140th Anniversary of Marx’s death (14th March 1883) & a week of banking crisis
Marx who died 140 years ago this week often wrote about banking and financial crisis which he saw as systemic to a market capitalist system. He would have recognised events of the last week.
Last Friday Silicon Valley Bank became insolvent, due to customers withdrawing money. It declared bankruptcy this week. Its much smaller UK operation was bought by HSBC for £1. The crisis developed from here. Some other medium scale US banks had to be shored and Credit Suisse is only surviving so far due to a £45bn loan backed by the Swiss Government.
The crisis relates to significant interest rate rises aimed at controlling inflation. That means that bank assets have dropped in value. The issue is current financial models factor in low interest rate.
The Financial Times (18th March) described it as a ‘week of madness’ and noted that ‘the question on everybody’s minds is what will break next’.
Before the 2008 financial crash Gordon Brown declared that his policies were moving beyond boom and bust. The only way to do that effectively however is to move beyond market capitalism.
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