Today the leaders of the Eurozone will be meeting once again in a desperate attempt to try and stop the collapse of the euro and prevent a massive default by Greece.
This emergency meeting takes place just a week after the EU leaders made a 12 billion euro loan to Greece to prevent an immediate default on its massive state debts.
This bail-out was immediately derailed by the international ratings agency Standard and Poor’s.
What they objected to was the provision for ‘rolling-over’ the Greek debt, a plan that involved the banks extending their loans to Greece.
This, as far as S&P were concerned, meant the private sector banks facing losses, something intolerable for the banking system.
The contagion from Greece has spread very rapidly over the past seven days; first to Portugal whose credit rating was reduced to ‘junk’ status and, even more seriously for European capitalism, Italy.
The news last Friday that Italian prime minister Berlusconi was threatening to sack his finance minister, Giulio Tremonti, caused panic amongst the holders of Italy’s state debt who rightly perceived that the country was at acute risk of default and so demanded much higher returns on their loans.
With Italy having a debt to GDP ratio of 119%, the largest in the Eurozone, it is clear that this massive increase in the cost of state borrowing is pushing Italian capitalism into the same boat as Greece, Portugal and Ireland.
Italy is the third largest economy in Europe and the seventh largest in the world.
A default on its debt would crash the entire economy and banks of Europe and internationally.
In the US, the revolutionary ‘contagion’ of Greece and now the major economies of Europe has spread into the centre of world capitalism.
The Republican and Democratic parties are still bickering over president Obama’s demand to raise the US debt from its present level of $14.3 trillion by the deadline of August 2nd. Failure to reach an agreement by that date would see the mighty US capitalist system in default on its federal debt and the country technically and practically plunged into bankruptcy.
While these two bourgeois parties will undoubtedly cobble together an agreement to avoid this, the latest economic indicators show that the US is gripped by an unrelenting collapse of epic proportions.
The latest employment figures from the US show that last month only 18,000 jobs were created in the US, down from 25,000 in May and way down on the 70,000 created between February and April.
These figures have exploded the wildly optimistic talk of an economic recovery in the US.
At the heart of this international crisis of capitalism is the massive capitalist expansion carried out for decades through huge amounts of freely available cheap credit.
The capitalist class, refusing to recognise that credit is simultaneously debt, believed that it had overcome the laws of value and that they could carry on indefinitely printing paper money and producing vast profits, again on paper.
This mad merry-go-round has come to an abrupt halt and now that credit has turned to debt they are demanding that the working class pay.
This crisis cannot be resolved through bail-outs and debt roll-overs. It can only be solved in the struggle between the capitalist class, determined to dump the crisis on the backs of the working class, and the workers and poor masses of the world determined not to be pauperised and starved to keep a bankrupt capitalist system alive.
This revolutionary confrontation between the two classes can only be resolved through the organisation of the world socialist revolution to overthrow this bankrupt capitalist system.