UNISONActive is an unofficial blog produced by UNISON activists for UNISON activists. Bringing news, briefings and events from a progressive left perspective.

Thursday, 23 June 2011

Is a New Banking Collapse Imminent?

The head of the world's largest public debt traders, Pimco, has warned that Greece is still likely to default on its debts, despite prime minister George Papandreou winning a crucial vote of confidence late on Tuesday night:  http://www.guardian.co.uk/business/2011/jun/22/greece-default-likely-says-top-bond-investor

Mohamed El-Erian, chief executive of Pimco, ratcheted up the pressure on Europe's leaders by predicting that other eurozone members could also follow Greece into default territory. The warning came as shares slid across Europe, as attention shifted to Papandreou's next challenge -persuading the Greek parliament to approve a new package of asset privatisation and spending cuts next week.

Crowds gathered outside the Greek parliament ahead of the vote of confidence, with some shouting "we give a vote of no confidence" at the lawmakers gathered inside. In London, the FTSE 100 fell as much as 33 points in morning trading and the euro also sagged, as experts warned that Papandreou's narrow victory did little to address the wider eurozone crisis.

The next banking crisis is not being deferred as George Osborne hoped.It's very clear that sometime sooner or later Greece is going to default on its debt repayments. If an exit from the EURO can be negotiated then Ireland and Portugal will surely follow suit, and maybe Spain and Italy too. All of this means that the capital of our the global banking system is at threat again because they will not get back the money they invested in Greek public debt. Insolvency is almost inevitable once more. 

The risk that it's going to happen is very real. It's not certain. No one can attach a probability on a date. But it looks very likely. Once again a microscope will be placed under our debt based money system and answers need to be provided. The answers are clear a government be it national or at EU level should create, issue and circulate all the currency and credits needed to satisfy the spending power of the government and the buying power of consumers. By adoption of these principles, the taxpayers will be saved immense sums of interest. Money will cease to be master and become the servant of humanity.