‘WE HAVE no ability to turn the economy around. When the next recession comes it is going to be deeper and last longer than in the past. We don’t have any strategy to deal with it,’ Professor Martin Feldstein, former chair of the White House Council of economic advisors, told The Daily Telegraph as he expressed openly the panic that is gripping the ruling class about the fast developing economic crash of capitalism.
Feldstein said that the ten years since the collapse of Lehman Brothers investment bank has been a decade of historically low interest rates coupled with central banks pumping unprecedented amounts of artificially created money into the capitalist banking and financial system in a desperate attempt to prevent the whole meltdown of global capitalism.
The net effect of printing trillions of dollars, pounds and euros and handing them out to the banks has been for them to use this ‘free’ money to speculate wildly on the world’s stock markets.
The prices of shares have been driven up to unheard of levels that bear absolutely no relationship to the productivity of the companies involved setting the scene for this huge debt bubble to explode and bring down the world capitalist system.
Across the world these companies have gorged on all this free money at super low interest rates to inflate their share value, while in reality producing barely enough profit to cover even the near-zero rate interest charges on their debts.
With central banks starting to push up interest rates in order to try and prevent the debt bubble exploding these companies will go bust very quickly throwing millions of workers across the world out of a job.
Feldstein told The Telegraph that the crash in the world stock markets when it happens will set off a $10 trillion crash in the assets of US households that will take $300 to $400 billion a year out of the US retail economy.
The US working class will not sit back and see their lives destroyed overnight in a crash that will dwarf the crash of Wall Street in the 1930s – there will be revolutionary confrontations fought out on the streets across America as workers refuse to accept poverty as the price for capitalism’s crisis.
British and European capitalism is so feeble that the effects of this crisis will destroy every bank and industry. In 2008 the banks and stock markets in Europe were effectively shored up by the Federal Reserve Bank printing dollars to flood the system. But, as Gordon Brown warned last week, this era of ‘international co-operation’ (in reality driven by the fear that if European and UK banks crashed then it would bring down US banks as well) has come to an end.
A collapsing US economy will not be in a position to act as a ‘lender of last resort’. Instead, it views the rest of the world as rivals to be fed to the wolves in order that American capitalism has any chance of survival. Dominating the panic of the ruling class is the fear that this crisis has grave implications for what they term ‘liberal democracy’.
In other words, the democratic facade of bourgeois democracy must be torn up by the ruling class, and the capitalist state must turn its armies and police against a working class that will rise up as they see their lives being destroyed by a system that protects the profits of the bankers and capitalists at all costs. For there can be no mistake about this, we live in the immediate era of socialist revolution as workers are unable to live in the old way and the ruling class can no longer rule in the old way.
The only way forward is for the working class to take the power by kicking out the Tory government and bringing in a workers government that will expropriate the banks, nationalise them under the management and for the benefit of the working class, as part of a socialist planned economy. This is the way forward for the working class in every country, to consign this bankrupt, anarchic capitalist system to the dustbin of history through the victory of the world socialist revolution.