FIVE WEEKS ago, falling interest rates seemed a certainty after Andrew Bailey, the Governor of the Bank of England, had signalled that lower borrowing costs were on the way, and had suggested that his casting vote could deliver them as soon as this month.
This certainty was shattered when the Trump administration launched ‘Operation Epic Fury’ that eliminated Ali Khamenei, Iran’s Supreme Leader as well as a number of his key lieutenants.
These killings triggered the war that turned the key Strait of Hormuz, a vital transit route for 20% of the world’s energy supplies into a deadly choke point, unleashing a fresh wave of price rises, and wiping as much as $2.5 trillion dollars off of global bond markets.
The resulting market chaos led to a stampede for the exits, with traders who had been pricing in two Bank rate cuts suddenly staring down the barrel of four rate hikes.
Hedge funds were suddenly ‘stopped out’ of their trades and were forced to count their losses.
Some of the biggest names including Citadel, Millenium and Caxton took hits amounting to billions of dollars.
Britain’s fiscal crisis means that the UK has faced a bigger increase in borrowing costs since the war than even some emerging markets.’
Morgan Stanley warned this week of a ‘pronounced’ UK recession at the turn of the year if energy prices stay at recent highs’.
Mohamed El-Eran, the chief economic adviser at Allianz, says that the British economy is now facing a triple shock.
‘We went from short term disruption to longer term damage to oil infrastructure.
‘Not only did that push energy prices and interest rates higher, but it also made people realise there will be three other effects.
‘One is going to be higher inflation, two, we will see lower growth as a result, and three, there is also the the risk of financial instability.’
All this means a big record growth in the numbers of jobless workers, with the bosses being able to impose wage cuts because of the growth in the numbers of the unemployed being forced to work for lower wages.
Faced with this developing crisis for the working class in the UK and also in the USA and EU there is only one way forward.
The trade unions must begin to really battle in support of their members and must demand an immediate recall of the TUC Congress.
This must meet and make the decision that is required by the growing crisis in the UK.
The TUC must be made to call a general strike of all of the trade unions and organise to bring down the useless Starmer Labour government and replace it with a Workers Government.
This will nationalise the banks and the major industries, and bring in a planned socialist economy that produces all of the necessities that the working class requires to live.
In a situation of a worldwide capitalist crisis, the advent of a Workers Revolutionary Government in the UK, will receive worldwide support from the working class of the world.
This will create the conditions for getting rid of the capitalist system worldwide and replacing it with a World Socialist Government that will bring in a government whose motto will be ‘From each according to their ability to each according to their need’.
Capitalism must be dumped into the dustbin of history and be replaced by a world wide socialist order.
Now is the time to build the Workers Revolutionary Party in the UK and sections of the Fourth International in every country.
The message to the working class of the world is to build revolutionary sections in every country in order to lead the struggle to put an end to capitalism and bring in a World Socialist Republic.
