World crisis hits eurozone

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THE announcement by the unelected Italian prime minister, Mario Monti, that he is quitting the job  sent the Italian economy into a massive crisis that has quickly spread throughout the eurozone.

Monti is an EU economic ‘technocrat’ who was parachuted into the job by the eurozone leaders after the existing prime minister, the disgraced Silvio Berlusconi, was forced out of office in November 2011.

For the past year Monti has presided over an unelected government of technocrats charged by the eurozone to impose massive cuts on the Italian working class in an effort to avert the complete collapse of the third largest economy in the zone.

The scale of the Italian debt crisis is huge, standing at an estimated 1.9 trillion euros, 123% of the country’s GDP.

Taking direct orders from his eurozone masters, Monti has embarked on a draconian round of austerity measures involving massive tax increases, pushing up retirement age and imposing huge cuts to welfare expenditure.

This has pushed the working class into outright revolt against the government as expressed in October this year by a march of 150,000 in Rome under the banner of ‘No Monti Day’.

Earlier, students and youth had taken to the streets in mass demonstrations against education cuts and youth unemployment which, at 35%, is amongst the highest in Europe.

The immediate cause of Monti’s ignoble departure was the decision by Berlusconi’s right-wing party, the People of Freedom Party (PDL), to withdraw their support from the technocrats government, with Berlusconi suddenly announcing that they could no longer support the austerity cuts and that he is considering a return to politics on a populist anti-austerity platform.

The effect of Monti’s announcement was swift and dramatic in Italy and across Europe.

Italian borrowing costs shot up to 4.8% while share prices came crashing down.

Hardest hit were the banks with Italy’s biggest Unicredit shares falling by 6% while others fell by around 7%.

In Germany the Commerzbank fell by 2.9%, in France BNP Parabis by 2.5% and similar drops were recorded in Spain’s biggest banks.

One commentator, David Thebault from Global Equities attempted to explain the collapse saying: ‘Monti is the one who managed to stabilise Italy and stop the contagion from Greece. His surprise resignation brings back the political risk in the equation, something we had forgotten about.’

What they had ‘forgotten’ – or more accurately ignored – is the simple fact that any attempt to isolate the contagion of the world debt crisis to one country is doomed to failure by the very nature of the international banking crisis.

What brought down Monti and caused this banking crash was the determination of the Italian working class and youth not to passively accept poverty and a lifetime of savage cuts in order to bail out the bankrupt banks.

While Berlusconi’s withdrawal of support from Monti may have been the immediate cause for his swift departure the fact remains that he and his eurozone-imposed government were brought down by the Italian working class and youth.

As the capitalist crisis is driving workers throughout Europe and the world into open revolutionary conflict with governments, this is massively exacerbating the political crisis within the ruling class, with bourgeois parties turning on each other in a frenzy of fear about their own survival.

This political crisis in turn feeds into the economic crisis destabilising even further the entire world capitalist system.

The issue before the working class is not whether they are strong enough to bring down governments – that has been proved in practice – but having brought them down, going forward to establishing a workers government that will advance to socialism.

For this it is necessary to build a revolutionary leadership within the working class prepared to lead such a struggle.

In Britain this means building the WRP and Young Socialists.