AS 100,000 workers marched through Athens on May Day, and tens of thousands marched through large numbers of Greek towns and villages, it dawned on the international banks, the World Bank and the IMF that the latest Greek loan package is lost already, as the Greek masses showed that their answer to the most savage cuts in the history of the country is revolution.
The euro slumped to its weakest point in over a year against the dollar and depreciated against the yen.
However, all of the ‘sick men of Europe’ were involved in the action as the pound sterling shuddered at the thought of a hung parliament in the UK, and ‘no government’, and the forecast that the UK budget deficit would advance to 13 per cent of GDP in the period ahead, overtaking the Greeks in that department.
The euro has lost 7.8 per cent of its price against the US dollar this year, while the pound has declined against dollar.
Greece doesn’t have the money to pay bond redemptions that total 8.5 billion euros this month and that’s why its parliament, headed by its ‘socialist’ government, has accepted an ‘aid’ package of 130bn euros, plus the IMF-EU conditions that the Greek working class is made to repay the loan with interest.
This means that the massive attacks that will continue to rain down on the working class and the middle class will leave the masses no alternative but to make a socialist revolution.
It also means that it will be much more expensive for countries like Portugal, Spain, the UK and Ireland to sell their debt off to obtain the revenue to cover their national expenditure.
Europe’s debt crisis now threatens the banks in Portugal, Spain, Italy, Ireland and the UK, and with it the very existence of the capitalist system. This now depends on the bosses of Europe and their governments being able to make the working class and the middle class pay for the capitalist crisis.
It is now being taken for granted that the contagion will spread to Portugal, Spain and Italy.
However there is a reservation to this perspective. This is that a ‘no government’ crisis may hit the UK in the days ahead, that will send the pound plunging, forcing a rapid rise in UK interest rates, and a savage deflation, that will see unemployment and house repossessions advance at a rate that has never been seen before.
This will necessitate an even more savage assault on the working class and the middle class than we are currently witnessing in Greece, and an eruption of working class anger that will bring down the banks of Europe.
Moody’s Rating Agency recognised this prospect yesterday when it stated that the sheer size and ‘vulnerability’ of Britain’s banking sector would present a threat to the economy if the UK’s sovereign creditworthiness was called into question after Greece.
Britain’s banking assets, pieces of paper containing promises to pay, represent the equivalent of more than 400 per cent of GDP in the UK, compared with 150 per cent in Greece.
The cost of insuring Portuguese debt rose to a record high yesterday after Moody’s placed Portugal’s credit rating on a three-month review, suggesting an imminent downgrade.
There is no telling what that cost will become if international speculators take advantage of a hung parliament crisis in the UK to sink the pound sterling.
The main issue is that the working class of Europe is beginning to accept that there is no bourgeois way out of this crisis outside of pauperising the workers, and that there is absolutely no reformist solution.
The way the Greek cuts are being carried out by the Papandreou ‘socialist’ regime is the proof of that. There is only the revolutionary way forward.
Now is the time to build sections of the International Committee of the Fourth International all over Europe to lead the European socialist revolution to its victory.