Workers Revolutionary Party

Not just European banks but world capitalism is a ‘lost cause’

THE panic gripping the world capitalist class over the impending crash of the banking system reached another new level on Monday with the publication of a report by KPMG titled ‘The Profitability of EU Banks: Hard Work or a Lost Cause?’

KPMG is one of the world’s four largest auditors and it has been taking a hard look at the EU banks and has come up with the inescapable answer to its own question, namely it’s a lost cause. Since the banking collapse of 2008, the cost-to-income ratio for EU banks has remained high while the amount of non-performing loans has increased from 1.5% of the banks’ total loans before the crash to over 5% today.

These non-performing loans are loans made by the banks which have no chance of being repaid. In total European banks have over 1.2 trillion euros worth of these toxic loans, loans that in the past they could pass around parcelled up as ‘assets’. Today they are stuck with them.

Despite all the trillions of dollars, pounds and euros handed out to the banks by governments through all the quantitative easing programmes they are, as KPMG is forced to conclude, stuck in a ‘downward spiral’ with no end in sight except a massive crash.

The economic crisis of capitalism is developing rapidly across the world with inflation set to explode. Increases in oil and commodity prices are driving inflation up at a time when in Britain the collapse of the pound by 18% of its value after the Brexit vote, coupled with the cuts in wages resulting from the austerity measures imposed to pay for the bankers bail-out after 2008, is leading to a ‘stagflation’ crisis.

Stagflation, where massive inflation is accompanied by the economic collapse of industry, was rampant in the UK in the 1970s, forcing the then Labour chancellor, Dennis Healy, to go to the IMF and beg for a bail-out loan. This is not an option today.

In the intervening three decades the world crisis has reached such epic proportions that there is not a capitalist nation in the world that is not on the verge of bankruptcy, not a bank that is not teetering on the brink of collapse.

This is a crisis that can only be resolved through the capitalist class taking on the working class to impose misery and starvation as the price for keeping capitalism from catastrophe. This crisis is reflected in the war between the governor of the Bank of England, Mark Carney, and the Tory leadership.

Carney spelt out a few weeks ago that a crashing pound meant that inflation was set to explode and that the Bank would accept no interference from politicians in dealing with it. For Carney, the only job of the government was to deal with the inevitable revolutionary sharpening of the class struggle arising from the impending crisis.

To underscore the supremacy of bankers, Carney has for the past week been threatening to resign, resulting in reports that Theresa May has been forced to retreat from her position that she could tell the Bank what to do, and beg for him to remain. What is clear is that the bankers are well and truly in charge – they are determined that in the coming crash they will do all that is possible to survive by dumping the full effects of bankruptcy on the working class, leaving May and the Tories to organise a counter-revolution to impose mass starvation on workers.

What is equally clear is that the powerful working class will not sit back and idly accept pauperisation as the price for capitalist bankruptcy. Immediately on the agenda is a sharpening of the class struggle in Britain to a revolutionary confrontation where the question of the working class overthrowing bankrupt capitalism and advancing to socialism is posed point blank.

The critical issue is the building of a revolutionary party that will lead this revolution.

This is the issue at the centre of the News Line Anniversary Rally on November 12 and we urge every worker and young person to attend and join us in this decisive struggle.

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