ON THE very day that Boris Johnson hailed the start of the economic bounce-back for capitalism with a return to work, the international stock markets delivered a crushing blow.
Stock markets around the world fell as the speculators began to realise that all the talk from governments about having conquered coronavirus and being in a position to force the working class back to work was just wishful thinking.
Until last week, the global stock markets had been rallying after massive crash back in March when lockdown was forced on the employers by the refusal of workers to risk their lives for the sake of shareholders’ profits.
The ‘recovery’ on Wall Street after this was on the back of the US Federal Reserve Bank pledge of unlimited amounts of free money to back up the banks and speculators.
The fact that the US economy was plunging into recession, that there was absolutely no relationship between the actual profits made by companies that were in practice bankrupt and their share prices, was irrelevant to the speculators.
Last week, reality started to sink in on Wall Street when it became apparent that there was a massive surge in new coronavirus infection rates throughout the US. The US states of Alabama, Florida and South Carolina reported record numbers of new cases for three days straight, sparking a massive wave of dumping shares.
This upsurge in coronavirus will inflame the mass uprising in the US with the demand for total shutdown until safety is assured.
Trump’s treasury secretary Steven Mnuchin has already said that Trump isn’t prepared to shut down the economy, setting the scene for a massive revolutionary confrontation between the classes in the US that will pose point-blank the question of power.
With the world’s largest capitalist economy in the grip of a historic economic depression, the weak UK economy is going under fast despite all attempts to revive it.
The catastrophic collapse saw the country’s economy shrinking by over 20% in just one month in April and the remaining 80% only kept going by the Tories borrowing billions of pounds to prop it up.
When these figures were released last week, the governor of the Bank of England, Andrew Bailey, said he will be ‘ready to take action’ to help weather the storm.
It turns out that the Bank is preparing to drop interest rates to zero and to pump yet more worthless paper money into the economy.
Interest rates are already at an all-time low of 0.1%. Now they are considering a zero rate and even doing the unthinkable and bringing in a negative rate – meaning that banks instead of paying interest on deposits will in fact charge for storing money.
This is a last throw of the dice for central banks – a desperate measure to get the money markets to keep on investing in capitalism.
In fact, as the collapse in shares shows conclusively, the speculators and hedge funds have realised that there is no chance of making a profit investing in companies that are bust and simply cannot survive.
Yesterday, the giant oil company BP announced that it was ‘writing off’ $17 billion as a result of the ‘enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period.’
With major companies like BP losing money hand-over-fist and the world capitalist economy plunging into the deepest recession in its history, there is no way out for capitalism from this crisis except to dump the crisis firmly on the backs of the working class.
A bankrupt capitalist system and a weak ruling class will be forced to take on a massively powerful working class and drive it into the ground.
The burning issue today is to build the revolutionary leadership of the Fourth International in every country to provide the leadership required to take this mass movement forward to overthrow capitalism through the victory of the world socialist revolution.
In Britain, it is the time to build the WRP and Young Socialists to organise the working class to bring down the Tories and go forward to a workers government and socialism.