AS the US government entered its first full week of shutdown, the ruling class in America and the world are in panic mode as an even greater economic cataclysm opens up underneath them, one that will spell the collapse of the entire capitalist system.
Speaking on Wednesday, president Obama sent the bankers a blunt warning that they should be very worried about a political crisis that has shut down the government and could trigger a US debt default.
The reason why they should be ‘very worried’ is that in two weeks time (October 17) the US government will reach the deadline for extending its borrowing limit.
This limit is fixed at present at a ceiling of $16.7 trillion, the total amount the government can borrow in order to pay its bills – if by October 17 this limit is not increased, bankrupt US capitalism will be unable to service its massive debts and will simply have to default on them.
The result of this would be for the dollar to collapse along with the entire international banking system which has used the dollar as its main reserve currency against which others are measured.
The net effect would be total economic and financial collapse on a world scale.
While closing down entire sections of the US government this week was seen as serious by the capitalist class, it was not considered to be fatal for capitalism internationally while a US default certainly is.
Lloyd Blankfein, head of the powerful investment bank Goldman Sachs, attended a meeting with Obama and emerged warning that America was getting onto dangerous ground by flirting with not raising the debt ceiling, noting that a previous period of brinkmanship on the issue badly hit the US credit rating.
He was blunt in his warning, saying: ‘There’s a precedent for a government shutdown, there’s no precedent for a default.’
So, closing down entire sections of the government, laying off 800,000 government employees and expecting thousands more to work for nothing is no big deal as far as the bankers are concerned.
What terrifies them is that this struggle of two sections of the capitalist class represented by the Democrats and the Republicans is going to bring the whole rotten system crashing down.
The reason Obama is finding it difficult to back down completely over his healthcare programme is its enormous popularity amongst the US working and middle class.
On Monday, the first day that they could, over one million people attempted to register for the scheme, showing the strength of feeling that exists for even a watered-down health scheme that promises cheap healthcare for the many millions who cannot afford any provision whatsoever.
To abandon it would open up the floodgate of working class anger that would bring him down.
The Republicans have, meanwhile, been portrayed as ‘mad dogs’ driven by an unreasonable fear of anything that smacks of ‘socialised medicine’.
They are not mad dogs. They represent a section of the capitalist class that recognises that for any section of the ruling class to survive the coming collapse there must be an all-out war with the working class to make it pay the entire costs of the crisis.
They want to create mass unemployment through closing down all government services, except of course the army, stop all benefits and pensions, and let every city go the way of Detroit.
At the same time, they are looking to wage war on their capitalist rivals abroad by letting the dollar collapse, bringing on a world crisis in which they consider only the strongest, ie the USA, will survive this test of ‘creative destruction’.
This desperation is indicative of a weak and bankrupt capitalist class, beckoning on its own destruction. It is re-proving Hegel’s proposition that all that exists deserves to perish, as they desperately push forward to meet their fate.
The essence of this world crisis is that the only class that can offer humanity a future is the working class, not just of the USA but of the world. As capitalism writhes in its death agony, the workers of the world must advance to carry out the world socialist revolution. This requires the building of sections of the Fourth International in every country.