Debtonation Day

Submitted by edg on Thu, 19 Apr '12 11.39pm

The current financial crisis can be seen as coming to a head five years ago today. "Debtonation Day" - the name appears to have been dubbed by economist and A Green New Deal author Ann Pettifor - occured on 9 August 2007.

On this day in 2007, responding to the mountain of debt that the banking sector had accumulated due largely to lax regulation, banks stopped lending to each other. Banks also stopped lending to their customers, sending a chill over the broader economy.

To the average person in the street there had been little warning of the turmoil that was about to come - but a month later customers of Northern Rock would be queuing up around the corner to remove their savings in the first UK bank run in 150 years.

It was just the start. Further bank bailouts and failures would ensue not just in the UK, but around the world. Whole countries have been bankrupted and the Eurozone has been pushed to the brink.

In the UK, interest rates have been held at historic lows, unemployment remained stubbornly high, wages have stagnated, inflation has climbed, and the pound has been devalued.

The social impacts will be felt for years to come. The government's response of bailing out the financial sector while imposing a regime of austerity on the broader population has led to criticisms that bankers have enjoyed "capitalism on the way up and socialism on the way down", particularly as bankers continued to award themselves handsome bonuses in spite of the financial carnage.

There has also been widespread criticism that the architects of the flawed and some say fraudulent economic model should not be left in charge of the re-building.

One of the most visible responses to the crisis has been the Occupy movement. What started with people setting up a tent city in Zuccotti Park in New York City quickly spread around the world.

Occupy Edinburgh established an encampment in St Andrew Square, which is in the heart of Edinburgh's historic financial district and a stone's throw away from the bailed-out Royal Bank of Scotland Head Office (now 83% owned by the UK taxpayer). Occupy Edinburgh was recognised in a motion by Edinburgh City Council.

Debtonation Day occurs in the first week of the Edinburgh Fringe.