THE Standard and Poor (S&P) credit rating agency downgraded Greek government bonds on Wednesday sending government stocks and share prices on the Athens Stock Exchange plummeting. The exchange rate of the euro was driven down to $1.31.
This is the first time government bonds in an advanced European capitalist country have been treated as of doubtful creditworthiness.
S&P only put Greek bonds on credit watch last Friday and took just five days to slash its rating from A-/A-1 to A-/A-2. Alongside Greece, S&P is now monitoring Ireland, Portugal and Spain.
S&P credit analyst Marko Mrsnik said: ‘The ongoing global financial and economic crisis has in our opinion exacerbated an underlying loss of competitiveness in the Greek economy.’
The credit rating agency added that the credit crisis and lack of domestic demand made likely ‘a recession and a possibly protracted adjustment’.
S&P made clear that their central concern was that Prime Minister Costas Karamanlis’ right-wing regime had failed to cut the budget deficit by slashing public sector pay and pensions. The fiscal deficit stood at 3.5% of Gross Domestic Product (GDP) in 2008 and the credit rating agency expects it to top 4% this year.
In referring to the failure of the Karamanlis New Democracy regime to cut public sector pay and pensions, S&P is alluding to the current revolutionary struggle of youth and workers in Greece to defeat the government’s attacks on education, healthcare, pay and pensions.
Greek Finance Minister Yannis Papathanassiou admitted as much when he said the government retained its long-term target of cutting the fiscal deficit, but was constrained by the global downturn and could not ignore ‘the social effects’ of balancing its budget.
There is a direct connection between the capitalist crisis in finance and production, and the revolutionary struggle of the working class in Greece.
However, this is not a Greek phenomenon. It is a European one, as S&P acknowledges in its ongoing monitoring of the government bonds in Ireland, Portugal and Spain. Currency dealers sold euros in the wake of the news from Athens.
Hundreds of thousands of Greek workers and young people are already engaged in a revolutionary struggle to defend their living standards and democratic rights against the onslaught of the Karamanlis regime.
They have been engaged in a wide variety of different forms of struggle – mass rallies, demonstrations, strikes, short general strikes, occupations, street fighting against the riot police and assaults on police stations.
School and university students have occupied the headquarters of the GSEE trade union federation demanding its leaders organise an extended general strike.
This has been vehemently opposed by the reformist leaders of PASOK and the Stalinist Greek Communist Party, and their allies in the bureaucratic leadership of the trade unions.
Workers and youth are demanding their leaders organise an indefinite political general strike to bring down the Karamanlis regime and get rid of bankrupt Greek capitalism.
Greek supporters of the Trotskyist International Committee of the Fourth International have made clear that this will require the formation of workers’ councils and small farmers’ committees, the basis of a workers’ and farmers government that will expropriate the banks and monopolies, and carry out socialist measures.
The financial meltdown in Greece is spreading to countries like Ireland, Portugal and Spain, provoking an eruption of revolutionary class struggles there too. This puts on the political agenda the struggle to overthrow capitalism, establish workers’ governments and go forward to socialism.
The decisive issue for workers and youth throughout Europe is that they must establish and build revolutionary parties of the ICFI in every country to organise this struggle and establish a Socialist United States of Europe.