The imposition of austerity budgets to reduce budget deficits – adopted across Europe by governments of all persuasions – is suddenly looking too dangerous to investors in the global markets.
Now these gamblers are worried about a self-defeating downward spiral in Europe, and shifting their funds to Japan, whilst piling on the political pressure for President Obama to issue a new pile of fantasy finance by way of the Federal printing presses.
Indicators of deflation and declining production have emerged as the latest and biggest threat to the global capitalist economy. Not least is the Baltic Dry Index that measures the shipping of bulk goods around the world. This dropped by 40% last month.
These signs of the economy once again falling off a cliff – the much feared “double-dip” - are sure to aggravate the latest phase of the financial crisis. Tomorrow the European Central Bank’s emergency facility of €442bn (£361bn) of one-year loans ends. It’s the largest sum ever lent by a central bank. If the ECB fails to renew the scheme, there are fears that it will trigger a catastrophic banking collapse in Spain.
The chaotic reversals in the bond markets which lend to governments show that neither austerity budgets nor more quantitative easing/printing money can stop the rapid deterioration of the global economy.
In Britain, for example, it is reported that the Coalition’s cuts programme will add another 1.5 million to the dole queue. They will certainly not be taking part in a growth of consumer spending.
In essence, this destruction of people’s jobs and livelihoods is the inevitable consequence of the capitalist crisis – not its cause. It is too simplistic to view the cuts just as old-fashioned Toryism, especially when the Greek and Spanish “socialist” governments are doing the same and New Labour had a similar programme in store if it had won the general election.
This is the context for general secretary Bob Crow’s spirited address to the Rail, Maritime and Transport union’s annual conference. He told the delegates: “‘This ConDem administration has thrown down the biggest challenge to the trade union movement since Margaret Thatcher took on the National Union of Mineworkers.
"I have no hesitation in saying that it will take general and co-ordinated strike action across the public and private sectors to stop their savage assault on jobs, living standards and public services."
He went on: "The trade unions must form alliances with community groups, campaigns and pensioners' organisations in the biggest show of united resistance since the success of the anti-poll tax movement. Waving banners and placards will not be enough - it will take direct action to stop the Cameron and Clegg cuts machine.”
Crow is on the right track, but resistance alone cannot withstand or push back the impact of this crisis. Its scale is unprecedented and opposing the cuts must involve more than trying to force the government to change course, which would be a hopeless and futile pursuit.
A key lesson of the miners’ strike for jobs that Crow referred to is that the state and the discredited parliamentary system is a front for global corporate and financial interests and this is what we have to transform.
“General and co-ordinated strike action” - which would have to defy the anti-union laws to happen - is certainly needed. But the assault on jobs, living standards and public services can only be dealt with if the alliances Crow calls for become the basis for People’s Assemblies in a direct challenge to the power of the capitalist state to rule over us.
People’s Assemblies will go beyond protest, taking control of the resources that make up the productive economy and the financial system, and converting them from the playthings of global speculators into the means of meeting the needs of the majority.