Jul 28, 2008
The recent images of Indy Mac depositors in California lining up to withdraw their money made the international banking crisis very real to millions of TV viewers.
Indy Mac went bankrupt when its depositors lost confidence in its ability to redeem their deposits. In a few days, they withdrew 1.3 billion dollars of deposits out of the 32 billion dollars in the bank. Following the bankruptcy, the Federal Deposit Insurance Corporation took it over, covering losses amounting to eight billion dollars.
The International Monetary Fund (IMF) predicts that the ongoing crisis will result in one trillion dollars in such losses. Specialists foresee the bankruptcy of 150 banks and financial institutions worldwide. The financial system hasn’t collapsed until now because different nation states, primarily through the central banks of the richest countries, like the U.S. Federal Reserve, have provided hundreds of billions of dollars in public money to the banks.
But still the crisis continues and gets worse.
When the mortgage crisis began to unwind, capitalists withdrew their money from real estate and, searching for places to profit, fed speculation in other sectors. They put their money into oil, raw materials or food products. They provoked a general price explosion in all these sectors. It’s estimated that the sum of money that flooded into oil speculation is 30 to 35 times higher than the total that all the oil in the world will actually sell for even at those high prices. This means speculators were buying, selling, buying again, selling again, etc.
In all the countries, including the U.S., working people are suffering a sometimes considerable cut in their standard of living from these price increases.
These trillions of dollars that the bourgeoisie uses for speculation did not come out of thin air. This money was accumulated through dozens of years of sacrifice and exploitation imposed on all the working class and all people. It was produced by layoffs, plant closings, wage and benefit concessions, the economic destruction of entire regions and countries, and an explosion of misery everywhere.
The workers are paying doubly. First, by the degradation of their living and working conditions. Then, even more seriously, because the money accumulated off their labor will have been used for more speculation, thus further destabilizing an economic system that is unstable by nature.
This is the umpteenth variant of the crises which regularly punctuate the functioning of the capitalist system, in which production isn’t carried out to satisfy needs but to generate profits. For decades, the capitalists figured that since the market for consumption was saturated, reinvesting their profits in industry wouldn’t bring a big enough return in profits. As a result, they diverted an ever bigger part of their profits toward the financial sphere and speculation.
The working class will end this never-ending crisis only by taking away control of the economy from this parasitic class, by making sure the economy finally meets the needs of everyone. All wealth is created by the working class. Without it, nothing works, nothing is produced.
The immense force of the workers is simply asleep today. If it is put in motion, the workers united in a common struggle easily have the force and the means to ensure everyone can finally live in a fashion worthy of their labor.