The New Worker

The Weekly paper of the New Communist Party of Britain

Week commencing 14th November, 2008




Arctic convoy veterans at the Soviet Memorial

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Lead 

THE MOTHER OF ALL RECESSIONS


by Daphne Liddle

MERVYN KING, Governor of the Bank of England, last Wednesday told a press conference that Britain is already in recession in the largest global economic crisis “since the outbreak of the First World War” – implying this is a bigger crash than 1929.

 And soaring unemployment figures published the same day tell the same grim story.

 The number of people now out of work in Britain has risen by 140,000 to 1.82 million in the three months to September, bringing the unemployment rate up to 5.8 per cent from 5.4 per cent, according to Government figures. This is the biggest increase in 11 years.

 The number of people claiming Jobseekers’ Allowance also rose by 36,500 to 980,900 in October, which is the largest increase since 1992. Economists are predicting that two million people will be unemployed within a few months.

 King told the media that “policy makers” are ready to lower the basic rate of interest “as low as needed” to prevent the current recession from “fuelling deflationary pressures”. The Bank of England report had said that inflation may slow “well below” their two per cent goal in 2009.

 King was asked if he was prepared to take the rates as low as zero and replied that they “are prepared to cut bank rate to whatever level is necessary” to make sure that inflation hits the bank’s targets.

 He claimed that a worldwide fall in commodity prices, especially oil and gas, has ended any dangers of too much inflation and replaced them with a threat of deflation.

 But in a brief aside he did mention that as far as Britain was concerned the falling level of the pound compared to other currencies could make goods in the shops more expensive.

 In other words, workers and pensioners doing their regular shopping will experience higher food bills while having to rely on the good heartedness of the petrol and domestic fuel companies to pass on the reduced commodity prices to customers. In the meantime the Government and other employers will be using the reduced inflation figures to try to cap wages.

 The Bank of England report also showed that the pound has reached a record low against the euro, fuelling speculation that Gordon Brown may soon find that parity between the pound and the euro would be a good time for Britain to join the single European currency.

Sterling dropped to 82.38 pence per euro, extending its fall this year to 10 per cent. Against the dollar, it dropped to the lowest since August 2002, falling to $1.5202 and has lost a quarter of its value since January.

 The Bank of England has already cut the benchmark rate twice in the last month, reducing it by 1.5 percentage points last week to a five-decade low of three per cent.

 The slump has worsened in the past month, with unemployment rising and house prices falling at the fastest pace since the early 1990s and manufacturing is in its worst recession since the early 1980s.

 The Bank of England’s forecasts – which tend to err on the optimistic side – show that the British economy will contract through 2009 and inflation will go below the Government’s one per cent minimum unless it cuts rates further.

 King was asked if he had underestimated the risks facing the economy and replied: “The world has changed” since the collapse of Lehman Brothers in September.

 The number of manufacturing jobs fell to 2.86 million, the lowest figure since records began in 1978. TUC general secretary Brendan Barber said: “The signs are that redundancies are coming even faster since these figures were collected. Countering unemployment must be public policy priority number one.”

 ING economist James Knightley said that the last recession in the early 1990s saw 31 consecutive monthly rises in unemployment.

 “We are likely to have plenty more bad news on the labour market to come,” he warned. He said the number of those out of work would “push towards 2.5 million in 2010”.

 Derek Simpson, joint general secretary of the giant Unite trade union, called for a programme of Government intervention.
 
 “Only urgent and widespread action by Government to protect jobs and homes will help hard-pressed families through the worst of this global turmoil,” he said.

 And GMB general secretary Paul Kenny said: “The Chancellor is right to spend money to keep people in work rather than spend money on unemployment benefit.”
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Editorials

Pensioners can speak for themselves

BROADCASTER Joan Bakewell last week told the press that she was happy to accept the position – appointed to her by Harriet Harman – of being Britain’s “Voice for the elderly”. We were startled; as far as we were concerned the elderly already had a voice: the National Pensioners’ Convention (NPC) – a democratic body with elected leaders, well debated policies and a list of demands that they regularly present to the Government through lobbies, demonstrations, pickets, letters to MPs and so on. The Government should be in no doubt at all about what pensioners in this country want and their priorities are a substantial rise in the basic state pension and the restoration of the link between the basic pension level and average earnings. Bakewell’s stated priorities are public toilets – a noble cause but not top of the list.

We rang the NPC and discovered that they had not been consulted nor informed of the decision to appoint Joan Bakewell. Bakewell is highly articulate and has supported one or two NPC petitions. But she has not been elected by anyone. She has been imposed on the elderly and the real voice of the elderly has been totally ignored. The implied message from the Government to the NPC is that, as far as we are concerned you don’t exist and we know better than the pensioners themselves what is best for them.

By doing this the Government can ignore the real demands of the pensioners and give their attention only to the issues that Bakewell raises. It’s an old trick of colonial governments in the face of popular uprisings – to dig out some quasi chieftain or king and appoint them representative for the whole people, ignoring the real voices of the popular movement while appearing to listen to the people’s demands.

It didn’t work then and we are sure the pensioners will not allow it to work now. They are more likely to redouble their efforts to make sure MPs and the Government cannot avoid hearing their real voice – and the whole labour movement should support them.

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Bankers rule

 
WORKERS throughout the country are angry that many of the leading banks, in spite of receiving generous bail outs from the taxpayers to save them from collapse in the current crisis, are still continuing with their policies of awarding huge bonuses to their fat-cat directors and top staff and spending hundreds of thousands of pounds on Christmas parties for their elite staff.

They are totally ignoring the instructions voiced a month ago by Gordon Brown when the bail outs were granted. They also dragged their heels in passing on the 1.5 per cent cut in the Bank of England basic rate to their customers.
What is happening demonstrates so clearly relations between the elected government and capital in a capitalist society. The Prime Minister can urge, plead and cajole the bankers to spare a thought for the taxpayers they are robbing but he cannot command them.

He had to bail them out because they control the finances of the country, they have their claws around the arteries of money that pay wages, enable buying and selling, transport and so on. If the big banks were allowed to collapse nearly all economic activity in the country would grind to a halt and there would be at first shortages and hunger and then anger and uprisings.

Railtrack a few years ago  ran the railway infrastructure very badly while paying vast dividends to its shareholders and continually demanding more and more taxpayer bailouts. They knew the Government could not allow the railways to collapse and would have to keep on paying up.

When the Government did finally take the system back into public ownership the shareholder howled and claimed they had been robbed. Now Network Rail is Government-owned, and despite the Government’s declared intention of eventually restoring it to the private sector, it has not yet done so. It would just be setting itself up for more of the same blackmail.

The implications are obvious. Banks that blackmail the Government, demanding bailouts while squandering money on bonuses should be nationalised – permanently. It is a demand unlikely to be achieved without first achieving a socialist revolution but it is a demand worth raising publicly because the working class can now plainly see the justice and importance of it.

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