Global economic crisis

We can't pay the price - organise to fightback!

Dow Jones falls amid turbulence, 19 march 2008

AMERICA IS in recession and news of deepening financial disaster comes thick and fast. Now, Bear Stearns, America's fifth largest investment bank has suddenly collapsed, triggering an emergency takeover of it by JPMorgan.

Judy Beishon

JPMorgan only agreed to the deal on the basis of the US Federal Reserve using taxpayers' money to guarantee $30 billion of the bankrupt bank's suspect loans. Terrified of further major bank collapses, the Federal Reserve also made $200 billion available for crisis loans to banks.

These actions and sums are unprecedented - as was the Ł24 billion crisis funding to Northern Rock in Britain.

Banks like Bear Stearns have lent huge sums of money that they did not actually have, enriching their shareholders and directors in the process. Almost unimaginable sums of money have also been 'traded' and betted, in a vast tangled web of transactions that spiraled and escalated. Now the edifice is crashing down.

Governments and top financiers across the world are realising how unstable the entire global financial system is. Panic is setting in, with references being made to the 1929 stock market crash. The US Fed is cutting interest rates to try to stem the flow of disasters. The problem though is not that interest rates are too high, but that no-one is daring to lend money in the first place.

This rapidly-descending crisis has not been caused by ordinary people, but we are expected to pay the price, in the form of low pay, lost homes, job losses, service cuts and other attacks. The blame lies with the capitalist profit system, which has always had periodic crises and always will, for as long as it exists.

Added to this, the economic prospects have been worsened by the phenomenal greed and mismanagement of those at the top of society. Regarding this in the US, Larry Elliot, economics editor of The Guardian, commented: "it is somewhat surprising that there is not already rioting in the streets, given the gigantic fraud perpetrated by the financial elite at the expense of ordinary Americans".

The US super-rich have increased their wealth massively over recent years, while ordinary people have not. A similar wealth gap has become more obscene in Britain too, yet incredibly, government minister John Hutton declared just last week that "more millionaires" are needed and that the 'freedom' to get rich is "a good thing".

Rather than 'rioting in the streets', workers must get organised, in fighting trade unions and by building a new force - a new workers' party - that can challenge the crisis ridden and rotten capitalist system. This party will need to pose a socialist alternative; that of replacing the madness of the profit-driven 'free market' with democratically elected, accountable, decision-making bodies at every level of society, that could plan the use of all resources for the benefit of the overwhelming majority of people.

On the 15 March national anti-war demonstration, hundreds of young people expressed an interest in the socialist ideas being put forward by the Socialist Party. A new generation is looking for a different future. Join us in fighting for one.

No house repossessions!

Nationalise the banks!

For a new mass workers' party!

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In The Socialist 19 March 2008:

Global economic crisis