A FURTHER nail was driven into the coffin of British capitalism this week with the release of figures showing that the income from overseas investment has collapsed, pushing the gap between imports and exports to a massive £57.7 billion – a shortfall of 3.7% of GDP – the worst level in over 20 years.
What these figures show is that manufacturing industry in the UK has collapsed to such an extent that even though the value of the pound has dropped by 25% over the past few years, making exports comparatively cheap, they still can’t sell goods abroad.
At the same time, the cost of imported commodities, especially essential supplies of gas and electricity, have sky-rocketed leaving UK capitalism bankrupt.
With the whole economy reliant on profits from the banking system, the situation is one of absolute catastrophe for the capitalist class as earnings from foreign loans collapse in the face of the eurozone crisis.
The lesson from Cyprus is not that it is a ‘special case’ but that it represents the future of every country in Europe – collapsed banks with the resultant loss to everyone with a bank account.
The catastrophic weakness of the banks was underlined this week by the Bank of England which demanded that UK banks ‘find’ £25 billion of additional capital by the end of the year.
Investigations by the Bank into the economic health of the banks has revealed the uncomfortable truth that they do not have enough money to weather the economic tsunami sweeping Europe.
The Bank actually estimated that they really needs an extra £52 billion.
This massive sum is reckoned to be the minimum the banks need to cover ‘foreseeable’ liabilities, losses due to having to pay out fines for mis-selling, settling claims for money laundering and the bad debts they have accrued – in other words all the usual dubious practices indulged in by banks to make huge profits for their shareholders and owners.
In no way does this figure even begin to cover the equally foreseeable liabilities that the banks will incur through the complete collapse of the euro and the imminent state bankruptcy of Greece, Spain, Italy, Portugal and Ireland, where UK banks are exposed to billions of pounds worth of unpayable debt.
Where will the banks find £25 billion?
In the case of RBS and the Lloyds group, which are reckoned to have the biggest shortfall, it will come from the taxpayer, given that they are 82% ‘owned’ by us – that is we own the debt. Their huge profits went off with the last owners.
In fact, the working class and middle class will be expected to pay for the entire debt of the banking system as was made clear in Cyprus this week.
In last week’s budget Osborne announced cuts of £11.5 billion from government spending; this week he instructed all government departments to cut their budgets by 10% to achieve this target.
Those departments supposedly ring-fenced from these cuts, health and education, are going to be plundered and privatised.
For the banks and capitalism to survive, the working class and the middle class must be forced to accept that their bank accounts are the property of the ruling class and that their Welfare State must perish.
This is therefore a historic crisis. It is having a massive revolutionising effect on workers throughout Europe who are being driven along the road to the socialist revolution.
To survive they must rise up and seize the productive forces from the capitalists and organise them in a planned socialist economy producing to satisfy people’s needs.
This socialist revolution is the only road. It will consign capitalism to the Natural History Museum to be displayed with all of the other fossils of pre-history, while the real history of humanity will get under way.