US Fed emergency rate cut fails to halt crash – only socialist revolution can resolve this crisis


FOR THE second time in less than two weeks the US Federal Reserve slashed interest rates to near zero on Sunday, a desperate last ditch attempt to keep US capitalism from crashing in the face of the coronavirus crisis.

Alongside this cut, the Fed also launched a massive quantitative easing (QE) programme aimed at injecting $700 billion into the economy in order to keep the banks and the financial system from closing down completely.

If the Fed thought that unleashing yet more paper money and encouraging yet more debt through zero interest rates would prevent financial meltdown then they were in for a rude awakening.

Stock markets around the world went crashing on Monday morning, with the FTSE dropping by 5.3% on opening to its lowest level since October 2011. It had already fallen by 17% last week. This fall was reflected globally in the US, Asia, Europe and Australia as it became clear that unleashing yet more free money and debt would have no effect whatsoever on this crisis.

With factories closing down, airlines and travel companies going bust, and the service sector destroyed by the lock-down of entire regions and countries across the world, it has become glaringly obvious that so-called ‘fiscal stimulus’ is impotent in the face of the world crisis.

The response of these companies faced with immediate bankruptcy has been to demand government bail-outs. As in the banking crash of 2008, they are demanding the working class pay for their crisis through bail-outs that will come out of even greater austerity cuts.

The airline companies are demanding Boris Johnson gives them £7.5 billion, with the train companies calling for similar support while insurance companies are also asking for financial help to meet their liabilities.

Meanwhile it is becoming increasingly clear, even to those people who are not the ‘ideological enemies of the Tories’, that Britain is headed for a catastrophe under the Tory government.

This was demonstrated in an article in the leading Tory-supporting Telegraph paper yesterday by Ambrose Evans-Pritchard on the catastrophic effect of coronavirus which ‘is about to explode among medical staff’.

Doctors and medical staff working in the NHS have been sending Evans-Pritchard emails detailing their ‘alarm by the failure of the government to take more drastic action to fight Covid-19’. These reveal that the Tories haven’t even instituted tests for NHS staff who are on the front line and at extreme risk of contracting Covid-19.

One consultant is quoted as saying that ‘he realised that several consultants in the hospital will probably die’, that they receive no advice on measures to reduce the spread in hospitals, and that while in South Korea medics attend hospital in full hazmat suits ‘I will be arriving in my suit and tie.’

He ended: ‘So, the NHS is just about to explode in terms of absences, simultaneously with the patient explosion. All entirely predictable’.

These doctors are justifiably furious about the Tory herd immunity programme which they insist would ‘overwhelm a Western healthcare system’ and that: ‘In short the government is taking a massive gamble with the population’s lives, the very opposite of the precautionary principle. And a gamble that is also certain to fail.’

Millions of workers and the middle classes are now up in arms about a capitalist system that is prepared to kill huge numbers while bailing out the bosses and bankers.

What is clear is that the time has come for the working class to use its huge strength by calling a general strike to kick out the Tories and bring in a workers government that will nationalise main industry and the banks and place them under the control and management of the working class.

With capitalism plunging into a huge economic and social crisis the only way forward is to overthrow the dictatorship of the capitalist class and replace it with the dictatorship of the proletariat and socialism.

Only socialist revolution can free society from the death grip of capitalism and provide resources needed to combat the coronavirus crisis and ensure a future for the young, the elderly and the entire working class.