The crisis is a direct consequence of some of the most grotesque features of New Labour and its conversion to global neo-liberalism. Northern Rock is in trouble because it was gambling in the international casino economy so beloved by Gordon Brown. In particular, it hoped to profit from the unscrupulous selling of the "sub-prime" mortgages that have led to the collapse of the US housing market. The resulting panic has seen huge losses for banks around the world and now poses a serious threat to the UK economy
When people place a bet on a horse, it's on the understanding that they will lose their money if the horse doesn't win. That's not how the rules work for big business. Now that the Northern Rock's gambling addiction has been exposed, it wants to use public money to cover its losses and Chancellor Darling has fallen over himself to oblige. BBC sources say that he has underwritten Northern Rock for up to five years, with little or no guarantee that the public will get its money back.
There is another way. Instead of flogging a dead horse, the government could use this opportunity to address the failure of its housing policy. The Northern Rock should be nationalized and become the nations housing bank. The value of its existing mortgages could be added to its other assets, along with the public money it has received.
In future, the bank could be used as the publicly-owned vehicle for investing in housing, particularly the new-build council housing we so desperately need. It could also provide mortgages for the many so called "low cost" housing products that are currently earning fortunes for housing associations and private lenders, with all proceeds to be ploughed back into a public housing investment programme.
If the government can find billions to prop up Northern Rock, it can also do it to invest in genuinely affordable housing.
RESPECT is proud to have been at the heart of the struggle to defend council housing in Wales. In Swansea, Paul Lynch, Chair of Swansea Defend Council Housing led a grassroots campaign of working class people on his estate that led to two-thirds of council tenants voting AGAINST the multi-million pound campaign by the LibDem council to sell off council housing.