Will the Euro zone break up?

As with the Soviet Union many capitalists couldn’t see how it could continue but also couldn’t see how it could break up. Many contradictions lay within the Euro zone today not least the nation state and how it fundamentally relates to capitalism. The CWI of which the socialist party is affiliated to predict at its inception the Euro could not last when not if a global economic crisis hit as we are seeing now. Nations will want to protect their own interests and national agitation will increase as a further feeling of trying to save their own backs first. With the news today that one of the fore thinkers behind the Euro project now laying doubt on the project and how long it can last we are left wondering how long it really can last and in what shape or form a break up could come in. Some members of the euro zone may have to leave the bloc as the debt crisis continues, according to one of the architects of the euro. "Everything speaks in favour of saving the euro area," said Otmar Issuing, a former European Central Bank chief economist. "How many countries will be able to be part of it in the long term remains to be seen," he added. His message comes as the ECB warned of a lack of lending within the region. The central bank highlighted the fall-off in money being lent across borders between the 17 countries that share the euro, saying the euro zone is becoming increasingly fragmented. The ECB said cross-border loans in the overnight money market fell to 40% of total loans, from 60% in a similar period last year. A recent report by Morgan Stanley focused on the "Balkanisation" of the euro zone banking system. "Its banking and money team have highlighted how the weaker euro zone economies - Spain, Italy, Portugal, Cyprus, Greece and Ireland - have been progressively starved of credit as banks in the bigger, stronger economies of Germany and France have stopped lending to them," the BBC's business editor Robert Peston said. 'Reforms pending' Mr Issing was a member of the German Bundesbank until 1998 and then worked at the ECB, during the introduction of the euro in 1999 until 2006. Promoting his new book on saving the euro, Mr Issing said: "We are still a long way off saying 'that's it, now we are sure to make progress'. "Substantial reforms in almost all countries are still pending." He added that it was not true that Germany would be better off returning to the deutschmark, saying the euro had been more stable than the mark. "One should focus on bringing the euro back to what it was meant to be: a stable currency, stabilised by an independent central bank, which follows a clear mandate, nothing else, and that the other protagonists, especially national governments, do their homework," Mr Issing said. This is impossible on capitalist lines a stable Euro is looking increasingly unlikely and a break up more and more inevitable now holding it together now looks a feint hope rather than a plan for European leaders. The comments come after France's central bank said that its economy would fall back into recession this quarter. The Bank of France estimates that the economy will contract by 0.1% in July to September. It has already predicted a fall of the same level between April and June. Italy is also set for its third consecutive quarter of contraction, while the Bank of England cut its UK growth forecast to close to zero from about 0.8% predicted in May. The UK is not in the euro zone but is hugely affected by what happens on the continent as a lot of the UK’s trade is with European countries and a break up of the Euro will affect the UK in a big way. Bigger than many economists care to imagine at this point. This could throw the whole system into turmoil and lengthen the crisis even further. What is clear to me is that capitalism has no way out of this crisis and many opportunities will arise for workers to take power. Whether they will or not depends on many factors but there will be the chance we must be ready for it.

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.