CREDIT ratings agency Moody’s yesterday reflected the rapidly developing EU meltdown by doing the unthinkable – warning the EU’s strongman, Germany, that it had feet of clay and faced a reduction of its Triple A credit rating.
This was in the wake of Monday’s world wide share crash after yields on the sale of ten year Spanish debt reached 7.6%, making the debt unrepayable. Despite the Spanish government’s repeated denials, the conviction rapidly developed that a full Spanish government bail-out was required and was unavoidable.
This would require a minimum of 500bn euros, a sum that would break the back of the Bundesbank and could be followed by a bail-out request from the much bigger Italian economy, the yields on its debt have already reached 6.7%.
This was all too much for the world share markets to bear. They crashed and that crash was immediately followed by Moody’s kiss of death for Germany which had been regarded as the only possible lender of last resort available.
This view is not held by Germany’s population who are determined that the experience of Weimar will never be repeated.
Moody’s also put the Netherlands and Luxembourg on a Triple A warning, saying that they were at risk from the increased likelihood of a Greek exit from the euro and the need to provide more support to Spain.
France and Austria lost their AAA ratings earlier this year.
Moody’s said that Greece leaving the eurozone, ‘would set off a chain of financial sector shocks’, that would devastate the EU’s economies and banks.
Their down gradings forced the German finance minister, Wolfgang Schaeuble, to tell the Bild newspaper: ‘Germany’s strengths are, naturally, not endless, but we are still as solid as a rock.’
Greece is being currently visited by the troika, representing the country’s bail-out creditors (the IMF, European Commission and European Central Bank), to re-open talks with the government to get its economic programme ‘back on track’, according to the IMF.
Germany however has had to publicly admit that ‘If Greece no longer meets its requirements there can be no further payments’. . . A Greek exit has long since lost its horror.’
Nevertheless, a Greek exit, a run on the EU banks, and colossal bail-out requests from Spain and Italy will have horrific effects on the EU, the Eurozone and the attempt, led by German capitalism, to resolve the contradiction between the development of the productive forces and the nation state by uniting Europe – under its leadership.
The troika is to decide whether Greece will receive 31.5bn euros – the last tranche of a 130bn euro ($158bn, £102bn) aid package agreed in March.
However Greece is behind in its plans to cut spending and debt because its economy is shrinking faster than forecast, and the working class and the youth are resisting every cut and demanding an end to Greece’s subjugation by the EU.
The class struggle in Spain has reached a real fury, with miners and every section of workers and youth resisting austerity in the face of hails of rubber bullets and a state repression that harks back to the days of Franco.
While the troika is visiting Athens, the German finance minister, Wolfgang Schaeuble, is meeting the Spanish Economy Minister, Luis de Guindos, in Berlin to demand stronger action against workers.
The class struggle is sharpening all over the EU.
The bourgeoisie of the EU is launching a class war to save the euro on the bones of the workers of Europe.
Everywhere the working class is being forced along the road of revolution.
The key to the situation is the building of sections of the International Committee of the Fourth International in every country of the EU, to lead the developing socialist revolutions to their victory, replacing the bankrupt EU with the Socialist United States of Europe.