Mar 31, 2008
The current financial crisis could become the most serious since World War II. None other than Allan Greenspan, the former head of the Federal Reserve Board, made this catastrophic diagnosis. A serious economic crisis means thousands of businesses closed or functioning at a slower pace, mass layoffs and unemployment. It means thrusting a great part of the working population into misery.
This crisis does not come out of some natural catastrophe. Not at all. it is of the bosses’ own making.
For years, the bosses claimed that competition forced them to carry out more layoffs while pushing more work on those left on the job, and at lower pay and benefits. High profits came from the greater exploitation. But the companies didn’t invest the growing mass of profits in production and the creation of jobs. Instead the bosses put those profits into financial operations and speculation.
The frantic growth of speculation has led to the collapse of the U.S. mortgage loan system. The crisis has spread to the entire banking system. All the great banks worldwide bought up securities based on mortgages, since for a time they were quite profitable. But today these securities are worth almost nothing. All the big banks hold so many of these practically worthless securities that they are threatened with bankruptcy. The banks don’t even trust each other enough to extend credit to one another. They may be awash in money. But they won’t lend it out.
The first phase of this shock was translated into hundreds of thousands of layoffs in construction and in the banking sector in the U.S., the epicenter of the financial crisis. Then millions of families were tossed out of their homes since they could no longer make the outrageous payments.
As a result, consumption started to decline and recession is taking hold. And this crisis will not remain limited to the U.S., by far the biggest economy in the world.
Who will the leaders of the capitalist world force to pay for this catastrophe? Those who had nothing to do with it. Those on whose backs the capitalists make those profits. Now the central banks, that is, the governments, are trying to avoid a chain reaction of failures. They are distributing tremendous sums to the big banks and are proposing to continue cleaning up the banks’ mess by buying up their rotten securities with taxpayers’ money. The banks still pocket the profits while sticking the taxpayers with the losses.
Even if these leaders find a way to stop the bank crisis – no sure thing – their solution will accelerate world inflation. Price increases already undermine the purchasing power of workers and retirees. The capitalists are smashing down the purchasing power of the working classes. All that is being done in order to save the profits of bankers and speculators. Only a social explosion can prevent them from imposing this.
Society is sinking under the weight of an economic structure that is both unjust and irrational. For the working class, the only solution is to expropriate the capitalists. Workers must take hold of the bosses’ profits for their common needs.