THE 0.1 per cent ‘recovery’, the ‘work’ of Gordon Brown and Chancellor Darling has caused laughter and incredulity throughout the planet. It is a classic case of sowing a very expensive dragon and reaping a flea.
The enormity of the capitalist crisis is breaking through all of the spin and ruling class propaganda.
Yesterday Bill Gross, the co-founder of the Pimco fund raising enterprise, said that the UK was a ‘must to avoid’ for Pimco debt purchasers, as far as gilts were concerned, since British indebtedness and ‘Its gilts are resting on a bed of nitroglycerine’.
There could not be a clearer warning of the explosion to come.
He added of the UK, that ‘High debts with the potential to devalue its currency present high risks for bond investors.’
Gross added that Britain’s ‘highest debt levels and a finance-oriented economy – were exposed like London to the cold dark winter nights of de-leveraging’.
As sterling fell yesterday Colin Ellis, the economist at Daiwa Capital Markets Europe commented ‘Never has an end to a recession been so underwhelming.’
The ONS data shed new light on the post-Thatcher British economy based on huge banks and service industries.
The services sector, which now accounts for a gigantic 70pc of GDP, increased by just 0.1pc, as did industrial production.
At the same time as the economy has seized up, the banks are preparing to face another major crisis with a ‘wall of maturities’ that will have to be settled. The banks will have to amass billions more in the coming years.
This is the latest warning from the IMF’s Global Financial Stability Report and ‘World Economic Outlook.
The IMF adds that the banks have yet to bolster their balance sheets sufficiently, and could be vulnerable to a whole range of shocks in the coming months.
The report also indicates that with governments, including the UK and the US borrowing so much in the next few years, there was an increasing chance of a sovereign debt crisis, something which could trigger chaos and collapse for public and private sectors alike.
The IMF focussed on the UK and its crisis.
It described the UK as the one country facing particular scrutiny over the state and sustainability of its public finances, saying the extra debt raised by the government could, at the very least, ‘crowd out private sector credit growth, gradually raising interest rates for private borrowers and putting a drag on the economic recovery.’
The reality of the situation is that the UK economy is in a gigantic hole, as is the whole of the worldwide capitalist economy. Further, it is a lesson of history, that it will not be able to get out of this hole without a massive destruction of the productive forces, that by far eclipses the destruction of these forces that took place between the 1929 crash and the 1945 ending of the Second World War.
The Bretton Woods settlement could only take place on the basis of the vast destruction of the productive forces, and that the US possessed the majority of the world’s gold.
There is only one way out of the world capitalist crisis for the working class and the billions of poor throughout the world.
This is through the organisation and building of the parties of the Fourth International, on a world scale, to organise the victory of the world socialist revolution.
Once again, capitalism only knows one way out of its world crisis, and this is through slump, wars to redivide the world, and civil wars at home.
The only way that the productive forces will be able to continue to develop is through overthrowing world capitalism, and bringing in a worldwide planned socialist economy, where production is to satisfy human need, and not to make billions of profits for a financial oligarchy.