Articles with the Tag nationalisation

Fortis nationalised

Dutch politics, economic crisis
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Jump you fuckers!

This time last week Fortis was to be part-nationalised by the governments of Holland, Belgium and Luxembourg. Less than a week later, this drastic measure costing billions of euros was already ruled to be insufficient and now Fortis is to be broken up, with the Dutch part nationalised and the Belgian and Luxembourg parts sold to a French bank. Instead of the four billion euros that were to be paid last week for 49 percent of Fortis, the government will now pay some 17 billion euros for the entire kit and kaboodle. No longer will it be dependent on the vageries of the stock market but instead the rot is stopped and it’s safe under state control. A thriumph for socialism?

Hardly.

There’s a big difference between a proper nationalisation done by the workers for the workers and a nationalisation of last resort as been done here. Yes, the recieved economic wisdom of the past three decades has been that state owned companies are evil, inefficient and that everything should be left to the free market, but in reality capitalism has always been happy to let government clean up its messes. In this case, the government has made clear this is a temporary measure, with Fortis to be privatised again once it has stablised, the company will be run according to normal capitalist rules rather than for the common good and the day to day running of Fortis will remain in the hands of the same people who run it now. In other words, nothing will change and the only positive thing the government has done is rewarding the same people who almost ran Fortis in the ground with their slice of the seventeen billion euros…

What’s more, that seventeen billion had to be borrowed on the financial markets, so interests will need to be paid over it. Sure, the profits Fortis will make might cover these costs, but in the short term and the current climate this is unlikely. Which means there will be more budgetcuts next year, less to spend on social welfare, especially as we’re still comitted to fighting an expensive (and of course, immoral) war in Afghanistan which also doesn’t come cheap. This at a time when the need for social welfare will surely grow, considering the collapse of the world financial system going on around us and the effects on the real economy this
already has.

No, this isn’t socialism, this is just socialism of risks and privatisation of profits: same as it ever was.

Credit crunch hits Holland

Dutch politics, economic crisis
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Fortis executive flashes rescue plans

So there it was on every front page this morning: Fortis, one of the largest banking and insurance companies in the Netherlands has been nationalised. What’s more, it’s been nationalised by no less than three countries: Holland takes over 49 percent of the insurance branch and pays 4 billion dollars, Belgium pays 4.7 billion for the same percentage of the banking branch, while Luxembourg invests 2.5 billion euros in the Luxembourg based interests of Fortis. Finally, the ABN Amro bank, which Fortis had just bought the Dutch branch off less then a year ago is to be sold, perhaps to ING, another finance giant, best known for taking over Barings when Nick Leeson had managed to bankrupt it…

So far the effects of the American mortgage crisis and subsequent credit crunch seemed to have barely hit the Netherlands, but with this part nationalisation it seems we too are no longer immune to it. The big question is whether Fortis is just the first to fail, or whether like the UK or America, we’ll see the whole financial sector collapse like a house of cards. There are other banks who, like Fortis, had to write off investments in the American mortgage markets this year and last, but none of these losses, including those of Fortis are big enough on their own to bring down any of the big banks. What made Fortis vulnerable was much simpler: a decision to get involved in a long and expensive hostile takeover at the exact moment that it became clear just how much of a disaster the US mortgage situation really was. This meant that Fortis had to find billions of euros it didn’t have itself to pay for its share of ABN AMro at a time when nobody was willing or able to lend it to them as cashw as tied up in the every increasing death spiral of the US mortgages.

So Fortis lost a lot of money, its shares plummetted and its customers moved their savings to other, more safer banks. Despite frequent denials and optimistic press releases, the end was near. Negotiations between Fortis and the Dutch, Belgian and Luxembourg governments started this weekend, and when one Fortis executive left the meeting on Sunday night, details of the rescue plan were clearly readable on the concept agreement he flashed the press, as seen in the picture. Which is how we know ABN Amro is to be sold and the chairman will lose his job, as officially only the part nationalisation has been agreed upon.

I’ve got mixed feelings about this. While it’s fun to gloat about how quickly dyed in the wool capitalists are converted to “socialism” when it’s their ass on the line, this isn’t the kind of socialism that actually benefits the workers themselves. What’s more, with the current plan the government doesn’t even get a controlling stake in Fortis, so has little to show for its generous investment. And generous it certainly is to pump four billion euros into a doddering company when plans to provide e.g. daycare for everybody founder on millions rather than billions. It puts the lie to the oft heard argument that “we just can’t afford” higher social benefits, or improved healthcare, or anything else that would actually improve the lives of ordinary people. Especially when you see how much money Fortis has wasted chasing after ABN Amro…

Nationalise the succesful companies, not the failures

economic crisis, socialism
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As someone who had been saying for the past few years that things like Nixonian wage and price controls would be considered beyond the pale in a world that, I thought, understood and appreciated some basics of free markets more than it did 35 years ago, well, it’s a good thing my jaw has dropped so much on the past week’s news that I have room to fit a lot of crow.

Is there anything more sad than a disillusioned libertarian once he discovers his beloved mistress capitalism isn’t as pure as he thought she was, but is quite willing to undergo intervention if that suits her interests? Well, yes. Brian Doherty’s discomfort is after all safely theoretical, a vague unease that the economic laws to which he dedicated his political life are being overturned now capitalism has failed again and the people responsible need the help of the state to bail them out, again. Unlike like many of the people who’ve lost their jobs, their houses or both in the process, Brian’s safe. Capitalism always needs its useful idiots.

One such useful idiot is the near-mythical taxpayer, who is going to pay the costs of all those emergency nationalisations and bailouts their governments have committed themselves to, from Northern Rock to AIG. Because it’s never the strong, succesful companies that are taken over, but the wrecks left behind once the shareholders and executives have sucked them dry. Not that there’s anything new to this pattern. Remember Railtrack?

Or, further back, look at which industries were nationalised by the great social democratic governments of Europe in that great wave of nationalisations after World War II, especially in Britain. The railways, coal mines, British Leyland, all industries that were in trouble, losing their profitability anyway, to the point were state interference is welcomed as much as resented. And it then fell to the state to dismantle these industries and deal with the fallout of this, like a eneration of unemployed miners after the 1984 Miner Strike. Even those industries that were re-privatised by succesive Tory and Labour governments still leaned heavily on government support, directly or indirectly.

Which is whay nationalism this way isn’t a victory for socialism or even social democracy, but just another way in which profits are privatised but risk nationalised. What we need is not the propping up of empty husks, but the nationalisation and put into the public trust of all key industries, a reworking of society in such a way that cooperation, not competition is its central
organising feature, where “to each according to their needs, from each according to their abilities” is its motto. To do anything else is just keeping capitalism alive to cause more disaster.

National Rock

economic crisis, libertarianism
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So Northern Rock is to be nationalised, but as the Darling treasurer hurriedly explained, only as a temporary measure and only as a last resort; wouldn’t want to do anything that frightened business, now would we? The Tories immediately started howling about how this was all an embarassement and a prelude to a new winter of discontent, with the mass strikes and the power cuts and the dead piling up in the streets and all that, while Northern Rock shareholders immediately started making noises about sueing because of course no matter what happens they deserve their pound of flesh. For the rest of the financial sector, however much they may not like the dreaded n-word, they seem happy to let it happen and have the tax payer take responsibility for their failings.

For all the angst surrounding it, this nationalisation really is only business as usual, as over eleven years of New Labour it has always been willing to guarantee private profits with public money, although it’s usually done through less visible methods like private finance initiatives. Nationalisation happened only because Darling was unable to get rid of Norther Rock any other way, had spent too much money propping it up already to sweep the losses under the carpet and the crisis was too high profile to resolve through the usual sleight of hand. Not just the opposition and the voters were watching, so was the EU competition commissioner. Any hint of preferential treatment and the EU would’ve pounced. Since nobody was stupid enough to buy an almost bankrupt company with a multiple billion pound debt, nationalisation was the only option remaining.

But while nationalisation should not be seen as some huge blow for socialism, the mere fact that the government actually wants to go through with it is a significant break with the past. until now the profit principle, privetisation and marketisation as the solutions to all ills had been sacrosanct. To abandon them in the case of Northern Rocks means things are changing. It fits in a larger pan-European trend of abandonment of free market principles, as even the Dutch government has now admitted privetisation of public services has largely failed to bring the benefits that they promised it would. Plans to sell off Schiphol have been halted and the threatened liberalisation of public transport in the four biggest cities has fallen through. The finance minister has even gone so far as to say that privetisation of remaining state run companies would be stopped entirely, unless there were compelling reasons otherwise.

This u-turn is not to be explained by a change in ideology on the part of the British or Dutch governments, but simply because both can see the threatening recession looming at the horizon and both know that this recession is likely to be severe. Contrary to free market ideology, business has always relied on the government to shelter them through these storms.