The Bills Are Now Due

Credit crunch 'will hit ordinary workers hardest'
Ashley Seager The Guardian

The global credit crunch is a crisis for free market capitalism which will hit ordinary workers hardest, international trades unions said yesterday, as they called for a huge increase in government regulation of financial markets.

"A toxic cloud is moving from Wall Street to main street and will impact the jobs, wages and pensions of ordinary working people," said Phil Jennings, general secretary of the Uni global union.

He said the era of globalisation has pushed the share of national income enjoyed by workers to historical lows, leaving them vulnerable to the latest downturn in the United States economy which was likely to spread to other countries.

"The financial wreckage is everywhere. It will make labour markets very precarious," he added.

"The party is over for corporate greed," said Sharan Burrow, head of the Australian Council of Trade Unions. "There has been a lack of transparency, governance and global rules and it will wreck the lives of ordinary families. Governments have failed the test."

She said that it was ironic that the US sub-prime mortgage crisis began because the poorest people in the US were unable to pay their mortgages; the current crisis could result in a lot more people losing their homes. "The drive for more and more profits by banks undermined the whole system," she said.

Guy Ryder, of the International Trade Union Confederation, denied the suggestion from bankers that the credit crunch was an accident. "Their self-interest overcame their self-awareness. The idea that it was an accident is simply not credible," he said. He was pleased that the US Federal Reserve had slashed interest rates this week but said that was only a "stop-gap" measure.

"There are big systemic problems ... The tendency of governments to hand responsibility to global companies has been a failure."

Jennings called on other central banks, in particular the European Central Bank, to cut interest rates to head off a slowdown in Europe. He accused the ECB of being too concerned about wage inflation.

President Bush should have directed his tax cuts at the poorest Americans who would have spent it all and given a boost to the economy. "That would have given the biggest bang for his buck."