THE sharp rises followed almost immediately by even bigger losses on the international stock markets over the past few days, point in only one direction – a spiral movement downwards of a completely out-of-control world capitalist system, towards a new and even deeper crash of the system.
The world stock markets – the casinos in which the bankers and financiers gamble huge amounts on stocks and shares – have been at an historic high recently, reaching levels not seen since 1999.
Events this week prove that, far from heralding any signs of recovery, the massively inflated amounts of worthless paper money awash in these markets are playing a decisive role in crashing the entire system.
The situation for the capitalist moneybags started to unravel last Wednesday when the chairman of the Federal Reserve, Ben Bernanke, told the US congress that it is too soon to end the central bank’s monetary stimulus programme (Quantitative Easing) or raise interest rates.
He said the Fed’s policies were ‘providing significant benefits’ and changing course now could harm economic recovery.
This was music to the moneybags’ ears and the stock markets went up on this assurance that the US government would continue to electronically produce worthless amounts of ‘money’ to hand over to the banks and speculators.
Currently, the Federal Reserve is pumping $85 billion a month of this valueless money into the capitalist system.
However, within hours of Bernanke’s reassurance to the bankers, the minutes of the last Fed meeting were released which showed that they were actually facing mounting calls for the whole QE policy to be ‘wound down’.
Faced with the prospect of losing all this ‘free’ money the speculators took fright and started to dump shares, grabbing what they could of their ill-gotten gains as share prices collapsed.
This threat to remove QE was compounded by the latest economic figures from China which showed manufacturing industry has started to contract.
With China as the biggest importer of goods and raw materials, any contraction of factory production represents a fatal blow to the surviving industries of the capitalist world, while governments in Europe and the US rely on China continuing to prop up their state debts through buying up massive amounts of government bonds as they have in the past.
What is clear is that the entire policy of artificially creating huge sums of worthless paper masquerading as money has produced an even bigger financial ‘bubble’ than the one that burst with such devastating consequences in 2008.
Then, all the funny money went into an inflated US housing market that went bust and brought down the Lehman Brothers bank, undermining every every other bank in the world.
The only thing that stopped this was the transfer of the bank debt to the sovereign state. Banks were nationalised or handed huge sums of taxpayers’ money to keep them afloat.
Today, the bubble is not just in the housing market but throughout the entire system; a gigantic bubble so fragile that it can burst just because the Fed Reserve is considering stopping QE and the Chinese economy is contracting.
This time round it will not be the banks that crash, but entire nation states will be going bankrupt and no power on earth is able to bail them out.
Such a crash will unleash an all-out class war to the finish as bankrupt capitalist states are forced to drive their working class into the gutter and beyond in order to survive.
What is happening today in Greece is set to be replicated on a much larger scale throughout the capitalist world.
The only way for the working class to save itself from this crisis is to break with the capitalist system that created it.
Since there can be no reform of capitalism, the only future for the working class of the world is to overthrow it by carrying out a world socialist revolution.