End misery of bankrupt capitalism with socialist revolution

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LAST Friday the European Banking Authority released the findings of this year’s Stress Test for European banks.

These stress tests, introduced one year ago, are supposed to assess whether banks hold a sufficient reserve of funds to enable them to cope with a deteriorating economy and falling house prices.

They were designed to reassure the financial markets that European banks are a safe bet.

What these stress tests don’t do is take into account what will happen when Greece defaults on its sovereign debt, something that is now regarded as inevitable by the capitalist money markets.

Consequently, the results of these tests – published after the world’s money markets had packed up for the weekend – have been greeted with widespread disbelief.

According to the EBA, out of the 91 European banks subjected to its rigorous testing only eight actually failed – five Spanish, two Greek and one Austrian – all the rest, including all the Irish banks, were declared solvent and more than up to weathering any economic storm that may occur.

The simpletons of the Financial Services Authority (the organisation tasked by the coalition to oversee British banks and keep them in check if necessary), were delighted with the results, claiming that it proved UK banks were ‘resilient’ to further crisis.

A much more realistic view was taken by an analyst with the Royal Bank of Scotland who admitted that these tests, despite their severe limitations, had exposed ‘pockets of weakness’ in the banking system and that it was virtually irrelevant given that the economic crisis has ‘reached a truly systemic stage as the once widely accepted view that contagion could be limited to small countries has proven to be a false hope’.

Capitalism’s world money men certainly did not believe in these tests and they reacted on Monday with predictable panic.

The share prices of banks went down immediately the stock markets opened as investment funds fled from the banks and sought out a safer haven in gold or Swiss francs.

The price of gold shot up to a record high of $1,600 a troy ounce.

Clearly they had not forgotten last year’s stress tests that gave a clean bill of health to Europe’s banks just months before all the Irish banks collapsed.

What these stress tests do reveal, however, is exactly how the banking debt has been transferred from the banks and their shareholders onto the backs of ordinary working people.

After the collapse of the US investment bank, Lehman Brothers, in 2008 – which sent shock waves through the international capitalist banking system and brought it to the edge of collapse – the banks determined that all their debt would be transferred to the state.

It is states like Greece, Ireland, Portugal, Spain, Italy and Britain that are being forced to prop up the banking system through huge loans from the financial markets at massive rates of interest, to be paid for through savage cuts in jobs, wages and state expenditure on every aspect of social spending from health to education and pensions, while at the same time privatising everything in sight.

Now, however, this mountain of debt has become unmanageable and the ‘unthinkable’, an inability of nation states to repay their loans leading to state bankruptcy and debt default, is inevitable not just in Greece but throughout Europe and even the mighty US.

The only way out for capitalism is to intensify its class war against workers and large sections of the middle class in order to rescue its bankrupt system.

The only way forward for the working class is to put an end once and for all to bankrupt capitalism through the world socialist revolution.