Workers Revolutionary Party

World Bank Report – capitalism  stands on brink of financial crash

THE WORLD stands on the brink of a financial crash according to the latest biannual Global Economic Prospects report from the World Bank.

This warns of a ‘debt accumulation wave’ that could have an ‘unhappy ending’ – a diplomatic way of saying that the global financial crash is underway as the world is drowned in a sea of debt.

The report highlights four previous waves of debt accumulation over the past 50 years and concludes that the latest wave which started in 2010 is ‘the largest, fastest and most broad-based increase’ in global debt since the 1970s.

In 2018, global debt reached a staggering record high of 230% of gross domestic product (GDP) – the monetary value of all the wealth produced by countries.

In emerging and developing countries, the ratio of debt to GDP reached a high of 170% of GDP in 2018 with the total amount of debt for these countries standing at £42 trillion – 54% higher than in 2010.

2010 was when the central banks in the US, UK and Europe unleashed Quantitative Easing (QE) on the world, flooding it with trillions of worthless paper money handed out to the banks and speculators who used it to provide ‘loans’ throughout the world to companies and governments.

Loans could be rolled over and paid off by acquiring even more debt in this massive debt-fuelled explosion, designed to keep the banks, hedge-funds and shareholders rolling in profit after the crash of 2008.

The World Bank is now warning that this accumulation of a debt mountain has not been accompanied by any growth in what is termed the ‘real economy’.

What makes this current crisis so much more catastrophic is that, unlike previous waves of debt accumulation, it is not confined to any specific region of the world or restricted, as in the past, to either governments or private companies.

Today, this debt crisis is completely global, encompassing every continent from Latin and North America, Europe, Africa, India and the Far East, with both governments and firms locked into a destructive cycle of debt piling on even more debt. As the World Bank is warning, this debt mountain is going to collapse the entire world capitalist system.

These emerging economies – which have been at the fore of taking on the cheap loans made available, and in some cases have had them thrust upon them – are just leading the pack and their inevitable collapse will reverberate across the world.

The era of state and corporate bankruptcy is already on us and the only solution capitalism offers is to make the working class and poor of the world pay for their crisis. This is driving revolution as can clearly be seen in the recent uprisings across the world.

Ecuador in March last year signed an agreement with the International Monetary Fund (IMF) for a $4.2 billion loan to bail-out the right-wing government and the capitalist class from bankruptcy.

The strings attached to this loan called for massive cuts to the country’s budget, leading to the inevitable sacking of tens of thousands of workers, increased taxes for the poor and privatisation of public sector services.

The IMF predicted that this would make Ecuador suddenly an attractive prospect for foreign investors to load the country up with even more debt.

The Ecuadorian workers and poor wouldn’t stand for it and erupted onto the streets over the austerity cuts demanded by the IMF.

Similar uprisings took place in Chile and in Lebanon, all of which forced their governments to retreat, while across Europe, France is gripped by the longest general strike in its history.

On Wednesday, millions of Indian workers and poor came out in a one-day strike against the government called by the Indian trade union federation against reactionary citizenship plans designed to split the working class on religious grounds and for an end to the government’s savage attacks on workers’ rights.

The world crisis of capitalism is driving forward world revolution in every continent at breakneck speed.

This makes the building of the revolutionary leadership, sections of the Fourth International in every country, absolutely decisive today to lead this fast-emerging world socialist revolution to victory.

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