IT REALLY doesn’t take very much to send the international capitalist money markets into a state of panic, as the US Federal Reserve chairman, Ben Bernanke, found out last Wednesday night.
He delivered his monthly resume of the Fed’s latest analysis of the state of the US economy and reported that, with just two exceptions, its members were in favour of continuing with the policy of quantitative easing (QE) although he gave a strong hint that this policy would be ‘tapered off’ later in the year.
At present, the US government, through the Fed, keeps the banks and itself from sinking into open bankruptcy by injecting vast sums of worthless electronically produced currency into the banking system. Currently, the Fed is pumping $85 billion a month into the banking system.
In the words of one financial analyst, the banks have become so addicted to this ‘free’ money that even the merest hint that the gravy train is about to be ended causes panic.
When the money markets opened on Thursday in Europe, the stock exchanges went into a tail-spin with the FTSE 100 in London falling by 142 points to its lowest level since January, wiping billions off the price of shares at a stroke.
The US stock exchange will follow suit when it opens later, with panic-stricken traders dumping shares in order to get out before the real crash occurs and every one of them is wiped out.
Contrary to what the Fed and the Bank of England have said about QE – that by handing billions to the banks they, in turn, will loan it out to private industry and thus promote ‘growth’ in the economy – all it has done is fuel a gigantic frenzy of speculation on the stock markets of the world, an economic bubble of truly historic proportions.
A bubble that is so inflated and unsustainable that a hint from Bernanke can burst it.
The reason QE ‘money’ won’t trickle down from the banks to industry is simple – capitalist manufacturing and productive industry is bankrupt and even the bankers are not stupid enough to loan it any money.
Instead, they were betting on being saved by the emerging economic ‘giants’ like China and Brazil, being promoted as the new industrial powerhouses that would save capitalism.
This hope was dealt two heavy blows with the latest news that Chinese industrial production had fallen dramatically, and that the Stalinist government is restricting foreign investments.
The second big blow this week for the financiers and bankers is the insurrectionary uprising of the working class, youth and poor in Brazil – one of the countries identified as a burgeoning new capitalist economy that would ‘grow’ enormously and be ripe for merciless exploitation and super-profits.
What Brazil shows is that the only growth in capitalism is the growth of revolution!
Just to heap even more woes on the beleaguered banks, came the news that the top British banks are so underfunded that they need £27.1 billion to plug a hole in their balance sheets.
This money is needed by RBS, Lloyds, Barclays and Nationwide Building Society just to cover the requirement that they hold capital resources of at least 7% of their ‘risk weighted assets’ – that is assets that have been assessed for whether they are, in fact, assets at all or just junk.
The picture couldn’t be clearer, the entire capitalist banking and financial system is heading for a crash of huge proportions – a crash that the ruling class is determined will be paid for by the working class through poverty, unemployment and the destruction of every vestige of welfare provision.
It is this crisis that is driving the working class internationally along the road to socialist revolution.
Only by putting an end once and for all to this anarchic, bankrupt and historically outmoded capitalist system through socialist revolution can humanity advance.
