January 2012        

Collective resistance is the only way forward


As we enter 2012 it is clear that this will be a year of further “austerity,” deeper cuts in government spending, and more jobs lost throughout the economy but in particular in the financial sector. It will be a year when billions of euros of the people’s money will be handed over to foreign banks and bond-holders. On 25 January alone the Government will hand over €1½ billion.
     On the wider economic front, Goodbody Stockbrokers lowered its forecast for growth. They believe that GDP will rise by only 0.7 per cent in 2012—down from its previous forecast of 1.2 per cent. The external EU-ECB-IMF “troika” is demanding that the sale of state assets should be increased to €5 billion.
     A large number of salaried workers who are paid monthly will have new deductions in their first wage packet of 2012, arising from last December’s budget. Working people are now feeling the full propaganda campaign in relation to the “household tax,” as the combined arms of the establishment, the state and the mass media attempt to manufacture consent by bullying and blackmail, to get people to register to pay.
     This is not a household tax, nor a wealth tax, nor a property tax, but a method of raising money to pay back the debt of Irish speculators.
     Meanwhile, throughout the European Union the crisis of the system, just as in this state, is deepening and becoming more profound. The quisling Greek government will have to come up with €14 billion to pay off maturing debt bonds by 20 March. It will not be able to meet these repayments without support from the EU and IMF. 2012 will see a sharp fall in internal demand, which should decline by 6½ per cent this year, with personal consumption decreasing by more than the expected 4.8 per cent.
     The net beneficiaries of this massive transfer of wealth from the Greek people will be London hedge funds. A growing number of investors are buying up Greek government securities that mature in March, in the belief that the Greek government will cough up and that neither they nor the EU will be able to impose a 50 per cent “haircut” on these speculators.
     March is when the Greek government hopes to receive a potentially make-or-break bail-out payment, a lifeline of as much as €30 billion, from the European Union and the International Monetary Fund.
     Over the next few months the Greek government will attempt to persuade private creditors holding about €200 billion in its bonds to “voluntarily” swap their existing bonds for new bonds that pay roughly 50 per cent less.
     In a recent report the J. P. Morgan Chase bank estimated that as much as €80 billion in Greek bonds was now owned by independent investors, including hedge funds, sovereign wealth funds, and other asset managers.
     Most investors and speculators believe that the large creditors may go along with this, because failure to participate in a debt exchange could trigger a default by Greece; but the difficulty is the smaller creditors, who will be told that their claims will continue to be fully serviced if they do not participate in the exchange. This will either prevent the bigger creditors from making a deal or will encourage them to offload more of their debt bonds to the smaller dealers. So a deal is far from being done.
     This will intensify the pressure on the EU and the euro and will have a serious impact on the other problem child for the EU: Italy. Italy’s quisling government faces a daunting task in meeting its target of raising €440 billion in 2012 through selling bonds and bills.
     Debt and the imposition of the austerity pact can only deepen the contradictions within the system. It cannot solve its problems in any other way than by the course of action it is now taking, driven by its own logic and internal needs.
     Globally, the system is sliding into deeper crisis and will possibly enter a period of stagnation and nil growth. There are simply no solutions within this system that can meet the needs of working people and their families.
     We need to build the people’s resistance and fight-back in an organised, strategic way, in struggle that strengthens the collective action of the people, and not place greater burdens on workers and their families. We need to focus on the strategic weaknesses of the ruling forces and where they can be pushed back and defeated.
[EMC]

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