From Socialist Voice, April 2010

Have you €27,000 to give the banks?

“The banks played fast and loose with the economic interests of this country,” Brian Lenihan stated. And to punish them he then outlined the most generous welfare scheme ever attempted by this state.
        A conservative estimate (taken from Enda Kenny, leader of Fine Gael) is that the welfare cheque given the banks on 30 March will cost every home €27,000. The Labour Party spokesperson on finance, Joan Burton, said the transfers of money from the state (i.e. the taxpayers) to Anglo-Irish Bank alone will cost every family €22,000. The likely figure and cost is far higher for every working family as we suffer attacks on our jobs, pay, and pensions.
        On top of the €4 billion already given to Anglo-Irish, €8.3 billion was committed this month, with a possible additional €10 billion necessary in the coming years. And that’s just one bank!
        It would be easy to almost laugh away what appear to be make-believe figures; but when the problem is explained as the equivalent of every family handing a cheque for €22,000 to the bank, the grim reality hits home, and the unashamed support for a failed system from a failed Government is revealed.
        In addition to this, AIB will require, and get, €7.4 billion, Bank of Ireland €2.7 billion, Irish Nationwide €2.6 billion, and the EBS €875 million.
        As has been argued on these pages for some time, we are witnessing a massive and unprecedented transfer of wealth from working people and their families to monopoly capital and in particular to finance capital.
        The bail-out of the banking system is part of a strategy to save the existing establishment but more fundamentally to sustain the foundations on which profit in the capitalist system is obtained: financial services.
        For Cowen it appears this simple: “Capital had been wiped out, and we need to put the banking system back into place.” But this totally denies the reality that for the last thirty or forty years profits from financial services have grown out of all proportion to any real value they create for society.
        Financial services have become the main source of investment, and profit, for capital accumulated in the system. We have arguably witnessed the bizarre scenario whereby money makes more money without any product or service in between (as outlined in a previous issue of Socialist Voice). Capital created more capital by means of a range of financial products and mathematical formulas.
        Coupled with the housing and mortgage bubble, now suffering from a crisis of overproduction, this created a mammoth sector completely out of proportion to its required size as part of any sustainable economy.
        Many establishment critiques of both the NAMA project and the recapitalisation being pursued by this Government are convinced that these projects will at least double our national debt while also making state borrowing from some sources costlier, and they could even bankrupt the state within a few years.
        The premise upon which NAMA operates is that property prices will rise by at least 10 per cent in the coming years. However (again as described in previous issues), for this to happen Irish banks must release credit at a rate seen during the boom years. This is not just unlikely but impossible, given their debts to international creditors that the banks need to pay off.
        So are the billions being handed over really going to release credit to the system, or will they be used to pay for the unsustainable short-term drive for profits at any cost witnessed over the last few decades? Are the policies being pursued really about the “national interest,” or are they about the interest of the system itself?
        It is worth noting in addition to all the figures mentioned above that unemployment, by its narrowest definition, increased in March to 13.4 per cent.
        The source of profits in the capitalist system cannot be returned to where it was, in financial services and property. But this is not our problem to deal with. We have to demand and fight for an alternative people-centred economy, as outlined in An Economy for the Common Good.

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