The Commonwealth Bank shows we are not all in this together
Posted by Bill, June 14th, 2009 - under ACTU, ALP, Australian Labor Party, Australian politics, Banking unions, Banks, Capitalism, Fighting back, Finance Sector Union, Interest rates, Kevin Rudd, Labor Party, Stimulus package, Strikes.
The Commonwealth Bank has raised its home loan interest rates 0.1 percent.
It’s only a very small interest rate rise, but it shows we are not all in this together.
For the Commonwealth, it is supposedly a response to the increased cost of borrowing.
Now remember, this is one of the banks which didn’t pass on the last Reserve Bank cut to customers in full.
Other banks will probably follow. They have a nudge/wink relationship. One Bank leads and the others follow.
Maybe they will listen to the Prime Minister and not increase their rates.
But Rudd’s call – please Mr Micawber, don’t take away more money - is the sigh of the powerless, more about spin and giving the impression of doing something than actually doing anything.
Shop around was Rudd Labor’s advice. Yes, move from the Commonwealth at an exorbitant cost to one of the other Big Four banks, all of whom already charge slightly more than the Commonwealth. Some choice.
The banks are doing what banks and all other big businesses do – putting profit before people. Kevin Rudd is in Government to manage that process.
Since that is your raison d’etre, Kevin, mate, why are you surprised when a bank puts profit first?
You aren’t surprised at all. You just have to feign mock outrage and then let them get away with it, like you did when they didn’t pass on the full rate cut last time.
The Commonwealth Bank has the money to absorb increase costs and pay it workers much more.
In the first half of this financial year it made $2.5 bn profit (an increase of 9 percent over the previous comparison period). Why not use some of that $2.5 bn to cushion borrowing costs? To pay more wages?
Ah, that would impinge on the bank’s profit rate. And that is inviolate, isn’t it? Profit before people.
The Commonwealth Bank is undermining Government policy, which is to increase aggregate demand. The Government says it is powerless.
This of course is not technically true.
But Labor won’t attack the logic of profit. It is managing the system in the interests of the likes of the Commonwealth Bank.
So Rudd and Swann can talk all they like about us all being in this together, but in fact every recession we have ever had shows it is workers who bear the burden of the crisis, not bosses.
Profit is sacrosanct. So Governments, bosses and most unions and their members put profit making before anything else. What’s good for profit is good for us all seems to be the mantra.
Until the crises of capitalism show us differently.
Let’s look at the Commonwealth bank scorecard for us all being in this together.
The Bank so far has refused to pass on all the last RBA cut and it has now increased its home loan rate. Home owners are apparently not in this togetherness bed with the Commonwealth Bank.
And which Bank is cutting the real wages of its staff? The Commonwealth. I have written on this wage cutting before on this site.
The Bank has offered a pay increase of 1.5 per cent to staff who earn below $100,000. This is well below the inflation rate and is a real wage cut.
So when Rudd and the bosses claim we are all in this together, the actions of the Commonwealth Bank in attacking its workforce and working class borrowers show that for the lie it is.
What can be done? In South Africa unions are threatening to strike if their Central Bank doesn’t cut interest rates to stimulate the economy.
It’s a good pointer for what the ACTU should do – strike to force the RBA to cut rates and to force the bosses to pay real wage increases.
As part of a real wage campaign, Commonwealth Bank staff could refuse to process the increase.
It’s all about profit. Cut off the flow of profit to the Bank and they’ll quickly begin to negotiate with you. Do nothing and they’ll steamroll you with wage cuts and the rest of us with rate increases.
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Comments
Comment from John Arthur Turner
Time June 15, 2009 at 12:05 pm
Each bank is able to add all profits in excess of the dividends outflow to their capital adequacy base and then use the multiplier to increase their loans.This practice has been a major factor in the housing and other asset inflation bubbles. Overpaying exectives and other professional has a similar effect. They cannot spend their incomes on consumption so in their aim to accumulate bricks and mortar assets they outbid those needing homes.
Comment from juan
Time June 15, 2009 at 3:27 pm
Hi Bill
No, obviously, we are not all in this together. But things are no nearly as bad as they seen to be getting in other places, say in Italy. Just to recap on some issues touched on in earlier posting.
Have a look at this! La ultraderecha italiana, lista para patrullar las calles
Las patrullas están formadas por voluntarios ultras con ropa paramilitar dispuestos a “salvaguardar la integridad nacional”
“The Italian extreme right wing is ready to patrol the street of Italy. The street patrols are composed of volunteers in full paramilitary uniform, ready to saveguard the nation’s integrity…”
If this item in the Spanish daily Publico.es (a fairly reliable paper) is to be believed, the Italians have cause to be worried.
In fact they are worry. Antonio di Pietro, a left parlamentarian has made an appeal to the people of Italy saying: “Italians wake up before it is too late!”. Hope things don’t get that bad here.
Comment from Arjay
Time June 15, 2009 at 8:05 pm
What we need is a National Monetary Fund whereby the Board members are elected directly by the people.It would be totally independant of Govt and have the fuction of loaning money to the Govt ,banks and appraising Govt expenditure.It could withhold finance on various projects if Govt is being incompetent.
Just get a selection of the best economic brains in the country and put them up for election.They would have to totally impartial and not be on boards of Corporate Companies or belong to political parties.
A NMF could provide funds for infrastructure and provde funds for pensions.People would be allowed to put their super there if it was performing well and guess what,no exit or entry fees.
There would be more interest in electing members to an NMF than voting for your local polly.
Just a note Juan.Those countries performing badly have one thing in common.Their Govts do not own their currency.The Bank of England owns the pound which is in turn owned by the Rothschilds.The Euro and US dollar is owned by a Banking cartel of Rothschilds Warberg,Rockerfellers etc.
We in Aust own our currency created by the RBA. Rothschilds “Give me control over a currency and I care not who makes the laws.”
Comment from Glen Sheather
Time June 15, 2009 at 9:37 pm
I do not know the history of why the Commonwealth bank was initially created. Was it created to make a profit or to keep the other banks honest. I suspect the later. Maybe it’s time to create another government owned bank.
Comment from Arjay
Time June 15, 2009 at 9:59 pm
Glen Sheather,just view the entertaining movie “Money as Debt’ by Paul Grignon above and you will really begin to understand why our monetary system has failed.
Comment from Arjay
Time June 14, 2009 at 10:23 pm
Corporates do not give donations to Govts for zero results.Kevin and Wayne will feign outrage and surrender.We should never have sold the CBA.It could have been used to keep the excesses of the others in check and also as a source of revenue so as to reduce taxes.Why do our Govts sell income earning assets?The Chinese Govt does not do this.
Banks through the fractional reserve system can conjure into existence 9 times the amount of money they have in reserves.90% of our money is created as debt and that is why we are in so much debt.
When they went off the gold standard in 1974 inflation went through the roof.Houses are 36 times more expensive while average wages have only gone up by 12.5 times.
This economic collapse can be attributed to this system,whereby banks can legally counterfeit money and loan it at interest to Govts and individuals.They destroy economies first by inflation and then deflation.When the collapse comes ,those with the capital go about buying under valued assets.
If Govts can create currency ,we can reduce taxes and not have any debt.
See Paul Grignon’s “Money as Debt.”
http://www.youtube.com/watch?v=vVkFb26u9g8