- Created: Tuesday, 14 April 2009 14:49
- Written by David Yaffe
FRFI 205 October / November 2008
The turmoil in global financial markets has finally forced Labour’s smug Chancellor Alistair Darling to face up to reality. In a short period of six months, Britain, according to Darling, has gone from being best placed of the G7 major capitalist countries to withstand global economic turbulence (March), to facing an economic downturn that looked set to be more profound and long lasting than initially expected (mid-July), to confronting an economic climate that is ‘arguably the worst in 60 years’ (end of August). DAVID YAFFE reports on the impact of the financial storm now hitting the British economy.
To prevent the global financial system going into meltdown, over an extraordinary period of ten days from 7 September, the most right-wing neo-liberal US government ever nationalised the two giant mortgage providers Fannie Mae and Freddie Mac; refused to bail out the fourth largest investment bank, Lehman Brothers; helped direct the takeover of investment bank Merrill Lynch by Bank of America and rescued the world’s biggest insurer AIG, by lending it $85bn in return for an 80% stake, to prevent it going bankrupt. In addition the world’s central banks injected some $550bn into the money markets in an effort to get them functioning adequately again. Finally came a last-ditch US government plan to create a $700bn fund to buy toxic assets – value unknown – from the banks in an attempt to ease the credit crunch. This is a desperate effort to socialise the unsupportable debt of a parasitic and decaying capitalism.