THIS WEEK the Washington-based International Monetary Fund (IMF) issued another warning that the world capitalist financial system is on the verge of a gigantic crash of historic proportions as the debt pile reaches a historic high of $135 trillion in the G20 wealthiest countries.
The IMF warns that this colossal debt, run up by companies and consumers, will be impossible to service if there is any increase in interest rates or if central banks cut off the supply of cheap money.
Near zero-level interest rates and the policy of pumping trillions of paper money into the banking system after the banking crash of 2008 have had the effect of ‘breeding complacency and allowing a further build-up of financial excess’ as companies use cheap credit to ‘load up on debt’.
Financial investors are also loading up on cheap credit to speculate on ‘risky’ shares which, when they crash, will bring down the world’s stock markets. While these leading financial institutions of capitalism can see the crash coming they have no idea how to prevent it. The same IMF report while calling for central banks to rein in cheap credit and increase interest rates, also warns that in doing so they risk a worldwide debt default.
It says: ‘Too quick an adjustment could cause unwanted turbulence and international spillovers.’
This insoluble financial crisis is reflected in the complete and utter political crisis that is gripping the capitalist class throughout the world.
Nowhere can this be seen more clearly than in Britain, the weakest of capitalist economies, where the minority Tory government is completely split, broken and at war with itself on how best to survive the coming economic crash.
For people like Boris Johnson and the die-hard ‘Brexiteers’ the answer is to throw the UK onto the mercy of American capitalism and become a vassal state wide open for exploitation by US corporations and banks.
The other wing of the capitalist class see their only salvation in remaining within the sinking ship of the EU and becoming a vassal state to Brussels. The ‘momentous decision’ facing the British capitalist class is whose doormat it is to become, the US or the EU.
The critical problem for PM May is that the EU is not interested in reaching any amicable split that would allow capitalist Britain some breathing space. The bankers and bosses of Europe are determined to make the British capitalists pay dearly for their stupidity in calling the 2016 referendum that allowed the working class the opportunity to vote to leave the EU!
Just as they deliberately inflicted untold suffering on Greek workers to try to teach the working class of Europe a lesson in servility to their capitalist masters, so they are determined to do the same to the British workers.
Massively compounding the crisis for the ruling class is that while the EU refuses to negotiate and while May clings to power by the skin of her teeth, the working class in Britain and Europe are not sitting back passively observing.
A mass movement of workers throughout Europe has emerged that hates austerity and hates the bosses and bankers EU. In Britain, this movement delivered a death blow with the referendum result and across Europe it is ripping up the old ruling parties of the bourgeoisie.
In France, the government of Macron faces a revolutionary strike wave as workers refuse to accept the destruction of their hard-won employment rights, while in Spain the hatred of austerity imposed by the central government has manifested itself in the Catalonian revolt, which has created a huge crisis not just for Spain but the whole of the EU.
With the bourgeois political systems in Europe and Britain collapsing, and the working class advancing in a mass way, the organisation of the European socialist revolution is firmly on the immediate agenda.
In Britain, this means that the trade unions must call a general strike to bring down the Tories, break with the EU and establish a workers government that will expropriate the bankers and bosses as part of a planned socialist economy in the UK. It must also join with the mass movement of workers throughout Europe to bring down the EU and establish an United Socialist States of Europe. This is the way forward for the working class.
