The European crisis of 2011 is the banking crisis of 2008. The fact that it continues, that it broadens and  deepens, that the major European powers cannot agree and constantly do too little too late to restore stability, indicates the fundamental nature of the crisis.

The  2008  banking  crisis  was  prevented from becoming total collapse by the transfer of massive sums of public money to the bankers and speculators. This sovereign debt immediately became the workers debt and the road to prosperity became a process  of  squeezing the wages, pensions and services of the working class, with Ireland leading the way as the European exemplar of how to squeeze the workers.

There are many problems with this strategy. Leading capitalist strategists doubt the ability of the individual states to apply the level of austerity required - which is why the governments of Italy and Greece have been replaced by direct representatives of capital. 

Another big debate is the Keynesian argument, where some social democratic politicians and trade union  leaderships  point out  that  austerity, at a certain point, will itself lead to economic collapse. They argue that the state must invest to stimulate the economy.  However a Keynesian solution is not possible as long as the bank bailout remains in force - it  would  demand  further  government  borrowing on top of the incredible sums already earmarked for the banks. 

A  third  element centers around tne size of the central funds needed to guarantee the sovereign debt. The most recent plan involved a fund of one trillion Euros, but this was a "leveraged" fund, where an initial European component was to be matched by Chinese investment. The French now want to use the European Central Bank to print Euros, while the Germans want a total restructuring of the Eurozone to protect their own banks. The British are fighting tooth and nail to prevent themselves being excluded from a Franco-German deal and to avoid a modest transaction tax on bank profits.

Yet for all the enormous political and social convulsions, all the human pain, the majority of capitalist strategies are, in the words of a number of capitalist economists, "kicking the can down the road". They     are   attempts to guarantee the huge debts built up by the financial system without discussing the underlying structural weaknesses.

To understand these weaknesses there is no alternative to the ideas of Karl Marx. The financiers imagine that money can be transformed into more money. Marx showed that value was generated from the intersection of capital and labour.  He explained that capitalism was inherently unstable, that the boom and bust of the business cycle were built into it, that  as it constantly struggled to reinvent itself crises would become deeper and deeper.

Hidden in the rebalancing mechanisms advanced by the capitalist powers are the strategies that Marx predicted they would use. The resources available to the workers in the form of public services are to be  handed  over to capitalist firms. The cost of labour is to be driven down and down - both direct costs and costs such as pensions and sick pay. When the rate of profit becomes high enough a new boom will occur, followed, further down the line, by the inevitable crash. A consequence of this strategy is  an  all-out  assault on democratic rights, with individual governments being ousted by banker’s cabals. 

The road open to workers should be immediately apparent - absolute  repudiation of the debt and total opposition to all the measures flowing from it. That means the closure of failed banks and in turn that means workers directly controlling a workers bank that will ensure the operation of a transitional economy based on meeting human need rather than guaranteeing profit. 

Such  a programme cannot be carried out within national boundaries. A minlmum requirement would be the call for a united socialist states of Europe and the struggle to unite workers movements across Europe. It would also launch a class war that could only  be  resolved  by  the  creation of a socialist society.

That's  the  rub.  The current leadership of the workers movements have totally ruled out the possibility of a socialist solution. Their role is in social partnership with capitalism to restore capitalist normality. The mass of workers, after decades of defeat and facing social collapse, cling desperately to the existing institutions.

Socialists should be fighting equally desperately to build a new workers movement and a new working class party.