Euro-zone leaders have taken the desperate measure of risking all on one throw of the dice, after advancing an almost $1 trillion package of loans, guarantees, swaps and bond purchases to try to halt the contagion that has emerged out of the collapse of Greek capitalism infecting Spain, Portugal, Italy and Ireland, and on the way to sweeping away the euro itself.
The response of this head to head challenge to the international speculators was a temporary rally of share markets, as the answer to the sovereign debt crisis was revealed to be the creation of an additional mountain of debt.
Stocks soared with the FTSE index rising by 4.5 per cent while the euro surged and the pound rose against the dollar and the euro.
However, the issue remains that in the middle of a world crisis of the capitalist system, the IMF is guaranteeing a gigantic 250 billion euros to the war to defend the euro, while the 500bn euros of the European Financial Stabilization mechanism is guaranteed by the very same euro states that are all near bankruptcy.
Of the 500 billion, 60 billion euros will be available from the European Union budget. The other 440 billion euros of funding, if required, is to be provided by euro states that are already in a state of terror about the crisis.
They have guaranteed funds that they will not be able to deliver if their bluff is called by the international financial mafia.
The prospect is that one or two states such as Germany and France will be called upon to provide the billions that may well be required to prop up the ‘PIGS’ states.
That this will cause revolutionary eruptions in their own countries where workers will definitely refuse to foot the bill for the historic bankruptcy of the world capitalist system is obvious.
This has been proven by the emerging Greek revolution, and also by the latest developments in Germany.
Yesterday Angela Merkel, the German Chancellor, admitted that she had suffered a ‘bitter defeat’ in the North Rhine-Westphalia state election. At the same time as she was guaranteeing the euro, with German money, the rug was pulled from beneath her feet by the votes of the German workers.
In a state where many cities are already bankrupt, last Sunday voters rejected that they should suffer austerity to support the bankrupt Greek capitalists and the equally bankrupt European Union.
This disaster struck Merkel on the same weekend that the EU summit voted its massive guarantees for the debt-ridden EU and the ‘PIGS’ states.
Merkel’s centre-right coalition also lost its majority in the upper house of parliament, meaning that her end is in sight.
Early and big tax cuts were a pet project of her junior coalition partner, the pro-business Free Democrats. Now they will have to be abandoned. Merkel’s government will no longer be able to simply push through its plans.
In the UK the coalition saga is heading into its fifth day, with Liberal MPs attracted by the perks of high office, but shaken at the thought that they will be unelectable if they side with and help the Tories mount their savage cuts onslaught on the majority of the UK population.
They are taking the fact that Thatcher turned Scotland and parts of Wales into a Tory-free zone as a warning as to what their fate will be, and all to get a handful of Liberals into a reactionary Tory cabinet.
However, the prospect is that with the euro currently strengthened for the moment by the appearance of a trillion euro guarantee, that the attention of the speculators will turn to the pound sterling, and drive it down.
The reality is that whatever unholy governmental alliance emerges it will be fought tooth and nail by the working class.
The question of the hour remains the building of the revolutionary leadership to mobilise the working class to bring down the government of the day and to go forward to a workers government via a socialist revolution.