Bank of England to ‘crucify the consumer’

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NOT ONLY has the world crisis of capitalism now been accepted as the reality by even the most sceptical of the bourgeoisie, its different factions have begun to clash over the different policies that they require to deal with it.

The banks having been told that the government is at their service, and that billions are being put at their disposal to shore them up, are battening down the hatches.

They have put their own interest rates to their mortgage and credit card holders up, and are calling for rates to be kept up to safeguard the currency, a policy that will push many bankrupt companies to the wall.

The service industries and light industry generally are interested in consumption, and there being consumers with enough credit available to them to shop beyond their means.

The policy that the Bank of England has just embraced, mirroring the IMF, is that the battle against inflation is primary, especially after the massive inflation in oil and gas prices unleashed by the strategic failure of the US-UK axis in the Iraq war.

Oil is now at $127 a barrel and heading for $200 a barrel. Foodstuffs including rice and wheat have reached such mountainous highs as far as prices are concerned, that the Afghan farmers are planting wheat and not poppies, so we are being told.

Wages are being cut by the minute, and with this huge decrease in spending power, the service industries are being pushed to the wall.

The only relief can come from a continuous cut in interest rates of the kind that the US Federal Reserve Bank has been engaging in.

For a while the Bank of England was seriously considering emulating their US cousins, until the desperate state of the UK, as one of the most indebted capitalist nations on the planet, sank in.

The B of E has now declared no rate cuts until 2010. This is the kiss of death for a large section of the British economy. It has certainly got a big section of the bourgeoisie screaming.

Peter Spencer, Chief Economic Adviser to the Ernst & Young ITEM Club commenting on the inflation figures reached on May 13 had this to say.

‘With CPI inflation now at 3% and hefty transport, energy and food price increases yet to come, it is now inevitable that the CPI will move and stay well above the target range this summer, requiring the Governor of the Bank of England to write a letter of explanation, probably several, to the Chancellor.

‘There is little that the MPC can do about that at this stage. However, it seems clear that interest rates will be on hold over the next few months, leaving the economy prone to the after-effects of the credit crunch.

‘Public perceptions of inflation are increasing and with inflation moving still higher there is an increasing risk that wage and other second round effects will break out. . .

‘Against this background, upward pressure on prices will continue to mean reductions in disposable income, particularly at the lower end of the income scale.

‘Although the pressure on UK inflation is coming from the surge in global energy, food and other commodity prices rather than domestic costs, it highlights a weakness in the current inflation-targeting regime. . .’

This analysis leads Professor Spencer to exclaim: ‘The consumer will have to be crucified in order to meet the inflation target as it is at the moment.’

Quite, and the consumer, the majority of which is the working class, will undertake massive strike actions to drive its wages up.

The ruling class will then be forced to take the working class on head-on, to try to drive it back.

What will be decisive is whether, at this, the sharpest point of the class struggle, the revolutionary party is ready and prepared to organise the working class to overthrow the bourgeois order and go forward to socialism.

With this situation ahead all serious workers and youth should join the WRP today.