Lamb-like approach to greedy banks means Labour slaughter

Economist Nouriel Roubini - previously dubbed "Dr Doom" when he predicted the catastrophe and who has now been entirely vindicated - forecasts that 2009 will be a painful year of global recession and further financial stress, losses and bankruptcies.

So it beggars belief that the same international financiers and awestruck politicians who have presided over the horrendous failings of neo-liberal globalisation are still stuck in its groove. It seems they even want to return to how things were before the global financial system went into cardiac arrest following the collapse of Lehman Brothers.

Perhaps we should not be so surprised. How things were intended was that the bankers, traders and chief executives could siphon off the wealth of those who worked in the real economy. Salaries and bonuses in the financial sector went into the stratosphere and income inequality grew beyond comprehension. Meanwhile, workers' salaries stagnated - forcing them into massive debt.

However, as the striking engineering construction workers at the Lindsey Oil Refinery in North Lincolnshire and elsewhere have said, enough is enough.
We have had enough of anti-union rulings that gave corporations powers to undercut wages across Europe. We have had enough of forcing people to become itinerants, travelling around Europe without their families and housed in floating former prison ships. And we have had enough of anti-trade union laws which have been such a disaster, fostering collective inaction and damaging collective well-being.

This Labour Government, a prisoner of the past, took pride in Britain having the most unregulated labour laws in Europe and encouraged the corporate globalisation that sapped workers' bargaining powers. Yet what is obvious from this economic crisis is that more acts of solidarity are required.

When striking construction workers protested against "social dumping", they were not acting "inappropriately", as Business Secretary Peter Mandelson claimed. Their actions were wholly appropriate. With mass unemployment on the horizon- there are predictions of four million jobless - they were demanding the right to work. Nor were they being xenophobic. The strikers were targeting the bosses, not the non-unionised Italian, Portuguese, Spanish and Polish workers who had been brought in by sub-contractors.

Previously, the mantra was all about the efficacy of globalisation. Now the strictures are against protectionism. This is merely another way of saying they don't want the system that has brought us to disaster to change. Lord Mandelson's reaction to the strike was that of "failed Davos man". And as the recession gets worse and the opinion polls reflect people's deep anxiety over their jobs and futures, the Government will have to change its free-market mindset or face a huge defeat at the next election.

Ministers could start by abandoning their unpopular and discredited aim to privatise the Royal Mail. Amazingly, their preferred buyer is Dutch company TNT - a firm which issued a profits warning on October 27 last year, according to a report posted on Reuters' website. Here again, Mandelson is betraying all the characteristics of "failed Davos man".

Alistair Darling should join him in the dock. Initially, he appeared to be seeing sense when he declared that there would be no bonuses for failure. Then he appeared to backtrack, alluding to legal reasons why the bonus binge had to continue. The Chancellor should call the banks' bluff, tell them to go ahead and sue and that he'll see them in court. As far as the Royal Bank of Scotland is concerned, if it wasn't for the bailout of taxpayers' money, there would be no RBS jobs at all - let alone bonuses.

Instead we get not radicalism but a review - the conclusions of which are not due until the end of the year. It looks as if the Government is merely playing for time. This review is meant to examine how the banks' owners and non-executive directors failed to assess risk, but were allowed to overdose on vast riches as a reward for taking us all to the point of ruin.

Over the past decade or so, we have been told ad nauseam that in a complex and globalised world, where modern technologies and communications cross continents, we need to have the skills to compete. Yet it would seem that those overseeing the banks' operations lacked any of the attributes which might have enabled them to see what the bankers were up to.

To rub salt into the wound, the person appointed to take charge of the review is one of the bankers' own - former City regular David Walker, who is hardly likely to launch a full-frontal assault on the status quo. As the BBC's economics editor, the inestimable Robert Peston put it: "Anyone hoping for revolutionary recommendations from the Treasury's review is likely to be disappointed. Based on his track record, Sir David is expected to try to fix the current governance system rather than declaring it bust and in need of replacing."

While Barack Obama rails against the bonus culture in the United States - calling the Wall Street moneymen "shameful" for rewarding themselves with $18 billion in bonuses - we in Britain have a review. While the new President seeks to boost the power of the trade unions and regards organised labour, not as a problem, but as part of the solution, we continue to decry the unions and pander to the bosses. While the Obama administration intends to crack down on offshore tax havens, we want an international agreement for the exchange of information.

Not since the poll tax have people in this country been so incensed at the behaviour of elites. Unless voters are persuaded that the corporate greed manifested in huge bonuses is being dealt with, Labour should prepare to be slaughtered - first at the European elections in June and then at the subsequent general election.

Joy Johnson