In These New Times

Cailean Bochanan

12th October, 2008

The reason all the deception and hype about the government’s midweek intitiative is now becoming clear: it wasn’t just about fooling the British public but was aimed at a wider audience. Brown wished this bailout plan to be  the model which the wider world will follow as collapsing markets lead,he will be hoping, to panic and loss of judgement. The government has just announced they will be taking major stakes in the main banks, which is odd because that was meant to be what last Wednesday’s announcement was about. Are the falling markets simply forcing the government’s hand? -after all,the banks and the government  were keen to avoid a government stake but now there is even talk of full nationalisation. Or is this just further deception providing cover for those who may wish to impose similar plans on other economies?

As we have pointed out, there was no commitment in Wednesday’s announcement to  buying preference shares in the banks and even less to controlling them. As the FT hinted the favoured route, and the one being reported this morning, is that the government  underwrite a bank share issue. In other words, the government will buy  the shares which are not taken up: presumably, almost all of them. By this process the government will end up with a significant shareholding but will do so as passively and as indirectly as possible. As the FT(9th October) pointed out, the

“treasury also has strong fiscal reasons to keep intervention at one remove. If the state is deemed to be dictating any bank’s “general corporate policy”, the lender’s liabilities cannot be kept off the public debt.””

The principal is to make this, as much as possible, one way traffic with the banking cartel the only beneficiaries. The real economy will collapse but the cartel will thrive.

The problem for Brown, and Paulson, is that, while they can pull this one off at home, they must internationalise it to assure success. Wrecking Britain and the US, whilst the rest of the world ride out the storm, would not assure the position of the anglo-american oligarchy. They must seek to wreck the real economy globally and foster the emergence of similar oligarchical elites globally. It’s like  a contemporary rerun of the drama of the Peloponnesian Wars. Whether the Anglo-Saxon oligarchies  prevail depends on how much trash paper they’ve been able to dump on the rest, particularly Europe which is now at the heart of this battle. It also depends on the quality of European leadership.

With CIA or neo-con assets at the helm in the key countries, France and Germany, there are reasons for fear, but US satraps are increasingly evading control as the credibility of the US plummets. Now is the time when Europe must throw off its post-war vassalage to the US and they can do no better than use this opportunity to move closer to Russia.

Wall Street and the City of London are undergoing a volcanic eruption. Whether the rest of the world can contain the collateral damage from the fallout is the decisive question for the future.