From the International Report delivered to the CPGB-ML’s central committee on 3 December
There is a real threat that the euro is going to collapse as a currency. This is because everybody is trying to get rid of their euro holdings. The reason this is happening is that it has become clear that Greece is not going to avoid defaulting on its debt, with the general consensus being that its lenders are going to have to take a 50 percent ‘haircut’.
At the same time, Portugal’s debt has been reduced to junk status by credit rating agencies, and borrowing costs for Italy and Spain have soared above the affordability mark, with even German bonds suffering increased borrowing costs. Now France is under threat as it is likely to need to bail out its banks as a result of their losses on their Greek debts, etc.
Attempts to put together a firewall that will enable European countries to continue to borrow at affordable rates of interest are floundering, and the Germans are resisting attempts to have the European Central Bank step in to perform this service, because they make the largest contribution to this bank and don’t want to throw good money after bad and then find themselves in financial trouble.
There is some suggestion that Germany would be willing to be more accommodating if the European countries would agree to greater fiscal integration, which of course implies a surrender of sovereignty to the EU which in turn is very much dominated by Germany and France. They of course can be expected to use that control for their national benefit at the expense of other EU countries.
In the meantime, the elected leaders of Greece and Italy have both been forced to resign, to be replaced by unelected ‘technocrats’ with close links to Goldman Sachs (which in turn was intimately involved with the repackaging of subprime debts as high quality by camouflaging them in complex ‘derivatives’). The new head of the ECB is also a former Goldman Sachs man.
The UK and the US are said to be making contingency plans for the chaos that will certainly ensue if the euro does in fact collapse. More detail in this month’s issue of Proletarian.
From the International Report delivered to the CPGB-ML’s central committee on 1 October
China has stepped in to provide assistance to Belarus in its current embarrassed financial situation. It will be lending the country $1bn in exchange for preferences for Chinese companies in acquiring shares in Belarusian industrial facilities.
China is already a major investor in the Belarusian economy, with $15bn invested there by Chinese banks over the last two years alone.
Results in Germany’s regional election on 5 September in Mecklenburg-Western Pomerania have come as something of a shock to the bourgeoisie.
As a government in power during a recession, it is hardly surprising that the Christian Democrats and Free Democrats who are the coalition partners in that government both suffered seriously, with the former slipping 5.7 percentage points to 23.1 percent while the latter have lost all representation in the state assembly as a result of failing to muster even 5 percent of the vote.
The Social Democrats took 35.7 percent of the vote (gaining 5.5 percentage points), the Greens 8.5 percent (a gain of 5 percentage points) while the leftist Die Linke took 18.4 percent.
As a gauge of the preparedness of the working class, this election result is encouraging insofar as it indicates a growing understanding among a significant minority of the regional electorate that it is capitalism, rather than mismanagement by this or that party, which is responsible for the problems that they are suffering.
Greece has increased VAT from 13 percent to 23 percent. Café and restaurant owners, who have already suffered a 20-40 percent decline in business as austerity measures bite, are simply refusing to pay, following a resolution at an extraordinary general assembly of the Pan Hellenic Federation of Restaurants and Related Professions, which represents over 15,000 hospitality outlets.
On 22 September, Athens was brought to a halt by yet another massive mobilisation. This was against fresh austerity proposals that will see the government slashing pensions and public sector salaries.
Iconic Swedish car manufacturer Saab has been forced to file for protection from creditors.
“The Saab factory in Trollhattan, southwestern Sweden, has been at a standstill for most of the year as the company struggles to pay suppliers. Since June it hasn’t been able to pay many of its 3,700 workers on time, testing the patience of labour unions, who have threatened to put the company in bankruptcy.” (‘Saab owner, Swedish Automobile, files for creditor protection’, Daily Telegraph, 8 September 2011)
In filing for protection the company was hoping to Dily hold out for long enough for Chinese investors to come to the rescue. While the court initially refused the application, this was overturned on appeal to allow the company to be rescued by its Chinese white knights.
Chief executive Victor Muller insists he can turn the company around as soon as it receives €245m ($335m) in cash injections from Chinese investors Zhejiang Youngman Lotus Automobile and Pang Da Automobile Trade Co. The Chinese authorities, however, have not yet approved those deals. company around as soon as it receives €245m ($335m) in cash injections from Chinese investors Zhejiang Youngman Lotus Automobile and Pang Da Automobile Trade Co. The Chinese authorities, however, have not yet approved those deals.