WHAT bourgeois economists thought was unthinkable just a few days ago is now about to happen.
In just four days time the United States is going to default on its massive debt repayments.
Next Tuesday is the absolute deadline for both the US Congress, dominated by the Republicans, and the Senate, controlled by the Democrats, to reach agreement on raising the debt ceiling for the US from its present figure of $14.3 trillion.
An increase is required in order that the US capitalists can pay back on loans due to mature on that date and also pay the interest on its other loans.
Failure to agree an increase will result in the US government simply being unable to service its debts and make any federal expenditure.
Already the White House has drawn up emergency plans in anticipation of this crisis. This involves attempting to ensure that it pays interest on these loans and avoids default by the simple expedient of cutting almost all federal expenditure.
This means stopping payments to federal employees, including soldiers, along with social security payments to the unemployed and pensions to ex-federal workers, along with Medicare payments.
These proposals represent a savage blow against US workers and the middle class at a time when unemployment is running at an all-time high of 9.2% (over 14 million) and house repossessions are set this year to be at the rate of 1.2 million.
At the heart of the political crisis, which is represented as a stand-off between the two bourgeois parties, is the emergence of an extreme right-wing tendency within the US capitalist class, personified by the ‘Tea Party’.
This grouping within the Republican party, and which dominates Congress, has decided that enough is enough for US capitalism, that there should be no more debt and, if necessary, the US should simply go bust.
The weak will go to the wall and only the fittest deserve to survive is its law of the jungle.
As for the working class and middle class – well, they can starve in their tent cities or survive as best they can, reduced to scavenging in derelict cities like Detroit.
This prospect of the mighty US economy going bankrupt has sent waves of panic throughout the capitalist world.
Everyone, from the head of the IMF to the chief executives of all the major banks, has written to the White House in horror at the situation, warning that default would crash the world economy and bring down the entire banking system.
It is not just the bankers who are terrified.
China, which is the US’ largest foreign creditor, holding well over a trillion dollars of US debt, has made clear its fears with articles appearing in official newspapers warning that the US government is ‘playing with fire’ and acting in a ‘dangerously irresponsible’ way.
The Chinese Stalinist regime is scared witless that its huge loans will not be repaid, leading to an economic collapse that will completely discredit it, and a political revolution by the working class that will overthrow it.
This fear of revolution is a fear that haunts not just the Chinese Stalinists ruling over the deformed workers’ state, but also the entire capitalist class of the world.
The contradictions of the capitalist system are reaching the point of revolutionary transformation, where the future of humanity demands the working class of the world, the gravedigger of capitalism, does its job, and consigns the bankrupt and out-of-date capitalist system to the museums, via socialist revolutions and the victory of the world socialist revolution.
The destruction of the massive debt mountains that have kept capitalism afloat for decades can only be achieved at the cost of the destruction of millions of workers’ lives, and the destruction of the productive forces in a massive slump and new wars.
The working class internationally has no choice. It must go forward to socialism.