GOVERNMENT borrowing across the most advanced capitalist nations in the world has been hit with the highest interest rate increases in decades, as the financial investors, who plough their money into buying up government debt, react to the failure of the United States to defeat Iran and secure the opening of the Strait of Hormuz.
These investors are dumping government bonds (debt securities issued by governments to raise funds required to keep them from collapse) out of fear that the inability of US imperialism to secure any kind of victory will inevitably cause a massive resurgence of inflation.
Yields, the interest charged by the international money lenders, increased sharply this week across the US, Japan, France and Britain because of the fear that the central banks would be forced to raise interest rates in an attempt to deal with the inflationary surge.
The interest rate on 30-year French bonds increased to 4.8558% – the highest level since the world banking crash in 2008.
Interest on the French 10-year bond hit its highest level since June 2009 while Germany saw its interest rate rise to its highest rate since 2011.
The US government’s long-term borrowing costs hit their highest level since 2007 – the year the US experienced a credit crunch that was rapidly followed by the global financial crash.
In the UK, the yield on 30-year-old bonds climbed to their highest points since 1998.
Meanwhile, Japan’s 10-year bonds reached the highest level since 1996 dealing a blow to right-wing president Sanae Takaichi’s plan to rescue the Japanese economy by cutting taxes and increasing spending.
The common thread that unites all these countries is that they are all suffering under a gargantuan national debt and reliant on selling what amounts to ‘promissory notes’ to the international speculators and hedge funds to finance their public spending.
The sharp increase in inflation across the world has been driven by the unprovoked and illegal war by US imperialism and its Zionist ally to crush Iran and reorder the Middle East under its domination.
The total defeat of the US militarily and the closure of the vital Strait of Hormuz has driven up the cost of oil and gas, while at the same time cutting off supplies of fertiliser threatening food production across Europe which is already suffering the effects of the recent extreme heat conditions.
Even the mighty US computer industry is not immune and is at risk, with one third of global helium production, vital for the production of the most advanced computer chips, unable to pass through the Strait.
The failed imperialist war on Iran has rebounded on the capitalist economies of the world, driving up inflation at home, while dragging the world to the brink of a new world war.
Inflation has not reached its peak as supplies of gas and oil have been severely depleted and the full effects of increases in the cost of energy for the working class is set to soar in the coming winter months.
There is no doubt that spiralling inflation in energy and food costs will be met with a revolutionary uprising from a powerful working class determined not to be driven into starvation levels of poverty by a capitalist system that has reached the end of the road.
In its desperation, the ruling class is determined to inflict its crisis on the backs of the working class by carrying out a class war to the finish.
The international financiers, who prop up bankrupt capitalist economies, are demanding that these governments carry out the most brutal and savage cuts to every gain made by workers in the past.
The working class in the US, UK, Europe and across the world will never accept having their lives destroyed to keep the bankers and bosses from crashing into bankruptcy.
The urgent job today is building the WRP and Young Socialists in the UK and sections of the International Committee of the Fourth International in every country, to provide the leadership necessary for the working class to organise mass strike actions to bring down their capitalist governments and bring in workers governments and socialism.
