THE head of the European Central Bank (ECB), Mario Draghi, has pronounced the Eurozone to be ‘unsustainable’ in its present form, while the EU Finance minister, Olli Rehn, demanded that Eurozone countries impose even more austerity measures on their working class if the Eurozone is to avoid total disintegration.
They delivered their dire warnings to the European Parliament on Wednesday with Draghi bluntly telling the leaders of the Eurozone not to expect the ECB to bail out the bankrupt nation states of Europe.
He said: ‘Can the ECB fill the vacuum of lack of action by national governments on fiscal growth? The answer is no. Can the ECB fill the vacuum of the lack of action by national governments on the structural problem. The answer is no.’
In short, he was telling the unpalatable truth which the leaders of the Eurozone and the whole of Europe have been avoiding for years, namely that the game is up.
All the injections of massive amounts of electronically generated money (quantitative easing) from the ECB to prop up the banks and sovereign debts of the Eurozone countries has failed to halt the rapid spiral into bankruptcy.
The ECB can no longer be relied upon to bail out banks and countries. It is now up to the states themselves to deal with the issue of financial collapse and ‘structural’ problems.
What is meant by ‘structural’ problems is the entire question of national sovereignty, that is of countries like Greece, Portugal, Ireland and increasingly Spain – followed rapidly by Italy, giving up any control over their economies and submitting completely to the dictatorship of the Eurozone.
In practice this would mean submitting completely to the iron demands of the German bourgeoisie who are the most powerful in the Eurozone and who would demand to call all the shots. What the German bourgeoisie will demand of the rest of the Eurozone was spelt out in the simple words of Rhenn, even more austerity, more cuts, and more privatisation on a scale not seen even in Greece yet.
The driving force behind this burst of honesty on the part of the leading bank bureaucrats is the crash this week of the Spanish banking system, a crash that has sent the stock exchanges and financial markets throughout the world into a tailspin.
Spain, the fourth largest economy in Europe, is set to go crashing out of the euro along with Greece, as its banks are bled dry by billions of euros of ‘toxic’ debt. It is conservatively estimated that Spanish banks would need 100 billion euros just to keep going.
The banking system is so interconnected across the world that a collapse in Spain will bring down banks across Europe. Spain’s largest bank, Banco Santander, for instance is the parent company of the large UK high street bank Santander UK. Santander UK is directly exposed to its parent company crashing, endangering the savings of millions of people in the UK.
As the EU bankers have made clear, the entire Eurozone along with its banking system is on the verge of collapse, and the only way out for the bankers is for the capitalist nation states to take on their own working class and impose on them austerity of an unimaginable magnitude – the kind of cuts that will drive the working class of Europe into the ground.
The huge problem for the bankers is that they face a working class that is powerful and determined not to submit to the destruction of its very right to life just to keep the banks afloat.
This crisis can now only be resolved through the revolutionary struggle by the working class to overthrow the entire system of capitalism and replace it with socialism.
