"The productive potential of the British and American economies is being mortgaged to prop up the banking system. The banks are being kept alive by our promise to provide an indeterminate proportion of our future economic output to make good the banks' future losses.

How big could the banks' call on us as taxpayers turn out to be?

Support for the UK's banks and for private sector lending in the form of loans, guarantees, insurance and investments is equivalent to just under 100% of GDP, or a bit more than £1.3tn".

 http://www.bbc.co.uk/blogs/thereporters/robertpeston/2009/03/we_are_the_monolines_now.html


The scale of the latest UK bank bailout is put into stark contrast by the efforts undertaken by the US administration this week to avoid nationalization or bankruptcies. Despite the fact that US economists such as Paul Krugman have criticised the generosity of the Obama administrations plan, this is small fry when compared with the UK plans. Indeed, Wednesdays Financial Times had unnamed sources at the Treasury confirming that it was the weakness of democracy in the UK that enabled the Government to undertake measures that would have been politically unfeasible in the US.

What the Government has done is agree to insure the uninsurable- namely, the billions of pounds in bad loans already made by Lloyds-HBOS and RBS to corporations, consumers, students and wouldbe homeowners. Since it is also becoming patently obvious that the increasing scale of the losses is also related to organized mortgage fraud operations, which took advantage of the no questions asked credit handouts, the taxpayer is going to be on the treadmill bigtime to enable the Government to pay out on these fraudulent insurance policies.

So the investors in these banks are to be bailed out by workers in the UK and elsewhere. UK banks borrowed the funds from private investors including councils and pension funds and lent them out to erstwhile hard working families, chancers and crooks yet the payback is to come out of all out pckets- private debt has become public debt. Taxes are set to rise and public services will be cut. As another FT headline stated earlier this week we will be in for a prolonged period of "severe austerity".

The impact of all this on the environment is likely to be catastrophic. In a search for quick, fast profits banks will bank on highly profitable dirty investments and funnel cash to the worlds biggest corporations to plunder the planet and buy up what remains of their competition. In the meantime, environmental regulations are likely to be sacrificed to facilitate this process and the necessary investments in greener technologies are unlikely to be forthcoming.

All this will come to pass unless there is an alternative political intervention. Clearly, Parliament has been decimated and lacks the ability to limit the power of Brown-Obama and their banker friends. Their plans rest on the notion that the UK will remain a stable, passive, well-behaved liberal democracy in which the lower middle classes grumble over their pints of bitter or perhaps sign up to militant fascist groups that can perhaps be accomodated or used by the Banking Government.

It may be that London will be brought to a standstill next week but that in itself will probably not be enough. The Reclaim the City movement needs to be sustained. Financial capitalism needs to be dismantled at the very least.