The failure of the Irish economy brings in its tail the near-certainty that Spain and Portugal are also going to need bailing out. Portugal’s economy, like Ireland’s and Greece’s, is relatively small, but the European Financial Stability Facility, which a few months ago seemed so gargantuan, is not large enough for Spain, which has been described as “too big to bail“. The possible collapse of the euro within the next few years is being mooted throughout the financial press.
Sooner or later, despite all the taxpayer billions thrown into the endeavour to save the banks, they and their sovereign backers are going to have to default, or ‘restructure their indebtedness’, which means that their creditors are not going to be paid in full, or are going to have to wait a long time for repayment, causing liquidity problems in the countries that have lent them money and triggering still more defaults.
It is rapidly becoming all too obvious that billions of pounds in bail-out funds can do nothing to ease the crisis of overproduction. In fact, as Marxists have all along demonstrated, the squeeze on spending that the bail-outs lead to only aggravates the crisis.
This crisis only arose in the first place because, in its bid to enhance competitiveness by reducing costs to a minimum, capitalism makes people too impoverished to buy all the products gushing exuberantly off the capitalist production lines. It follows that more impoverishment means worse crisis. The bail-outs can do nothing to help; they merely tend to go to the relief of the billionaire bourgeoisie, leaving most of the burden to fall on ordinary people, who pay through higher taxes, reduced wages and benefits, pension fund collapses, bank account freezes, etc.
Serious bourgeois commentators can actually see that this is laying the groundwork for revolution. Bob Herbert in the New York Times expressed his anxiety that “societal conflicts” will “metastasize“, as in the 1930s, in the following terms:
“The class war that no one wants to talk about continues unabated.
“Even as millions of out-of-work and otherwise struggling Americans are tightening their belts for the holidays, the nation’s elite are lacing up their dancing shoes and partying like royalty as the millions and billions keep rolling in.
“Recessions are for the little people, not for the corporate chiefs and the titans of Wall Street who are at the heart of the American aristocracy. They have waged economic warfare against everybody else and are winning big time.
“The ranks of the poor may be swelling and families forced out of their foreclosed homes may be enduring a nightmarish holiday season, but American companies have just experienced their most profitable quarter ever. As The Times reported this week, US firms earned profits at an annual rate of $1.659tr in the third quarter – the highest total since the government began keeping track more than six decades ago.” (26 November 2010)
Like a Victorian philanthropist, or a religious sage, Bob Herbert urges the rich to dispense a small quantity of their mind-blowing wealth on the relief of the poor. “There is no way to bring America’s consumer economy back to robust health,” he quite rightly says, “if unemployment is chronically high, wages remain stagnant and the jobs that are created are poor ones. Without ordinary Americans spending their earnings from good jobs, any hope of a meaningful, long-term recovery is doomed.”
He should know, though, that for the most part, the rich don’t heed such good advice until the impoverished masses are actually mustering for revolt, and often not even then. Proletarian revolution and the establishment of socialism is the only solution.