Monday, 5 July 2010

Never forget the reason we're in this mess - and that there are alternatives to cuts

Last week the BBC's Robert Peston posted a blog on the BBC website 'The risks of forcing banks off welfare'. It's an interesting post and of itself is thought provoking - is it in bad taste when £11bn welfare cuts have just been announced? Would the 'impartial' BBC allow a blog opposing the withdrawal of welfare to human beings?

However, in his honest appraisal of the state of the banks, Peston does reveal some useful information:

"At the peak of the financial crisis in late 2008, public-sector support for the worlds' banks - in the form of loans, guarantees, insurance and investment - was equivalent to a quarter of everything the world produces, or more than $12trillion.
In the UK, support reached a maximum of around £1.3trillion, almost 100% of GDP.

"These weren't just a few handouts. This was the biggest co-ordinated financial rescue operation the world had ever seen."

While £1.3 trillion was paid out in bank welfare, the unsustainable UK human welfare bill is just £0.19 trillion per year. And here, according to Peston are the UK payback terms:

"In the UK, for example, UK banks face a deadline of the end of 2012 to repay £165bn of high-quality liquid assets supplied to them by the Bank of England under the Special Liquidity Scheme.

"And over the same timescale, British banks will have to find £120bn to pay back debt that has been guaranteed by the Treasury under the Credit Guarantee Scheme (there is an option to roll over a third of these government guarantees to 2014)."

Right, so we have a annual deficit of £159 billion, and within 18 months the banking sector should repay £165 billion ... let's also remember that if it was not for these extraordinary levels of support the banks got, it is quite possible that the entire UK banking sector would have collapsed. Yet despite saving an entire industry, despite the fact we paid more to save it than it was actually worth at the time, we own virtually none of it, and control very little.

The UK bank bailout was the largest redistribution of wealth in our history. From poor to rich. The Emergency Budget consolidated that. There is a class war being waged, not by militant trade union leaders but by the state and big business.

There are of course alternatives to the Government's approach and that of its predecessor. We need to be publicising those alternatives, publicising the real reasons for the crisis and not accepting the need for cuts.

PCS has produced an excellent flyer for its members 'Our alternative to spending cuts', which could be used by any activist seeking an alternative to the cuts.

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