UK: Warnings Of Future Crisis

For opponents of the gleeful butchers of the coalition government, bent on destroying the State to pay for Britain’s deficit, while protecting their thieving friends in the City who caused the financial crisis in the first place, and turning a blind eye to the corporate tax avoiders who could make up the shortfall instead, there was good news on Friday, as the results of a by-election in Barnsley Central were announced.

The Liberal Democrats saw their share of the vote drop from 17.3% in last year’s General Election to just 4.1%, and the Tories saw their share of the vote drop from 17.3% to 8.2%. Although the former MP Eric Illsley left under a cloud, imprisoned for fiddling his expenses, Labour bounced back under their new candidate Dan Jarvis, a former soldier who served in Afghanistan and Iraq, who took 60.8% of the vote, and observed that the people of Barnsley Central were sending the “strongest possible message” to David Cameron and Nick Clegg.

“Your reckless policies, your broken promises and unfair cuts are letting our country down,” he said. “I grew up in Margaret Thatcher’s Britain. I remember how angry it made me feel. Whole communities abandoned to unemployment, public services run down, talents wasted, opportunities taken away. Thatcher was wrong then and Cameron is wrong now.”

The voters of Barnsley Central were not the only people to deliver a damning verdict on the government and its policies last week. On Tuesday, in testimony to the Commons Treasury Committee, Mervyn King, the Governor of the Bank of England, said, as the Guardian described it, that “people made unemployed and businesses bankrupted during the crisis had every reason to be resentful and voice their protest.” King told the committee that “the billions spent bailing out the banks and the need for public spending cuts were the fault of the financial services sector.”

These are his exact words:

The price of this financial crisis is being borne by people who absolutely did not cause it. Now is the period when the cost is being paid, I’m surprised that the degree of public anger has not been greater than it has.

I was surely not the only reader bemused to find that I agreed 100 percent with Mervyn King’s analysis, but I couldn’t find anyone else in the Guardian prepared to point a finger so unerringly at the banking sector, and, by extension, at the coaltion government that has chosen to present its unprecendented programme of cuts to State funding for everything from the arts to the universities and from welfare to the NHS as being solely the fault of the Labour government.

The actor Bill Nighy popped up to claim that King’s comment that “he was ’surprised that the degree of public anger has not been greater than it has’ suggests that either he had a very high expectation, or that he has misread the public mood.” Nighy, who noted, “I have been arguing for the last year that the banks, hedge funds and other titans of the City of London whose gambling got us into this trouble should pay to clean up the mess they caused,” took the opportunity to point out that he is “an ambassador for the Robin Hood Tax campaign, which calls for a tiny tax of just 0.05% on every casino-style financial transaction in order to help poor people, reverse public service cuts at home and abroad, and tackle climate change.”

This is all very worthwhile, but either Nighy has a different concept of anger to me (and Mervyn King) or it was he who had misread the governor’s remarks. The Robin Hood Tax campaign is one thing, but it is quite another for citizens to rise up in vast numbers, brandishing pitchforks, and setting off for the City with a Tahrir Square-style determinaton to not return home until the thieves responsible have been toppled from power, and the balance of blame and payment shifted to where it belongs.

Elsewhere, columnist Deborah Orr also turned up, claiming, “Yes, Mervyn King, we know the banks are to blame,” but failing, also, to summon up the anger that King sees as bafflingly absent from British life. Instead readers received a sound enough history lesson:

Both main parties had busied themselves with handing power over to the international financial sector for three decades, and their political surrender created an unaccountable financial elite that was and is, famously, too big to fail. It is too big, even, to be bossed around now that it has failed and been bailed out, apparently. A couple of years on from the crash, and still the nation waits fretfully for a coming report that will suggest some possible reforms. How can reform of the public services be so urgent, and reform of the financial sector so . . . laissez faire? It’s purely because politicians have themselves made the financial sector so monumentally powerful that it has become an unelected court of Versailles. Their paralysis is born of a refusal to own up, even to themselves.

This is all well and good — and true — but, again, there is no mention of pitchforks.

Beyond the students and schoolchildren who brought palpable anger back to Britain’s streets before Christmas, and who actually threatened the malignant politicians risking the collapse of Britain’s university system just to make overstretched young people even more in debt, perhaps the only people prepared to contemplate pitchforks, but to decide instead that economically disruptive political theatre is a good way to start the revolution, are the activists of UK Uncut, who are targeting banks and high street chains for their thievery and tax avoidance, with a simple but powerful message — and one that focuses unerringly on the only analysis that matters: recognizing that the banks, corporations and hypocritical politicians are the enemy, and that only the rich and the super-rich will benefit if we the people fail to make our voices heard.

This could be through the kind of anarchic street theatre favoured by UK Uncut, which has a long and powerful history in the UK, or though the creation of our own Tahrir Square, or, for that matter, through the creation of our own version of the occupation of the capitol building in Madison, Wisconsin, where, for three weeks, up to 100,000 people have been braving the winter cold in the first concerted opposition to further Republican greed at the expense of workers that has been seen in the US for decades.

If America can do it and we can’t, then we really are in the deepest of holes, and perhaps deserve to have so many of the things that are central to any notion of the common good — the NHS, the welfare state, our universities — privatized or otherwise broken. Forget the further impoverishment of the poor, the attacks on the unemployed and the disabled, the loss of hundreds of thousands of jobs and livelihoods, the increase in homelessness, and even the criminalization of homelessness, and Ignore the fact that Cameron, Osborne, Clegg and their cronies have no mandate for these sweeping changes, and that they lied or omitted to mention most of them on the campaign trail or in their manifestoes.

Forget too, if you will, that, in an interview with the Daily Telegraph on Friday, Meryvn King warned that Britain risks another financial crisis unless it undertakes fundamental reform of the banking sector, even though the government is still furiously blaming the Labour government and ordinary people for the country’s financial problems, and George Osborne is “believed to be cautious about major structural changes” to the banking sector, even though these should, logically, involve more than empty hand-wringing about the kinds of bonuses announced recently, and the indecently small amounts of tax paid by banks, and should also lead to what the Guardian described as “a clear separation between high-street and investment banking operations to prevent the public from footing the bill for catastrophes on City trading floors.”

Readers who want to be truly alarmed by George Osborne’s love affair with bankers and big business should read George Monbiot’s recent columns about the Chancellor’s deliberate attempts to make Britain a kind of offshore tax haven, crippling “the common good” still further, and should compare the Chancellor’s position to that taken by Mervyn King, in some of the key passages in his interview with the Telegraph:

[A]lthough Mr King thinks the worst of the crisis was handled correctly, he does not think we are out of the woods. “We allowed a [banking] system to build up which contained the seeds of its own destruction”, and this has still not been remedied: “We’ve not yet solved the ‘too big to fail’ or, as I prefer to call it, the ‘too important to fail’ problem. The concept of being too important to fail should have no place in a market economy.”

I quote to him the recent remarks of Stephen Hester, the chief executive of the largely publicly owned RBS, in which he seemed simultaneously to say that RBS should pay little tax because it had made little profit, but also that it should pay big bonuses because its investment arm had made big profits. Wasn’t there some sort of contradiction? Mr King nods. The remark illustrates, he says, the clash between the needs of high-street banking and the ambitions of investment banking. The key question, in his view, is not why an individual bank says it needs to pay bonuses (the reason cited is always the need to keep talent), but: “Why do banks in general want to pay bonuses? It’s because they live in a ‘too big to fail’ world in which the state will bail them out on the downside.” They are tempted to excessive risk and excessive payments: “It is very unproductive to single out individuals. Bankers were given incentives to behave the way they did. That’s what needs to change. We must resolve this problem.” He has high hopes that the independent banking commission will do so. In the Governor’s mind, this is not ultimately a technical but a moral question. It goes to the heart of whether people are ready to accept life in a free economy.

Over the past 30 years, he says: “We changed Britain away from a sclerotic economy with inefficiencies and problems in labour relations. Everyone got to the point where we no longer expected government to bail us out. Everyone bought in to market discipline. We were all better off. It was working very successfully.” But now, people have every right to be angry, because “out of what seems to them a clear blue sky”, the crisis comes, they find they do lose their jobs and there’s the sharpest fall in world trade since the 1930s. “But, surprise, surprise, the institutions bailed out were those at the heart of the crisis. Hedge funds were allowed to fail, 3,000 of them have gone, but banks weren’t.” Could there be a repeat? “Yes! The problem is still there. The ’search for yield’ goes on. Imbalances are beginning to grow again.”

Are you angry yet? I certainly hope so.