[lbo-talk] Gordon Brown nationalises the banks

[James Heartfield]

The press here are lauding Gordon Brown's far-sighted public purchase of stakes in the major banks, a bailout proportionately greater than Paulson's. Some LBOsters will be impresed that Brown has used the purchase to impose policy on the banks: no bonuses (this year, and reform to the bonus system in the future); a guarantee for inter-bank lending; and an obligation to lend to small business and domestic borrowers at the same rates as last year.

As a Briton who sounded off about the US bailout, I am struck that there was no public debate about our bailout plan. Politicians, press and trade unions closed ranks to welcome the action in a Stalinist exercise in non-partisanship. In that respect America's democracy seems more willing to ask questions of its leaders.

I can't shed any tears over the bank leaders forced to resign, and everyone says that the move was what was needed to restabilise the economy.

Still, I can't help but think that the British bank 'nationalisation' (they are not entirely in public hands, let it be said) fails to get to the root of the problem: the country's extraordinary dependence on financial intermediation, and the depletion of its manufacturing base. It is to soon to say that the plan has been a success, especially not if it merely restarts the same credit-driven consumer capitalism that allowed Britons to give up on manufacturing.