Mar 31, 2008
Since the beginning of the financial crisis last summer, the governments of the capitalist powers have continually injected public money into financial markets, as they say, to “lower the pressure.” But, the pressure isn’t going down and confidence is not going up. Again and again, the sick financial system has been getting new injections of money.
In mid-March, the U.S. government made 400 billion dollars available to both commercial and investment banks in order to stabilize the panicky financial markets. On March 14, the U.S. Federal Reserve Board offered 30 billion dollars in loans to Bear Sterns investment bank alone, at a rate that would bring joy to any worker buying a car. On March 25, the European Central Bank loaned 15 billion dollars at a very low rate to European banks lacking liquidity.
For a long time now, governments and central banks have been spending money they don’t have in order to “plug the drain,” as a Japanese official put it. He and other leaders of the capitalist world now propose to completely buy up bad debts to make the market “healthy.” They say that soaking up all this speculative debt could cost from two to three trillion dollars.
And where will they get such a sum? From the pockets of the population.
And still it won’t solve their problems. For these trillions of dollars will appear as budget deficits. And how do governments pay for budget deficits? By price increases, stagnating wages, cutbacks in public services, infrastructure, education and health, and by increases in taxes. All these measures will be direct attacks falling hardest on those who can least afford it.
The U.S. is the country with both the richest capitalist corporations and the highest budget deficit (176 billion dollars for the month of February alone). Millions of people have lost their homes; bridges have collapsed in the middle of cites due to lack of maintenance; the working class standard of living is in free fall. Furthermore, the central place of the U.S. in the world economy allows its competitors to finance its debt. So now Chinese workers can also pay part of the U.S. deficit.
All the other capitalist countries, like France or Britain, are more or less at the same point, following the same road. So this eventual levy of three trillion dollars on the backs of the populations, far from putting an end to the financial crisis, will only accelerate it. Until when?