Will the last person out turn off the tap?

Death by (il)liquidity, final chapter.

It's nauseating to read it in The Telegraph given that their idea of a 'sensible' policy would presumably be a dose of austerity and 'hard choices' such as Obama is now bemoaning his forebears not making. However, the accusations in the article below are fair up to a point. Of course no capitalist could have avoided the current crisis, the idiocy that is now apparent was the only viable course to sustain an otherwise unsustainable system given the masses' distaste for unmitigated austerity; to attribute the ability to 'design' what is now coming to pass to Gordon Brown et al is to seriously overestimate the extent to which capital is under anyone's control. That said, the article is right to point out the monumental smug imbecility of Brown et al.

What's interesting though is the detail regarding the scale of off-balance sheet accounting in the UK economy and state debt. The 'boom' was built on fictititous capital creation on an unprecedented level and the PFI projects which Labour was so proud to take over as its modus operandi for infrastructural 'regeneration' from the Conservatives amounted to the looting of nature, public assets, and infrastructure. (Cf Damian Abbott's excellent article on this site)

This ponzi-scheming siphoned off state cash to financialised private sector companies years before there was open talk of bailing anything out. In fact, we have already lived through a long bailout that flooded the economy with liquidity to create white elephants that either died at birth or opened belatedly to go on sucking up public and private money without delivering much in the way of reproductive services to capital. (If you pour money into services which do not reproduce labour power or constant capital, that do not contribute to the expanded reproduction of capital but at best go to the reproduction of unproductive service sector workers who consume but do not through their labour contribute to the valorisation of value, you have a dead loss, the makings of the 'bottomless pit'.)

Don't believe that the last decades represented unproductive investment? Then take the City Academies training future generations of english businessmen and financiers (ha ha ha), virtual opera houses and as-yet-incomplete megastadia, super-leveraged and subfunctional ferry services, private and privatised hospitals not to mention all the other semi-functional services for potentially productive workers cancelled and closed down... If one wants to see how fictitious capital/non-reproduction couplet works, check out the housing and services in e.g. Hackney, PFI'd to a fraction of their former inglory. We finally have new security doors on my estate (it stops the dealers from running up and down the corridors, they say) but the council are still gunning to sell the green space for private flats (for city workers and city academy key workers, no doubt...).

But anyway, that's all history cos if there's nothing left to sell - and the family silver has long since been looted, sold and resold - our collateral is only our combined capacity to be worked to death. Can't wait to see what the IMF has in mind...

Everywhere the obvious is colliding with the obvious - an economy built on the consumption and expenditure of an elite is not sustainable. The only 'solution' to the crisis lies in breaking with the illusion of a capitalist (whether 'alter' or 'anti' capitalist, for that matter!) future.

B

Gordon Brown brings Britain to the edge of bankruptcyIain Martin says the Prime Minister hasn't 'saved the world' and now faces disgrace in the history books

By Iain MartinLast Updated: 8:41AM GMT 21 Jan 2009Comments 385 | Comment on this article

When will the Gordon Brown nightmare end? Photo: Jane MingayThey don't know what they're doing, do they? With every step taken by the Government as it tries frantically to prop up the British banking system, this central truth becomes ever more obvious.Yesterday marked a new low for all involved, even by the standards of this crisis. Britons woke to news of the enormity of the fresh horrors in store. Despite all the sophistry and outdated boom-era terminology from experts, I think a far greater number of people than is imagined grasp at root what is happening here.The country stands on the precipice. We are at risk of utter humiliation, of London becoming a Reykjavik on Thames and Britain going under. Thanks to the arrogance, hubristic strutting and serial incompetence of the Government and a group of bankers, the possibility of national bankruptcy is not unrealistic.The political impact will be seismic; anger will rage. The haunted looks on the faces of those in supporting roles, such as the Chancellor, suggest they have worked out that a tragedy is unfolding here. Gordon Brown is engaged no longer in a standard battle for re-election; instead he is fighting to avoid going down in history disgraced completely.This catastrophe happened on his watch, no matter how much he now opportunistically beats up on bankers. He turned on the fountain of cheap money and encouraged the country to swim in it. House prices rose, debt went through the roof and the illusion won elections. Throughout, Brown boasted of the beauty of his regulatory structure, when those in charge of it were failing to ask the most basic questions of financial institutions. The same bankers Brown now claims to be angry with, he once wooed, travelling to the City to give speeches praising their "financial innovation".Does the Prime Minister realise the likely implications when the country joins the dots? He has never been wild on shouldering blame, so I doubt it. But Brown is a historian. He should know that when a nation has put all its chips on red and the ball lands on black, the person who made the call is responsible. Neville Chamberlain discovered this in May 1940 with the German invasion of France.We're some way from a similar event. But do not underestimate the gravity of the emergency and potential for disgrace.The Government's bail-out of the banks in October with £37 billion of taxpayers' money was supposed to have "saved the world", according to the PM, but now it is clear that it has not even saved the banks. Our money kept the show on the road for only three months.As the Liberal Democrats' Treasury spokesman Vince Cable asks: where has the £37 billion gone? The answer, as Cable knows, is that it has disappeared down the plug hole.It is finally dawning on the Government that the liabilities of the British banks grew to be so vast in the boom years that they now eclipse the entire economy. Unfortunately, the Treasury is pledged to honour thoseliabilities because it has guaranteed not to let a British bank go down. RBS has liabilities of £1.8 trillion, three times annual UK government spending, against assets of £1.9 trillion. But after the events of the past year, I wager most taxpayers will believe the true picture is worse.Meanwhile, the assets are falling in value. This matters, because post-nationalisation these liabilities are now yours andmine.And they come piled on top of the rocketing national debt, charitably put at £630 billion, or 43 per cent of GDP. The true figure is much higher because the Government has used off-balance sheet accounting to hide commitments such as PFI projects.Add to that record consumer indebtedness and Britain becomes extremely vulnerable. The markets have worked this out ahead of the politicians, as usual, and are wondering what to do next. If they decide our nation is a basket case, they will make it so.The PM and the Chancellor , both looking a year older every day, tell us that for their next trick they will buy more bank shares, create a giant insurance scheme for bad debt, pledge to honour liabilities without limit, cross their fingers and hope it all works. The phrase "bottomless pit" springs to mind for a reason: that is what they have designed.In this gloom, the Prime Minister has but one slender hope: that somehow, by force of personality, the new President Obama engineers a rapid American recovery restoring global confidence, energising the markets and making us all forget this bad dream.Obama is talented but he is not a magician. Instead, Gordon Brown's nightmare, in which we are all trapped, is going to get much worse.