Ten years ago today, the credit crunch that would catapult the world into financial crisis first began. On that day, August 9, 2007, BNP Paribas announced it would stop activity with three hedge funds, citing concerns over US mortgage debt. The European Central Bank pumped 95bn euros (£63bn) into the Eurozone to quell market fears.
Former Northern Rock boss, Adam Applegarth, called it “the day the world changed”.
A month later, UK bank customers withdrew £1bn in savings in the biggest run on UK banks in one hundred years. And within a year, Lehman Brothers would collapse.
The rest, as they say, is history.
But how much have we learned from this history? And are we doomed to repeat it?
As unsecured debt again balloons to what many fear is unsustainable levels – now £200bn – and wages continue stagnating, the answer may be an unreserved ‘yes’.
Unite general secretary Len McCluskey today (August 9) explained why.
“First, the ‘good’ news; the failed banks are leeching us for only £85bn now, down from the mind-blowing £1,162bn we coughed up in the aftermath of the crashed,” he said.
“The bad news is that we’re all going to be worse off for a long time to come.
“Our NHS is in crisis. Our hard-pressed public servants’ pay is being pinched. Our schools are struggling. And the only banks that are giving back are the thousands of foodbanks now a feature of the high street of every town in this, the fifth richest country on the planet,” McCluskey noted.
“On the other side of the balance sheet, the economy staggers along,” he added. “Growth is measly, less than predicted. Personal debt is the highest in Europe. Mindless cuts choke the life out of our high streets.”
“You wait for weeks to see your GP but that’s the price the Tories say we must pay for the high rollers’ greed. Unite finance sector members pay with their wages and jobs slashed. Our children and grandkids will be paying long into the future too. Yet not one bank boss has faced charges for the ruination they wrought.”
Indeed, many of these bosses who were complicit in the crisis – far from facing charges – are living it up like never before.
As the Daily Mirror today highlighted, Northern Rock boss Adam Applegarth owns a £2.5m mansion near a golf course in Newcastle. Former RBS chief executive, though stripped of his knighthood, still has a £342,000 pension and spends his days playing golf in the South of France. And ex-HBOS boss Andy Hornby eventually went on to run bookmakers Coral, where he raked in more than half a million pounds a year before leaving in 2015.
Even as most bank workers, many of them Unite members, barely scrape by on meagre salaries as jobs are slashed and bank branches shut, eye-watering bonuses for top-earning staff persist. In fact, bankers’ bonuses have totalled £128bn since the financial crisis.
Ten years on from this crisis, you’d think that the damage will have been undone as living standards recover – but the fact is wages are still 5 per cent below pre-crisis levels. A London School of Economics report last month highlighted that the only OECD country whose wage levels have fared worse than the UK’s in the last decade is Greece.
What, exactly, is going on? While various economic factors may be to blame – not least of which is the uncertainty unleashed by Brexit, nearly a decade of ideological austerity has taken its toll.
McCluskey laid the blame of continued wage stagnation and an economy barely moving along squarely on the shoulders of political choices, as he called for an end to government cuts.
“Never ones to let a good crisis go to waste, the Tories fashioned the lie that the economic woes were the fault of the Labour party,” he said.
“The truth is that it was the Tories’ mates in the banking elite who robbed us blind as we saved their skins.
“To mark this decade we desperately need some new thinking,” McCluskey argued. “We need a government that realises the patient cannot recover when you have hacked off the limbs – only to come back for the vital organs.
“The Tories are stuck in their idiotic austerity addiction. They cannot grow our economy back to health. Their economic incompetency means we’ll endure the curse of the crash long into the future.
“We can only build the Britain we need – for you, not the banking elite few – when the Tories are good and gone.”