The great 'deception' that killed millions

Perhaps it is fitting on the day that the slaughter of World War One finally ended, the Treasury is said to be preparing for “economic Armageddon”.

Vince Cable’s admission refers to the consequences for Britain of a disorderly (it can’t be orderly) break-up of the euro as a currency and the resultant depression that will sweep not just Europe but the global economy.

But there’s no hiding the connection with the world wars of the 20^th century that cost tens of millions their lives. They were essentially the product of inter-imperialist conflict over trade, empire and markets.

Let no-one claim otherwise, although the political establishment tries might and main to do so every November when the official line is that millions went off to fight “for their country” in 1914.

Wearing a poppy becomes almost compulsory in official circles. Everyone on TV wears one. Those called in for an interview are asked to wear one, whether they want to or not. Of course, it is not wrong to honour the dead but we have to cut through the hypocrisy.

What is never up for discussion is that within months, soldiers on both sides realised that they had been trapped, even duped into a conflict from which they could not escape. A war which was not of their making exacted an intolerable price.

With the first global conflict unresolved, another one arose out of the break-down of the capitalist economy in Europe and the United States. And less than 70 years after its conclusion, with the mass murder of Japanese civilians, the storm clouds are gathering again.

The European Union, which was designed in part to prevent a repeat of 20^th century wars by bringing nations together, is in disarray. Governments in two member states were brought down this week by the economic crisis.

In Greece, the unelected former vice-president of the European Central Bank is to become prime minister of a national government. In Italy, the financial markets are demanding a government of technocrats. In both countries, early general elections were ruled out by the financial markets because they would take too long! Democratic procedures are now considered dispensable.

Now the talk is of a core of richer countries like Germany and France ganging up to exclude the poorer economies within the EU as well as Britain. So the seeds for conflict of all kinds are being sown. A system driven by the need to access and grow markets has no other direction to travel.

So perhaps the best way to mark armistice day is with the letter that the great war poet Siegfried Sassoon wrote to his commanding officer in July 1917, declining to return to duty after recovering from his wounds:

I am making this statement as an act of wilful defiance of military authority because I believe that the war is being deliberately prolonged by those who have the power to end it. I am a soldier, convinced that I am acting on behalf of soldiers. I believe that the war upon which I entered as a war of defence and liberation has now become a war of aggression and conquest. I believe that the purposes for which I and my fellow soldiers entered upon this war should have been so clearly stated as to have made it impossible to change them and that had this been done the objects which actuated us would now be attainable by negotiation.

I have seen and endured the sufferings of the troops and I can no longer be a party to prolonging these sufferings for ends which I believe to be evil and unjust. I am not protesting against the conduct of the war, but against the political errors and insincerities for which the fighting men are being sacrificed.

On behalf of those who are suffering now, I make this protest against the deception which is being practised upon them; also I believe it may help to destroy the callous complacency with which the majority of those at home regard the continuance of agonies which they do not share and which they have not enough imagination to realise.

Paul Feldman

Communications editor

Second wave of the crisis reaches land

In pursuing what the prevailing law defines as their perfectly legitimate individual interests, investors are collectively destroying the universe within which they – and we – all live. As agents of the capitalist way of doing things they have no alternative.

The latest assault on Italy, where investors are bailing out of banking and the market rate of borrowing has soared underlines, what is surely obvious to all – the second wave of the crisis which erupted in 2007-8 is now underway.

The punitive rates of interest charged for the loans needed by Greece, Portugal, Spain, Ireland, Italy and Iceland to avoid default only ensure that such defaults are inevitable.

Rating agencies have now declared Ireland’s debts to be worthless. Greece is virtually certain to default in the immediate future. The recession – decline in production – in each of these debt ridden countries is deepening. A collapse of the euro as a currency, leading to an immediate slump in trade, is a distinct possibility.

The formerly mighty US is locked into a political impasse over proposals to reduce its staggering $14 trillion debt mountain. If it is not sorted out soon, the US government will come to a default and the unthinkable – a dollar default – comes closer.

Occasionally, in struggling to find solutions to the impossible contradictions which dog their attempts to explain the deepening crisis and find solutions, a rare commentator will be found shedding light on the inevitable consequences of following the current path.

The Financial Times’ Martin Wolf is one member of this rare breed. In a recent column reviewing the crisis in the eurozone he revealed another two of the impossible contradictions that are skewering the global economy -

- the more successful a country is in reducing its debt burden in order to be able to return to growth, the deeper its recession gets. Latvia’s GDP, for example has dropped 23% since the crisis erupted.

- the more successful a country turns out to be in cutting its costs, the worse the debt burden becomes.

The solution? Wolf says “debt restructuring [a polite term for state bankruptcy, default, and debt cancellation] is merely a necessary condition for an exit. It is unlikely, in all cases, to be enough.”

His chilling prediction sets the scene for the coming months. “Some economies may just wither away.”

Putting it simply, mounting and ongoing resistance to the measures – “austerity” hardly begins to encompass it – being used to attempt to reduce unsustainable global levels of debt, means that debt must now be “restructured”, wiped out.

But the debt grew throughout the last 40 years to fund growth. So growth must now give way to contraction. Latest estimates suggest that the value of Greece’s debt must be reduced by 75%. And so must its production. And not just in Greece.

Grasping how markets, governments and corporations are driven by forces more powerful than the sums of their parts is vital. We have to get to grips with the contradictory forces at work in the capitalist economy and show that the system itself is broken and unsustainable.

Cuts in services, £9000 fees for university courses, soaring unemployment, inflation, mounting house repossessions, privatisation and attacks on pensions are the consequences of the crisis that broke in 2007-8.

What is coming up the line as the second wave of the global tsunami advances will shake society to its foundations. At the same time, it will create opportunities for transcending capitalism and creating a rational, sustainable economy. It’s a chance we can’t afford to squander.

Gerry Gold

Economics editor

How to end 'dictatorship of the market'

Protests and strikes are mounting throughout Europe as governments begin to carry out the austerity measures required to attract the investment funds needed to postpone state bankruptcy.

Mounting civil unrest is undermining investors’ confidence in European governments’ ability to impose the brutal measures on their populations.

It is patently clear that agreement on a €750 bailout package to prevent the collapse of the euro is hopelessly inadequate to stem the attack on the currency.

Panic moves in the USA, Germany and Venezuela yesterday against speculative investment markets are adding to the global instability as hedge funds look to move their headquarters and activities to the less-regulated East.

The German government banned “naked shorting” – the selling of shares and bonds that the sellers neither own nor have borrowed.

In the US, Chris Dodd, the Senate banking committee chairman, proposed letting regulators decide whether banks should be banned from dealing in all derivatives in a last-minute amendment to the financial regulation bill

Venezuela's Chavez-led government took control of foreign currency trading in an attempt to prevent further attacks on the bolivar.

The International Monetary Fund has forced Romania’s six-month old centrist government to promise cuts to state wages of 25% and to pensions of 15% as part of an effort to meet the requirements for the release of the next tranche of loans in a 20 billion-euro bailout package. This scale of attacks on living standards will prove to be just the down payment.

Trade unions in Romania have called a mass demonstration in Bucharest today. If their forecast turnout of 60,000 proves correct, the protest outside government headquarters will be one of the biggest since the revolutionary overthrow and execution of the Stalinist Nicolae Ceauşescu and his wife Elena in 1989.

Greek unions have called the fourth in a series of general strikes for tomorrow against a 10% cut in wages and spending in the public sector, an increased retirement age, VAT increases and the freezing of pensions.

A group of left-leaning members of the European Parliament – the United Left / Nordic Green Left (GUE/NGL) – are attempting organise co-ordinated protests in the week of 21 to 26 June against the power of the financial markets.

The MEPs have put together a series of left-sounding demands:

• Workers must not pay for the crisis - Make the super rich and bankers pay

• Solidarity with the Greek workers and for the unity of working people across Europe

• No to cutbacks, wage cuts, unemployment and increases in the retirement age

• No to privatisation of public services

• End the dictatorship of the financial markets, credit ratings institutions and the IMF

• Stop the bailouts of the banks - nationalise the banks and financial institutions in the interests of working people

But their intention to send use these protests to send “a clear message to the European establishments” and “building a European-wide resistance to the ongoing neo-liberal agenda” is wholly inadequate.

Financial markets are not susceptible to protest or even actions of the German state, representing the most powerful economy in Europe. Shares on European markets tumbled further, as did the euro, after Germany’s attempts to ban short-selling.

One London-based bond trader commented: "Nobody ever thought they'd do this in a million years and it raises the long-term question of who is now going to want to buy their debt."

A World to Win has a different set of aspirations to the MEPs. We’ll be discussing our plans to replace the dictatorship of financial market and the for-profit capitalist system with collectively owned, democratically managed not-for-profit system at our conference on Saturday.

Gerry Gold

Economics editor