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The ECBs big bazooka

When Mario Draghi announced in late July that the ECB would do "whatever it takes" to save the Euro he managed to halt a financial panic and bring relative stability to the bond markets. However many of the financial commentators pointed out that he had simply bought himself time and that he would need to produce a "big bazooka" to avoid a financial meltdown. 

Draghi Has now produced the big bazooka. It operates on a number of levels. It is not at all certain that it can stabilize capitalism, but it is certain that it offers no hope at all to the working class. 

The first level is the level of confidence. Bond markets are betting on the likelihood of collapse of countries such as Spain. This pushes up the interest rate on loans and greatly magnifies the burden of debt. Most individual countries do not have the resources to meet the challenge without a default but a European response would involve the German state guaranteeing the debt. 

The new instrument is a halfway house. The ECB will guarantee loans by borrowing back funds it has already lent to European banks. This money shuffle will generate a fund of just under 1 trillion, with the aim of gaining time for an overall economic recovery. However in the absence of such a recovery the major European banks will be exposed to the debts. 

The plan also has a structural component. Europe is to provide a united fiscal platform by removing democracy and replacing it with the rule of the banks. Where countries are weighed down by sovereign debt the Troika will rule. In the background the ECB will supervise the major European banks, overruling national governments and implementing a Fiscal Austerity Pact that outlaws any pretence of Keynesian reform. 

The rule of the banks will allow attempts to resolve the capitalist crisis - burning up vast amounts of public resources and sharply reducing the cost of labour - returning the workers to conditions last seen in the 19th century. 

It is in this context that we must view IMF calls on Ireland for mass privatization and for pension and wage cuts, the removal of basic employment rights from British workers, the savage attacks on the sick and disabled. The proposals for Greece involve cutting the basic wage, the abolition of the 5 day week and the 8-hour day - pushing the working class back 150 years. 

In these circumstances the idea of a fairer and better capitalism, the formal policy of the trade union movement and a policy now illegal under the terms of the Fiscal Stability Pact, is simply nonsense. 

The unofficial unstated policy of the unions - social partnership and austerity until capitalism recovers - will only work for capitalism. Success for austerity will leave the workers in permanent poverty.

The Draghi Plan is meant to buy time. The measurement of that time is no longer a question of financial calculation but of the most savage class struggle, where capitalist stability rests on its ability to force workers to accept starvation and poverty without rising up to destroy their tormenters.


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