THE LATEST latest annual report from the BIS (Bank for International Settlements) on the economic crises gripping world capitalism couldn’t have been clearer – capitalism is heading for a gigantic crash that will collapse the economies of every single country.
In this latest report the BIS has gone even further than before in its warnings that the global debt has reached such mountainous levels that there is simply no way to avoid a crash of epic proportions. The scale of world debt today stands at 217% of global GDP – in other words the debt of governments, companies, banks and financial institutions stands at well over twice the amount of the wealth being produced in the world.
In 2008, on the eve of the collapse of the US investment bank Lehman Brothers which crashed the world banking system, global debt was a mere 179% of GDP. The BIS report points out that a complete collapse in 2008 was only postponed by the central banks adopting the desperate measure of pumping trillions of dollars, pounds and Euros into the financial system through Quantitative Easing programmes.
This mountain of worthless electronically-produced money was backed up by policies of zero interest rates meaning that nations and companies could feast on cheap loans with miniscule interest repayments. QE and zero interest rates were the only measures left in the economic arsenal to stave off a historic collapse of capitalism.
But now, as the BIS is warning, debt levels around the world have reached such an epic high level that any rise in interest rates threatens to bring the whole capitalist system down. For although the majority of world debt is owed by the so-called ‘emerging economies’, where companies grabbed all the free credit made available by the banks and ‘asset’ companies, the BIS is afraid that as these companies will be unable to finance their debt and go bust following any increase in interest repayments this will cause a ‘blowback’ that will hit the advanced capitalist economies.
The fragility of capitalism to any crisis is demonstrated in the US where the BIS say ‘corporate leverage today is at its highest since the beginning of the millennium’. These giant corporations are only keeping going by taking on more and more debt while they produce nothing or very little in terms of value, these are the so-called ‘zombie companies’ which buy their own shares with cheap loans in order to boost their stock market value and justify the billion dollar bonuses paid to the bosses.
What is clearly driving the BIS economists mad is that despite all their warnings the capitalist class and its politicians are not taking the blind bit of notice, indeed with his recent unfunded multi-billion dollars worth of tax cuts to the rich and US corporations, Trump has massively increased the debt of the US in order to pay for this windfall.
The BIS is also tearing its hair out over Trump’s declaration of trade war on the rest of the world, warning that it seriously threatens to destabilise world trade and become one of the shocks that will bring matters to a head – that is precipitate one almighty crash. What the BIS economists fail to understand is that the capitalist class is only too aware that a crash is imminent, they can do nothing to stop it and for Trump and the US ruling class it is a question of being the last man standing when it comes.
This is the panic dominating the ruling classes throughout the world, how to survive in the war against their rivals and how to survive against a powerful working class that will not accept seeing its jobs, wages and every welfare gain wiped out by this cataclysmic crash.
With the working class across the world already rising up against austerity, this crisis is rapidly forcing on it the conclusion that capitalism is a bankrupt system that must be put down. This demands the building of revolutionary parties of the Fourth International to lead these uprisings to the seizure of power and advancing society from bankrupt capitalism, that can only survive through wars, to socialism, through the victory of the world socialist revolution.