As the credit crunch hits the economic system worldwide, we see governments frantically attempting to put blocks in front of a run-away train to economic catastrophe.
In the United States, the Bush regime has stepped in to buy up the failing mortgage giants, Fannie Mae and Freddie Mac. The Financial Times correctly called this “nationalisation by another name”, an unheard of move by a neo-conservative government, going against all that they stand for.
The US Treasury supremo Henry Paulson was stampeded into making this move when banks in China and Europe, main investors in these two mortgage corporations, the largest in the USA, threatened to call in their debts. This would have led to an even more serious situation if Paulson had not acted. This move was followed by the Bank of America being forced to buy another failing investment bank, Merrill Lynch, for the knock down price of $50 billion (US). This was a consequence of the collapse of another big investment bank Lehman Brothers.
However government intervention either in the USA or in Britain cannot head off a slump in the housing market, nor the collapse of banks and indeed the airlines! Many economists are predicting a further collapse of US banks and of many airlines. The USA hoped to find a way out of this mess with increased exports, thanks to a weaker dollar, but with the economy slowing down simultaneously in Europe, China and Japan, this is unlikely.
As a result unemployment climbed to 6.1 per cent in the USA whilst in Britain it was predicted in some quarters that unemployment could rise to two million. In September the campaign group Credit Action released staggering figures on the levels of personal debt in Britain. One person is declared bankrupt or insolvent every five minutes and 660 people became unemployed every day during the June-August period and an average of 104 homes are repossessed every day! The Council of Mortgage Lenders estimates this figure will rise to an average of 123 a day by the end of this year and citizens advice bureaux are dealing with 6,600 debt problems on a daily basis.
Britain’s economy froze between April and June this year for the first time since the early 1990s, according to the Office for National Statistics. Almost 16 years of economic expansion is at an end. With a pound weaker against the dollar and the Euro there is a likelihood of increases in inflation. Recession in the British economy is now predicted by economic analysts at Commerzbank and by the Organisation for Economic Cooperation and Development (OECD). For its part the Bank of England predicted that 2,000 people would lose their jobs every day until the end of December 2008.
The weaker pound will mean an increase in imported goods, in particular fuel. At the same time the Brown government is standing firm on any significant wage increases for public sector workers. After years and years of wage restraint, tempers are rising among workers. The doctored lap-dog of the Labour Party, the Trades Union Congress, is now forced to snap at its masters’ heels, with pressure increasing from union members. Workers should realise that we cannot rely on either the TUC, Unison, Unite! or any of the other unions to realistically struggle for better wages. Their solution is in our own hands. The bus workers strike in London in September was an early sign of growing wage discontent.
Anarchists should argue the case for action around wage struggle in the workplaces. At the same time, they should increase their agitation and propaganda in general, both at work and in the neighbourhood, with the message that life does not have to be like this and that a different future is possible. If we do not offer both an inspiring vision and encourage and support radical answers to the economic slump on a practical level, then the vacuum opening up in society, with the collapse of the Left, will be filled by the radical right.