Evidence grows that UK is entering a sharp recessionUKWatch.net - 2 Nov 2008“In recent weeks, the global banking system has arguably undergone its biggest episode of instability since the start of the first world war,” the Bank of England’s bi-annual Financial Stability Report released this week states. Total losses as a result of the global financial crisis will reach some 1.8 trillion ($2.8 trillion), the Bank forecast. This is three times the UK’s annual public spending bill, 36 times the amount spent on aid to the developing countries and enough to provide for all the basic requirements?health, food, education and basic infrastructure?for 3 billion of the world’s poor. According to the bank, losses in the US have reached 1 trillion ($1.58 trillion). Losses among UK financial institutions total 122.6 billion so far, while losses in the euro zone area have risen to ?784.6 billion (625 billion). Commenting on the report, which he said was not for “those of a nervous disposition”, the BBC’s Robert Peston noted the Bank’s estimate “that 5,000 billion has implicitly or explicitly been made available by central banks and governments since April 2008 to support wholesale funding by banks,” which is “equivalent to about a sixth of the total annual economic output of the whole world”. Even so, the Bank warned that measures such as the UK’s 500 billion bailout were only a temporary palliative. Britain’s six largest financial institutions could lose up to 130 billion over the next five years, with the Bank stating that “even after accounting for recently announced capital-raisings which the UK government will help underwrite, the largest UK banks would need to shed around one-sixth of total assets to reduce leverage back to, say, 2003 levels.” “Risks remain in the financial system,” it stated, noting fears over the stability of emerging economies, the balance sheets of insurance companies, and the fragility of the commercial property markets. The financial crisis was “rooted in weaknesses within the financial system that developed during an extended global credit boom: rapid balance sheet expansion; the creation of assets whose liquidity and credit quality were uncertain in less benign conditions; and fragilities in funding structures,” the report continues. The Bank’s own figures bear this out. In 2001, the level of lending by UK banks to customers was equal to deposits but by 2008, they had lent out 700 billion more than they held. The value of lending to UK households rose from approximately 60 percent of GDP in 1998, to some 90 percent in 2007. Mortgage loans at 3.5 times income grew from 10 percent of homebuyers in 2004 to 35 percent four years later. The result is that the ratio of household debt to annual disposable income is 170 percent in the UK, compared to around 140 percent in the US, and an average of approximately 100 percent in Western Europe. Total mortgage, loan and credit debt stood at 1.44 billion in June 2008, outstripping the UK’s GDP. Yet the Bank goes on to claim that “few predicted” these “weaknesses” would cause “such dislocation in the global financial system.” If the Bank, and the government, were unprepared for events it was in part because they were completely taken in by their own propaganda eulogising the triumph of the “free market”. Only last year Brown proclaimed that a “new Golden Age” had begun, thanks to the “high value-added, talent-driven” City of London. But more fundamentally, a tiny layer of the super-rich were doing extremely well out of the huge profits generated by collateralized debt obligations, credit default swaps and the like, despite their being based on a mountain of debt backed by virtually no real value. It is the interests of this layer that have determined social and economic policy over the last two decades. And despite this having created what Charles Bean, the Bank’s deputy governor, has said is “possibly the largest financial crisis of its kind in human history” the concerns of this financial oligarchy continue to determine official policy. The last week saw 90 billion wiped off the FTSE 100 index, and the pound suffering a 10 percent fall against the dollar, to $1.53. Nick Parsons, from National Australia Bank, forecast that the pound could be as low as $1.40 by early 2009. “We will go down further because the problems the UK faces are worse than other countries. We are uniquely exposed because of the sheer amount of debt we’ve got,” he said. Official figures also showed a sharp contraction in GDP?down by 0.5 percent in the July to September period?the first fall in 16 years. The decline is particularly significant as it concerns the period prior to the onset of the financial meltdown of the last weeks. “It’s a big shock that the decline is so large. It is truly dire,” said Philip Shaw, chief economist at Investec. Peter Mandelson, the business secretary, was just as blunt during a trade visit to Russia. The UK faced an “unparalleled financial crisis,” he said. “I don’t think people have realised what the impact is going to be on our real economy, on businesses and jobs back home.” The scale of the crisis has caused an apparent volte-face in ruling circles. After more than a decade in which it has denounced any “interference” in the free market, and championed “light-touch” regulation, the Labour government is now involved in one of the largest state interventions anywhere in Europe. In addition to the 500 billion bailout, which does not include some 100 billion extended to Northern Rock, the government is to bring forward capital spending programmes in an effort to “kick-start” the economy. This week the government signalled that it would tear up its so-called 40 percent “golden rule” on public sector borrowing, introduced by Gordon Brown as chancellor in 1997 as proof of New Labour’s break with its reformist past. Without a trace of embarrassment, Alistair Darling, chancellor of the exchequer, told an audience at the Cass Business School on Wednesday, “Just as markets change, so should policy. Today, governments all over the world are using approaches that had until recently been consigned to policymaking history, but it is natural that the conduct of policy should evolve.” “Flexible” rules could enable government to borrow up to 3,225 for every person in the country; with some predicting government borrowing could reach 110 billion by 2011. The plan caused ardent New Labour supporter, the Guardian‘s Polly Toynbee, to excitedly exclaim that an “epic ideological battle has begun.” It was “Keynesian versus neo-conomist in the battle for Britain’s future”, she claimed, referring to Conservative criticism of the plan and opposition to the government’s abandonment of “laissez-faire” from a group of 16 economists in a letter to the Sunday Telegraph. “This is Labour’s great chance to show what good government can do to save people in time of need,” she said, while warning that “Labour would be rash to think pro-Keynesianism was a done deal.” In reality, the proposal bares no resemblance even to the limited reforms of the New Deal introduced by Franklin Roosevelt in 1933. Little concrete detail is currently available as to what will constitute the speeded-up public sector projects, which at any rate are heavily dependent on private finance. And both Brown and Darling have made clear that they will ensure any borrowing is swiftly reduced as soon as economic conditions allow. Moreover, the move has the backing of significant sections of big business, which recognise it as an extension of the government’s efforts to place the burden of the financial crisis onto working people. The Financial Times editorialised that while it was “galling” to see the rules on public sector borrowing relaxed, “Mr. Brown and Mr. Darling are doing the right thing,” noting “the private sector’s appetite to lend money to governments has never been bigger… As Adam Smith once remarked, there is a great deal of ruin in a nation.” The government’s “stimulus” plan in fact involves no help for the millions facing joblessness and home repossession. The Bank warned that 1.2 million UK homeowners are at risk of negative equity if house prices continue to fall sharply. Already house repossessions have climbed by 71 percent over the year, amidst warnings that some 25 percent of homeowners are under threat as house prices are expected to fall by 30 percent. With hundreds of thousands facing the loss of their jobs, Brown categorically ruled out any aid stating, “I can’t promise people that we will keep them in their last job if it becomes economically redundant. But we can promise people that we will help them into their next job.”
Fights, not deals can save workers’ jobsUKWatch.net - 2 Nov 2008There?s a right way and a wrong way for unions to confront job losses?and this was highlighted last week by the crisis in the manufacturing industry. The right way is based on strikes and protests to defend every job. The wrong way gives away pay and conditions in exchange for promises of security from the employers. The fight at Ford?s Southampton plant is an example of the former. Some 400 workers there walked out unofficially on Monday of last week in protest at threats to transfer production of the Ford Transit van to Turkey. They returned to work on the same day but by Friday action had flared again, with 40 walking out on the evening shift. Tony helped to organise the unofficial protest. He told Socialist Worker that the initiative came from longstanding workers he describes as a ?small, determined, crusty group? but who were cheered on by younger workers. ?People here feel cheated, lied to, and kept in the dark about the future of the plant,? he says. ?Some also feel that the union is moving too slowly?that?s why we had to act.? In response to the walk-out, the company has warned all those who took part that they could face disciplinary action, while ?ringleaders? have been threatened with the sack. ?It?s now up to our Unite union, at a local and national level, to take the fight forward,? says Tony. Backing ?They have the union machine to call on. If we had that backing, we could bring more than a thousand workers out.? Ford Southampton is one of many plants where jobs are threatened. The company has also refused to make any long-term commitment to its Halewood plant in Liverpool. These attacks are taking place across the industry. Last week Peugeot-Citreon announced massive production cuts. Chrysler has said it wants to slash a quarter of all its white collar jobs. Dave works at Nissan?s Sunderland plant where the company is halting production of its Micra and Note cars for two weeks because of lack of demand. ?I work on the Qashqai car line, which is not directly affected, but even here the mood is bleak,? he told Socialist Worker. ?Temporary workers and those on short term contracts are being sacked in December, and those of us who are permanent are worried about the future. ?People with five or more years experience are being offered redundancy. And we?ve already been forced to agree to pay cuts of 200 a month for new starters.? Nissan made profits of 4.9 billion last year, up on the previous year. Many other firms that have for years made startling profits from their workers? efforts are now seeking to slash their pay bill in order to keep costs down and their shareholders happy. They say that unless workers accept this logic factories will close. Unfortunately, some in the leadership of the trade union movement appear to have fallen for the trick. Last week workers at JCB were blackmailed into a deal which will see a reduction in their hours from 39 to 34 a week in order to cut back production?with a pay cut of around 50 a week. Laid off The company, which has already laid off 379 workers in Britain this year, said that unless workers accepted their offer, a further 350 jobs would go before the end of the year. Tragically, the GMB union allowed a ballot on the loaded question and greeted the result of the four to one vote in favour of the proposals as a show of ?social solidarity of union members in action?. Yet JCB is not a company in trouble?it is one of the top three construction equipment firms in the world. In 2006 its profits jumped by 35 percent to 149 million, and 2007 was better still. With profits of 187 million, JCB announced that ?sales, profits and market share reached record levels?, and that it had been ?the most successful year in our 62-year history?. By helping JCB cut its costs, the GMB will encourage a downward spiral in which jobs and wages will be traded for ever smaller guarantees of protection for workers that remain. This makes the example of struggle at Ford?s Southampton plant even more important. Tony says that there is now talk of Unite organising a national fight that combines this year?s pay round with the demand to keep the Transit at Southampton. This could see Ford workers from around the country rallying around the threatened plants. Under difficult circumstances, Southampton Ford workers have shown that they can put up a determined fight. Many trade unionists, including the local trades council, are hoping that Unite will call a national demonstration against any possible closure as part of building a wider fight. It is only this kind of action?not the selling of pay and conditions through backroom deals?that can prevent a jobs massacre. That?s a lesson that some of our trade union leaders badly need reminding of.
Policing “target communities”UKWatch.net - 2 Nov 2008The decision of the Court of Appeal that the state can place people under control orders (house arrest) without ever telling them what they are accused of has huge implications for civil rights. A control order works by tagging the individual around the ankle and restricting him or her to a house or flat for a set number of hours each day. When the individual leaves the premises, they have a set area in which they are able to move. The individual has to ring the tagging company a number of times each day from a dedicated phone and may also be required to report to a police station. The case of Ceri Bullivant underlines the dangers. A Muslim from Essex, Bullivant was put on trial before last Christmas for breaking the terms of a control order. His solicitor, Gareth Peirce, argued successfully for his acquittal and says he was cleared after it emerged that the basis for the control order was a tip-off from ?a friend of Ceri?s mother who, after drinking heavily, had phoned Scotland Yard, which failed to ever contact the caller to ask for further information?. The way in which anti-terror laws can be used for purposes other that those for which they were purportedly enacted are becoming legend. For instance, anti-terror powers were deployed against pensioner Walter Wolfgang for his protest at the 2005 Labour Party conference. He was forcibly ejected from the conference centre after observing that Jack Straw was talking ?nonsense?. The ensuing publicity helped Wolfgang to get elected to Labour?s National Executive Committee. Others to have fallen foul of the contentious legislation include arms protesters arrested outside London?s ExCeL exhibition centre. Most recently, it was used as the reason for freezing of the funds of Icelandic banks as they collapsed into bankruptcy. All this is aside of the 1,343 times that 46 councils have used anti-terror laws under the Regulation of Investigatory Powers Act for offences such as rogue trading, benefit fraud and anti-social behaviour. To find the root of this diminution of human rights, it is necessary to go back to the Birmingham pub bombings of 1974. The biggest mass murder in British history at the time claimed 21 lives and led to the passing into law of the first Prevention of Terrorism Act. Then Home Secretary Roy Jenkins introduced the PTA on November 25 1974 declaring that ?the powers? are draconian. In combination, they are unprecedented in peacetime.? The Bill bringing in seven-day pre-charge detention passed in record time, clearing both Houses of Parliament by November 29. The PTA was rewritten in 1976, 1984 and again in 1989. However, it continued to be used as emergency ?temporary? powers that had to be renewed each year. The first person arrested under the Act was Paul Hill, who was one of the innocent men subsequently convicted of the Guildford pub bombings. He served 15 years in prison before being freed by the Court of Appeal. A succession of miscarriages of justice followed over the next two decades, with the whole Irish Roman Catholic community becoming regarded as generally suspect. It is mistake to think that the PTA was brought in solely to combat Irish terrorism. The real agenda has been the gradual erosion of human rights in the name of security. This could be clearly seen at the start of the new millennium when the Government brought forward the Terrorism Act 2000 ? at a time of peace in Northern Ireland and before the events of September 11. The Terrorism Act doubled the period of time allowed for pre-charge detention from seven days to 14. It also broadened out the definition of terrorism beyond Irish groups. Terrorism was also to include ?the threat? of ?serious damage to property? in ways ?designed to influence government? for a ?political cause? anywhere in the world. Notably, there was no pretence of the legislation being temporary and so in need of renewal each year. The next step was the British Government?s response to the attacks on New York and Washington on September 11. This included the reintroduction of internment with the Anti-Terror Crime and Security Act. This allowed for foreign nationals who cannot be deported or removed for fear of torture abroad to be detained indefinitely without trial on the basis of secret intelligence that neither they nor their lawyers could view. After September 11, 12 men were taken almost immediately into custody in Belmarsh prison. They were then detained for three years until the House of Lords ruling the ATCSA unlawful under the Human Rights Act. This led to the next Prevention of Terrorism Act in March 2005 which introduced the concept of control orders. Those who had been held in Belmarsh were put under control orders. They still were not told of what they were accused. Bruce Kent, who has visited several men put under control orders since 2005, describes the system as ?callously cruel?. The veteran peace campaigner recalls a man under the conditions of his control order in north London not being allowed to visit Finsbury Park, which was 100 yards away from where he was living. However, he was permitted to go Clissold Park, which was three quarters of a mile away. Says Kent: ?At the same time, in the two hours that he was allowed out at lunchtime, he had to report to a police station in the opposite direction,? He describes another case in which ?a man under a control order was checking into the police station every day as required. On one occasion, he was just grabbed by the police and sent to Long Lartin prison.? In other cases, suspects were allowed to go to the mosque, but parts of the bus route they wanted to take were ruled outside the area of movement. This meant it was impossible to get there in time for prayers. At the time that control orders were first imposed, there was also an attempt under the PTA 2005 to increase the pre-charge detention period from 14 days to 90. However, in one of those rare victories for civil liberties, this was rejected in favour of 28 days. This still constituted a doubling of the previous limit and a quadrupling of Roy Jenkins? previous ?draconian? measure. More recently, Gordon Brown Government?s attempted to demonstrate its anti-terror credentials with an introducing 42 days? detention with charge. This was overwhelmingly defeated in the House of Lords, but it is unlikely that the House of Commons will let the issue lie indefinitely. Bruce Kent?s view is: ?The problem is that, with control orders, we have had indefinite detention for years. There is a tendency among some campaigners to focus on headline-grabbing issues like 42-day pre-charge detention, while ignoring the iniquity of control orders. It?s a bit like ignoring the elephant in the room.? The project that began back in November 1974 has come a long way and it is still a work in progress. First, it was the Irish who were the suspect community; now it is the Muslims. In the future, it could be another group and ultimately anyone who dissents. As Gareth Peirce warns: ?The continuing experiment is dangerous and insidious in more than one way. It has become very clear that, when one challenge is overcome, the goalposts are moved and a new system comes in.? The Court of Appeal?s recent decision to uphold the right to impose control orders without the subject knowing what they are charged with is another dangerous step.
