US CAPITALISM, the most powerful in the world, is teetering on the brink of collapse under a tidal wave of debt.
This dire warning was handed out this week by the bi-partisan Congressional Budget Office (CBO) as the US Congressional talks between Republicans and the Obama administration were failing.
These talks centre on the Democrats pushing Congress to raise the legal limit on government borrowing from the current level of $14.3 trillion, and the Republican refusal to allow such a move without huge cuts to federal spending on benefit programmes, such as Medicare, and the biggest ever tax cuts for the rich.
At the heart of the CBO warning of impending catastrophe is the massive and rapidly growing US debt, which the CBO states ‘could soon spark a European-style crisis’.
The intervention by the normally placid CBO points to the extreme depth of the capitalist crisis.
It warned that within ten years the US debt will equal the size of the entire US economy, rendering the country bankrupt and inevitably facing a ‘sudden fiscal crisis’ or, to put it more accurately, a complete economic meltdown.
What haunts the CBO is that of the $14.3 trillion US debt, $9.7 trillion is held by investors and foreign countries, mainly China which has in the past bought up massive amounts of government bonds issued to finance the federal deficit.
The scenario which they see unfolding very rapidly is the revolutionary ‘contagion’ – that has ripped the heart out of the Greek economy and is bringing down the European banks and the EU – spreading to the USA.
The banks will then come to the conclusion that the US government can no longer repay its debts and, in order to secure their loans, force up interest rates to an unaffordable level.
The government will have no alternative but to embark on a round of the most savage spending cuts and huge tax rises, in order to be able to repay the banks.
This is exactly the ‘Greek situation’ – a crisis that will bring a revolutionary response from the US working class, which simply cannot live under the conditions imposed by a bankrupt capitalist system.
This crisis cannot be solved through agreements in Congress between the two bourgeois parties. It can only be resolved through the US workers breaking with the Democrats and taking the revolutionary road of taking power and establishing socialism.
US foreign policy is a continuation of its home policy of making the working class pay for the crisis.
It is no accident that, at this time, US imperialism has marshalled France and the UK to attack Libya, is propping up the absolutist feudal regimes of Bahrain and Saudi Arabia in preparation for an attack on Iran, and is now seeking to organise Turkey to take military action against Iran’s ally in the Middle East, Syria.
In the Pacific region it is trying to bring together the forces to confront China. The imperialist crisis is forcing the US ruling class to consider that the only way to resolve its debt to China will be through overthrowing its Communist Party regime and restoring capitalism.
China, whose status as a major owner of US bonds has placed it in a position to collapse the US economy, is now the number one enemy.
This is the reason behind the current trip to the Philippines by US secretary of state, Hillary Clinton, where she promised the US would arm it to the hilt as an ally in the ‘escalating tensions in the South China Sea’, and where she warned of border incidents between Syria and Turkey, the former colonial master of the region, and now a key US ally, complete with ambitions to restore the glory of its empire.
Clearly the only way out of this deepening world crisis is through the organisation of the victory of the world socialist revolution.