Labour MP John McDonnell is one of the few public figures who has questioned the wisdom of today's action by the government. While politicians of every hue have been eager to present a united front in the face of the crisis the left wing MP is not convinced, despite being someone, who in his own words, "has been calling for the nationalisation of the banking sector since this crisis began". He is reported as saying "This deal is like your neighbour going on a massive spending binge – throwing a party, buying a new car, going on holiday – and then sending you the bill. Taxpayers will end up paying doubly, once through loose subsidies to dodgy banks and the second time as the recession bites and they risk losing their jobs, homes and going further into debt."

George Galloway was more supportive of the government's handling of the situation. In response to Alistair Darling's statement to the House of Commons this afternoon:
"Liberals seemed like Labour and the Conservatives are communists"
... (& also paraphrasing Blair's speech to the Commons after 911) ..."while the kaleidoscope is in flux, let us re-order this world around us" - meant to be in refernce to the part-nationalisation of the banking system (it's actually a loan).

Galloway, the Respect MP, further commented that the taxpayer should have a seat in the boardroom of these financial institutions, echoing the sentiments of Chris Mullin who warned that "these habits within the city" may reoccur (Mullin mentioned how previous bailouts had occurred in the past, and yet history repeated itself). Darling replied to Mullin that much stiffer regulation is now being put in place. The fact does remain, however, that when Darling has guaranteed that the savings of 96% of depositers will be secured, what he is not explictly saying (but what those in-the-know would be being made aware of by) is that 4% of depositers in the UK banking system own 45% of total bank desposits - many of them from overseas! Tough shit to them then.

It's clear that the Brown-Darling deal is making the best of a bad situation (they have invested a stake of public debt into the system with conditions attached; Paul Mason, Newsnight's economics editor, suggests on his blog that the time taken for the government to reach a deal may have been due to resistance from banks may have been less than enthusiastic about the conditions on lending). Mc-Donnell's fears are justified, and he reflects the quiet, indignant anger which most people feel towards these reckless gambling city spivs and the culture within the city which has openly encouraged them and this pattern of behaviour.

When the world economy is teetering on the brink with sub-prime, sold to people with no income or savings - so-called Ninja mortgages (No-Income, No-Job Assets) - have been re-leveredged into share capital across the world, you know that all this is just buying time before the whole thing collapses. The world system is built upon a collossal pyramid of public (national) and private debt. When oil prices start rising again and the underlying value of the economy is found wanting, all it will take is one further financial problem to send the whole system crashing as speculators and stock exchange traders are left reeling. They say we are entering a storm; we've not reached the eye of that storm yet.

Like most nation states stuck within the neoliberal system, they are completly reliant upon deriving wealth from international financial markets. The conventional explanation is that there comes a time when those markets suffer downturns; what is never discussed is the overwhelming level of indebtedness which the whole world system and world economic growth is predicated upon (the US national debt is now over $11 trillion; it's military superiority merely a result of it's ability to owe itself vast sums of money bailed out by banks in Asia and the Middle East savings their deposist there).

This is why the wealthiest nations and corporations are actually the most indebted (the United States is the most indebted nation on Earth: its combined national, private and commercial debt to the banking institutions is above $25 trillion - of which it's GDP - 14800 billion which is 0.0148 trillion - is a mere fraction - just 0.0037%!). Allied to these ever-widening distortions, there prevails the hypocrisy of the USA who allowed it's national debt to increase from $235 billion in 1960 to it's current level whilst at the same time, the “truly indebted” countries of the South are frogmarched through the macroeconomic straightjacket of restrictive fiscal (deficit) policy through Structural Adjustment Programmes by the Bretton Woods institutions. This extent of enduring a high national debt is also a trend similarly replicated in other leading industrialised economies such as Germany and Japan. Rather like the hypocrisy of the supposed free trade regime, which opens developing country, markets which the rich nations resist adherence to themselves, all-in-all this amounts to a fully-evolved stage of imperialism.

What about the UK. Larry Elliot and Dan Atkinson write in their new book 'The Gods that Failed' that in October 2007 there was: "£1,200 billion outstanding on mortgage debt and £222 billion oustanding on unsecured consumer credit, giving a grand total, in round numbers, of £1.4 trillion. In other words, using an admittedly imperfect statistic of 46 million for the adult population in the UK gives an average mortgage debt per adult of £26,086 and average consumer credit debt of just under £5,000. Seven years earlier, in Oct 2000, the figures looked like this: on mortgages, £525 billion was outstanding (£11,413 per head) and on consumer credit £125 billion (£2,717 per head), giving a grand total, in round figures, of £650 billion. The increase, in other words, has been of the order of 115% in 7 years. During these same 7 years, earnings rose on average less than 30%."

Within the UK, capitalism as a system is a precise arrangement configuring state infrastructure largely in support of the financial growth of those sectors of the economy accruing most value, with a banking system largely aloof from social and environmental obligations, acting as the unlimited supplier of credit for economic activity - analogous to an unlimited supplier of fuel for the driving engine of economic growth, which the accelerator-pedal of speculation and venture capital has been driving forward. What exists, however, is a speculative bubble, which is predicated on these huge amounts of debt, which by the 1990s reached unprecedented and unsustainable levels.

Yet it is this process of debt which propels the world economy! Poorer nations with international debt, which grew at excessive rates with interest during the 1980s, have been forced into a situation of neocolonial “selling off the family silver” in terms of concentrating on the sale of cheap commodities and minerals, and exploiting their own natural resource capital such as fish stocks and depletion of rainforests.

Meanwhile, the state cannibalises itself by selling off its public institutions in return for maintenance of economic solvency as long term public spending exceeds revenue over time in the absence of the state‘s retreat from further utilising it’s ability to create public credit in deference to private banks ability to create unlimited loan capital, ……(to do so without regulating credit controls on banks would be inflationary). This situation prevalent within the modern free-market economy where credit is largely privatised and overwhelmingly wrapped up in mortgages. Not only that debt increase exponentially year-on-year, since money creation is based on a loan-spiral predicated on the fractional reserve system - which is where many times the amount of money is loaned out than actually exists in deposits ('reserve requirements') – a system based on usury (interest) which is largely accepted by most economists as the necessary means of providing the means for speculative investment to generate wealth creation and spread economic activity. The increase in money supply which is in step with the increase in economic growth is the result of the loan spiral of loan built upon loan effect of the banking system. Elliot & Atkinson: "For 25 years after the 2nd World War, this magical power was stricly controlled by the state. Since 1971, these controls were progressively dismantled." The money supply and it's accompanying debt escalated after reserve ratios were abandoned in 1981 when new rules meant that the only legal requirement for banks was for them to lodge 0.5% of their total assets at the Bank of England, in the form of notes and coinage! The huge growth of international financial capital and the growth of international debt alongside it soared thereafter. The huge economic crash has been expected ever since.

The longer the economic growth spurt of world capitalism lasts, the deeper will be the economic crash that will inevitably follow.

See also: The coming financial collapse, interview with Martin Summers, the Former East European projects officer for the New Economics Foundation talks about present day money matters as we slide down a slippery slope:
 http://www.youtube.com/watch?v=GLnryKeQ16A


Solutions:

LETS & Complementary Currencies Regional Links:
 http://www.letslinkuk.net/regions/uk-map.htm

Radical Routes
www.radicalroutes.org.uk

Credit Unions in the UK:
 http://uk.local.yahoo.com/United_Kingdom/Credit_Unions/uk100000168-s-23424975.html

Ecovillage Network
www.evnuk.org.uk/
Assists individuals, projects, and organisations in developing environmentally, socially and economically sustainable settlements.
305 members registered on this site. The eco-village PeopleFinder helps put you or your project in touch with the people or places you are looking for. ...
www.peoplefinder.org.uk/

Christian Council for Monetary Justice:
 http://www.ccmj.org/

All you need to know about Islamic Finance in the UK:
 http://www.islamicmortgages.co.uk/index.php?id=267
Under Shariah Islamic law, the governing of making money from money, such as charging interest, is usury and therefore not permitted

PROSPERITY, a monthly Money Reform journal based in Glasgow, Scotland, which is dedicated to spreading understanding about the nature of our debt-based money system, and campaigning for publicly-created debt-free money:
 http://www.prosperityuk.com/