European stocks are bordering on a crash situation. In Spain the day opened with a sudden downturn in employment this September… despite European tourists delaying their holidays. Around the world, the worst oil production figures in 16 years and the stagnation of world trade (1.2%) speak of a productive engine unable to rev up or even keep up its rhythm. In Europe as a whole, industrial production has been at its worst since 2012. The first victim: Germany. Economic activity figures for 2019 have fallen so low that Germans coined the term “mini-growth” to describe the aggregate result.
Businesses lack sufficient demand, leaving capital with nowhere to be productively placed
Interest rates are negative throughout Europe, in other words, the Central Bank subsidises banks that want to lend money and the banks subsidise anyone who wants to invest. Draghi bids farewell confessing that the monetary policy lever is broken and that capital’s last hope is the policy of public spending, that is, to increase the debt of the states to save time and see if, magically, the engine starts again.
The problem is that there is nothing to invest in because no business looks good with falling demand. The situation is so extreme that the German finance minister exclaimed “It can’t be that investment has become so complicated!” He knows what he’s talking about. He has 15 billion public investment funds to invest… and nobody is asking him for the money, not even under the best terms. “Please, take the money!” he shouted shamelessly in the press. But whatever, the over-accumulation of capital is increasingly outrageous. The famous “unicorns” no longer go public because they no longer need funds or retailers. “Family offices” that accumulate enormous amounts of fictitious capital to place are enough for them. The devaluation of capital is a vicious circle, as there are no profitable investment destinations, the financialised companies, which thrived by collecting cash and speculating with it, keep sinking one after the other. The first one to go down was Thomas Cook. It was followed by a great German tour operator, Tour Vital. But now it has jumped to the textile and even to the continent: the American low-cost clothing chain Forever 21 filed for bankruptcy this week. U.S. retail is falling apart.
The trade war is already here
The US strategy to all this is to “bounce back” the crisis by aggressively defending its domestic market while trying to impose trade agreements that will secure some new orders. This has been obvious in the negotiations with Japan. But in the relationship with Europe it has not been any less so. Amidst threats, denunciations and peripheral attacks, the US keeps German automobile industry in check.
Now, with the blessing of the WTO, which has acknowledged that Airbus competed with Boeing on the basis of covert subsidies, the US is preparing a new wave of tariffs. Brussels responded by preparing a counter-offensive… but it has nothing more to lose.
In Spain, U.S. tariffs would be especially painful, as two of the main exports to the U.S. – wine and oil – would be choked under a 25% tariff. It couldn’t have come at a worse time. Growth in the second quarter was the lowest in three years. And it’s no wonder that growth expectations keep dropping over and over again. The Industry has the worst figures in six years… and they were already quite bad. The tourism sector is already taken for lost, in just over a week the bankruptcy of Thomas Cook has brought to the closure of more than 500 hotels.
The stock market indices, which show the value evolution of large investments and monopolies of Spanish capital, are, as could not be otherwise, being increasingly punished. The state beats records… of public debt, and inflation is at a three-year low showing an economy where capital is overmanned – because it has no capacity to exploit the workers – and wages are under no upward pressure anywhere.
A generalised attack against workers is coming
We’re not just going to suffer all this with unemployment. In Germany, attacking the pension system is already a blatant goal. In France they have already started. In Spain, under the elections’ covering noise, the depth of the bourgeoisie’s love for Sánchez is not even questioned. The crisis has fallen on top of the national bourgeoisies and as our congress pointed out last June:
The global situation is not even the same as it was ten years ago. Not only do the central bank mechanisms no longer have any spare room to maneuver or wiggle around, but the ability to create social cohesion around the needs of the national capital is significantly diminished by internal battles of the bourgeoisie itself and the years of desperate – and sterile – movements of the petty bourgeoisie.
The only way in which the world bourgeoisie seems to find its way out is through the direct appropriation of the workers’ coverage and meager savings – pension, health and education systems – and the increase in exploitation in absolute terms: more real hours of work for lower total wages paid. Capital forces the realization of surplus value by using the state, which is supposed to cushion its contradictions…. Finally encouraging them.
1st Emancipation Congress