THE world crisis of capitalism has sharpened to the extent that even the staid Bank for International Settlements (BIS) has been forced to express its alarm that the international banking system is on the brink of a collapse that will dwarf the one in 2008.
In its recent Quarterly Review the Swiss based bank, which has the role of monitoring the movement of capital internationally, raised the alarm about the colossal amount of off-shore lending in US dollars.
$9 trillion US dollars – valueless money artificially created by the US Federal Reserve Bank’s policy of Quantitative Easing – has been pumped into the world economy, especially into the so-called emerging markets like China, India and Brazil.
Dollar loans to Chinese banks and companies have leapt from nothing five years ago to $1.1 trillion today, while dollar credit to Brazil stands at a massive $456 billion. Russia has an external debt of $715 billion, mostly in the form of US dollars.
The fact that the BIS draws from the history of Germany to illustrate the scale of today’s crisis speaks volumes for their fears.
They point out that the practice of countries disguising the extent of their borrowing is the same as that employed by German companies in the 1920s; the exposure of industry and the banks in Germany to a mountain of debt led directly to the economic collapse and hyper-inflation of the 1930s.
When Swiss-based bankers start talking in these terms you know that a crisis of epic proportions is well underway.
Their fears are expressed in the following lines: ‘To the extent that these flows are driven by financial operations rather than real activities, they could give rise to financial stability concerns. …. More than a quantum of fragility underlies the current elevated mood in financial markets.’
The BIS point to ‘risk-on, risk-off, flip-flopping by investors.’
What is meant here is that financial speculators out to use all the ‘free’ money handed out by the central banks are using it in a spectacular round of high risk speculative investments across the globe.
These are now termed ‘macro-tourists’, funneling vast sums of valueless money all over the world and especially into emerging markets and who will jump ship at the first hint of trouble leaving whole industries and enterprises across the world bankrupt and up to their neck in debt.
In turn the world banking system would be brought down as the mountain of un-repayable debt comes crashing down.
Left to pick up the pieces after such a crash would be the governments of these countries as the ‘lender-of-last resort’, expected to once again bail-out the banks, just as they did after the 2008 crash only this time it would be a crash that will dwarf anything that has gone before.
All the countless trillions of dollars pumped out electronically by the Fed, the Bank of England, the Japanese and now the Eurozone, fictitious bits of paper masquerading as real value, is on the point of destruction – and the working class of the world will be made to pay for it through the destruction of their wages, pensions, and conditions far in excess of any austerity measures capitalism has so far implemented.
This crisis is exacerbated for the capitalist class because in its state of weakness and bankruptcy it is forced to attempt to impose these conditions on a strong, undefeated working class that is refusing to accept impoverishment as the price for keeping a handful of bankers and capitalists in luxury while they and their children starve in the gutter.
Across the globe workers and especially the youth are rebelling against this bankrupt capitalist system.
They are becoming acutely aware that the only possible future lies in the overthrow of capitalism and advancing to a higher form of society – to socialism where production is for social need not for bankers’ profits.
The burning issue of the hour is the building of sections of the Fourth International in every country to lead the coming world socialist revolution to victory.
