There has been a lot of speculation about Barclays Bank seeking emergency funding from the Bank of England recently as a result of the credit crunch (with banks unwilling to lend to each other due to subprime mortgages of people with poor credit records, largely but not just in the USA), which has led to big falls in its share price. Whereas the Bank of England has so far been willing to bail out Northern Rock after the run on that bank (with big queues outside its branches of customers trying to withdraw all their savings), they couldn't bail out a huge bank like Barclays and they would have to let Northern Rock go bankrupt too, wasting the billions of pounds they have already lent them. This is probably the reason why Northern Rock shares fell another 4% yesterday, when other banks were recovering slightly (maybe the Queen's Speech reassured some investors) after losing a total of £5 billion on Monday triggered by the resignation of the boss of Citigroup (the biggest bank in the world) due to credit crunch losses.

 

On Saturday, an article appeared in the Herald (one of the two quality Scottish daily newspapers, the other being the Scotsman), pointing out that Barclays received two emergency loans from the Bank of England in the summer, presumably before Northern Rock. The article said it was for "technical reasons" but Barclays would obviously not resort to such a drastic measure unless it had run out of funds.

 

The Herald article included the sentence "But the Bank of England said it had not made any emergency loans through its penalty-rate, standing facility on Thursday, a source which was tapped twice by Barclays during the summer for technical reasons"; you can read the full Herald article on the web at http://www.theherald.co.uk/mostpopular.var.1807184.mostviewed.banking_fears_prompt_further_market_jitters.php (this now works but didn't on Monday which I presume was due to internet censorship).

 

On Monday I started distributing a document of mine I had just written, entitled "Barclays Bank will go bankrupt!", in which I told the world about the information the Herald leaked (providing proof via the newspaperdirect service to view the full printed newspaper on the screen since it wasn't properly on the internet). I sent it out more widely yesterday, since I did not have much time on Monday.

 

That document is now indexed by Google, and can be found by searching both the web and groups for suitable keywords - but not by Yahoo! or MSN. Doing a normal Google search finds it on an anarchist forum http://libcom.org/forums/news/barclays-bank-will-go-bankrupt-05112007, from which I have been banned as a result (but my message has been moved to a "bin" bulletin board rather than deleted). Doing a Google Groups search finds it on a group for fans of the revolutionary singer Sandi Thom (that I set up) at http://groups.google.com/group/sandi-thom/browse_thread/thread/a858bf59cc786dfd/8c112f7e9188b332?hl=en&lnk=st&q=%22steve+wallis%22+citibank. It can also be found on my website www.socialiststeve.me.uk (with colour coding to highlight important points and names of banks, including several others that seem to be in financial difficulty).

 

Yesterday, an article appeared in the Guardian, stating that "Northern Rock has borrowed only £18bn of the £23bn lent by the Bank of England from its emergency loan fund, leading to speculation that other British banks need £5bn of extra funds to cope with the global credit crunch". You can find that article at http://business.guardian.co.uk/banking/story/0,,2204473,00.html.

 

It therefore seems most likely that Barclays was lent the grand total of £5 billion in the summer in two payments, but it is of course possible that some of the £5 billion was lent to another bank - perhaps the Royal Bank of Scotland, which like Barclays has been having particular bad share price falls lately.

 

I included the Herald article's author, Business Editor Ian McConnell, in a list of email addresses I sent the message to on Monday. I have received an automatic reply, saying that he is out of the office until Friday. It is therefore likely that full details of Barclays' problems will appear in the Herald next Saturday (10 November) - and an international run on that bank will start soon after that. Be warned to get your savings out before the queues get too big...

 

I have created a hierarchy with an "Economics" bulletin board (including sub-boards for stock markets, banks, building societies and economic theories) in the "Ideas" category at my Revolutionary Platform Network forum. I recommend using those boards to discuss these issues further; I will post further messages about problems in the economy there as well as interesting articles from the media. Go to: http://www.revolutionaryplatform.net/forum/index.php?board=156.0.

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Steve Wallis (Glasgow, Scotland)
For important/urgent communications, please email: warcrysteve@...
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