The merry-go-round of high finance stalled in 2007-8, throwing off and injuring millions of people.
Chancellor George Osborne is anxious to start it up again, and to stage some privatisations in the run-up to the 2015 general election as distraction from the economic gloom.
In 2008 governments across the world, including the most conservative and neo-liberal of them, stepped in to nationalise and bail out banks and financial institutions, and thus to steady the merry-go-round.
Then, they talked of neo-liberalism being discredited, and of a new era of social regulation. Once the financiers regained their balance, however, they began lobbying. The new regulation has been slight, and the nationalised banks have been run as they would be under private ownership, except that the government's guarantees protect them from going bust.
George Osborne wants at least to start the re-privatisation of Lloyds and RBS before 2015. He is considering a scheme in which people could get shares without any down-payment, and pay the government only when they sell on the shares, which they would do only after the shares had risen above the privatisation base-price.
This little bit of something-for-nothing would be paid for by the government accepting a loss. Lloyds shares are now trading at a bit over 60p, and the government bought its 39% stake in the bank at 80p a share; RBS trades between 300p and 350p, and the government bought an 81% stake at 503p.
In 2008-9 the government disbursed £1100 billion in outright buy-outs, loans, and guarantees, to save the banks. Cash losses could never be anything like that much, short of the comprehensive economic meltdown that the intervention was designed to avert. Loans would be repaid, guarantees would not be called on, assets bought could later be sold.
But when the coalition government sold the “good bank” bit of Northern Rock in 2011, it accepted a loss of about £500 million, and kept the “bad bank” bit (a heap of dodgy mortgages) on which there may be further losses. Even now, conditions for banks are tricky, as the Co-op Bank's crisis shows.
The government won't mind about crystallising a loss of £20-odd billion on Lloyds and RBS if it can do a flashy financial manoeuvre and get the merry-go-round whirling again.
The government also plans other privatisations. Royal Mail is to be sold off within a year. A chunk of student loans will be sold off, and possibly, later, the whole Student Loans Company, with nearly £50 billion of outstanding loans.
The nuclear fuel processing company Urenco is up for sale, and so are a couple of smaller government enterprises; and contracting-out of large areas of police work is being pushed ahead.
All these moves speed the spiral in which the economic depression enriches a few, while the majority suffer the longest and deepest drops in real wages on statistical record in Britain, and cuts in benefits and public services.
The TUC congress in 2012 voted for public ownership under social control of high finance. The unions should demand that Labour commit to that policy, instead of criticising privatisation only on tactical grounds.
