The Bank of England yesterday warned that the capitalist financial markets are at risk of ‘sharp correction’.
In its latest financial stability report the Bank said that high inflation and ‘geopolitical risks’ could trigger a fire sale of assets by the financial speculators who have made fortunes buying up assets and stocks across the world in search of massive profits.
The report says: ‘The prices of many assets such as shares and bonds remain high relative to historic norms, and some have continued to rise.
‘This suggests that investors in financial markets are continuing to expect the economy to recover and inflation to fall. They are placing less weight on risks, such as geopolitical developments or continued high inflation, that might cause weaker growth or interest rates to stay higher than expected.’
It warns that ‘These risks make it more likely that there could be a sharp correction in asset prices that could ultimately make it more costly and difficult for UK households and businesses to borrow.’
One of the main areas of concern for the Bank is the political uncertainty in the French election that could see the far right National Rally party, led by Marine Le Pen, making substantial gains.
In an attempt to grab the populist vote Le Pen has come out in favour of increased public borrowing that would drive up France’s already massive national debt culminating in what the French finance minister called a ‘Liz Truss-style scenario’ in the country.
The European Central Bank has already made it clear that it will not step in to rescue France in the same way that the Bank of England was forced to step in and spend billions buying up UK debt to prevent the country from going bankrupt but would instead insist that French workers pay through savage austerity cuts to wages, services and conditions, creating a revolutionary confrontation between the working class and the French state.
The political instability in France is worrying the Bank of England as it threatens global financial stability and sends shockwaves through the wider financial markets, forcing up borrowing costs at a time when households and the heavily indebted companies are facing ruin as interest on debt increasingly becomes unaffordable.
Piling on the pressure is the financial crisis rapidly emerging in the US stock markets where share prices have reached levels reached just before the Dot-Com crash in 2000, a share bubble that burst spectacularly fuelled by the massive speculation in computer technology.
This is being repeated on an even bigger scale in the US stock markets over the frenzied speculation in AI (artificial intelligence) companies whose share value, compared to what profits they actually make, is in the stratosphere and destined to crash bringing down the world capitalist financial system.
The Bank of England report lists the ‘geopolitical risks’ to financial security namely the continuing imperialist war in Ukraine and the billions spent by the imperialist nations propping up both the Zelensky regime, and the genocidal Zionist regime, in a war against the Palestinians, that is now on the verge of expanding to engulf the entire Middle East.
Added to this is ‘Geopolitical Fragmentation’ by which the Bank means the complete breakdown of US imperialism’s ability to police the world and impose American dominance across the globe.
The entire report exposes the fear that capitalist supremacy has been shattered and its global financial system is diving over the cliff into a massive economic crash with the working class and the masses of the world expected to bear the cost.
What is clear is that capitalism is on the brink of a stock market crash, the like of which hasn’t been seen since the 1929 collapse of Wall Street which ushered in the Great Depression of the 1930s.
The powerful working class in the US, UK and EU have shown they are not prepared to submit to being driven back to the ‘hungry thirties’.
The urgent task today is for the working class to mobilise its strength by forcing its trade union leaders to call general strikes to bring down their capitalist governments and put an end to the rule of the bankers, the finance capitalists speculators and bosses with the victory of the world socialist revolution.
Only the WRP fights for this policy and perspective. Now is the time for masses of workers and youth to join the WRP and its youth movement the Young Socialists to organise and lead the successful British socialist revolution, as part of the struggle for the victory of the World Socialist Revolution which will consign the backward and out of date capitalist system to the ‘dustbin of history!’
