3-20-08, 9:15 am

Original source: Morning Star

The anger of finance union Unite and Labour MPs in north-east England over the threat to Northern Rock jobs is entirely understandable.

Apart from the damage done to the region by such wanton sackings, it must be stressed that the bank's staff are utterly blameless for the crisis that is consuming their jobs.

But for the demutualisation of Northern Rock, their jobs would have remained secure, providing mortgages on the basis of secure income rather than opting for higher profits on the basis of an ultimately unsustainable practice of borrowing short and lending long.

Although, in the long term, its mortgages guaranteed adequate income, the sharp rise in current interest rates presented it with cash-flow problems that made it impossible to repay savers.

That strategy was decided by directors who paid themselves huge bonuses as though they were financial geniuses rather than gamblers on a brief winning streak.

It wasn't taken by the staff who are now paying the price for the greed and incompetence of the bank's former management and for the failure of the banking regulator and the Bank of England to tackle those faults.

And standing behind this catalogue of disaster is the Prime Minister, who, as Chancellor, set in place the structures that encouraged feather-duster regulation and untrammelled speculation.

Amid all Gordon Brown's self-satisfied claptrap about 'an end to Tory boom and bust,' the reality has always been that, despite periods of apparent calm, capitalism has crisis built into it.

Capitalism without boom and bust is like war without casualties. It doesn't exist.

The Prime Minister and Chancellor ought to have intervened at a much earlier date and nationalised Northern Rock - not as a temporary expedient to clear up a mess and then sell it off at a knockdown price to another bank that would be likely to use similar methods to those of the disgraced Northern Rock directors but as a public asset to offer honest banking services.

They dithered because they believe that the electorate is more worried by the dreaded N word than by the prospect of thousands of workers paying the price of corporate avarice.

And, make no mistake, government ministers know precisely what strategy Ron Sandler has for 'rescuing' Northern Rock.

It is the classic capitalist recipe of making the workers pay for the actions of the rich. The bank's debts will be reduced by sacking staff and by selling off chunks of its mortgage portfolio to other financial institutions.

This, of course, does not include the cream of the bank's assets which were spirited away earlier to a tax haven by an untouchable bank subsidiary called Granite.

When it is possible to write off the unrealisable debts such as the no-deposit 125 per cent mortgages, this slimmed-down - both in terms of staff and assets - will be sold off.

And, in common with all privatisations, it will be a giveaway to encourage the private sector to enrich itself still further.

The saga of Northern Rock, which will almost certainly fail to repay the Treasury investment and interest, stands as a condemnation of both capitalism and new Labour's subservience to it.

From Morning Star