The New Worker
The Weekly paper of the New Communist Party of Britain
Week commencing 29th March 2013
THE BANKING crisis in Cyprus is the first chink of a new round of big bank crises within western capitalism. The blatant seizure of depositors’ savings has sent big savers all round the world into a state of extreme nervousness. They know that the Cypriot bank is not the only bank in dire trouble. Most western banks are still seriously under-capitalised. They keep up their shiny facades but behind there is very little in the way of resources and a sudden loss of confidence by savers, who may want to withdraw their money and put it under the mattress or invest it in something more solid like gold, land or art treasures, will see these banks crashing like dominoes.
The giant US bank JP Morgan, headed by Jamie Dimon who boasts of two Treasury Secretaries on his payroll, is reported to be a hollow shell kept up by spin and hot air alone. Many other major banks are being accused of fraud lying about their situation.
The wealthier savers of the Bank of Cyprus include many very wealthy Russian oligarchs who transferred their spoils gained in the aftermath of the fall of the Soviet Union. This is why the European Union and Germany in particular see this as a worthwhile pot to plunder. And appeals from the Cypriot government to the Putin government have elicited little sympathy for the plight of those oligarchs who stash their money in Cyprus to avoid Russian taxes.
But Cyprus is not the only country to plunder the savings of its citizens. The Bank of England has been doing this indirectly for years with its zero rate of interest. This does not mean that manufacturers, small businesses and home buyers can have zero rated loans. Only the big banks benefit from this. If they lend the money on they certainly charge interest rates in line with global markets and keep the difference.
This was supposed to help them replenish their empty coffers after the 2008 banking collapse and it went handin- hand with quantitative easing, which raised inflation and left savers properly stitched up. When the savers are multi-millionaires, this is just one lot of capitalists robbing another. But it is a different matter when it is workers’ pension funds.
But the big banks have not used these resources to build their reserves, nor have they lent the money to manufacturers, small businesses or home buyers. They have carried on as before, speculating in futures, hedge funds, wind, water and fairy dust.
They have brought themselves back to where they were in 2007 only this time western capitalist governments can no longer bail them out. They may plead they are “too big to fail” and threaten the scenario of cash machines with no money, companies with no funds to meet payrolls and millions of people with no money to buy day-to-day necessities but it may come to that. Whatever happens, it is going to be yet more hell for the working class of Europe and the United States — unless they get together, rise up and say they’re just not taking anymore of this.
Meanwhile the BRICS nations, Brazil, Russia, India, China and South Africa have been meeting in South Africa and changing their structure from a simple trading group to something with a little more political bite. In contrast with the US and Europe, their economies are expanding on average by four per cent.
They are talking about a “fairer world”, “social justice” and defending countries like Syria from imperialist aggression — and expanding their alliance to include more countries. And they don’t deal in wind, water and fairy dust. This could mean the long-suffering working classes of Africa, Asia, the Middle East and Latin America might get some improvement in their living standards.