THE Morgan Stanley bank is worried that the world crisis is going to shatter the already bankrupt UK economy, causing a flight of capital out of the country and a crash of the pound sterling, unleashing a deeper slump and massive inflation.
It fears that the UK will be the first of the major world capitalist economies to be completely shattered by the crisis, and hurtled down the Zimbabwe road of a worthless currency. Zimbabwe reached the point of printing 10 trillion dollar notes.
This created a situation where people demanded payment in US dollars, whether they were shopkeepers, bankers, or wage workers.
The US bank has pointed to the UK’s economic and political crisis and the need of the bourgeoisie to have a strong government in power. This is needed to make the attempt to force the population to accept savage spending cuts, many more unemployed, and the destruction of the Welfare State.
The Morgan Stanley bank states that a hung parliament in 2010, a feeble minority government, or a coalition government would lose the UK its Triple A rating that allows it to sell its debt, and would see foreign capitalists withdraw their capital.
The bank says ‘An inconclusive result in the general election could increase uncertainty in markets, it could put some downward pressure on sterling and upward pressure on bond yields.’
A loss of confidence could result in a ‘sharp drop’ in the pound, the investment bank’s report added. It would also mean a very steep rise in the cost of living.
Morgan Stanley said that in an ‘extreme situation’ the Bank of England might be forced to ‘hike rates to shore up confidence in monetary policy and stabilise the currency, threatening the fragile economic recovery.’
Hiking up rates would, of course, push very large numbers of people out of their homes, as well as creating a large number of additional unemployed.
The government’s reply to the Morgan Stanley scenario is no reply at all.
It merely restates: ‘The government remains committed to sustainable public finances and has set out clear plans in the Budget to reduce borrowing once the economy is recovering and to reduce debt as a percentage of the economy once these shocks have passed through the economy in full.’
The Bank’s plea is that the British ruling class must make sure that it has a strong government to deal with the working class.
Even with a big Tory majority such a government would need to have Labour and Liberal leaders in its cabinet to try to reduce the massive opposition to its cuts policies.
The issue is, of course, if parliament cannot provide the government to do the job, how will such a government come forward.
In Greece in the mid 1970s such a crisis of rule brought forward the regime of colonels, complete with the abolition of bourgeois democracy, and the use of torture chambers.
In the UK at the moment there are already a growing number of embittered police chiefs and generals who consider that they should be running the country, and that the politicians are bent and corrupt and incapable of rule.
It has already been suggested that the massive campaign over parliamentary expenses was organised to discredit politicians and boost ‘our military heroes’ who are busy losing the Afghan war.
The issue for the working class is clear. It must use its strength to protect its interests, its wages, jobs and basic rights.
That means organising a general strike to bring the Brown government down and bring in a workers government. This will carry out socialist policies, expropriate the bankers and the bosses, and sack the generals and police chiefs, to begin the British socialist revolution.