fact is that the global banking system was saved by taxpayers.

Lehman Bros HQ

Up to the collapse of Lehmans a culture of huge bonus payouts had become the norm in banking, and in fact when Lehman's collapsed they were still trying to pay out $6 billion in bonuses. After the bailout the culture of huge bonuses continued even at taxpayer 'owned' banks, much to the dismay of the taxpayers themselves. The banking collapse lead directly to an economic collapse which in turn has lead to a sovereign debt crisis.In the process, the UK economy has contracted by 7%. Having paid for the bailout we are now paying for the crisis with the Coalition government's austerity programme. The cost is increasing unemployment, pay freezes, pension cuts  and an attack on the living standards of all but the wealthiest. Bad as things are in the UK, they are far worse in countries like Greece and Ireland, and the Eurozone is itself in danger of collapse.

What does all this tell us? It shows the power of financial capitalism and that our democracies are dominated not just by financial capitalism but also the other big corporations. In the West, which has been hardest hit, politicians have put the interests of financial capitalism above the rights and interests of their own people. The aim has been to preserve the capitalist system and to continue 'business as usual' at all costs, even though it is obvious that the austerity programme in the UK and elsewhere isn't working, at that it will probably make things worse rather than better.

The latest manifestation of the row about bankers bonuses centres around Stephen Hester who is the CEO of taxpayer 'owned' RBS. He was awarded £963,000 in shares as a bonus this year, despite the fact that RBS is still struggling and 33,000 employees have lost their jobs. David Cameron claims there is nothing the government can do about this but that is clearly not true. The Independent revealed that there is nothing in Hester's contract that would prevent the government denying him a bonus. There have been claims that the RBS board would have resigned but so what? They are not the only people who can run a bank. The fact is that the government is taking sides and its not our side, its the bankers side. They are putting the interests of capitalists above our interests. RBS is clearly not being run in the national interest. The bank should be fully nationalised and turned into a green national investment bank to make the loans that  businesses need to help create jobs. That is something that RBS and the other private sector banks are failing to do.