THE governor of the Bank of England, Mervyn King, made it clear this week that the banking system faces total collapse due to ‘systemic problems’ in capitalism.
In other words King was admitting that, far from being caused by the greed of a few bankers, the international crisis of the capitalist system is due to the inherent contradictions within capitalism itself which are sharpening to the point of a revolutionary catastrophe.
These contradictions cannot be resolved through cutting back on wage levels for the bankers, they can only be resolved through the class struggle as King himself came close to admitting.
His recipe for staving off, temporarily, a banking collapse is simply for the government to pump more and more money into the banks.
According to King the banks should ‘give serious consideration to raising external capital in the coming months’.
All this talk of raising external capital means only one thing – it will come out of the flesh and bones of the working class through more and more money being taken out of state expenditure on welfare provision, health and education etc., whilst the drive to cut back public sector pay and jobs will be intensified on a scale transcending even the savage cuts already inflicted by the coalition.
These cuts will dwarf anything seen so far and can only be implemented through the physical defeat of the working class in a class war.
There simply is no other way for the banks to secure the funds that King reckons are necessary even to tide them over for a few months.
Share prices in RBS and Lloyds banks have slumped to half that of when they were last bailed out by the state to the tune of £66 billion – so no chance of raising capital through any share flotation.
The scale of any state ‘rescue’ of the UK banking system is truly gigantic because the scale of the banks’ exposure to the bankrupt capitalist economies of Greece, Ireland, Italy, Portugal and Spain are equally colossal.
According to figures provided by the Financial Services Regulator (FSR), between three main UK banks (Barclays, Lloyds and RBS) the total exposure to European sovereign debt amounts to £180 billion.
Against this debt of £180 billion these three have provisions to cover less than £19 billion!
As the FSR puts it in typical understatement: ‘An immediate risk to UK banks’ funding could arise from concerns about their exposure to vulnerable euro-area countries.’
There is no ‘could’ about it, the UK banking system, along with every bank in Europe and beyond, is facing complete collapse and its only chance of survival is to make the working class and poor of the world pay for it through super-exploitation, mass poverty and the destruction of their unions.
This is not simply a crisis of the credit system or a glitch in the banking world caused by a few avaricious wide-boys.
This is a full-blown crisis of the entire world capitalist system and one that can only be resolved through the complete victory of one class over another.
The capitalist class is acutely aware that this crisis requires civil war against the working class at home and counter-revolutionary violence abroad to recapture its imperialist possessions for domination and exploitation.
While the ruling class and its spokesmen have no illusions that this is a fundamental crisis of capitalism, the same cannot be said of the trade union leaders, who have kept silent about the depth of the crisis and who are still peddling the belief that concessions can be won from this government.
These leaders can lead the working class to nothing but defeat. The situation demands that they be removed and replaced with a new, revolutionary leadership prepared to organise an indefinite general strike to bring down the coalition and go forward to a workers government and socialism.
Only the WRP and the YS have prepared for this situation, and have a programme for the working class to take power through a socialist revolution to resolve the capitalist crisis by putting an end to capitalism and establishing socialism. Join us today.
