Economy

It is often said that central bankers 80 years ago were responsible for
creating the Great Depression. Constrained by their commitment to the
gold standard, they failed to ease monetary policy (cutting interest
rates) fast enough, say the economists, thus turning a crisis into a
Depression. But that is not the real reason.

A spectre is haunting Europe – the spectre of capitalist crisis.
Events are moving at lightning speed. This slow-motion train wreck has
suddenly speeded up.  Each day we come closer to a Greek default and its
exit from the euro. Squeezed by foreign bankers, demanding their pound
of flesh, ordinary Greek people are being pushed to the limit. They are
being reduced to a state of wretchedness and indignity.

The latest “decisive” EU
summit-to-end-all-EU-summits-and-fix-the-Eurozone-crisis-once-and-for-all
has signally failed to do so – just like all the previous “decisive”
and “final” summits. As in previous meetings, within days the results
were declared completely unsatisfactory by the markets. These gatherings
of EU heads of state are now a thoroughly debased currency. Nothing has
changed except that the national contradictions are sharper and more
insoluble than previously thought.

Another
variation on the demand to “tax the rich” is the call for a tax on
financial transactions, otherwise known as a “Financial Transactions
Tax” (FTT), “Tobin Tax” (after the Nobel economics laureate, James
Tobin, who first proposed the idea in 1972), or “Robin Hood Tax” (i.e.
taking from the rich and giving to the poor).

The present
economic crisis has been described in various ways by mainstream
commentators. All manner of “solutions” have been posed, both by the
bourgeois politicians and economists, and by the reformist leaderships
of the working class. What these commentators and representatives cannot
admit is that this crisis will not be solved by this or that reform.
Society is living through a crisis of capitalism and the choice facing
mankind is simple: socialism or barbarism

Europe’s economic crisis is being
transformed by the day into a deep political crisis. Italy and Greece
both have new governments – governments of “national unity”, pledged to
solve the economic and financial crisis that has rocked Europe to its
foundations. What are these so-called technocratic governments and what
do they represent?

Last week Angela Merkel was warning
that peace in Europe could be endangered if an agreement was not
reached at the EU summit on how to manage the crisis that has engulfed
the euro and the whole of the EU economy. Speaking to the German
parliament she said, “No one should think that a further half century of
peace and prosperity is assured. It isn’t. And that’s why I say if the
euro fails, Europe will fail, and that mustn’t happen." Some of the more
serious strategists of capital have even raised the prospect that the
euro could break up. The 27 EU leaders on Wednesday night, however,
finally produced a three part deal.

A new International Labour Organisation reports says that as much as 50%
of youth are now unemployed in many countries. Capitalist crisis has
meant soaring unemployment especially amongst the young. The report 
warns of difficult years ahead where young people may resort to violence
to vent their anger at governments worldwide.

The world
crisis of capitalism has entered a new stage. Rather than recover,
several countries are showing features of a depression. This is an
unprecedented situation and shows the deep malaise affecting the
capitalist system, still reeling from the slump of 2008-9.

“When sorrows come, they come not single spies, but in battalions!” Shakespeare: Hamlet Act IV.
Each week the financial crisis seems to be moving from one country to another without a pause. No country can feel safe. This is the grim reality for world capitalism today. Political editor, Rob Sewell, looks at the reasons for this ongoing crisis and explains why capitalism cannot find a way out.

The euro zone is heading into stormy
waters. The crisis that opened with the near collapse of the world
banking system in 2008 has now deepened into a crisis of insolvency of
entire nations. The bourgeois has no idea of how to get out of the
crisis, which is sweeping like an uncontrollable tsunami from one
country to another in Europe. In the words of Italy’s finance minister,
“There should be no illusions about who will be saved. Like on the
Titanic, the first class passengers won’t be able to save themselves.”

As I write these lines the destinies of Greece are being decided in a
titanic struggle in which the Greek working class is confronting the big
banks and capitalists of all Europe. The EU is subjecting Greece to the
most shameless blackmail. They say: either accept draconian cuts in
your living standards, or else we will refuse to hand over the next
tranche of 12 billion euros.