ON MONDAY night Andrew Bailey, Governor of the Bank of England, blamed a wave of early retirements for forcing the Bank to make its eleventh increase in interest rates last week in an attempt to stem the inflationary spiral.
Both Bailey and the Tories blame the working class, the elderly and the sick for driving inflation and forcing them to slam on the brakes of all the free money and cheap debt that have kept the banks from collapse for over a decade.
Inflation, Bailey insists, was not driven by the decade-long policy of the central banks to print trillions of worthless paper money to prop up the banks after the banking crisis in 2008, backed up by near-zero level interest rates.
No, for Bailey and the ruling class the real cause of the inflationary spiral today is the working class, and the ‘solution’ is to hold down wages to poverty levels to prevent a ‘wage-price spiral’.
Now another cause for inflation, namely the so-called ‘economically inactive’, is being held as responsible.
Along with driving down wages, the demand from Bailey and Tory Chancellor Jeremy Hunt is for the sick, the disabled and older workers to be driven back to work under the whip of having benefits cut.
In his March budget, Hunt announced the ‘biggest change to our welfare system in a decade’ to ‘support’ more disabled and long-term sick people into work, while at the same time implementing a policy of forcing older workers off Universal Credit and into low-paid jobs in order to rescue British capitalism from its economic crisis.
The massive depth of the crisis that Bailey and the Tories intend to dump on the backs of workers became clear last Tuesday when Bailey appeared before the Treasury Committee of MPs to answer questions about the collapse and rescue of the UK branch of the US Silicon Valley Bank (SVB).
Bailey was at pains to paint the collapse of SVB in the United States as a one-off situation, unique in the speed of its collapse.
And when questioned about the collapse of the very large and internationally important Credit Suisse bank almost immediately after the crash of SVB, Bailey was equally dismissive.
He said the collapse of Credit Suisse, which had to be flogged off when it became insolvent, was just another unique event.
Bailey described the Credit Suisse crash as ‘rather an institutional-specific issue’.
On the near collapse of the giant German Deutsche Bank last Friday – a collapse that sent the entire banking system in the UK and Europe diving into a meltdown with massive losses on their share values – Bailey said it was not a crisis just ‘sharp market movements’ and a sign that the strength of certain banks are being ‘tested out’ by the markets, certainly not any ‘identified weaknesses’ in the banks.
In fact, the banks across the UK and Europe came close to being tested to destruction last Friday when banking stocks took a massive dive as fears of a global banking crisis reached fever pitch.
The Euro Stoxx bank index fell by 5.4%, the French Société Générale lost 7%, and the UBS bank (that was forced to rescue Credit Suisse), saw its share value slump by 7%.
As for Deutsche Bank, its shares plunged by 13% after a massive increase in the cost of insuring its bonds against the risk of default.
Bailey and the central banks are desperate to try to convince anyone who will listen that the capitalist banking system is not diving into a gigantic world-wide crash and that the real cause of the crisis is inflation and the way to beat inflation is to drive the working class into the ground.
The working class and youth in Britain and across Europe are not prepared to see their lives destroyed by poverty wages and being worked to death to keep the banks from collapse and the bosses in profit.
The burning issue today is for this powerful working class to put an end to bankrupt capitalism through socialist revolution.
This is the only way forward.
