Bury bankrupt capitalism – forward to socialism


SUNDAY marked the fifth anniversary of the biggest banking collapse in the history of capitalism to date.

On 15 September 2008 Lehman Brothers, a massive US investment bank, went bust and filed for bankruptcy, a collapse that sent shock waves throughout the world banking system and threatened to collapse the lot.

Lehman brothers was not the cause of the bank crisis, it was the first victim of the gigantic expansion of credit by the capitalist financial system that saw banks with tiny amounts of assets lending massive amounts of money and reaping billions of profit in interest on these loans.

Lehman’s was up to its neck in the subprime mortgage racket in the US which involved giving large mortgages – frequently 100% or even more – for property purchases to people who simply couldn’t afford the repayments.

These loans (credit) were actually counted as assets by the bank, so on paper Lehman Brothers looked wealthy beyond the dreams of mortal man.

Not just Lehman’s, but every bank in the world was involved in similar schemes with these ‘assets’ being parceled up and traded between the banks in America, Britain and Europe especially.

What was ignored is the simple fact that credit is simultaneously debt.

When the subprime industry went belly-up, with home owners unable to afford repayments, the entire pack of cards collapsed, with Lehman Brothers first in line for bankruptcy.

Terrified by this, the banks now demanded that all their debts be taken on by the capitalist state.

Having transferred the bank debts to the sovereign state, the banks now demanded that they be kept going, through massive injections of money by governments in the form of quantitative easing (QE).

At present, the Federal Reserve is pumping out $85 billion a month of this entirely fictitious money which has absolutely no value whatsoever, while the Bank of England has printed £375 billion.

Printing all this fictitious money was justified as being meant to ‘stimulate’ the capitalist economy, while in reality, all it did was provide cheap or even free money for the Banks to carry on speculating on a scale that exceeds that of 2008.

The situation is now that these giant banks are so ‘addicted’ to this free money that even the suggestion that it would come to an end was enough to send the money markets and stock exchanges around the world into a tail-spin.

Tomorrow, the Federal Reserve is due to release its latest intentions about QE and whether it should be tapered-off.

What is terrifying the Fed, is that printing such vast sums of valueless paper money can only lead to hyper-inflation where every dollar, pound or euro, in fact every currency in the world, becomes worthless bits of paper overnight.

But if it tapers off QE, the banks will be exposed as having nothing in the vaults and the whole financial system of capitalism will come crashing down.

The implications of this crisis are revolutionary.

The only way out for capitalism is to vastly increase the austerity measures it has already sought to impose on workers in order to pay off the debts of the banks.

For capitalism to have any chance of survival in the worsening crisis, it must impose conditions on the working and middle class not seen in two hundred years, where there is no Welfare State, no National Health Service, no social housing or free education and pay rates are at starvation level.

Already, workers in every country are refusing to accept poverty as the price for keeping the banks afloat, the intensification of the crisis will revolutionise them completely as it becomes absolutely apparent that bankrupt capitalism has reached the end of the road and the historic task of the working class is to put an end to it through the victory of the socialist revolution.