Havoc In The Eurozone!


THE noose strangling the entire capitalist economy of Europe tightened round the neck of Germany yesterday with the news that the powerful Asian investment markets are getting out of the eurozone as fast as their legs can carry them.

Investors from Japan and China have been dumping eurozone bonds in the well-founded belief that the crisis of European capitalism cannot be solved and that a spectacular crash is inevitable.

The news that they are now disinvesting from even the once-mighty German economy signals that the game is up and the whole of Europe is now openly seen as on the verge of complete economic collapse.

At the heart of the immediate crisis for Germany is the gigantic exposure of its banking system to the sovereign debts of other eurozone countries.

According to official figures, the German central bank (Bundesbank) is liable for 465 billion euros in loans to the central banks of Greece, Italy and Ireland.

In addition, it is the final guarantor of 180 billion euros so far spent by the European Central Bank in buying up the Italian and Spanish debt – a figure that is increasing every day.

On top of this, Germany is liable for 211 billion euros as its share of the EFSF bail-out fund designed to rescue countries from state bankruptcy.

If this money were to be lost, as now seems inevitable, the German debt would be 120% of its GDP, the same as bankrupt Italy.

The demand from France and Britain, where the crisis is already reaching Greek proportions, is for the German Chancellor, Angela Merkel, to agree to pouring vast sums of money into the EFSF to bail out virtually every country in the EU.

The sums required to perform this herculean task are enormous and would mean printing money on a scale never seen before, money that would have no value outside the paper and ink used to make it, leading to currency inflation on a scale not seen since the days of Weimar Germany in the 1920s and 30s where the deutschmark became completely worthless.

The memory of those years is deeply ingrained in the  German working class, and Merkel faces a revolt by them if she goes down that route.

The economic options for capitalism to survive this crisis have been exhausted. The only way out for the bosses is through imposing a dictatorial rule over the working class of Europe under which they can impose the most savage cuts on the working class, middle class and small farmers of the continent.

The imposition of unelected governments of so-called ‘technocrats’ on Italy and Greece points in the direction capitalism is heading at speed – dump bourgeois democracy and replace it with open dictatorships.

The response of the working class has been emphatic.

In Greece, workers and their allies have embarked on the revolutionary road with occupations and strikes that have seen off the government of Papandreou and are now confronting the unelected coalition headed by the banker Lucas Papademos, a former vice-president of the European Central Bank.

In Italy, workers have taken to the streets against austerity measures and the imposition by the EU of a government headed by businessman Mario Monti.

The Italian working class are not accepting going back to the days of dictatorship that they suffered under Mussolini.

This insurrectionary upsurge is spreading throughout Europe and the world as the crisis of capitalism is producing a revolutionary working class not prepared to pay to keep the banks afloat.

What this situation demands is the building of a revolutionary leadership in every country that can give the leadership necessary to take the working class to power and put an end to capitalism for good.