|The News Line: Editorial
Wednesday, 7 January 2015
World crisis deepening to explosion point!
JAPANESE stocks led big falls across Asia on Tuesday, posting their biggest drop in nearly 10 months, as investors became hysterical about falling oil prices and the deepening crisis of the European Union, particularly with the forthcoming Greek crisis election on January 25th.
The benchmark Nikkei 225 closed down 3% at 16,883.19 points – its worst day since March, as the US oil price fell below $50 a barrel for the first time since 2009, and Brent crude fell to $53 a barrel. In fact companies need an oil price of $90 per barrel to make their profits.
Yet oil production grows with the Saudis leading the pack with their statements that they will not curb production even if oil reaches down to $20 a barrel.
In fact Russia’s oil production hit a post-Soviet record last year (approximately 10.58 million barrels per day), while Iraqi oil exports also reached their highest levels in December 2014 since 1980.
In Australia, investors also reacted to falling oil prices and the crisis of the eurozone, with the benchmark S&P/ASX 200 closing down 1.57% at 5,364.80 points. Australia’s latest trade figures showed the country’s deficit widening in November from October to about 950m Australian dollars ($770m). It is the eighth trade deficit in a row.
Tristan K’Nell, head of trading at Quay Equities, commenting on why investors had the shakes over some of the details of the world crisis, pointed out: ‘Investors are watching closely the US interest rates, growth slowdowns in Europe and the Asia Pacific, political uncertainty in Greece, geopolitical issues between Russia and Ukraine and also the Middle East, and the volatility and crashing prices in crude oil and iron ore.’
Saudi Arabia, the most influential OPEC member, is not interested in cutting its oil extraction anytime soon. ‘Faced with the painful choice of losing money maintaining current production at $60/barrel or taking 2 million barrels per day off the market and losing much more money – it’s an easy choice: take the path that is less painful,’ oil consultant Arthur Berman explained.
He added: ‘The price of oil will recover. Opinions that it will remain low for a long time do not take into account that all producers need about $100/barrel. The big exporting nations need this price to balance their fiscal budgets. The deep-water, shale and heavy oil producers need $100 oil to make a small profit on their expensive projects.’
Oil prices will hurtle up once again and hit new peaks when either the productive areas such as Libya and Iraq explode with new wars or the Saudis wipe out some of their competitors.
Meanwhile, the EU sinks while it nervously awaits the economic and political consequences of the refusal of the Greek workers to accept more austerity and their determination to take on the EU’s bosses and bankers.
Der Spiegel reports that Angela Merkel thinks Greece can be ejected safely from the euro if the Syriza radicals win the January 25th election.
‘We are past the days when we still have to rescue Greece,’ said Michael Fuchs, the parliamentary leader of Mrs Merkel’s Christian Democrats, adding that Greece is ‘ no longer “systemically relevant” for the euro.’
Meanwhile, the head of the European Central Bank (ECB), Mario Draghi, is caught. He is determined to kick off a trillion-euro surge of quantitative easing on January 22nd to head off the deflationary forces that threaten to lock the eurozone into a Japanese-style trap. This will entail the purchasing of Greek debt!
The German bourgeoisie and bankers are opposed to quantitative easing, while the Italian, Spanish and Portuguese governments are demanding it and saying that they represent the EU majority.
The victory of the Greek radical Syriza party in the January 25th elections will see the Greek working class surge forward with their demands to repudiate all ‘EU debt’, to break with the European Union, and to nationalise all of Greece’s major industries and banks putting them under workers management.
The revolutionary actions of the Greek workers will bring all of the contradictions of the EU to explosion point, encouraging workers throughout the EU to rise up and bring down the EU, to go forward to the Socialist United States of Europe.
The crisis of capitalism is in fact driving forward world socialist revolution.
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