IT is one of the features of the capitalist crisis that it proceeds not in a straight line but through a downward spiral movement of apparent recovery followed by an even deeper plunge into economic collapse.
Indeed, it is a mark of the historic depth of this, the latest, and by far its worst crisis that the period between evidence of ‘recovery’ and the subsequent revelation that the economy is spiralling downwards is now measured not in months or weeks, but days and even hours.
So it was this week when on Tuesday the pages of the financial press were awash with the good news that Britain had ‘turned the corner’ and that the economy was showing distinct signs of recovery.
Headlines trumpeted that UK manufacturing had experienced its fastest expansion for ten months and that the economy was well on the road to salvation.
This euphoria lasted precisely one day.
By Thursday, the same papers that heralded recovery were having to report a very different story.
Official figures released by the Office for National Statistics (ONS) reveal that, far from expanding, British manufacturing output experienced a ‘shock fall’ in output in the month of February.
UK manufacturing fell by 1%, the biggest monthly fall in ten months, while factory output was down 1.4% over the figures for last year.
These figures have forced the ONS to revise its manufacturing figures for January to show a drop in output of 0.3% instead of the 0.1% rise it had confidently predicted.
Dominating the busted UK economy is the developing collapse of the capitalist system in Europe and America.
On the same day that the UK manufacturing recovery shrivelled into dust, so shares in the City of London collapsed as it became obvious that another fiction – that the Eurozone had managed to contain the Greek sovereign debt crisis – also evaporated.
Over the past months, a crash has only been postponed in Europe by the simple expedient of the European Central Bank pumping in over a trillion euros to prop up the banks.
This money (conjured up out of thin air by Quantitative Easing) has been used to buy up the sovereign debt in the form of government bonds of the very countries that make up the ECB.
These bonds command high interest rates, so in effect the banks have been pocketing the money and using it to increase their own profits, while insisting that the European working class pays through austerity measures that are driving it into poverty.
This mad merry-go-round has hit the buffers now, as it has become clear that quantitative easing, far from saving capitalism, is producing a vast inflationary crisis that is sweeping the capitalist world.
This has caused the Obama administration in the US to come out against any further QE, thus creating conditions for an even bigger banking disaster than that which emerged out of the 2008 US sub-prime mortgage crisis.
In Europe, the ECB is under pressure from the German bourgeoisie to find an ‘exit strategy’ from pumping money into the crumbling banking system.
In fact, there is no ‘exit strategy’ – every attempt to solve the world crisis through printing money has had the reverse effect of deepening it to the point of bankrupting the entire banking system and all sovereign states.
There is only one way out for the capitalist class. This is to wage war on the world working class and make it pay by imposing the kind of savage cuts and slave labour economies that far exceed anything experienced to date.
For the working class there is also only one way out of this crisis, and that is through the socialist revolution to put an end to this bankrupt and historically redundant capitalist system once and for all and to bring in world socialism.
