Socialist Revolution To Put Bankrupt Bankers Out Of Their Misery

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IN its latest annual report, the Bank for International Settlements (BIS), the ‘central bank of central banks’, has warned that capitalism is ‘defenceless’ against the next economic crash.

According to the BIS the monetarist policies pursued by the world’s central banks have not only failed to overcome the banking meltdown that erupted with the collapse of Lehman Brothers bank in 2008, but have hugely exacerbated the crisis to the point where the next crash will be catastrophic.

Accusing the central banks of ‘using up’ all the ammunition of fiscal policy the BIS is scathing about the use of ‘free money’ to save the banks. After the Lehman’s collapse, in order to save banks from bankruptcy, they were provided with trillions of dollars of free or very cheap money through Quantitative Easing, and interest rates that have hovered around zero for 8 years.

All this free money handed to the banks was supposed to be invested in productive industry, job creation, increased wages and consumption and all the other benefits that the central banks and politicians boasted would accrue. In fact, the banks had no intention of investing in bankrupt capitalist industries. They were intent on making huge paper profits by engaging in an epic round of speculation on the shares and currency markets of the world, especially in the so-called emerging markets.

This orgy of speculation has resulted in inflated share and asset prices worldwide, a huge economic bubble far greater than that which exploded under Lehman’s, and which is set to burst at any moment. Claudio Borio, head of BIS monetary and economic department, said of low interest rates: ‘Rather than just reflecting the current weakness, they may in part have contributed to it by fuelling costly financial booms and busts and delaying adjustment. The result is too much debt, too little growth and too low interest rates.’

The BIS solution to this crisis is for central banks to dramatically raise interest rates, a move that even the IMF fears will cause bankruptcy and debt defaults on a massive international scale as debt repayments go through the roof. What is clear is that capitalism has exhausted all the weapons of economic manipulation to try and stave off its historic crisis, and all it has done is make its situation worse.

However the BIS report makes clear that the real solution for the capitalist class lies not in QE or low interest rates but in taking on and defeating the working class – the only class that produces real value through its labour power. Referring to the crisis in Greece the report states that it showed the ‘toxic mix’ of private and public debt being used as a solution to economic problems and that the only solution was to implement ‘badly needed’ structural reforms.

By structural reform they mean smashing the wages and conditions of the working class, instituting a programme of mass privatisation and ending all state expenditure of welfare benefits, pensions, education and health. This is the policy that the Troika are insisting be applied to the Greek working class.

It is no accident that when Tsipras crawled before the Troika last week and put forward a rescue plan for cutting Greek spending by increasing taxes on the rich and business owners, this was rejected out of hand on the basis that it harmed Greek capitalists – all the cuts had to be inflicted on pensioners and workers.

The same story of making the workers pay in cuts for the crisis is repeated in every single capitalist country. There can be no economic solution to the crisis of capitalism. In its historic crisis it can only survive by dumping the full effect of this crisis on the backs of the working class and this can only be done through a class war.

For the working class, this means only one thing – this bankrupt capitalist system, which can no longer provide any future for workers and young people across the world, must be put out of its misery through the victory of the world socialist revolution.