"Robert Tchenguiz, the property entrepreneur, lost £1bn in just 24 hours after being forced to offload his stakes in J Sainsbury and Mitchell & Butlers as the fallout of the Icelandic banking crisis hit corporate UK. Mr Tchenguiz lost up to £600m on the sale of a 10 per cent holding in Britain’s third-biggest supermarket chain and about another £400m on his exit from the pub company, making the entrepreneur one of the biggest individual casualties of the credit crunch in the UK. He was said to be taking a philosophical approach to his losses." ( Financial Times, 8 October)
When I was a kid my mother read me the riot act about foolishly spending two shillings (20p) on the Grand National horse race. My mother and I were less than philosophical, but then unlike Mr Tchengiiz we were members of the working class. Lost £1 billion ? I shudder to think what my old lady would have said. RD
The Glasgow & Edinburgh Branches Blog. Towards a better understanding of the world, in order to change it.
Sunday, October 12, 2008
BUDDY CAN YOU SPARE A GRAND
Outside in the streets of New York you may be asked by some homeless worker for change, but not everybody in that city is finding capitalism a harsh society. "One of the quietest, most private rooms around is the discreetly deluxe Ty Warner Suite, which literally looks down on Manhattan from the 52nd story of the 52-story Four Seasons Hotel at 57 East 57th Street, between Park and Madison Avenues. With its travertine floors, grand piano, health spa and remote-controlled bidet, it is uncontested as the city’s most expensive temporary rental, clocking in at a Bolshevik Revolution-producing price of $30,000 a night."
(New York Times, 6 October) RD
(New York Times, 6 October) RD
Saturday, October 11, 2008
CAPITALISM IS WORLDWIDE
"The Russian government will start buying stocks next week, spending billions to help prop up stricken markets, Prime Minister Vladimir Putin said Friday as parliament approved anti-crisis measures designed to get cash moving quickly into the troubled banking sector. Russia's stock markets remained closed after heavy sell offs."
(Associated Press, 10 October) RD
(Associated Press, 10 October) RD
A FRIGHTENING FUTURE
"Pentagon officials have prepared a new estimate for defense spending that is $450 billion more over the next five years than previously announced figures. The new estimate, which the Pentagon plans to release shortly before President Bush leaves office, would serve as a marker for the new president and is meant to place pressure on him to either drastically increase the size of the defense budget or defend any reluctance to do so, according to several former senior budget officials who are close to the discussions." (CQ Today, 9 October) RD
Friday, October 10, 2008
Who cares about the poor ?
Our hearts bleed for them ...i think not . More than £100 billion will be wiped off the personal fortunes of Britain's wealthiest industrialists and entrepreneurs in the coming months as tumbling stock markets and sliding property prices take their toll according to The Times . What will the effect be on those super-rich , i wonder . One less house in their tropical paradises , one less luxury limosine ...
Certainly it will not the same as the consequences the Credit Crunch will have on the working class .
The number of people seeking advice from the Citizens Advice Bureau about how to manage their debts has surged by a third in the past year according to this BBC report. 77,000 new callers in England and Wales with mortgage and loan arrears.
"These figures show how the current economic situation is hitting vulnerable and low-income households the hardest."
Mortgage lenders, on average, started repossession action when people were four months into their arrears. No government bail-out or rescue for the poor .
House repossession was rated as the event most likely to cause mental health problems according to a survey.
Certainly it will not the same as the consequences the Credit Crunch will have on the working class .
The number of people seeking advice from the Citizens Advice Bureau about how to manage their debts has surged by a third in the past year according to this BBC report. 77,000 new callers in England and Wales with mortgage and loan arrears.
"These figures show how the current economic situation is hitting vulnerable and low-income households the hardest."
Mortgage lenders, on average, started repossession action when people were four months into their arrears. No government bail-out or rescue for the poor .
House repossession was rated as the event most likely to cause mental health problems according to a survey.
"Even for people lucky enough to hang on to their home, the stress and worry of arrears building up can be enough to harm your mental health - this survey shows it worries millions of us."
Thursday, October 09, 2008
CAPITALIST PRIORITIES
We live in a society where millions try to survive on a $1.25 a day, where children die for the lack of clean water and yet this society spends billions of dollars trying to find more efficient ways to kill people. The priorities of socialism would be to feed, clothe and shelter its citizens but capitalism has other priorities. "Top U.S. Army officials on Monday said a $160 billion Future Combat Systems modernization program managed by Boeing Co and SAIC Inc was "on budget, on track," but could see changes over time. Army Chief of Staff Gen. George Casey said the Army was going through a detailed review of 14 separate weapon systems included in the program to ensure that the technologies involved were on schedule. "We're committed to Future Combat Systems. It's just a question of adjusting as the world changes, and as the need changes," Army Secretary Pete Geren told reporters at the annual Association of the U.S. Army meeting. ...The Army's FCS program is a family of 14 manned and unmanned aerial and ground systems, tied together by communications and information links."
(Yahoo News, 6 October) RD
PUTING HIS FOOT IN IT
Last year when he was Chancellor of the Exchequer Gordon Brown outlined his annual budget speech with these words - "Britain's growth will continue into its 60th and 61st quarter and beyond ...Inflation has fallen from 3% to 2.8%, and will fall further this year to 2% ...Looking ahead to 2008 and 2009 inflation will also be on target. And we will never return to the old boom and burst." (quoted in Time, 13 October)
He was warmly applauded by the Labour benches and praised by the press for his sagacity and prudence. What a difference a year makes. Inflation stands at about 4.7%, mortgage lender Bradford and Bingley has been nationalised and a deep economic recession looks likely. Capitalism is an anarchic, uncontrollable system. Boom and burst are the very foundation of capitalism. No doubt a future Conservative Chancellor of the Exchequer will in turn pretend that he can control this mad profit system. RD
He was warmly applauded by the Labour benches and praised by the press for his sagacity and prudence. What a difference a year makes. Inflation stands at about 4.7%, mortgage lender Bradford and Bingley has been nationalised and a deep economic recession looks likely. Capitalism is an anarchic, uncontrollable system. Boom and burst are the very foundation of capitalism. No doubt a future Conservative Chancellor of the Exchequer will in turn pretend that he can control this mad profit system. RD
A MUCH BETTER IDEA
Robert Reich, former US secretary of labour, commenting on the recent economic crisis showed that he understood that China was a capitalist country when he said "There are still only two kinds of capitalism. There's authoritarian capitalism as in China and Singapore, and there's democratic capitalism as in US and Europe. If there's anyone out there who has a better idea, I'm sure the world would love to hear it." (Newsweek, 13 October)
If someone can get us Mr Reich's address we will send him a subscription to the Socialist Standard so he learn about the socialist alternative. RD
If someone can get us Mr Reich's address we will send him a subscription to the Socialist Standard so he learn about the socialist alternative. RD
Wednesday, October 08, 2008
SOUTH AFRICAN NIGHTMARE
The end of Apartheid and the election of the ANC to power was supposed to see the grinding poverty of the townships ended, but the ANC have turned out to be powerless to run capitalism in a way that would end exploitation and poverty. Despite 14 years of power the ANC are just another political party dedicated to running capitalism. "A dusty maze of concrete, sheet metal and scrap wood, Diepsloot is like so many of the enormous settlements around Johannesburg, mile after mile of feebly assembled shacks, the impromptu patchwork of the poor, the extremely poor and the hopelessly poor. Monica Xangathi, 40, lives here in a shanty she shares with her brother’s family. “This is not the way I thought my life would turn out,” she said. Her disappointment is not only with herself; she is heartsick about her country. Fourteen years after the end of apartheid, South Africa — the global pariah that became a global inspiration — has lapsed into gloom and anxiety about its future, surely not the harmonious “rainbow nation” so celebrated by Nelson Mandela on his inauguration day." (New York Times, 5 October) RDTHE JOYS OF FREEDOM
"Two Turkish immigrants who were reduced to begging on the streets after being released from prison are pleading with authorities to send them back to jail, judicial sources said Wednesday. Sahin Eren and Erden Vardar were arrested in July, 2006 in southern Spain in possession of 11 kilogrammes (24 pounds) of heroin. But confusion over their date of arrest forced a judge to release them in July as the two-year legal period of preventive detention had passed. Since then, the two men have begged on the streets of Madrid, where they sleep in a Red Cross hostel. They have pleaded with the judge to send them back to prison, a request he denied as they have not been convicted and sentenced." (Yahoo News, 1 October) RD
The Crunch of the Matter
From one of our comrade fellow bloggers
Quoth Alistair Darling:
"The Financial Services Authority has announced a further increase from tomorrow to the compensation limit for retail bank deposits to £50,000 per depositor, which means £100,000 for joint accounts. That measure will ensure that 98 per cent. of accounts are fully covered."
Now, quoth Iain Duncan Smith:
"At the Dispatch Box, the Chancellor mentioned, quite rightly, that our protection covers about 98 per cent. of all depositors, but he will also recognise that we have significantly more money on deposit than Germany does. The reality is that that 2 per cent. represents a very significant amount of money. What concerns me right now is that, given the febrile nature of the markets—watching little things and then panicking—if they see any flight of capital, even that 2 per cent., towards Germany, it could cause another stampede and another crisis. I recognise the Chancellor's problem about indicating what he may or may not do, but does he not recognise that that 2 per cent. alone is perhaps enough to tip over the markets if they saw a flight of that money to, say, Germany or even Ireland?"
So, what they are saying is that the vast majority of accounts in the UK hold less than £50,000 (£100,000 for joint accounts) in retail banks.What they are saying is that there is an incredible disparity of wealth - but that the very wealthy have the capacity to cause crises by the overwelming might of their money.
Let's be clear, what this means. Economic crises are not natural phenomena, they are the results of the owners of society exerting their influence. They are profoundly political - the wealthy making us dance to their tune. The wealthy on strike.
Capitalism causes a crisis by its very existence, starvation, starvation related diseases, gross poverty, curtailled life-spans, wars - they are all ignored as background noise.
When the capitalists feel the pain, then we are all made to jump.
This isn't a case of being for or against bail-outs - after all, who can blame the man with a gun to his head - but a matter of being for or against capitalism.
Our only demand must be: "End class society!" else this will all happen again. It is not a glitch, it is politics, the political decision of the real voters to vote with their feet.
From our discussion forum
Robert Reich, former Labor Secretary under Bill Clinton has an interesting article in the current New Statesman:http://tinyurl.com/4h4ss8
"The problem lies deeper. Most Americans can no longer maintain their standard of living. Remember, Wall Street's near-meltdown originated with the bursting of the great housing bubble. That bubble had allowed millions of Americans to take money out of their homes byusing their rising home values as collateral for loans. But now the bubble has burst, those homes can no longer be used as piggy banks.…The bubble masked this basic reality: for most Americans, earnings have not kept up with the cost of living. The earnings of non-government workers who are paid by the hour - and who comprise 80 percent of the American workforce - are lower today than they were in 2000, adjusted for inflation. They are barely higher than they were in the mid-1970s"
This fact is so undeniable, that even the `CIA world fact book' (a US foreign policy reference guide - http://tinyurl.com/33l9f8) describes the situation in the US as:
"The onrush of technology largely explains the gradual development ofa "two-tier labor market" in which those at the bottom lack theeducation and the professional/technical skills of those at the topand, more and more, fail to getcomparable pay raises, health insurance coverage, and other benefits.Since 1975, practically all the gains in household income have goneto the top 20% of households."
Now, for Reich this becomes a basic under consumptionist theory –that Labour was unable to buy back its produce. In simpler terms, it shows the basic failure of the sub-prime lending model. Lending to labour when wages aren't rising meant the whole of that lending relied on continually rising house prices, as soon as the rise stopped, the pyramid scheme failed.I think the most significant part of this crisis is that it shows how capitalism cannot meet workers' needs. All the talk of irresponsible lending masks the fact that in order to get and keep a roof over their heads, workers resorted to massive quantities of debt... this is where our focus should lie.
Obviously, upping wages would not simply end the problem, because cash strapped firms would be unable to pay them. But I think thisdoes confirm a class centric view that a weak working class is actually bad for capitalism – certainly, for advanced markets. I once read that the US industrialised so rapidly due to the small sizeof its skilled working class – this compelled industrialists toinnovate and improve the intensive exploitation of capital. The converse is true if skilled Labour is plentiful.More pertinently, if productivity has been rising without wage rises to compensate, this too could affect the quantity of money capital kicking around, hence feeding the stock market/banking bubbles...As I say on my blog today, the crisis is nakedly political - what weare calling a crisis is tantamount to strike action by the owners of the world, as they try to protect their investments and their income.I think we need to avoid giving the impression that it is a mechanistic problem, rather than the result of conscious human action in an unequal society...[An] interesting factoid from Alistair Darling's statement yesterday, by guaranteeing accounts up to £50K (£100K in joint accounts) they are guaranteeing 98% of deposits. That's a gross amount of inequality,because the remaining 2% contain collosal amounts of cash, sufficient to cause bank runs by their chasing security and returns.
That 98 per cent of deposits contain less than £50,000 but of the 2 per cent that were above this, they accounted for about half of the total amount desposited. In other words, the top two per cent have as much on deposit as the other 98 per cent put together, yet another confirmation of the Party's case over the years.
Quoth Alistair Darling:
"The Financial Services Authority has announced a further increase from tomorrow to the compensation limit for retail bank deposits to £50,000 per depositor, which means £100,000 for joint accounts. That measure will ensure that 98 per cent. of accounts are fully covered."
Now, quoth Iain Duncan Smith:
"At the Dispatch Box, the Chancellor mentioned, quite rightly, that our protection covers about 98 per cent. of all depositors, but he will also recognise that we have significantly more money on deposit than Germany does. The reality is that that 2 per cent. represents a very significant amount of money. What concerns me right now is that, given the febrile nature of the markets—watching little things and then panicking—if they see any flight of capital, even that 2 per cent., towards Germany, it could cause another stampede and another crisis. I recognise the Chancellor's problem about indicating what he may or may not do, but does he not recognise that that 2 per cent. alone is perhaps enough to tip over the markets if they saw a flight of that money to, say, Germany or even Ireland?"
So, what they are saying is that the vast majority of accounts in the UK hold less than £50,000 (£100,000 for joint accounts) in retail banks.What they are saying is that there is an incredible disparity of wealth - but that the very wealthy have the capacity to cause crises by the overwelming might of their money.
Let's be clear, what this means. Economic crises are not natural phenomena, they are the results of the owners of society exerting their influence. They are profoundly political - the wealthy making us dance to their tune. The wealthy on strike.
Capitalism causes a crisis by its very existence, starvation, starvation related diseases, gross poverty, curtailled life-spans, wars - they are all ignored as background noise.
When the capitalists feel the pain, then we are all made to jump.
This isn't a case of being for or against bail-outs - after all, who can blame the man with a gun to his head - but a matter of being for or against capitalism.
Our only demand must be: "End class society!" else this will all happen again. It is not a glitch, it is politics, the political decision of the real voters to vote with their feet.
From our discussion forum
Robert Reich, former Labor Secretary under Bill Clinton has an interesting article in the current New Statesman:http://tinyurl.com/4h4ss8
"The problem lies deeper. Most Americans can no longer maintain their standard of living. Remember, Wall Street's near-meltdown originated with the bursting of the great housing bubble. That bubble had allowed millions of Americans to take money out of their homes byusing their rising home values as collateral for loans. But now the bubble has burst, those homes can no longer be used as piggy banks.…The bubble masked this basic reality: for most Americans, earnings have not kept up with the cost of living. The earnings of non-government workers who are paid by the hour - and who comprise 80 percent of the American workforce - are lower today than they were in 2000, adjusted for inflation. They are barely higher than they were in the mid-1970s"
This fact is so undeniable, that even the `CIA world fact book' (a US foreign policy reference guide - http://tinyurl.com/33l9f8) describes the situation in the US as:
"The onrush of technology largely explains the gradual development ofa "two-tier labor market" in which those at the bottom lack theeducation and the professional/technical skills of those at the topand, more and more, fail to getcomparable pay raises, health insurance coverage, and other benefits.Since 1975, practically all the gains in household income have goneto the top 20% of households."
Now, for Reich this becomes a basic under consumptionist theory –that Labour was unable to buy back its produce. In simpler terms, it shows the basic failure of the sub-prime lending model. Lending to labour when wages aren't rising meant the whole of that lending relied on continually rising house prices, as soon as the rise stopped, the pyramid scheme failed.I think the most significant part of this crisis is that it shows how capitalism cannot meet workers' needs. All the talk of irresponsible lending masks the fact that in order to get and keep a roof over their heads, workers resorted to massive quantities of debt... this is where our focus should lie.
Obviously, upping wages would not simply end the problem, because cash strapped firms would be unable to pay them. But I think thisdoes confirm a class centric view that a weak working class is actually bad for capitalism – certainly, for advanced markets. I once read that the US industrialised so rapidly due to the small sizeof its skilled working class – this compelled industrialists toinnovate and improve the intensive exploitation of capital. The converse is true if skilled Labour is plentiful.More pertinently, if productivity has been rising without wage rises to compensate, this too could affect the quantity of money capital kicking around, hence feeding the stock market/banking bubbles...As I say on my blog today, the crisis is nakedly political - what weare calling a crisis is tantamount to strike action by the owners of the world, as they try to protect their investments and their income.I think we need to avoid giving the impression that it is a mechanistic problem, rather than the result of conscious human action in an unequal society...[An] interesting factoid from Alistair Darling's statement yesterday, by guaranteeing accounts up to £50K (£100K in joint accounts) they are guaranteeing 98% of deposits. That's a gross amount of inequality,because the remaining 2% contain collosal amounts of cash, sufficient to cause bank runs by their chasing security and returns.
That 98 per cent of deposits contain less than £50,000 but of the 2 per cent that were above this, they accounted for about half of the total amount desposited. In other words, the top two per cent have as much on deposit as the other 98 per cent put together, yet another confirmation of the Party's case over the years.
Tuesday, October 07, 2008
Monday, October 06, 2008
MORE RELIGIOUS NUTCASES
"In Israel's ultra-Orthodox Jewish community, where the rule of law sometimes takes a back seat to the rule of God, zealots are on a campaign to stamp out behavior they consider unchaste. They hurl stones at women for such "sins" as wearing a red blouse, and attack stores selling devices that can access the Internet. In recent weeks, self-styled "modesty patrols" have been accused of breaking into the apartment of a Jerusalem woman and beating her for allegedly consorting with men. They have torched a store that sells MP4 players, fearing devout Jews would use them to download pornography."
(Yahoo News, 4 October) RD
(Yahoo News, 4 October) RD
DAFTER AND DAFTER
"A Muslim cleric in Saudi Arabia has called on women to wear a full veil, or niqab, that reveals only one eye. Sheikh Muhammad al-Habadan said showing both eyes encouraged women to use eye make-up to look seductive. The question of how much of her face a woman should cover is a controversial topic in many Muslim societies. The niqab is more common in Saudi Arabia and the Gulf, but women in much of the Muslim Middle East wear a headscarf which covers only their hair. Sheikh Habadan, an ultra-conservative cleric who is said to have wide influence among religious Saudis, was answering questions on the Muslim satellite channel al-Majd."
(BBC News, 3 October) RD
(BBC News, 3 October) RD
old and in debt
After a lifetine of labour and drudgery what do we hve to look forward in thetwilight of our years - more debt .
A study of over 60s who sought help from CAS found debt levels had risen to £17,767 since 2004, but more than a quarter had a debt of over £25,000. The report, Growing Old Together: Older CAB Clients and Debt, claimed that average debt levels for this group were 29 times their monthly income.
The research found that household bills, such as council tax and utility bills, created the most anxiety for older people and that they were using credit to pay them
Saturday, October 04, 2008
City scandals
INSIDERS AND OTHERS
We can see today how easily stock markets can tremble when investors get the jitters over, say, the mere rumour of a small increase in interest rates or some other trivial matter. Imagine what those jitters will be like when the socialist movement begins to grow. V. V.
A Glasgow comrade gives an insight to share dealings of yesteryear.( or “Is it this year?” )
Did you get your British Gas shares ok? What's that, you didn't bother? Well, neither did most other workers who had the chance, and no one knows how many of those who did buy the shares will hold on to them. It was estimated that on the day after the sale, around one tenth of the shares had already changed hands as small-time buyers sold out to the big institutions like insurance companies and pension funds. This is what happened with British Telecom shares. When they were first sold in 1984 the number of individual shareholders was 2.3 million. By May 1986 the number was down to 1.6 million, a drop of over 30%, and this figure is certain to fall still further as time passes.
Nevertheless, interest in the stock market is a lot higher than ever it was before. Until recently most people only ever saw the stock market quotations in the newspapers if they accidentally turned over two pages at once, but the saturation coverage by the media of the government's privatisation programme has changed all that. Also, the fear of unemployment has ensured that many employees of quoted companies follow the share price of those companies as a guide to their job prospects.
However, the workings of the stock market remain a mystery to the vast majority of people and this helps preserve the silly notion that financiers, stockbrokers and the like who do understand it are brainier than the rest of us. Actually, it's not nearly as difficult as it seems One of the main reasons why someone not involved in finance finds it baffling is the frequent use of several different words to describe one item. For example, government "stock , which pays a fixed rate of interest, is also called "gilts" (gilt-edged) or "consols" (consolidated) while "securities" is simply the a11-embracing name for stocks and shares of all kinds.
Different types of shares have different rights and rewards. The "ordinary" shares are the ones which actually own the company. Holders of these have full voting rights and receive a variable dividend depending on the company's profits, if any, and what the directors decide to pay out. These shares are also referred to (more confusion) as "equities". "Preference" shares usually have no vote but entitle holders to a fixed dividend ahead of the ordinary shareholders assuming there is something to pay out. "Debentures" are loans made to companies by investors who receive fixed-interest whether the company makes a profit or not.
Until October 1986 members of the London Stock Exchange had to be British-born. And although they would angrily denounce "who does what disputes in factories, shipyards, etc.. they had their own restrictive practice. This meant that only those who were brokers could buy and sell securities for the public and they made their money by charging clients a fixed commission. "Jobbers", on the other hand, bought and sold on their own account but could only deal with the public through the brokers and made a living from the difference between the prices at which they bought and sold. So brokers couldn't act as jobbers and vice-versa. Since October membership of the Exchange is open to other nationals and the difference between brokers and jobbers is abolished along with fixed commissions. Now the price on deals is negotiable
All of these changes, known as "de-regulation", are the result of the Big Bang" we have all heard so much about. The idea is to make the London Stock Exchange more competitive with its main rivals in New York (Wall Street) and Tokyo. After all, if customers can have their business carried out more cheaply in New York or Tokyo then that is where they will make their deals and the new computerised communications technology makes that easy to do. This new technology also means that dealers in London will now transact business in their offices and the Stock Exchange floor will be almost deserted from now on
Any stock market must protect its reputation for honest dealing If investors think that they may be ripped-off then they will take their business elsewhere and this is why the New York and London Stock Exchanges are trying to curb "insider dealing". The most notorious insider is the Wall Street speculator, Ivan Boesky, who for years had apparently anticipated the rise in price of various securities which he bought on a huge scale. Hailed as a genius, Boesky had simply been using confidential information passed to him, for a cut, by people who were professionally engaged in takeover bids which would push up the price of the shares involved.
It is hard to imagine that Wall Street didn't know what Boesky was up to. No one can consistently tell in advance what the market will do. The anarchy of capitalist production sees to that. When every company in every industry is making its plans independently of all the others, and when all of them are subject to forces beyond their control such as decisions taken by foreign governments or even their own, then how can future market trends be forecast with any certainty? The truth is that large-scale insider dealing has been the norm for a long time and will continue in the future whatever steps are taken to eliminate it. So much for the claim frequently made on behalf of the capitalists that their high returns are justified because they are the risk takers''. Not if they can help it, they're not!
What about the other claim that the capitalists are the wealth creators" because of their activities in the stock market? The real wealth of society consists of human beings using their physical and mental energies plus the resources of nature to produce the goods and services society needs. This wealth is legally owned by the owners of the enterprises whose workers have produced it. All the workers receive in return for their efforts is a part of the total value produced in the form of their wages and salaries. The remainder, surplus value in the form of dividends and interest, belongs to the owners of the various stocks and shares. These securities are merely legal title to this surplus and it is this title which is being traded when securities are bought and sold. So capitalists create not a scrap of wealth and stock exchanges are only the places where surplus value is divided between them.
Even so, the enormous power of the capitalists makes them seem invincible and many workers, even against their wishes, cannot see how capitalism can ever be toppled. But the power of the capitalists does not lie in the amount of pounds, dollars and francs they own. It lies in the fact that the vast majority of workers still see production for profit as the only possible method of producing and distributing society's wealth. If that idea should weaken due to the growth of socialist consciousness in the world's working class then the power of the capitalists would not look so invincible at all.
We can see today how easily stock markets can tremble when investors get the jitters over, say, the mere rumour of a small increase in interest rates or some other trivial matter. Imagine what those jitters will be like when the socialist movement begins to grow. Who will be willing to invest then? Capitalism depends for its continued existence on working-class support for it. When that support crumbles then so too will the power of the capitalists. V. V.
Socialist Standard February 1987
We can see today how easily stock markets can tremble when investors get the jitters over, say, the mere rumour of a small increase in interest rates or some other trivial matter. Imagine what those jitters will be like when the socialist movement begins to grow. V. V.
A Glasgow comrade gives an insight to share dealings of yesteryear.( or “Is it this year?” )
Did you get your British Gas shares ok? What's that, you didn't bother? Well, neither did most other workers who had the chance, and no one knows how many of those who did buy the shares will hold on to them. It was estimated that on the day after the sale, around one tenth of the shares had already changed hands as small-time buyers sold out to the big institutions like insurance companies and pension funds. This is what happened with British Telecom shares. When they were first sold in 1984 the number of individual shareholders was 2.3 million. By May 1986 the number was down to 1.6 million, a drop of over 30%, and this figure is certain to fall still further as time passes.
Nevertheless, interest in the stock market is a lot higher than ever it was before. Until recently most people only ever saw the stock market quotations in the newspapers if they accidentally turned over two pages at once, but the saturation coverage by the media of the government's privatisation programme has changed all that. Also, the fear of unemployment has ensured that many employees of quoted companies follow the share price of those companies as a guide to their job prospects.
However, the workings of the stock market remain a mystery to the vast majority of people and this helps preserve the silly notion that financiers, stockbrokers and the like who do understand it are brainier than the rest of us. Actually, it's not nearly as difficult as it seems One of the main reasons why someone not involved in finance finds it baffling is the frequent use of several different words to describe one item. For example, government "stock , which pays a fixed rate of interest, is also called "gilts" (gilt-edged) or "consols" (consolidated) while "securities" is simply the a11-embracing name for stocks and shares of all kinds.
Different types of shares have different rights and rewards. The "ordinary" shares are the ones which actually own the company. Holders of these have full voting rights and receive a variable dividend depending on the company's profits, if any, and what the directors decide to pay out. These shares are also referred to (more confusion) as "equities". "Preference" shares usually have no vote but entitle holders to a fixed dividend ahead of the ordinary shareholders assuming there is something to pay out. "Debentures" are loans made to companies by investors who receive fixed-interest whether the company makes a profit or not.
Until October 1986 members of the London Stock Exchange had to be British-born. And although they would angrily denounce "who does what disputes in factories, shipyards, etc.. they had their own restrictive practice. This meant that only those who were brokers could buy and sell securities for the public and they made their money by charging clients a fixed commission. "Jobbers", on the other hand, bought and sold on their own account but could only deal with the public through the brokers and made a living from the difference between the prices at which they bought and sold. So brokers couldn't act as jobbers and vice-versa. Since October membership of the Exchange is open to other nationals and the difference between brokers and jobbers is abolished along with fixed commissions. Now the price on deals is negotiable
All of these changes, known as "de-regulation", are the result of the Big Bang" we have all heard so much about. The idea is to make the London Stock Exchange more competitive with its main rivals in New York (Wall Street) and Tokyo. After all, if customers can have their business carried out more cheaply in New York or Tokyo then that is where they will make their deals and the new computerised communications technology makes that easy to do. This new technology also means that dealers in London will now transact business in their offices and the Stock Exchange floor will be almost deserted from now on
Any stock market must protect its reputation for honest dealing If investors think that they may be ripped-off then they will take their business elsewhere and this is why the New York and London Stock Exchanges are trying to curb "insider dealing". The most notorious insider is the Wall Street speculator, Ivan Boesky, who for years had apparently anticipated the rise in price of various securities which he bought on a huge scale. Hailed as a genius, Boesky had simply been using confidential information passed to him, for a cut, by people who were professionally engaged in takeover bids which would push up the price of the shares involved.
It is hard to imagine that Wall Street didn't know what Boesky was up to. No one can consistently tell in advance what the market will do. The anarchy of capitalist production sees to that. When every company in every industry is making its plans independently of all the others, and when all of them are subject to forces beyond their control such as decisions taken by foreign governments or even their own, then how can future market trends be forecast with any certainty? The truth is that large-scale insider dealing has been the norm for a long time and will continue in the future whatever steps are taken to eliminate it. So much for the claim frequently made on behalf of the capitalists that their high returns are justified because they are the risk takers''. Not if they can help it, they're not!
What about the other claim that the capitalists are the wealth creators" because of their activities in the stock market? The real wealth of society consists of human beings using their physical and mental energies plus the resources of nature to produce the goods and services society needs. This wealth is legally owned by the owners of the enterprises whose workers have produced it. All the workers receive in return for their efforts is a part of the total value produced in the form of their wages and salaries. The remainder, surplus value in the form of dividends and interest, belongs to the owners of the various stocks and shares. These securities are merely legal title to this surplus and it is this title which is being traded when securities are bought and sold. So capitalists create not a scrap of wealth and stock exchanges are only the places where surplus value is divided between them.
Even so, the enormous power of the capitalists makes them seem invincible and many workers, even against their wishes, cannot see how capitalism can ever be toppled. But the power of the capitalists does not lie in the amount of pounds, dollars and francs they own. It lies in the fact that the vast majority of workers still see production for profit as the only possible method of producing and distributing society's wealth. If that idea should weaken due to the growth of socialist consciousness in the world's working class then the power of the capitalists would not look so invincible at all.
We can see today how easily stock markets can tremble when investors get the jitters over, say, the mere rumour of a small increase in interest rates or some other trivial matter. Imagine what those jitters will be like when the socialist movement begins to grow. Who will be willing to invest then? Capitalism depends for its continued existence on working-class support for it. When that support crumbles then so too will the power of the capitalists. V. V.
Socialist Standard February 1987
Reading Notes
- More definitions from the Devil’s Dictionary:-
- Infidel – In New York, one who does not believe in the Christian religion. In Constantinople, one who does.
- Idiot – A member of a large and powerful tribe whose influence in human affairs has always been dominant and controlling.
- History – An account mostly false, of events mostly unimportant, which are brought about by rulers mostly knaves, and soldiers mostly fools.
- Heathen – A benighted creature who has the folly to worship something that he can see and feel.
-for socialism John Ayers
- Infidel – In New York, one who does not believe in the Christian religion. In Constantinople, one who does.
- Idiot – A member of a large and powerful tribe whose influence in human affairs has always been dominant and controlling.
- History – An account mostly false, of events mostly unimportant, which are brought about by rulers mostly knaves, and soldiers mostly fools.
- Heathen – A benighted creature who has the folly to worship something that he can see and feel.
-for socialism John Ayers
Friday, October 03, 2008
GOD AND MAMMON
"God squared up to Mammon last week as the two most senior figures in the Church of England rode into battle against City traders. John Sentamu, the Archbishop of York, condemned as "bank robbers and asset strippers" the dealers who made millions by betting that shares in HBOS would fall in price. ... In The Spectator, Rowan Williams, the Archbishop of Cantebury and a self-confessed "hairy lefty", praised Marx for his attacks on capitalism and said more regulation was essential. Was all this criticism a little hypocritical, though? Ekklesia, the liberal Christian think tank, pointed out that the Anglican church used speculative methods for its own investments when it set up a currency hedging programme in 2006, in effect short-selling sterling....This year the church, with billions invested in stocks and shares, returned a record profit of 9.4%." (Sunday Times, 28 September) RD
BABY, IT'S COLD INSIDE
"The number of households in fuel poverty in the UK rose to 3.5 million in 2006, government figures show. The figures from the Department for Environment and the Department for Business show this is an increase of one million on 2005 levels. Fuel poverty is defined as households who spend more than 10% of their income on fuel. The Unite union said thousands more people are likely to suffer from fuel poverty this winter. The figures include around 2.75 million homes classed as "vulnerable" -containing a child, elderly person or someone with a long-term illness. The number of homes in fuel poverty in England rose from 1.5 million in 2005 to 2.4 million in 2006, including an extra 700,000 vulnerable households."
(BBC News, 2 October) RD
(BBC News, 2 October) RD
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Paternalism is a common attitude among well-meaning social reformers. Stemming from the root pater, or father, paternalism implies a patria...
