The New Worker
The Weekly paper of the New Communist Party of Britain
Week commencing 14th November, 2008
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THE MOTHER OF ALL RECESSIONS
by Daphne Liddle
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
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
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
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.
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
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
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
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
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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