The Global Financial Crisis by Hizb ut-Tahrir Britain

The £500 billon stake in the banking sector appears to be the last throw of the dice by the UK Government in an attempt to rescue systemic collapse in the financial system. Like a losing gambler who returns to the casino repeatedly to recoup his losses the British Government too keeps pouring real tax payers money to cover financial ‘asset’ losses.

Western nations have for decades lectured the world about the benefits of freedom of ownership as epitomised in market capitalism. Not only that, they have, via highly paid consultancies, developed and implanted privatisation programmes, free trade policies, capitalist company structures and stock market operations around the globe.

Through the so-called ‘Washington consensus’ the IMF and World Bank have imposed capitalist policies on poor developing nations ill equipped to deal with the disastrous direct consequences of these ‘adjustment’ programmes. Whole economies have been brutally vandalised with catastrophic consequences. Yet the bankers (IMF and WB) have argued each time and after every crisis that these capitalist policies are a necessary step in the right direction.

However, faced with an economic collapse at home western nations have contradicted, overlooked or plainly disregarded the same prescription.

Contradictions with capitalist free market policies and principles which provide clear signs of an ideologically bankrupt West have been numerous in the current crisis:

1. Previously profitable failed private companies have been nationalised (e.g. Northern Rock and the Royal Bank of Scotland in the UK and Fannie Mae, Freddie Mac in the US) 2. Monopolies and anti-trust (or anti-competition) laws have been disregarded (e.g. the merger between Lloyds and HBOS in the UK).

3. Hundreds of billions of tax payer’s money has been poured into the private banking system to lend money to commercial profit making financial institutions.

4. Interest rates have been cut despite relatively high inflation contradicting ‘sound’ monetary policy (e.g. US, UK and Europe).

5. Taxes have been cut despite high public borrowing and debt (e.g. US) contradicting ‘prudent’ fiscal rules.

6. 100% of the financial liabilities of private profit making companies (banks) have been guaranteed by governments (e.g. Ireland).

7. Car manufacturing private corporations have been given credit guarantees to stimulate investment (e.g. US).

8. Governments have used taxpayer’s money to buy shares in insolvent private corporations (e.g. UK bank rescue plan).

9. The planned amendment of accounting rules including fair value (mark to market) within Financial accounting standards.

The systematic failure of financial markets is a clear indictment of capitalism because the financial system epitomises capitalism in its thoughts, values, policies, culture and outlook, more than any other capitalist institution. The capitalist principle of freedom of ownership once sacrosanct has proved disastrous and ruinously damaging for society in the West. The other extreme of communism which denied ownership altogether has also proved unworkable.