world in crisis, central banks not providing the anser

Increasing concerns and contradictions Per-Åke Westerlund, from Offensiv, newspaper of Rättvisepartiet Socialisterna (CWI Sweden) The severe downturn in 2008-09 made the world economy into an experimental workshop. But neither extreme austerity or trillions to the banks has led to a solid recovery. Now there is growing concern among politicians and economists. At the center of concern is the crisis in Europe. In early 2012, both Italy and Spain were close to sovereign defaults, which in turn would have made the whole euro project collapsing. EU’s leading politicians and institutions were scared into taking extreme measures. The European Central Bank, ECB, promised "unlimited access" to capital for both states and banks. Since then, the ECB lent 360 billion euros to Spanish banks and 260 billion into Italian. A large part have been used to buy their respective state bonds. The interest rate gap - how much more it costs for Spain or Italy to borrow than Germany - have fallen from 6-7 percentage to 2-3 percent. The ECB’s generosity is matched by other central banks. The U.S. Federal Reserve is in its fourth round of Quantitative Easing which means that the Fed buys government debt notes for $ 85 billion each month. Japan’s new right-wing government has now embarked on a "quantitative and qualitative" monetary policy in double pace compared to Fed. In two years, the central bank (Bank of Japan, BOJ) will use equivalent to a quarter of Japan’s GDP - the third largest economy - to purchase government bonds, equities and real estate. Central Banks But now there is increasing concern that central banks’ intervention is not the solution, but rather deepens the crisis. "Some of the leading figures in central banking concede they were flying blind when steering their economies," reported the Financial Times (18 April), from the International Monetary Fund’s (IMF) spring meeting. Lorenzo Samgh of the the ECB’s executive board: "We do’nt fully understand what is happening in advanced economies." The head of the Bank of England, Mervyn King, said that no one can be sure that the expansionary monetary policy is correct and wondered if they are “running the risk of reigniting the problems that led to the financial crisis in the first palce?”. Central bank intervention has eased the immediate crisis for the most vulnerable banks and states. But they do not kick start economies - investments in the advanced capitalist countries is still at a record low. However, the new policy opened for sharper conflicts between nation states. The Japanese currency, the yen, has fallen by 25 percent since last year. It has benefited the Japanese export industry, at the expense of for example German and South Korean industry. The IMF’s semi-annual reports from April (Global Financial Stability Report and World Economic Outlook) notes that central banks’ actions have achieved “a broad market rally” but also created new risks. Capital now flows back from the richer countries to developing countries, creating potential instability. The Fed boss Ben Bernanke recently warned that banks’ speculation may increase. IMF But especially worried is the IMF for what happens when easing ends. There is no equivalent in history to learn from. "Continued improvements will require further balance sheet repair in the financial sector and a smooth unwinding of public and private debt overhangs. If progress in addressing these medium-term challenges falters, risks could reappear. The global financial crisis could morph into a more chronic phase marked by a deterioration of financial conditions and recurring bouts of financial instability", writes the IMF. The conditions raised here - balance sheet repair and unwindling of debts - have so far failed, which points towards a more chronic crisis. The second leg of the crisis policy - the extreme austerity measures - have had worse immediate effects. 19.2 million are now unemployed in the euro zone, of which six million in Spain alone. In Greece, youth unemployment is 59.1 percent. The New York Times reported in an article on Greek school children who faint and are searching for food in the bins. The Portuguese Prime Minister Pedro Passos Caolho - a strong proponent of the infamous Troika (IMF, EU and ECB) austerity - promised in 2011 that "two terrible years" would be followed by recovery. But as a result of the extreme austerity, in 2013 Portugal "faces a much deeper and longer recession than the government or international lenders had foreseen" (Financial Times). The IMF estimated in April that the risk of recession (the economy contracts) in the euro zone was 50 percent. Since then, the ECB president Draghi warned that even France is dragged deeper into the crisis. The EU has given Spain and France two additional years to meet the rule that budget deficits should not exceed three percent of GDP. Under new rules they would otherwise been fined. In a large survey among capitalists and finance investors in Europe, made by the credit rating company Fitch, a large majority believe this year’s calm in Europe is transient. "Fitch warns in a statement that it [2013] can once again become a summer marked by the euro crisis, just as in 2011 and 2012, since there is a strong contradiction between the recent stock market rally and euro zone recession and rising unemployment." (From Swedish daily, Dagens Industri). No capitalist solution None of the capitalist institutions have a solution. Many warn that austerity has gone too far, but stil emphasise the need for a balanced budget for the "medium term". How quickly the Cyprus crisis threatened to spread shows that EU countries need a banking union, writes the IMF in its report. And before the ECB’s "limitless" capital flow eased the crisis, leading EU politicians like Germany’s Angela Merkel and European Commission President Barrosso put forward the EU needed a much tighter budget policy and synchronisation. But national interests and conflicts makes especielly German politicians hesitating. The risk, in their view, is that Germany then definitely become the guarantor of banks across Europe. In parallel with the growing contradictions within the EU member states there is a sharp increase of distrust against the EU itself. In Spain today 72 percent are critical of the EU, against 23 per cent before the crisis. Germany the increase is from 36 to 59 percent. The crisis has been exploited to push through many of the counter-reforms the capitalists dreamed of. Worse pensions in Italy, easier to fire workers in Spain, pay cuts of 50 per cent in Greece and so on. Now the capitalists increase their pressure on French President Hollande go the same way. He has already abolished the capital gains tax and promised to reduce the cost of unemployment insurance, pensions and municipalities. At the same time, the political pressure from below is increasing. In a French opinion poll, 70 percent believes a "social explosion" is possible in the coming months. The IMF in April again lowered its forecast for world economic growth this year to 3.3 percent (though 3.5 in October). World trade is expected to only increase by 3.6 percent this year after 2.5 percent last year. The index of large corporate purchasing managers in both the EU and Japan is still below 50, indicating that the economy is not growing. But even the index for China is just over 50. China China’s economy - the world’s second-largest, estimated to overtake the U.S. before 2020 - is now slowing sharply. The large stimulus package in 2009, which held up growth through massive investment, is now hitting back with full force. Debts of municipalities and provinces is estimated at between 20 and 40 percent of the country’s GDP. In the first quarter of this year these debts increased twice as fast as in the same period in 2012. The IMF and politicians in the West are talking about how consumption in China must increase and investment must go down. But lowering the investment share of GDP from the current 50 percent to 30 percent in a position when economic growth will be 6 percent instead of the previous 10 percent "would cause a depression, all on its own", concludes economics columnist Martin Wolf of the Financial Times. Demand would collapse, with considerable effects on the world economy. Governments and capitalist classes now places greater pressure on other states. The U.S. wants to see greater demand in Germany and Europe, while European politicians requires that the deficits in the U.S. and Japan are reduced. The budget deficit in Japan this year is near 10 percent of GDP for the fifth consecutive year. Public debt is expected to be 255 percent of GDP in 2018. The U.S. deficit is five per cent of GDP and the debt is 110 percent. Growth in the US is expected this year to be the highest of the developed capitalist countries, 1.2 percent. But the forecast is uncertain since the automatic cuts, the sequester, will have effect in the latter half of the year. With the failures of "unorthodox methods" more and more people will realise that there is no solution within the framework of the capitalist system. The resistance from workers and poor will grow, like for example the general strike in Portugal in early March, which was the largest since the revolution in 1974. The task for socialists is to build new workers’ parties with a clear socialist answer to the crisis.

Spain, property bubble explosion and the aftermath

I watched a BBC documentary this week by Paul Mason one of the BBC’s better political correspondents on Newsnight this week. The show took you right from when Spain had its first democratic elections after the fall of Franco right up to the present day post 2008 housing crash where all of Spain’s huge property bubble went through the floor in a spectacular way. Spain was rocked to its very foundations when the sub prime mortgage effect of property in Spain crashing and huge debts were mounted up when people simply could not pay back the interest let alone the re payments. Thousands upon thousands of workers in the construction industry were thrown out of work into poverty those who had stable jobs earning a decent wage in construction found themselves right up against it and now Spain unemployment stands at 25 % and a lot higher for young people who have felt this harder than most. The biggest crisis in Spain is currently the housing crisis where forced evictions are occurring regularly. I wonder myself if our comrades in Spain could take a leaf out of our American comrades who used the occupy movement to defend families being forced out of their homes by big banks. In recent weeks Amaia Barakaldo Egaña climbed onto a chair and jumped from the fourth floor of her building. This was the second high-profile death related to mortgage foreclosure in only a few weeks. The outstanding debt default which led to the eviction was less than € 214,000. José Miguel Domingo, 53, was found dead in the courtyard of his home in the neighbourhood of Chana in the city of Granada. Joseph had a loan for 240,000 euros. A man also jumped from a balcony in Valencia before being evicted. He was hospitalized with serious injuries. They are the last three known cases of a social drama that is taking place in the Spanish state, a graphic reflection of the barbarism of the system and the crisis of capitalism. Every day of the first half of this year (2012) 500 evictions were executed in the Spanish state, a social drama that overflowed into a people’s revolt with the second suicide in 15 days. These tragic cases have caused widespread shock and anger. In Madrid, about 50 people threatened with eviction for non-payment of their mortgages were sleeping rough in a camp in front of the main branch of Bankia in Celenque Square, near the Puerta del Sol One of these protestors said: "People are extremely angry over the issue of evictions" In Barakaldo where Egaña Amaia lived thousands, 8,000 according to organizers, marched directly following her death, under the slogan "No to unemployment. No to evictions. Yes to Social protection.” During the march, protesters chanted slogans against the banks and financial institutions daubed "murderers" on their windows. Paint cans were thrown at the bank ‘La Caixa’ where Amaia had her mortgage. The demonstrators chanted slogans: "Not a suicide, a homicide," "They have the money; we have the dead", "No eviction without response" or "Stop financial terrorism". The public reaction has shaken both the PP and PSOE and they have been forced to be seen to be ‘doing something’ about the issue, entering emergency negotiations to agree on a “humanitarian” bill to stop executions in very limited extreme circumstances. It was the pressure from social movements and the street that has obliged them. PSOE particularly must be condemned particularly for its opportunism. During last PSOE government issue was repeatedly raised IU / ICV and measures were put forward to end the drama of evictions. These measures were repeatedly rejected by PP and PSOE. The Police Trade Union (SUP), adopted a semi-revolutionary decision in response to the movement. They said they would legally support agents who find themselves unable to execute evictions. It also requested that the Government take measures to stop the evictions. Other police unions branded the eviction orders as "barbaric" and "very difficult to implement." The Basque Police union, Erne, also said that the organization will support and provide legal defence to members who refuse to participate in evictions. Judges also denounced usury, unjust enrichment and abuse by banks. A judge said: "Judges are not the mere appliers of the letter of the law." The reactions of the police and the judges in the face of the protests are very significant. The PP policy of cuts and attacks on living standards of workers is reaping a whirlwind of opposition. These cracks are the first to be seen in the state machinery. Clearly many in the police and judiciary have no desire to continue with the policies of the PP and its consequences. The TV channel La Sexta has shown images of police actions in which they resemble an occupation army. They are seen going from house to house throwing families out of their homes. The feeling of great injustice is a very bitter taste in the mouths of millions in Spain. Even the Queen daytime television presenters, Ana Rosa Quintana, dared to call for civil disobedience! Because of this social pressure, in Euskadi, Kutxa and Caja Laboral had to immediately suspend all evictions, even before the PP government announced their measures. Although clearly insufficient, the temporary measures that the PP government have announced can be considered a victory since they would never have been implemented without pressure from below. The anti-evictions movement also shows that a sustained and determined movement can force the government to back down. However, the fight should not stop here. The conditions of the two year moratorium are very restrictive and the problem is far from solved. The consequences of evictions and the opposition will continue. Mortgage law and the law of civil procedure will be untouched. People who are evicted in Spain face abusive default interest charges and court costs. As well as losing their homes they also have to keep paying the mortgage even though the bank can sell their property! The PP Economic minister, Luis de Guindos claims that people have to rely on the Banking Code and the willingness of the banks to follow ‘good practice.’ Some hope! There is one law for the working class and another for bankers and big business. Since 2008 bankers and politicians have ruined building societies and banks yet have received multi-million euro payoffs while in the same time period half a million working class families have lost their homes in Spain. Perhaps the saddest aspect of Amaia case was that she was a PSOE member along with her husband and a former councillor. A party with ’Socialist’ in its name should offer a vision of the future and have a programme to fight the injustices of capitalism. However, these tasks are on the shoulders the left real. Our challenge is to completely stop ALL EVICTIONS and nationalise the banks and use their enormous wealth and empty housing stock to ensure the right to adequate housing through social rents for all workers and their families. Second part of this post taken from www.socialistworld.net the homepage for the Committee for workers international CWI

Solidarity with workers in Europe fighting austerity

As we head out of a relatively quiet summer on the struggles of workers in the main we now enter a hot autumn of struggle this has started in Ernest in Spain tonight as a protest movement has clashed with riot police in Madrid. This blog express’s its solidarity with these protesters and opposes police brutality. Spanish police have fired rubber bullets and baton-charged protesters attending a rally against austerity. The clashes broke out as protesters tried to tear down barriers blocking access to the parliament in Madrid. Spanish media reported that at least 20 people had been arrested and more than a dozen injured. The "Occupy Congress" protest comes as the government prepares to unveil further austerity measures on Thursday in a bid to shrink its budget deficit. Spain is in its second recession in three years and unemployment is near 25%, with youth unemployment far higher. The government will unveil the draft budget for 2013 on Thursday and is expected to present new cost-saving reforms to reassure lenders about the state of the country's public finances. Emergency funds The demonstrators - known as Indignants - say "Occupy Congress" is a protest against the kidnapping of democracy. Thousands of people had massed in Plaza de Neptuno square in central Madrid for the march on parliament. But their route towards the parliament building's main entrance was blocked off by metal railings, police vans and hundreds of Spanish riot police. One of the main protest groups, Coordinadora #25S, said the Indignants only planned to march around parliament Mark Smith, who lives near the site of the protest, said: "I saw riot police with their batons charging at protesters trying to split up the crowd." Tuesday's demonstration was organised via social media sites and many young people turned out, says the BBC's Tom Burridge in Madrid - but the protest's public profile meant the police were ready for them. Spain’s at a position now where a quarter of the population are unemployed and many are now struggling to feed themselves. I read earlier this week that 8000 people a day in Greece go to food banks to get fed. This is modern day Europe everyone. Austerity is biting hard but workers are fighting back. In Greece tomorrow there is another nationwide 24 hour general strike things are starting to hot up. Its essential we show solidarity with our European brothers and sisters from South Africa, Spain to Greece the best thing we can do is demand our TUC name the day for a 24 hour general strike in Britain too. Fight fire with fire. With extracts from the BBC.

Desperate times call for desperate measures by capitalists

When there is panic all around you you have no idea what to do what do you do? This is the question facing leading capitalist leaders in Europe today. 5 years into one of if not the biggest economic crisis in history there is still no solution on a capitalist basis to the economic crisis engulfing Europe and many other parts of the world. Europe is affected far more badly than other areas due to the way it was set up with many less wealthy nations trying to compete on the same level economically as the powerhouses of Germany, Holland and Belgium some of the more northern European nations. But it is becoming increasingly clear to even the capitalists now that Spain will need a full scale bail out very soon and short term ideas at stemming the contagion will just not do. As capitalists think they think short term and long term profit as the Euro crisis burns on engulfing further countries in southern Europe the European Central Bank is coming under increasing pressure to start buying up bad sovereign debt of nations like Spain and to start selling off Euro bonds which are seen as safer investments at this time. These ideas of the ECB stepping in have been held off and held off until now as a fear of using these schemes will create further upheaval in Brussels where German capitalism are reluctant to continue to bail out countries as it is having a affect back home with rising anger as its seen as Germany propping up a very sick Euro. So when times get tough and they re set to this autumn with a warm summer in Spain and Greece turning into a red hot autumn with further strikes, occupations, rising unemployment and further attempts to force through austerity against the working and middle class’s in these nations. Of course I haven’t mentioned Italy and not many have in recent weeks Italy is sure to come back on the menu for needing a full scale bailout at some point. But bail out after bail out will only temper the crisis and provide respite for a time this will not ultimately deal with the real fundamental issues undermining the economies deep down. The ECB will see itself having to play a more hands on roll in the coming months and years as it looks to grapple with the economic crisis does it have the power to prevent a full scale break up of the Euro. I’m not sure it does but when things get desperate desperate measures are often used. We may well see various tactics of short term growth being tried to jump started flagging economies. But and crucially this will have little to no affect as this crisis is not just limited to Europe as I said it’s global. Where will you as a country start trading more with China and the US plummeting southwards too. There really will be no where to turn. As the working class is pummelled into the ground by austerity it is essential in the battle of ideas that Marxist ideas are popularised in the working class and middle class only socialist ideas and the over throw of capitalism can do now for workers. Its going to get to situations where workers may be able to win huge concessions out of the ruling class if the situation gets to the point where the ruling class is faced with reform or revolution capitalists will get desperate when their system is at stake the fact that many of them do not even understand their own system works against them. But as Marx says there is no final crisis of capitalism it must be over thrown you cannot reform it out of existence it will always find a way out of a crisis and that I’m afraid may mean the ruin of the working class. Let’s not see that happen the working class over the globe will have op opportunities to com to power in the coming period. We as Marxists must arm the workers with the ideas of genuine socialism to transform society to meet the needs of the many not just the few.

Going over the edge Euro style

With what has seemed a relatively quiet summer on the whole for European markets the turn from the august holidays back into September is sure to raise questions about the long term sustainability of the Euro and certain countries to remain inside the Euro for much longer. With Spain and Greece teetering on the edge. The newly formed Greek government need to find 13 odd billion euros in cuts and savings to remain in the Euro I personally cannot see how they will be able to do that so the question is what will fall first the Greek economy or the Greek government under huge pressure from Berlin and at home with mass opposition now to austerity any further attempts to force austerity in the direction of the Greek working class could see this very weak government fall very quickly indeed. The question will then turn to then what with Greece ultimately likely now to leave the Euro how will this affect the rest of the Euro zone. No one knows it would seem it is all much unknown. Capitalist leads cannot see how the Euro can be sustained but they equally can’t imagine how it can break up. But I am increasingly becoming convinced it will now. The global economic crisis now 5 years in this month looks to be stubbornly stagnating world economies most have not recovered their output since 2008. With only three of the G7 countries (Canada, the US and Germany) have got back to their pre-crisis peak of production. Now US growth is petering out, while there is either stagnation or recession in the euro zone (with Germany now sliding into recession). In 2007-08, the housing mortgage crisis triggered a worldwide banking and financial crisis. Now the sovereign debt crisis holds both European governments and the major banks in the thrall of financial turmoil. Greece and Spain in particular are like time-bombs which could detonate a major explosion at any time. The new prime minister of Greece, Antonis Samaras, leader of New Democracy, is now demanding that the implementation of austerity measures already agreed in return for two bail-out packages should be postponed for two years. It is estimated that this would require a further €20 billion in bail-out funds. On this, as on everything else, the euro zone leaders are divided. Hollande and others are in favour of giving Greece more time, while Merkel and others are opposed to any relaxation of the austerity measures. In reality, the only issue is timing: the debts piled on to Greece supposedly to provide a way out of its debt crisis, are unsustainable. Despite New Democracy’s narrow victory, there will be further explosive movements of the Greek working class and middle class against the barbaric austerity measures being imposed on the country. It is clear that the giving Greece more time to pay off its debt will not ultimately solve the situation it is becoming clearer to European capitalists that Greece simply cannot continue within the Euro and pressure is mounting for it to be forced out. Forced out, default either way I cannot see it continuing with the Euro for too much longer now. Capitalist leaders fear the break-up of the euro zone, which would have incalculable repercussions in Europe and throughout the world economy. But the contradictory forces bottled up in the euro zone are working in the direction of partial break-up, if not total break-up somewhere down the line. The outlook for global capitalism is indeed gloomy. Since April/May this year there have been growing indications of a new downturn in the world economy. There are a number of overlapping and interrelated elements of crisis: The burden of debt: The high level of public and private debt and attempts to reduce debt (‘deleveraging’) is restricting the flow of credit and depressing consumer demand and investment. For the OECD area, government budget deficits averaged -2.1% during 1999-2008. In 2009 this shot up to -8.1% and is still currently -5.3%. The aggregate national debt for the OECD area has continued to increase, and is now 108.6% of GDP. Household debt (gross debt-to-disposable income) is also very high. For the euro area, for instance, the pre-boom level in 2000 was 85.3% but is now 107.9%. Company debt continues to be high. For non-financial companies (debt-to-GDP ratio) was 78.8% whereas it is now 96.8%. For financial corporations the debt ratio is even higher: it was 269.1% in 2000 and is now 381.7%. These figures are unsustainable on the basis of weak or completely stagnant growth, and carry the threat of increasing defaults in both the household and company sectors. Mass unemployment: Unemployment remains catastrophically high. This is an effect of the downturn, but reinforces it through weakened consumer demand, reduced tax revenues, and increased costs of unemployment benefits. In the EU (27 states) there are 24.6 million unemployed men and women, of whom 17.4 million are in the euro area (17). This is a jobless rate of 11% in the euro zone, 10% in the EU. In a number of countries the situation is much worse: in Spain the unemployment rate is 24.3%, in Greece 21.7%. Youth unemployment for both these countries is a catastrophic 50%. Global unemployment is a devastating indictment of capitalism. According to the ILO there are now 200 million jobless people internationally (up from 175 million in 2000). There are 75 million young people unemployed, an increase of four million since 2007. A joint ILO/OECD paper for the G20 summit in Mexico says “G20 countries would need to create 21 million jobs in 2012 in order to return to pre-crisis employment levels…” “If unemployment continues to grow at the current rate of 1.5%, it will be impossible to close the approximately 21 million jobs gap that has been accumulated across the G20 since the onset of the crisis in 2008”. (ILO press release, 16 May) The ILO director general warned (30 May) in coded language of the threat of a social explosion due to mass, long-term unemployment, especially of the youth. “The austerity-only course to fiscal consolidation is leading to economic stagnation, job loss, reduced [social] protection, and huge human costs, undermining those social values which Europe pioneered. While trying to reduce the public debt, unsuccessfully by the way, a social debt is building up that will also have to be paid”. Big corporations hoard cash: While some companies (especially small and medium) are hit by the credit squeeze, big corporations internationally are hoarding cash rather than investing it in new productive capacity. In the UK, non-financial companies are estimated to be holding £731.4 billion of cash reserves. In the euro zone, cash hoards are estimated at around €2 trillion, while in the US non-financial companies hold more than $2 trillion in cash and other liquid assets. The big corporations evidently cannot find sufficient opportunities for profitable investment. Its time for an alternative. A socialist alternative. Working people around the globe create the wealth for the 1% its time we owned that wealth and it was used to benefit the many not just the few. With extracts taken from Lynn Walsh’s excellent article in Socialism today “riding the double dipper” http://www.socialistworld.net/doc/5829

Spain the next epicentre of the Euro crisis?

Whilst many of us have been watching Greece and the recent elections which electrified the left across Europe with the fantastic result of Syriza who came a narrow 2nd mainly down to the fact they turned to the right and watering down their programme just before the elections meant they fell short of a majority.

But now the situation of the Euro crisis seems to be moving closer and closer to the centre of Europe Spain is the next on the markets hit list it would seem.

Spain which is the 4th biggest economy in Europe would del a huge blow to the EU project if it falls.

With a likely exit from the Euro by Greece termed a Grexit the next term to be popularised is known as a Spanic which has all of the ruling class worried as Spain’s one of the biggies one of those quoted as too big too fail. Well if a change in direction is not found Spain is very likely going to head the very same direction as Greece very quickly indeed.
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As it fell, the Zapatero government was frantically scrambling to avoid a Troika bailout and combat the black cloud of ’risk premium’, which has determinedly mushroomed despite the government’s most earnest servility to the markets. Now, just a few months after Zapatero’s hammering by the electorate and the PP’s rise to power as a ’safe pair of hands’ to bring an end to uncertainty in Europe and the markets, the spectre of “intervention” has returned. This brings home the dramatic (and inevitable) failure of Spanish capitalism, under two separate governments, to put up a wall between the Spanish situation and that of other “peripheral” countries, which have already received bailouts.
The brutal austerity policies, with new measures systematically announced every Friday by the government, have had the same effect in Spain as elsewhere – they have dragged the economy further towards a depressionary spiral. Alongside the conveyor belt of negative statistics and predictions, a social nightmare is developing for millions. Mass unemployment is steadily worsening (over half of youth are without work) against a backdrop of grinding poverty, which is evidenced on almost every street corner. Those who only a few years ago enjoyed regular and seemingly stable work are seen rummaging in dustbins for food.
This flagrant contradiction – between a Spanish capitalism which struggles to remain in the “premier league” and a working class with its living conditions being driven down towards third world levels in a hopeless bid for a ’way out’ of the crisis – is set to be the determining factor in shaping the events of the coming period. To get a glimpse of the intensity of the new class battles which will continue to develop even more widely, one need look no further than the militant struggle of the miners in the north of Spain, who have erected flaming barricades on motorways and railway lines around the country and defended them with home-made rocket launchers, in some towns successfully driving out the police.
An indefinite strike of miners has been underway for days in Asturias and Leon, which has been joined by transporters. Major daily clashes are taking place, with scenes reminiscent of a civil war situation in the mining communities being widely circulated on the internet. These scenes of pitched battles between workers’ pickets and riot police armed with guns firing rounds of rubber bullets will have an electrifying effect in a country brewing with anger and a growing desire to fight back, which is why the strike was blacked out of the capitalist press for a number of days. The deepening of the crisis has generally been accompanied by rising levels of resistance.
The last two months have ushered in the most intense period of mobilisations since the beginning of the crisis. The massive general strike on 29 March and the numerous millions-strong mobilisations around it were followed by over one million marching on May Day and then by another million marching in cities across the country on 12 May to celebrate the anniversary of the Indignados movement. On 22 May, there was an 80-percent-solid strike of the entire education sector. These mobilisations, despite the limitations imposed from above by the movement’s “leaders”; show it is impossible for capitalism to implement its plan of impoverishment without raising an outcry from the working class and youth

One of the main reasons why the markets have been taking for granted that Spain needs a bailout is precisely because they believe that it is not capable of bailing out its own banks. Thus, in a desperate attempt to avoid an Irish-style scenario (where the government was in effect bankrupted by its banking guarantee and forced into a bailout), the right-wing People’s Party (PP) government began to demand a European bailout directly to the banks, without having to pass through the government.
The speed of the latest banking crisis, with the trigger of the collapse and nationalisation of Bankia (the fourth largest bank in Spain), has been breathtaking. Only a few days after Bankia’s chairman vowed that the firm was capable of solving its own financing problems, it was already in need of an emergency nationalisation. The public cost of this “nationalisation” and recapitalisation then went in another few days from 4 billion to almost 25 billion euros. The pathetic unprepared ness of Spanish capitalism for the advent of this crisis is revealed by the fact that their Fund for Orderly Bank Re-structuring (FROB) which was set up under a recent finance reform to provide a ’cushion’ to the banking sector, contained barely more than €5 billion at the time of the Bankia collapse.
In comparison with other peripheral economies, such as Ireland, the relatively low debt-GDP ratio in Spain has had a lot to do with the “unfinished” bank rescue programmes of 2008-2009. But then, instead of learning the lessons of the disastrous international experiences of nationalising bad banking debts, the PP government and European powers seem determined to repeat these situations step by step. The bailout of Bankia alone is set to send public debt up to 90 percent of GDP, above previous estimates. The €100 billion in fresh debt now being taken on by the public finances will send this figure shooting further upwards. How will this “ease the pressure” on the Spanish economy from the markets?
This is being billed as a “soft” bailout, limited to the financial sector and without a Troika austerity programme attached. However, despite the fact that the Spanish government’s policies are already largely shaped by the diktats of the Troika powers, the idea that this bailout will go without a hardening of anti-worker measures is laughable. The conditions put forward by the European Commission for a mere one-year delay of Spain’s 3 percent deficit limit target, which included an acceleration of pension reforms, a hardening of the labour reform and deteriorations to the unemployment pay system, give a small example of the “sacrifices” which will be demanded.
It is true that the size and importance of the Spanish economy gave Rajoy the room and bargaining power to prevent (so far) a Greek-style Troika bailout with all its blood-curdling conditions. Incidentally, this is a crushing blow to the right-wing fear mongers in Greece, Ireland and elsewhere, who base themselves on the idea that the Troika’s bluff cannot be called. But Spain will still be under the ’supervision’ of the “men in black”, as they have been referred to in the Spanish media, with the Troika’s austerity “recommendations” now becoming more like “impositions” with the added instrument of blackmail that is the bailout. Like the others, this bailout will be paid out in tranches (differentially structured instalments); with the threat of funds being withheld if the government “misbehaves”.
Whatever form a bailout of the Spanish banks takes, it will not consist of bailing out ordinary people, but of a disastrous policy of the public shouldering tens of billions of euros in bad private sector debt, ultimately to be paid for by bleeding workers, youth and the unemployed dry. A banks-only bailout also addresses only one of the planks of Spain’s public debt crisis, doing nothing to resolve its fundamental problems - the looming disasters in autonomous regions, for example, which the Spanish state would be equally incapable of responding to. Thus, while the initial bank rescue figure may seem “manageable” to European and Spanish capitalism, it could be a mere attempt at a ’quick fix’ which touches only the tip of the iceberg that is the deep crisis of Europe’s fourth largest economy

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Capitalism has proven itself to be pathetically incapable of preventing a Greek-style scenario from developing in Spain. The responsibility for evading such a disaster must thus fall to the working class, the youth, and their organisations, starting with a struggle against the lowering of living standards and the dismantling of the welfare state that is currently underway. Ultimately this struggle must be international in scope. The left thus has an historic responsibility to provide a consistent alternative to the road of ruin and misery offered by EU capitalist austerity. There is a climate of fear being whipped up by the media and government as they talk of Spain being cut off from borrowing money and of capital fleeing the country (almost 100 billion has been withdrawn from the Spanish economy since January). But this fear can be turned on its head if it is answered with political alternatives that go on the offensive against the bankers and capitalists.
The 20 biggest Spanish companies have reserves of over 40 billion euros, which are not being invested due to the depth of the world crisis that the profit system is passing through. In order to put this money to work, a revolutionary restructuring of the economy where the main companies and industries are run under democratic public ownership would be necessary.
It would then be possible to halt the flight of capital and invest Spain’s wealth (which the rich and corporations are currently hoarding) in an emergency anti-crisis programme to create jobs and public works. The 29 billion euros destined to be thrown into the black hole of Spanish debt payments this year alone - not to mention the billions paid to buy off property developers’ bad debts in the banks - could instead be put to social use.
The condition of Spanish economy screams the need for such policies, which could transform the situation in Spain and throughout Europe. But only a working-class government operating on the basis of socialist policies would be capable of carrying out this programme in a thorough and consistent way. The adoption of such alternative policies in Spain or another European country would in today’s globally integrated economy be only the first step, one crucial part of an international struggle for a working-class alternative to the capitalist Euro and E


with extracts taken from www.socialistworld.net

A Greek exit from the euro looking more like when than if now

With the euro financial crisis deepening by the day and sometimes it f eels by the hour as the markets continue to tumble it looks increasingly likely that Greece will be forced to leave the Euro sooner rather than later now. With senior European bankers discussing the idea over the weekend it looks to me as though they are preparing the ground for a controlled Greek default and to allow them to leave the Euro. As i’ve said on this blog before the Germany economy is very strong but is not without its troubles of course and as a result is already reprinting the German mark currency and is all ready to go if a sudden collapse means it necessary to reintroduce.

I imagine we will see the Greek drachma reintroduced this year too before too long. As Marxists we are always approached as being out of touch but we were the only ones to have predicted the global financial crisis with the Euro zone especially venerable once an economic crisis hit which is always likely under capitalism due to its very nature of periodic crises ingrained in its make up every 10 or so years.

The capitalist state is based on the nation state trying to force 27 odd countries with different economies, cultures, traditions working patterns was just simply never going to work. We don’t oppose the EU on nationalist lines as that divides the working class we oppose it as a boss’s club and was only created to benefit the ruling classes only now it is all falling apart around their ears. In theory the EU could have worked if they’d transformed into a federal body like the United States of America although getting 27 different nations to agree on everything looks very unlikely.

With the markets this morning falling into panic mode due to the uncertainty of the Greek political scene with no government being able to be formed and further elections looking likely the markets don’t like it and well Greece has been running on empty for sometime bumping along the ground and stumbling by getting injections to a dying corpse not being allowed to die just yet due to the fears of others in the EU but I think now the ruling class are starting to consider letting them go. Which would not solve the Greek’s problems one little bit if anything it’ll only make things worse for them as the country is still pretty much bankrupt with huge debts even still? I imagine they will have part of their debt written off but will still endure years if not decades of austerity now with the working class and the poor feeling it most. Leaving the Euro won’t solve things for Greece but it may give the rest of the euro zone a temporary boost but it will be short lived when the crisis shifts to Spain, Italy or Portugal and Ireland which looks its next victims.

A European fight back on a mass scale is needed now the crisis is becoming clearer and workers who are fighting back can see now that they are fighting similar battles to their co-workers in the other parts of the Euro now if they join up the dots and realise they areal fighting the same enemy the system the movement created could be electric.

World unemployment soars , a reserve army of workers being faild by capitalism

All around the world there is millions of workers unemployed and wasting their
skills doing nothing with their lives. This is through no fault of their own, they are not lazy or work shy as this is the sole fault of a system based on greed and profit. When a business feels it cannot make any more profit its workers are quickly chucked out on the scrap heap.

Take spain for example
Spain's unemployment figure passed the five million mark in the last quarter of 2011, official figures show.
The National Statistics Institute said 5.3 million people were out of work at the end of December, up from 4.9 million in the third quarter.
The rate rose from 21.5% in the third quarter to 22.8% - the highest rate in nearly 17 years.
Spain already has the highest jobless rate in the 17-nation eurozone and is expected to slide back into recession.

The 22.8% rate is more than twice the average unemployment rate of the eurozone, which stood at 10.3% in November, according to data released earlier this month.
The Spanish figures show almost half of all 16-24 year-olds in the country are jobless - 48.6% compared with 45.8% before.
Spain's new ruling Popular Party conservative government has pledged labour reforms to try to improve the jobs market.


But it is clear none of the ruling class have any idea about a way how to get out of this crisis other than make workers pay for a crisis they did not creat.

Looking back nearer to home in Britain we currently have 2.67 million out of work that includes 1.12 millin young people. Aged between 18 and 24. To me this is not only deeply unfair on these peoples lives but a huge waste of the skills and techniques of these workers. The world is wasting its labour resources by keeping millions out of work long term until there is a profit to be made.


Virtually all of the world’s advanced economies have suffered some effects from the recession. Though unemployment is a problem all over the world, some countries have suffered a worse rate of unemployment than others. People who are under 16, are in the armed forces and people who are currently incarcerated are not considered unemployed because they are not considerate to be a part of the work force. In addition, people who don’t have jobs but who have not been looking for work within the last four weeks are not considered to be unemployed.
Canada and the United States have both experienced massive job losses during the recession. The United States now has an unemployment rate of 9.5 percent and Canada has an unemployment rate of 8.4 percent.
Europe has also been hard hit by the recession, with some countries faring better than others in terms of unemployment. In Austria, there is 4.5 percent unemployment. In Belgium, there is 7.4 percent unemployment. The unemployment rate of Cyprus is 3.8 percent. The Czech Republic has an unemployment rate of 7.9 percent. Denmark has a 2.9 percent unemployment rate. Finland has an 8.8 percent unemployment rate.
France has an 8.8 percent unemployment rate. Germany’s unemployment rate is 8.3 percent. Greece has a 9.1 percent unemployment rate. Iceland also has a 9.1 percent unemployment rate. Ireland has a high European employment rate with 11.8 percent. In Italy, the unemployment rate is 7.4 percent.
In Luxembourg, the unemployment rate is 6.1 percent. Unemployment in Malta is 6.4 percent. The Netherlands has a 4.4 unemployment rate. In Norway, the unemployment rate is 3.1 percent. Portugal’s unemployment rate is 8.9 percent. Unemployment in San Marino is 2.8 percent. Unemployment in Slovakia is 10.9 percent. In Slovenia, the unemployment rate is 8.8 percent. Spain has an extraordinarily high unemployment rate at 18.7 percent. Sweden has an unemployment rate of 8.9 percent. Switzerland maintains a low rate of unemployment at 3.5 percent. Israel has an unemployment rate of 7.6 percent.
Much of Asia has maintained a low unemployment rate despite the recession. Hong Kong’s rate of unemployment is 5.3 percent. In Japan, the unemployment rate is 5.2 percent. In Singapore, the unemployment rate is a low 3.2 percent. South Korea has an unemployment rate of 3.9 percent. The unemployment rate in Taiwan is 5.7 percent. The Australian unemployment rate is 5.7 percent. New Zealand has an unemployment rate of 5 percent.
This is waht karl marx called the reserve army of workers, all wanting jobs to join the wage slave queue. These people could affect real change if they were organised.
All in all this creates a huge force of unemployed people if they were to get organised in a mass way and start to threaten the capitalists and their power. Joining up with workers in strikes and demonstrations. Joining with the working class to form new workers parties across the globe to popularise the ideas of a better way, a fairer way, a socialist way forward that puts people back to work not for the boss’s profits but for the betterment of society and for eachother.

Paul Murphy MEP writes on diminished democracy in the EU

democracy in the EU .
Thursday, 01 September 2011 14:02 Paul Murphy . .
The continued economic crisis gripping the eurozone has raised questions of the role of democracy in the European Union, writes Paul Murphy, MEP from the Irish Socialist party part of the CWI.

Euro crisis – democracy diminished to facilitate austerity

In scrambling to avoid a break-up of the eurozone, the approach of the elites in Europe has been characterised by two common themes – austerity programmes to make the working class pay, and a further diminishing of democracy to facilitate the implementation of that austerity.

The results of that austerity have been felt by millions of people across Europe, particularly those in the countries that have received ‘bailouts’ for the European bankers – Ireland, Greece and Portugal. The failure of this medicine of cutbacks and attacks to generate economic growth and enable economies to be redeveloped has also been documented.

Here, I want to focus on the sinister and persistent undermining of democratic checks and controls that have been driven by the establishment in Europe in the course of the crisis. In saying that, no one should presume that the EU was a bastion of democracy prior to the crisis. Even within the limited terms of capitalist democracy, the EU is an inherently undemocratic organisation.

Despite the repeated rhetoric to the contrary, the European Parliament, which is the only directly elected body, has relatively little power. It has no power to ‘initiate’ legislation and a large portion of its work simply consists of making recommendations or suggestions in so-called “Own-Initiative reports” that go to the European Commission. It is with this unelected European Commission (President: Jose Manuel Barrosso) and the European Council (made up of the heads of state of the EU countries) that real power lies.

The Commission in particular plays the role of a strategic thinker for the capitalist classes in Europe. Shielded from the pressure of mass movements and not having to face elections in the member states, it is able to baldly put forward a strategy for a neoliberal, militarised Europe like that set out in its “Europe 2020” strategy.

So even in advance of the economic crisis, the level of democracy within the EU structures has been extremely limited. Decision making consciously takes place out of sight and mind and shrouded in technocratic language to make it very removed from public scrutiny and debate.

However, with the advent of the crisis and the consensus of the establishment around the need to impose austerity as a solution, democratic checks are being diminished even further. This attack on democratic rights fundamentally flows from the fact that if given a choice, the mass of people would not choose vicious austerity, cutbacks and mass unemployment! Therefore, to achieve the chosen ‘solution’ of the establishment, the people must not be given a choice. These attacks on democratic rights have taken a variety of forms.

Increased role of the European Central Bank


The European Central Bank is, in line with neoliberal economic logic, ‘independent’. Independent of whom, you might ask? Well, independent from any democratic check or oversight by representatives of ordinary people. It certainly isn’t independent from the interests of big business and the right-wing economics that serves their interests. One of the clear developments in this crisis has been an increase in the role of the European Central Bank, and its President, Jean-Claude Trichet.

The ECB is now an equal partner in the so-called ‘Troika’ of the European Commission, the ECB and the IMF. This means that the central bank for Europe is actively intervening with the governments of Europe to demand certain austerity policies. More than that, however, particularly in recent weeks, it has used its powers as a potential buyer of bonds on the bond markets, to blackmail countries into implementing very specific austerity policies.

It has emerged that Mr. Trichet wrote a secret letter to the Italian government in early August detailing a series of austerity measures to be implemented in exchange for the ECB agreeing to purchase Italian bonds. The letter called for privatisation of municipal assets, liberalisation of various sectors and gave detailed advice on how to relax Italian employment law!

The response was swift, with both the Italian and Spanish governments aceding to the requests, which are in line with the right-wing character of these governments in any case. Berlusconi announced a package which included extra austerity measures worth €45.5 billion. The Spanish government did likewise, and promised a constitutional cap on debt amongst other measures.


This incredible situation – whereby an ‘independent’ ECB dictates, not just the general thrust of policies (which would be bad enough), but also offers detailed austerity proposals – was not commented on widely. However, it is a very clear indication of the diminishing of democracy within the EU as part of the establishment’s response to the crisis.

So much so that Berlusconi (no friend of democracy or workers’ interests) was moved to exclaim: “They made us look like an occupied government.” Of course, it suits the likes of Berlusconi to blame the ECB for the austerity his right-wing government is carrying out. Clearly a genuine left government would refuse to be bullied by the ECB or the markets, by refusing to pay the debt to the international bondholders and instead raising necessary funds by taxing the super-rich and corporations as well as developing economic growth through a democratic plan based on the needs of ordinary people. However Berlusconi’s comment is indicative of the incredible power that this entirely unelected and unaccountable institution has gathered for itself.


Moves towards an “economic government"

Repeated calls have now been made by the establishment in Europe for the creation of some sort of ‘economic government’ or ‘economic council’, to be chaired, if the current wishes of Chancellor Merkel and President Sarkozy are to be met, by Hermann Van Rompuy (the currently unelected President of the European Council). This body would be a sort of economic leadership for the eurozone countries. In other words, its aim would be to ensure that sufficient austerity is applied with sufficient vigour across Europe.

After their recent summit, President Sarkozy announced the aim “to create a real economic government for the eurozone” and Chancellor Merkel announced “there has to be a stronger coordination of financial and economic policy". You can be sure that they are aware that this “stronger co-ordination” (read: common austerity) and economic government will not be welcomed by the mass of people.

Instead, to achieve this move towards fiscal unity, they know they have to diminish democracy further, hence the concentration of more powers and “economic direction” into the hands of an unaccountable “economic government”.

The most boldly-stated version of this proposal has come from the German Foreign Minister Guido Westerwelle who has called for a “stability council” of unelected supervisors for the economies in the eurozone, with the power to impose sanctions on countries that don’t implement sufficient austerity.

Economic governance and the eurozone plus pact


The apex of the current attacks on democracy within the EU are plans for “economic governance”. This series of proposals, which are currently still being fine tuned, amount to a further serious diminishing of democratic checks within the EU.

Budgets will now have to be presented to the European Commission and Council for approval (“surveillance”) in advance of any debate in national parliaments. The proposals also strengthen the “Growth and Stability Pact” which limits countries’ public debt to 60% of GDP and their annual deficits to 3% of GDP. Sanctions are to be introduced for countries that miss these targets, with states in breach having to pay 0.2% of their GDP into a non-interest bearing account, which will be lost as a fine if they do not follow the directions of the Commission. This fine can be increased up to 0.5% of GDP (around €700 million for Ireland). The final element is a procedure to prevent “macroeconomic imbalances”. The Commission will create a series of parameters (as yet unannounced) and a scoreboard of austerity will be used to measure a country’s progress. If a state fails to meet the targets, further massive fines can be imposed.

All of these moves are designed to facilitate the imposition of semi-permanent austerity in Europe. It is being prepared with the awareness that a major movement of opposition to cutbacks already exists in Greece, Portugal and Spain and can easily develop in Ireland and other countries. Conscious of the pressure that such movements can exert on governments that have to seek re-election, this is designed to move decision-making further away from working people and create a counter-pressure on national governments (through the threat of fines and the process of budgetary surveillance) to enable them to resist these movements.

How can the further diminishing of democracy be stopped?


The diminishing of democratic checks is entirely related to the content of the proposals that the undermining of democracy is designed to facilitate. Therefore, the battle against austerity of the Left and the trade union movement needs to take up the question of democracy within the European Union as well.

In Ireland, loud noise must be made to demand a referendum which it is the intention of the government to not grant us, on the amendments to the Lisbon Treaty to facilitate the establishment of the European Stability Mechanism. Fundamentally, the whole undemocratic EU project must be resisted and a struggle for an alternative, socialist Europe, based on the interests of working people across the continent and mass participative democracy, must be waged.

--------------------------------------------------------------------------------

Paul Murphy is the Socialist Party and United Left Alliance MEP for Dublin. He replaced Joe Higgins after his victory in the 2011 General Elections. More information can be found on his blog: http://www.paulmurphymep.eu/.

World economy, capitalists unable to stop the turmoil

this is a excellent article on the growing turmoil in the world of capitalism from this week's socialist. The newspaper from the Socialist party where you can find more excellent articles each week at
www.socialistparty.org.uk

As their system continues to slide further into its worst crisis since the 1930s, the frantic efforts of world capitalist leaders to reverse the process are farcical, contradictory and ineffective. "Financial markets at their wits' end", was the headline in the Financial Times.

In a matter of weeks, trillions of dollars have been wiped from equity market values worldwide. The rush out of equities (shares in companies, banks etc) to alleged 'safe havens' of gold is now greater than at the time of the collapse of Lehman Brothers in 2008. This indicates the depth of the present crisis which threatens to become a prolonged slump.

The credit-worthiness of the USA, the most powerful economy in the world, has been questioned. Eurozone leaders are stumbling from one summit to another without being able to solve the crisis.

On Friday 5 August, the credit rating agency Standard and Poor (S&P), downgraded US government bonds from AAA to AA+. This, they said, was due to the debacle between Democrats and Republicans over the debt ceiling for the US - now standing at $14 trillion, the highest in the world. These are the very same 'experts' who gave an AAA rating to the sub-prime lending spree in the first place which helped to lay the basis for the present crisis.

Big investors in US 'treasuries', including the Chinese government, are still not likely to move out significantly, but China's official People's Daily newspaper took the opportunity of the S&P assessment to chide the US government with its own interests in mind. It should not "become blind to the great risks that a weak greenback could pose to the world's fragile economic recovery by lifting dollar-denominated commodities prices", it wrote.

Double-dip recession
The S&P found the sums on which it based its assessment were wrong - by $2 trillion - but, pessimistic as they are about growth prospects, they still believed that lenders would have doubts about buying US government bonds. The latest figures for January to July show the US economy already crawling along at a rate of just 0.8%.

The US economy is now almost certainly facing a 'double dip' recession. There are legitimate fears, now widespread, that the austerity measures being imposed in the US and many other countries to tackle high levels of debt, will actually stifle their already weak economic recoveries and plunge them further into crisis.

This is behind the renewed expectations that the US Federal Reserve will announce a new round of 'quantitative easing' (QE - printing money) in response to forecasts of the US having a 50-50 chance of entering recession before the end of the year. But QE1 and QE2 have not solved the problems and it remains to be seen whether a new 'stimulus package' will be sufficient to stem the crisis.

Fears about the future of the world economy have been reflected in the price of gold and oil. Gold - not 'paper value' but a store of real value - is always a favourite 'investment' in uncertain times. Its price has jumped to new nominal records well over $1,720 an ounce and could, in some estimates, go as high as $2,500 by the end of the year.

Another 'safe haven' for investors - the Swiss Franc - has reached in the last month record highs against the euro and the dollar. The 'Swissie' has now moved into negative interest rate territory, which means investors paying the banks to hold their assets safe!

On the other hand, the price of oil has considerably declined. This is because of the grave concerns about downturns in growth leading to a fall in demand.

As the CWI has explained on many occasions, the very feeble recovery in most countries has not been accompanied by any sizeable growth in total output. Apart from some notable exceptions, it did not bring jobs for the tens of millions of unemployed, nor stem what seems like a war on the poor - massive cuts in public spending.

Further cutbacks and downturns in the prospects for young people lie behind the outbursts of anger recently seen on the streets of England. Seriously prepared strikes and general strikes are urgently needed in a series of countries now to stem the attacks on pension rights.

Without the trade union leaders giving a clear lead in the struggle against cuts across Europe and in other countries, clashes with police and attacks on property could erupt in the most deprived urban areas.

A programme of jobs and homes for all has to be accompanied by a struggle for the nationalisation, under democratic workers' control and management, of the banks and big monopolies. This can channel all the anger and frustration of youth and workers against the system.

Crisis measures
On 21 July a special meeting of Eurozone finance ministers agreed another bailout for the Greek government. But within days it was clear this would not solve Greece's underlying problems or prevent a default of its national debt. Before the 21 July agreement can even come into force, it has to be ratified by all of the Eurozone governments, mostly through their parliaments which are not in session during August.

Only two weeks after this, under pressure from the Eurozone leaders, especially Merkel and Sarkozy, the European Central Bank (ECB) was forced to announce new measures to try and prevent the stock markets going into a tail-spin after Friday's news from America! Its previous policy of not buying Italian and Spanish bonds on the open market was reversed.

This reduced, at least temporarily, the rates on these countries' borrowings. However, stock markets remain volatile, reflecting investors' doubts over effective EU measures to solve the eurozone sovereign debt crisis.

Other discussions have taken place about expanding the powers to intervene by using the €440 billion in the European Financial Stability Fund but they are hampered by the need for unanimity across the zone.

Italy and Spain's governments alone need to find an extra €840 billion over the coming 18 months - more than the total of bailouts already found for Greece, Ireland and Portugal.

The ECB measure will ease the situation in relation to the debts of Italy and Spain but the strings attached will bring them into head-on confrontation with their populations.

Italy's prime minister, Silvio Berlusconi, has tried to give the impression there is no major problem in Italy. But his country has one of the biggest debts as a percentage of GDP (nearly 120%) and an economy which has failed to grow more than a fraction of 1% for the past two decades.

He has now agreed, with his government, to bring forward the deadline by which budget cuts will balance the state books - from the original 2014 (well after the next general election) to 2013 (still after the next election is due!).

Extra austerity measures, nearly double those already announced, have been put through the cabinet by decree. Already, even in a summer period, opposition is mounting. Berlusconi has said he will not stand next time round, but he desperately needs a government in power that will not allow three major court cases against him to proceed.

Spain's prime minister, José Luis Rodríguez Zapatero, has also declared he will not stand in November's election, sensing the widespread dissatisfaction with his inability to get Spain's economy back into healthy growth.

He has nevertheless agreed to increase austerity measures as a condition of the new loans. The massive level of youth unemployment in Spain and a feeling of utter neglect by politicians have been behind the mass movement of the 'indignados' - young people disillusioned with political parties and looking for radical, even revolutionary solutions.

Richard Hunter, a broker from Hargreaves Lansdown, said: "The markets are looking for a concrete plan out of Europe and the US in terms of how they are going to deal with their deficits." But because of private ownership and the states' role in defending the national interests of their own capitalists, a clear plan is something that capitalism, by its very nature, can never provide.

Capitalist anarchy
Trying to control an anarchic and blind system, none of the measures they take seems to stem the downward spiral into the worst crisis since the 1930s.

The measures they take to try and rescue their system will mean yet more cuts and austerity, yet more suffering and anguish for the vast majority of the world's population. The accumulating crises - economic and political - of the last few weeks, have only served to underline the chaotic and wasteful way in which capitalism works or fails to work.

Only 58.1% of Americans of working age now have a real job. Tens of millions of people worldwide are on the scrapheap when they could be producing goods and providing services.

On the basis of public ownership and democratic planning, all the human and physical resources of society could be harnessed for the benefit of the vast majority instead of the increasingly rich minority.

The stranglehold of the banks and capitalist politicians over the lives of millions, in fact, billions, has to be broken. Mass movements, including general strikes, will show the power that the working class can wield in society.

Linked with the energy and anger of the youth, new mass workers' parties can be rapidly built. Confidence in the idea of a socialist alternative to capitalism can and must be renewed without delay.

Markets take a tumble as fear spreads about state of world economies, a socialist alternative is needed

Today saw one of the biggest falls on the global stock markets in 3 years with big dips in America and in Britain.

Wall Street had its worst day for almost three years as shares tumbled on fears about the eurozone debt crisis and the US economic recovery.

The Dow Jones index closed down more than 500 points, or 4.3%, and came after the leading European bourses fell more than 3%.

It was the biggest one-day fall for the Dow since 22 October 2008.

Earlier, European Commission President Jose Manuel Barroso warned that the sovereign debt crisis was spreading.

Also in New York, the S&P 500 index fell 4.8% and the tech-rich Nasdaq was more than 5% lower.

Meanwhile, Frankfurt's Dax and London's FTSE 100 indexes had their worst day this year, closing almost 3.5% lower as investors fretted that Italy and Spain might become engulfed in the debt crisis.

"People are throwing in the towel because they can't find relief on any front," said Milton Ezrati, market strategist at Lord Abbett.

Investors sought the relative safety of gold, sending the price of the metal to a new record high of $1,677 an ounce.

More weak jobs data from the US also raised concerns about the strength of the economic recovery there.

Wall Street's financial power houses were hit hard, with JP Morgan and Bank of America falling 5% and 7.4% respectively.

In Europe, Lloyds Banking Group fell 9.9% and Royal Bank of Scotland was down 7%. France's Societe Generale lost 6.9% and Germany's Commerzbank dropped 6.8% in Frankfurt.

Miners also suffered, with Vedanta Resources slumping 9.5% and Xstrata and Eurasian Natural Resources falling more than 8% in London.

The oil price also slumped on fears that a weaker global recovery would hit demand. Benchmark West Texas crude for September delivery fell $5.30, or 5.8%, to $86.63 a barrel. Brent crude fell 5.3% to $107.25.


This just highlights the fragileness of the global recovery if you can even call it one. There are fears over Italy and Spain who are borrowing at high interest rates which they are not thought to be able to sustain for too long.

There is increasing doubt over these economies and this doesnt even begin to mention Greece which surely will take anotehr tumble sadly. But all this means that global economists are urging for more cuts and less borrowing. I.e austerity which we are all starting to become very familiar with unfortunatly. If your nearing the edge pull back and cut is the message being sent to countries in trouble.

But this is no warmth to the working class who as a result of all this will feel their living standards cut even further and jobs lost, wages cut and gains we have made over decades taken away.

Unless we resist . There i a growing movement of reisstance but i feel this now has to be stepped up to a major scale. Bringing whole cities and towns to a stand still for prolonged time. The demand to write off the debt must be started to be made i feel too. If this message is spread early enough it can become ingrained in workers contiousness and spread.

The absence of a workers party in much of europe and the world is still very evident. The struggle for this must continue with building of things like TUSC - trade union and socialist coalition in order to give workers a voice on thepolitical stage and a alternative to the cuts and austerity.

Idealy this need for a party would not be nessesarily to win elections and replace labour as a careerist capitalist pro busienss party but to reject capitalism and offer a new way forward for workers to realise. NOt by just voting will things change it all has to be linked to the continuous need for socialism and democratic workers control of the planned economy.

We are not out of the woods yet, not by a long shot

If by some strand of imagination you are under the impression our financial crisis is getting better and we'll be able to get out of it i have bad news for you.

This economic downturn is not a usual economic downturn i think we are on the verge of something big. Very big. The talk now is very much of a double dip recession even leading to a even longer deep depression.

It is no exageration that the rate in which our cost of living and standard of living are rising and falling just as sharply. It is no doubt we are heading backwards from where we have come from i believe.

But is this ia big surprise ? to us marxists no it isnt. Capitalism is full of contradictions and is always just a few steps away from another major international economic crisis.
This is just the ne xt in its long history. Yet still it doesnt learn its lessons if indeed it can. I explain.

In Europe where i think will be where a major shift will occur. We may even see the brak up of the Euro as we know it if a country like Greece, Portugal, Ireland or even Spain which god forbid will send huge shockwaves around the Euro zone as Spain is a big economy. But this is entirely possible.

The Greek economy was one of the fastest growing in the eurozone during the 2000s from 2000 to 2007 it grew at an annual rate of 4.2% as foreign capital flooded the country.] A strong economy and falling bond yields allowed the government of Greece to run large structural deficits. According to an editorial published by the Greek newspaper Kathimerini, large public deficits are one of the features that have marked the Greek social model since the restoration of democracy in 1974. After the removal of the right leaning military junta, the government wanted to bring disenfranchised left leaning portions of the population into the economic mainstream.[15] In order to do so, successive Greek governments have, among other things, run large deficits to finance public sector jobs, pensions, and other social benefits. Since 1993 debt to GDP has remained above 100%.

On 27 April 2010, the Greek debt rating was decreased to the first levels of 'junk' status by Standard & Poor's amidst fears of default by the Greek government.[34] Yields on Greek government two-year bonds rose to 15.3% following the downgrading.] Some analysts question Greece's ability to refinance its debt. Standard & Poor's estimates that in the event of default investors would lose 30–50% of their money.] Stock markets worldwide declined in response to this announcement.[36]

Following downgradings by Fitch, Moody's and S&P,] Greek bond yields rose in 2010, both in absolute terms and relative to German government bonds.[38] Yields have risen, particularly in the wake of successive ratings downgrading. According to The Wall Street Journal, "with only a handful of bonds changing hands, the meaning of the bond move isn't so clear.

On 3 May 2010, the European Central Bank suspended its minimum threshold for Greek debt "until further notice",] meaning the bonds will remain eligible as collateral even with junk status. The decision will guarantee Greek banks' access to cheap central bank funding, and analysts said it should also help increase Greek bonds' attractiveness to investors.[41] Following the introduction of these measures the yield on Greek 10-year bonds fell to 8.5%, 550 basis points above German yields, down from 800 basis points earlier.

On 5 March 2010, the Greek parliament passed the Economy Protection Bill, expected to save €4.8 billion through a number of measures including public sector wage reductions. On 23 April 2010, the Greek government requested that the EU/IMF bailout package be activated.] The IMF had said it was "prepared to move expeditiously on this request".] Greece needed money before 19 May, or it would face a debt roll over of $11.3bn.

Without a bailout agreement, there was a possibility that Greece would have been forced to default on some of its debt. The premiums on Greek debt had risen to a level that reflected a high chance of a default or restructuring. Analysts gave a 25% to 90% chance of a default or restructuring.] A default would most likely have taken the form of a restructuring where Greece would pay creditors only a portion of what they were owed, perhaps 50 or 25 percent.] This would effectively remove Greece from the euro, as it would no longer have collateral with the European Central Bank.


Greece has already had 9 general strikes across the country and there is a great distrust of the government and the EU as a whole there now.

One of the central concerns prior to the bailout was that the crisis could spread beyond Greece. The crisis has reduced confidence in other European economies. Ireland, with a government deficit of 14.3% of GDP, the U.K. with 12.6%, Spain with 11.2%, and Portugal at 9.4% are most at risk.

On the positive side, The Economist acknowledged on 27 May 2010 that while Europe's "profligate economies will struggle ... as austerity kicks in," it also pointed out that "waning confidence will be mitigated by the boost that exports receive from the euro’s plunge."


But this may not be enough to save the tumbling Euro. There is smimply no fat there to absorb this next wave of the crisis. I think we stand on the edge of another banking crisis where several big banks require bailing out again. I do think this can and will happen. I hope it doesnt obviosly but another banking cris that could make 2008 look like a drop in the ocean compared to the next banking crash could effectively end the Euro as we know it today. there is simply nothing to absorb the crash coming up it seems.

As further bailouts will have to happen as the governments of these countries look to prop up their failing battered capitalist system with fear growing across Europe further austerity cuts will be forced on the working class to pay for more and more of this.

I really dont think we have even seen the start of this crisis yet only just the tip of the iceberg there is still plenty time to go and i feel we will get worse before we improve.

Even a labour party who you would think would regain power in 2015 at the next general electionw ill be forced into making cuts by the markets who will be wanting them to carry on with the project of cuts to restore confidence in the financial markets.

So if we think labour will be any better we will be sorely mistaken. This is a global crisisa nd no one government will be able to solve this alone i feel.

Only a changing of the whole system, a over throw of capitalism thrown on to the scrap heap for good with a socialist planned economy will be able to bring the world back to a even keel i feel.

Will any country try going down that route ? i really do hope so.

Only socialism can provide for the many not just the few. It is time to rid ourselves of this blood sucking system that capitalism has forced upon us.