As many of you will be aware, the child benefit records of 25 million
people in the UK, including details of 7.25 million bank/building
society accounts, were put on two CDs by an employee of HM Revenue and
Customs, and lost in the post. See http://news.bbc.co.uk/1/hi/uk_politics/7104945.stm
for example. This crisis is being dubbed "datagate" by some.

The BBC (on that website and the ten o'clock news last night) is
trying to tell people that there is no need to close your accounts
(because other information such as passwords is required). However,
bank and building society bosses are not being so cavaleer - according
to http://news.bbc.co.uk/1/hi/business/7105215.stm, "Customers are
advised to monitor their accounts closely and notify their bank of any
unusual transactions or other suspicious activity." Quite frankly, if
I had a child, I wouldn't take the risk of losing my savings and
hoping to get the money back eventually - I'd close my account ASAP
and open another one (for which I'd recommend the Nationwide Building
Society or the government's National Savings & Investments as safest
in these days of the credit crunch)!

[If you have an overdraft (like me at present), you would probably
have difficulty transfering to a different bank/building society, so
you should insist on opening another account at your current bank/
building society under the same conditions, to prevent money from
being taken out increasing your debt. Don't worry about them going
bankrupt due to the credit crunch - if that happens, you won't have to
pay any of the money back! My overdraft is with the Nationwide so I
won't gain this way...]

If you do lose money as a result of datagate, the government says that
the banks will be liable to pay you the money back. But they would
probably sue the government for any money disappearing from accounts
of people who have children, since the banks aren't exactly
responsible for this fiasco. If you do get your money back, you may
have to wait ages for this to happen.

The BBC Breakfast TV programme yesterday  morning said there was a
danger of lots of people changing bank account details (as did today's
Herald, a Scottish broadsheet newspaper). I don't know how long it'll
take to happen, but I predict there will soon be queues outside many
bank and building society branches across the UK with people closing
and opening accounts.

Northern Rock savers justifiably didn't trust the government, bankers
or accoutants who said that their money was safe, resulting in the
first run on a British bank for over 100 years. Its savers have
continued to withdraw their money, despite government assurances, and
the Bank of England has so far lent about £20 billion to that company.
Much of that money is unsecured and none of the takeover bidders are
willing to repay any of the unsecured debt owed by Northern Rock. With
the bank's total share value now considerably under £0.5 billion, the
only real option left is for it to be nationalised. As with all
companies, the priority of the management is the interest of
shareholders, rather than taxpayers whose money the New Labour
government is putting at risk. A stock market investor friend of mine
has told me that nationalisation of Northern Rock may be illegal under
European Union law; maybe that's another reason to withdraw from the
EU (apart from the many other laws designed to protect the interests
of big business)...

The day before yesterday, shares in Paragon, the third biggest buy-to-
let lender in the UK, fell by 51% (recovering to about 40%) due to the
effects of the credit crunch. It had another big fall yesterday.

It has not been a good week so far for New Labour and particularly
Chancellor Alistair Darling. According to yesterday's Financial Times,
government borrowing is £6.7 billion higher than last year for the
first seven months of the financial year, at the highest level for 13
years - despite the economy growing which is usually a time for a
budget surplus! Darling's estimate at the time of the pre-budget
report was £38 billion but it is now heading for £42 billion - and
this figure excludes money lent to Northern Rock, money borrowed under
PFI/PPP schemes and borrowing by local councils.

I have been warning that Barclays Bank is likely to become bankrupt,
via messages I've distributed far and wide on the internet. My initial
analysis can be read from a document on my website - which also
mentions various other banks in trouble, particularly the Royal Bank
of Scotland (RBS), Alliance & Leicester and Bradford & Bingley - at
www.socialiststeve.me.uk/barclays-bankrupt.htm. A follow-up message,
revealing that the Bank of England lent up to £5 billion to Barclays
in the summer can be accessed at
http://groups.google.co.uk/group/alt.politics.socialism/browse_thread/thread/66d04df9b5d6a9d9/9039f21672a7c768?lnk=st&q=%22steve솩斊#9039f21672a7c768.
Shortly after I sent the latter message out, Barclays shares had a
sudden 9% fall, resulting in them being suspended. To what extent I
was responsible for shareholders panicking is debatable...

Barclays was forced to make a statement claiming that they had to
write off only a total of £1.3 billion as a result of subprimes, when
a figure of around £10 billion was rumoured, on Thursday of last week.
Shareholders were initially reassured, with shares going up about 6%,
but they fell back later that day. On Friday and Monday, the shares
again fell sharply (about 4% both days), indicating that shareholders
have been far from convinced. They did rise back again by about the
same amount the day before yesterday and early yesterday, but after
putting an earlier version of this message on the internet at 2.45pm
yesterday, a 5% gain for Barclays turned into a 5% fall - make your
own mind up whether this was a coincidence... Unsurprising that
shareholders are not conned into believing Barclays' figures when the
total assets and liabilities of Barclays Bank are around £1.8 trillion
(£1,800 billion) as shown from last year's accounts (http://
finance.yahoo.com/q/bs?s=bcs&annual). Stating that the credit crunch
has affected them to less than 0.1% of this amount is hardly credible!

Some people are undoubtedly sceptical about the idea that a bank as
big as Barclays is in danger of going bankrupt. Indeed, they are not
exactly known for good value in the UK, and their £7 billion profit
last year (see www.guardian.co.uk/money/2007/feb/19/business.accounts)
sounds a lot. However, that works out at only 0.4% of the value of
their assets, so they actually have a lower profit margin
internationally than Northern Rock! To reassure shareholders they
would have to issue dividends to them, eating into the liquidity that
they may prefer to keep back for a rainy day. And with two million
people expected to lose their homes in the USA next year, the subprime
crisis is going to get bigger.

As I pointed out in my document "Financial meltdown soon - prepare for
revolution" (www.socialiststeve.me.uk/meltdown-revolution.htm), we are
heading for some sort of massive worldwide economic crash. I am
currently reading a very good book by Naomi Klein called "The Shock
Doctrine: The Rise of Disaster Capitalism", in which she explains how
right-wing economists led by the late Milton Friedman advocating a
complete free market (many such people call themselves "libertarians")
applied shock therapy, tried out in Chile with the shock of the CIA-
sponsored coup by Augusto Pinochet, with "electroshock" torture (that
had been tried out earlier on mental health patients - present day
electro-convulsive therapy (ECT) that can still legally be used
against patients' wishes in the UK and results in short and long-term
memory loss is more humane but still appalling in my opinion) and
economic shock, starting from a sort of "blank canvas". The result was
disastrous both for the Chilean economy and the lives of many ordinary
Chileans. The blank canvas resulting from the meltdown will enable
left-wing political solutions to be carried out in some countries -
read my "Financial meltdown" document at www.socialiststeve.me.uk/meltdown-revolution.htm
for discussion about whether this is likely to be a more ethical form
of capitalism or a form of socialism. Unethical solutions, such as
fascism, Stalinism and fundamentalist religious regimes, may result in
some countries but I am very confident the world will be a much better
place. One massive by-product of datagate is that New Labour's ID
cards proposal, which would take us towards the sort of capitalist
society predicted in George Orwell's book "1984" where all possibility
of revolt is extinguished if massive defiance didn't take place, looks
dead...

--
Steve Wallis (Glasgow, Scotland)
For important/urgent communications, please email:
warcrysteve@yahoo.co.uk
Blogs: http://groups.yahoo.com/group/steve-wallis-socialist-blog,
http://blog.myspace.com/galaxiasteve

My socialist website: http://www.socialiststeve.me.uk
Founder, Ethical Capitalism Network: http://www.ethicalcapitalism.org
Founder, Foundation for PR-based Socialism: http://www.PRsocialism.org
Founder, Revolutionary Platform Network: http://www.revolutionaryplatform.net
My socialist band, Galaxia/Red Day/Red Friday: http://www.galaxiamusic.org,
http://www.myspace.com/galaxiamusic
Author, "Revolution Destroyed? Have I ensured that a world socialist
revolution will never happen?": http://www.revolutiondestroyed.net
Free Priya Reddy (warcry): http://www.warcryallies.net

For discussion of the credit crunch which may cause Barclays Bank to
become bankrupt, go to http://www.revolutionaryplatform.net/forum/index.php?board=156