The international financial crisis has forced the central banks to perform an unprecedented rescue operation of the big capitalist conglomerates. In a few hours they squandered half a trillion dollars, the kind of money which is never available for health, housing or education.
Bush rescues the speculators at the same time he reduces the health benefits of the soldiers returning from Iraq and Afghanistan and when the US is facing the collapse of its basic infrastructure (dams, dikes and bridges), which has led to the disappearance of the old New Orleans and the Minneapolis catastrophe.
The stock market collapse sank the private pension funds. The pension savings of millions of workers around the world has been crossed out with the stroke of a pen. The same has happened to the health funds of the workers of big US companies, as well as the savings of part of the middle class the world over.
It is not a partial or localized crisis. A huge mass of fictitious capital is stopping up the pores of capitalist society. It is estimated that in the US alone speculative capital reaches 48 trillion dollars, three-fold the gross national product.
The financial crisis brings to a close the cycle that began in mid 2002 when the US Federal Reserve started to reduce the interest rates and to issue money (at a rhythm four times the gross national product growth rate) in order to get the US (and the global economy) out of the recession.
The monetary issue and the piling up of debt unleashed speculation which was out of control. Those resources were not intented to expand productive capacity because the global markets are packed with goods and industrial profitability is low. A recent report by the Bank for International Settlements says that over the last few years there has been an "investments strike"... in the midst of the biggest financial priming in history. The mass of funds emerging from the monetary issue -multiplied by the debt- was used for the purchase of existing companies, with the aim of gutting them, or for the purpose of capturing their cash flow, that is, in order to establish a basis for financial speculation later on. All this shows the complete parasitism of the capitalist economic process.
That fictitious capital sought real profits, snatched right out of the hands of the workers by means of freezing or reducing wages and salaries, the liquidation of their working conditions, outsourcing, and the destruction of social welfare and pensions. Bush's "recovery" was the first in US History in which neither real wages and salaries nor the workers' participation in national income did not grow. The highest speculative profits in history coincided with a period of acute social backwardness for the workers.
What was meant to be a way out of the catastrophe ends up becoming another catastrophe: the stock market meltdown due to 2001`s tech stock bust. In the last twenty years we have seen an endless series of financial catastrophes. The US stock exchange crisis of 1987 (which caused a recession that lasted four years) was followed by the collapse of the saving and loan societies, at the end of the 80`s (which caused a huge banking crisis that led Citibank to the edge of bankruptcy), the Japanese crisis in the mid -90`s (which left an economic depression that 15 years later Japan has still not overcome), the Mexican crisis of 1994/95, the Asian crisis of 1997/98, the defaults in Russia, Turkey and Argentina, the bankruptcy of LTMC trust funds in 1998, the collapse of Enron and WorldCom at the beginning of Bush's administration and the tech stock collapse in 2001.
Each attempt at a solution - by promoting speculation, displacement of competitors, over exploitation of the workers and a bigger appropriation of the world resources by a handful of powers and imperialist groups- has ended in an even worse crisis.
In the US a recession in the building industry is already emerging. The statement saying that the financial crisis is a "storm in a teacup" because the so-called "foundations of the economy" (consumption, business profits) are solid is complete nonsense.
Everyone from Bush to Lula is saying that. In the Brazilian case, the mass of capital that entered over the last few years is almost completely formed by debt undertaken by speculators in countries with low interest rates (the US and above all Japan) to take advantage of Brazil's skyrocketing interest rates. Another country on the verge of bankruptcy is Turkey, located in center of imperialism's great defeat in Iraq.
The "foundations of the economy" are not solid at all. Consumption is not the consequence of better wages and salaries or a bigger participation of the workers in the national income, it is triggered by primed credit. The consumer debt is the highest in history, a substantial part of industrial companies' profit comes from the financial handling of its funds.
In the US the eviction of millions of insolvent mortgage debtors, most of them workers, has been announced. The industrial recession will cause millions of layoffs and will reinforce even more the tendency towards subcontracting, outsourcing and wage cuts. The US faces the perspective of an unprecedented social collapse: abandoned neighborhoods, collapsed services and workers without housing, work or social welfare.
Is China the way-out?
Over the last decade, China has become the main center of capital absorption in the world. The crisis will turn red hot all the contradictions accumulated during the boom. China is not a national economy but rather a platform for exporting to the world market.
The devaluation of the dollar to save US speculators will depreciate the huge reserves that China has accumulated; the recession will reduce its capacity to export to the US and the world market. The commercial war has already started with toys and food. The fall in exports and financial reverses will lead to the bankruptcy of a great number of investments, with millions of layoffs.
China's transition will have to face more acute social explosions than those already being suffered and even revolutionary situations.
The center of gravity of the whole international situation will be, more than ever, political action.
The capitalist states will try to impose the rescue of the speculators onto the backs of the peoples by means of state coercion, repression and wars. That is most valid of all for those states governed by center-left coalitions. The union bureaucracy as the agent of the bourgeoisie inside the workers organizations will be forced to play to the utmost its role as police agent inside working class organizations.
Against the capitalist rescue of a historically exhausted social regime, we oppose the necessity for a complete reorganization of society based upon new social foundations.
All the advances of capitalism against the masses, from the loss of social gains to the capitalist restoration in the ex 'socialist' countries, will be placed at issue once again. The historic alternative of our era -socialism or barbarism- is more valid than ever before.