4 * Editorial Wine he is remainic etis le are in a new political period
since the 1930s remaining entirely unresolved and with a right-wing neoliberal coalition government in place.
The consequences of the Coalition slash and burn policy are becoming apparent more quickly than many people thought possible. Far from 'resolving' the crisis or reducing the debt, Coalition policy is making it worse. Goldman Sachs announced massive bonus payouts in January in the same week that 'official' unemployment went up to over 2.5 million. Unemployment of 16-25 year olds within that increased to a
It is the first major crisis in a fully globalised world and is a structural crisis of the system itself. After decades of casino capitalism the financial systems were in meltdown worldwide and despite massive 'recapitalisation' of the banks in 2008, and the nationalisation of many of them, this crisis remains entirely
In Britain despite the actions of governments since 2007 the crisis is set to get a lot worse — not least because of a mounting crisis in the Euro zone and its implications for the British economy.
It is a multiple crisis of the economy, energy, food, and of the ecology of the planet. Despite the attacks on climate science, which have set the movement back, the reality of climate change is inescapable. The past year has been the hottest on record with extreme weather events from the heat waves and fires in Russia to the floods in Pakistan, China, South East Asia, Queensland, Brazil and
The consequent loss of harvests and a consequent rise in food prices to an historically high level is already impacting the economic situation, rising food prices were a tactor in the revolt in Tunisia and are already having an impact in other parts of the Middle East and beyond. This situation combined with a growing scarcity easy to extract oil is pushing commodity prices up further and making the change to renewable energy even more urgent.
In Ireland, last November, the Fianna Fail coalition faced its 'Lehman Brothers' moment when a collapse in the markets turned into a full-scale run on Irish banks with money being withdrawn Northern Rock style. The root cause was the same as well. The Irish economy had been massively inflated by a property market based on toxic loans which were destined to go belly up once the world economy went into downturn.
Although Ireland is a small country it could not be allowed to fail because of the effects on the Euro zone itself. EU ministers feared what they termed 'contagion' across the Euro zone via the most vulnerable economies - in particular to Portugal, Spain and Italy. There were potentially serious consequences for the British banks as well.
The UK's loan exposure to Irish banks, through two of the UK's nationalised banks, RBS and Lloyds TSB, was bigger than any other country. Between them they were exposed to the tune of £80b. This was behind Chancellor George Osborne's sudden conversion to bank bailouts last December, and his offer of £7b as a part of an EU/IMF 85b Euro rescue package. This was conditional on a massive austerity programme, administered by the EU and the IMF, which was the biggest in the republic's history, which will perpetuate Ireland's crisis for many years to come. It includes a cut in welfare benefits by 14% and a 1 Euro cut in the minimum wage but retains Ireland's low (12%) corporation
In Britain a toxic combination of rising unemployment, rising inflation, and with the debt likely to go on rising month after for the foreseeable future it may not be so long before the British economy faces a crisis situation.
As we point out in this issue the leadership of the Labour movement has had virtually nothing useful to say on any of this. However in recent months we may just have started to see the emergence of a new generation of leaders who are willing to fight. For that reason much of this issue is devoted to the inspiring student mobilizations.