Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page: https://secure.socialistparty.org.uk/issue/504/3207

From The Socialist newspaper, 4 October 2007

Banking turmoil continues

The governments's effective nationalisation of the deposits in the stricken Northern Rock bank and guarantee of deposits up to 35,000 in all banks, have not ended the financial turmoil. This is because the run on Northern Rock was only one early consequence of the financial sector crisis.

Judy Beishon

Switzerland-based finance multinational UBS has now declared a write-off of over a billion pounds of its 'assets' and a resulting overall loss in its July to September quarter performance. This is no minor player; UBS is one of the largest global asset managers, operating in over 50 countries and employing 80,000 people 1,500 of whom are about to be made redundant.

The bank rushed to replace its head of investment and its chief financial officer and announce "structural improvements" in an attempt to maintain the confidence of its clients. Its chief executive blamed continuing "turbulent conditions" following the onset of the US subprime mortgage crisis in August, as the reason behind these decisions.

UBS is not on its own. US multinational Citygroup has written off $6 billion. The current-year profits of all City of London banks from asset-backed financial products are expected to be several hundred million pounds lower than originally predicted.

London will be hit harder than other financial centres in Europe because it has been a key player in the complex money dealings that have been based on spiralling debt. The change is sharp and sudden; Barclays Capital has reported that since July not a single deal has been sold by any bank in asset backed securities (loans or bonds backed by mortgages, loans, credit card debt etc).

The banks are trying to pull back rapidly from their own recklessness. In the year 2000, they tended to have balanced books. But just six years later - by the end of 2006 the amount they had loaned out was 530 billion more than their deposits held.

The financial turbulence is leading to lower economic growth forecasts. In the UK, business services are a third of all economic output, so the impact of the turmoil will be very significant.

And the government has no quick fix available. The Bank of England is now expected to copy the US Federal Reserve and reduce interest rates to ease the present inter-bank loan and housing mortgage crisis, but with oil and commodity prices rising, they fear stoking inflation.

The crisis has not yet impacted heavily on ordinary people, but unfortunately it will. Nearly a quarter of home owners with fixed rate mortgages face an end to their fixed-rate period in the next 15 months. It is estimated that on average they will then have to pay between 167 and 415 a month more than they are at present! New mortgage seekers face potentially prohibitive terms, such as deposits as high as 25% of house value.

The levels of mortgage arrears, other debt, house repossession, insolvencies and homelessness are clearly set to rise. This is from a starting point where household debt has already trebled over the last decade.

Some capitalist economists are still in denial over the approaching recession, but as the socialist has warned basing our analysis on the cyclical nature of capitalism as explained by Karl Marx at some stage soon, it is inevitable.

Why not click here to join the Socialist Party, or click here to donate to the Socialist Party.


In The Socialist 4 October 2007:

Support postal workers: decisive action can win

"We've had the battle - now this is war!"

Protests make bosses ditch closure plan


War and terrorism

Iraq: end the occupation nightmare

Stop the War Coalition (STWC) national demonstration


Editorial and comment

Tory party fears an autumn election

Banking turmoil continues

Corporate Labour


Socialist Party NHS campaign

Come to the NHS demo!

Swansea meeting


Socialist Party news and analysis

Classroom assistants on strike

Supermarket price-fixing scandal

Success! Double whammy for nursery campaign


Socialist Party features

EU's anti-working class 'reforms'

Fighting nuclear power


Socialist Students

Students want to fight back


Socialist Party feature

Che Guevara - revolutionary fighter


Socialist Party events

Socialism 2007: Ideas for our future

Socialism 2007.net


International socialist news and analysis

Burma: Dictatorship under threat


Socialist Party reviews and comment

QPR buy-out - Reclaim the game!

It's a free world, a film by Ken Loach

Anno 1701 - Dawn of Discovery


Socialist Party workplace news

Local government pay offer: It's time for action

Remploy workers win partial victory

Care workers on strike

National Shop Stewards Network makes plans


 

Home   |   The Socialist 4 October 2007   |   Join the Socialist Party

Subscribe   |   Donate  




Related links:

Banking crisis:

triangleBarclays finally charged for having hands in till

triangleLessons of the 'N30' 2011 pension strike

triangleWaltham Forest Socialist Party: The banking crisis

triangleRotten greedy banks still threaten crisis

Debt:

triangleLebanon - mass protests cut across sectarian division

triangleNHS debt so high it can't be repaid - so don't pay it!

triangleMass movement topples governor of Puerto Rico

triangleTheresa May admits tuition fees system is broken - but plans new attacks on students

Northern Rock:

triangle10 years since the financial crash - the socialist answer to capitalist crisis

triangleTories flog bank assets to hellhound US profiteers

triangleThem & Us

Nationalisation:

triangleLabour leadership contest and public ownership

Capitalism:

triangleEast London Socialist Party: Coronavirus and the failure of capitalism

Reports and campaigns

Reports and campaigns

22/2/20

PCS

Workers call on Interserve bosses to recognise union

19/2/20

Rhondda Cynon Taff

Keep the pressure on to save Royal Glam A&E

19/2/20

Climate change

'Roses are red, violets are blue, BP and Shell - we're coming for you'

19/2/20

Newham

Stop Newham Labour's cuts and gentrification

19/2/20

Unite

London bus rep dismissal update

19/2/20

Birmingham

Support Clive Walder

19/2/20

East London

East London anti-academy strikes escalate

19/2/20

NEU

Sixth-form strikers stand firm for increased funding

19/2/20

Unite

Unite union executive council elections

19/2/20

CWU

CWU: Build for a massive Yes vote in Royal Mail

19/2/20

Hackney

Hackney parking wardens strike for 15 an hour

19/2/20

The Socialist

The Socialist: Ideas to change society

19/2/20

Peterborough

Peterborough food workers picket and protest

19/2/20

The Socialist

Socialist sellers

19/2/20

Environment

Socialist Students says democratise the climate strike movement

triangleMore Reports and campaigns articles...


Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party
Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube

LATEST POSTS

CONTACT US

Phone our national office on 020 8988 8777

Email: info@socialistparty.org.uk

Locate your nearest Socialist Party branch Text your name and postcode to 07761 818 206

Regional Socialist Party organisers:

Eastern: 079 8202 1969

East Mids: 077 3797 8057

London: 020 8988 8786

North East: 078 4114 4890

North West 079 5437 6096

South West: 077 5979 6478

Southern: 078 3368 1910

Wales: 079 3539 1947

West Mids: 024 7655 5620

Yorkshire: 077 0671 0041

ABOUT US

ARCHIVE

Alphabetical listing


February 2020

January 2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999