‘UNCERTAINTY’ is the word on the lips of every banker and bourgeois politician today as they grapple with a capitalist system that is unravelling economically and politically at breakneck speed.
It was the risk of causing uncertainty in the financial markets that was used by the Tory chancellor, Philip Hammond, to explain away the decision imposed on him by the IMF to put an end to interim budget statements last week. The same uncertainty emerged even more ferociously in a report issued by the European Central Bank’s (ECB) latest Financial Stability Review issued last Thursday.
The ECB review outlined ‘systemic risks’ to financial stability, including ‘Financial contagion stemming from political uncertainty’. Giving them nightmares is the ‘re-emerging sovereign and non-financial private sector debt sustainability.’ The ECB review added that this would become a real full blown crisis ‘if political uncertainty leads to stalling reforms at the national and European levels.’
In other words the decisive intervention of the working class in Britain and Europe, rising up against austerity, threatens the only way that the central bankers have of surviving – to impose the most vicious austerity cuts on workers under the banner of necessary ‘reforms’.
Along with the UK vote to leave the EU, the ECB is desperately worried about the Italian referendum on December 4. This referendum has been called by Italian Prime Minister, Matteo Renzi, to concentrate political power in his hands and enable him to introduce by diktat the hated austerity cuts in public spending.
If he loses, as expected, then Renzi has promised to resign, creating the conditions for a snap election, an election which the anti-austerity Five-Star movement could easily win, creating another Brexit crisis in Europe. A political crisis in Italy allied to the complete collapse of its banking system which has led one US investment specialist to declare bluntly: ‘Europe is screwed. You guys are still screwed. In the Italian system, the banks say they are worth 45-50 cents in the dollar. But the bid price is 20 cents. If they were to mark them down, they would be insolvent.’
With a banking system that is royally ‘screwed’ and a working class that is refusing to accept poverty as the price for keeping the banks afloat the ECB is right in believing that the whole future of capitalism is ‘uncertain’. To add to their misery these central bankers are now having to deal with the uncertainty of a Trump presidency in the US.
The working class made its decisive intervention in the US election that dealt a body blow to Wall Street favourite Hilary Clinton, while Trump’s stated economic policy of nationalist protectionism threatens a trade war that will completely destroy what is left of industry on both sides of the channel.
According to the ECB’s review this will also lead to a ‘cut back on asset purchases and a rise in borrowing costs’. In other words inflation is set to rise along with interest rates with disastrous consequences for all the banks loaded under with debt which they are struggling to contain even with near zero rates of interest.
Any hike in the interest rates will plunge them over the fiscal cliff and into open bankruptcy. With capitalism on the brink of a ruinous trade war while at the same time drowning in a sea of debt, it is small wonder that the political crisis gripping the bourgeoisie is so acute and in turn fuelling the economic crisis.
In Britain the crisis is most acute, with a Tory government that is at war with itself over Brexit and the revelation yesterday that the governor of the Bank of England has been organising secret meetings with bankers to discuss how Brexit can be overturned behind the back of May and Hammond. The only force that can put an end to this chaos and uncertainty is the working class internationally.|
The urgent requirement is building sections of the Fourth International in every country that can lead the mass revolutionary movement of workers and youth to finish off bankrupt capitalism for good with the victory of the world socialist revolution.