STOCK markets in Europe and Asia crashed yesterday morning as the international financial world suddenly woke up to the grim reality that US capitalism is diving headlong into recession.
The past months have seen countless assurances throughout the financial press that the dominant global US economy was in ‘robust’ shape, as proven by the soaring price of shares on Wall Street reflected in the UK, Europe and the thriving Asian stock markets.
On Friday, this optimism was dealt a brutal blow when official employment figures in the US showed a marked decline in job vacancies and a growth in unemployment putting an end to the ‘jobs boom’ and post-Covid pandemic recovery that the American capitalist class boasted about.
The US unemployment rate has jumped to a three year high of 4.3% while figures showed a sharp decline in manufacturing output.
The stock markets were already in a state of shock following the decision of the Federal Reserve Bank last week to keep interest rates currently at a 23-year high of 5.5%.
The Fed had been confidently expected to cut this rate, making debt cheaper to finance, an absolute requirement for a capitalist system that is only staggering on through debt.
The refusal of the Fed to cave in to these pressures, on the grounds that inflation had not been significantly brought down, set off a panic, with investors selling off their shares as they sought more secure homes for their money.
All the talk in the world financial system today is of recession in the world’s most powerful capitalist economy, a recession that spells catastrophic disaster for international capitalism, triggering a crash on Wall Street on Friday that continued across the stock markets worldwide yesterday morning.
One of the biggest panic stock sell-offs was amongst shares in the hi-tech companies, especially those that had seen their share prices soar into the stratosphere on the back of promises of massive profits to be made speculating in Artificial Intelligence companies.
Major US tech companies such as Amazon and computer chip maker Intel reported financial losses and falling sales, with Intel last week announcing plans to cut over 15,000 jobs.
In a further blow over the weekend, it was revealed that the massive investment firm Berkshire Hathaway had sold half its stake in the US technology giant Apple, a stark sign that the big investors are running scared of an almighty crash and seeking to secure their money somewhere ‘safe’.
The price of gold surged to $2,474 per ounce on Friday as the speculators dumped their worthless shares and headed for the security of gold.
At the same time as Wall Street crashes the entire US economy is bankrupt, with the national debt going over $35 trillion for the first time in history on July 28th.
Accelerating the economic crisis is the drive of the US and its allies to an all-out war in the Middle East after the failure of its tame Israeli attack dog to dominate and smash the resistance of the Palestinian people and assert imperialist domination over the region for the exploitation of its vast mineral wealth.
The crash on Wall Street has immediately brought down the stock markets of the world and will precipitate a massive financial crash, plunging the entire world capitalist system into recession and economic depression.
The working class in the US and across the world will be expected to pay the cost of this historic crisis and accept being driven into mass unemployment and poverty by a capitalist system that is bankrupt and beyond repair.
Capitalism is in its death agony and can only continue by waging war on the workers at home and war on the peoples of the world.
The only way forward for the working class internationally is to put capitalism out of its misery by the working class taking power and replacing bankrupt capitalism with socialism.
This requires the building of sections of the International Committee of the Fourth International in every country to organise putting an end to capitalism with the victory of the world socialist revolution.
