In 2008, the financial crisis which hit the United States hard, with several banks failing one after the other, suddenly plunged millions of proletarians into misery. Among the main symbolic characters of the banking sector, Lehman Brothers, one of the great pillars of the American economic system, quickly fell into bankruptcy, provoking panic throughout the entire international banking system of which it was one of the star players.

Behind the sub-prime crisis, the barbarity of capitalism

Thanks to the loans given to the banking establishments by the investment bank of Lehman Brothers, hypothecated (pledged) housing credits at variable rates (sub-primes) were granted to households with weak incomes. The workers in these households, among the poorest in the United States, were conned into thinking that these long-term credits would allow them to buy their homes. In reality, the rates were "interesting" (favourable) as long as the price of houses increased. The new potential buyers could then re-sell their houses at a profit allowing them to pay off their borrowings if they could no longer pay their debt. But at the end of 2006 and the beginning of 2007, the American housing market collapsed. The variable rates of sub-prime credit increased and the workers couldn't keep up with them. In this situation, the lending banks wanted to take back the hypothecated properties and ruthlessly launched a sordid and massive operation of repossessions. From one day to the next, some seven-and-a-half million workers were brutally expelled from their homes and thrown onto the streets, sometimes in military-type operations with the aid of the police. While these families found themselves without a roof over their heads, some obliged to sleep in shelters or find some other form of accommodation, the majority of the repossessed buildings remained unsold and empty.

It is clear that the workers were quite simply swindled into naively thinking that they would be able to buy these properties thanks to the "interesting" rates of credit that attracted them. Many of them didn't even know what they had signed up to! These families of workers were thus direct victims of the capitalist sharks in the "world of finance", a particularly corrupt and rotten sector of the dominant class.

The American state evidently did nothing to prevent this human catastrophe. On the contrary, it quite deliberately allowed Lehman Brothers to put the key back through the letterbox and walk away. It thus bears the major responsibility for plunging millions of proletarians into the misery and destitution worsened by the explosion of the "housing bubble".

The state comes to the rescue of its financial system

If the US banking system decided to let Lehman Brothers collapse (whereas it had supported other banks on the edge of insolvency) it's because the major world power wanted to make an example out of it and send out a warning to the bourgeoisies of the main industrialised countries to mobilise in order to save the international financial system, raising the spectre of a similar or even worse crash than that of 1929. The main European banks had also invested heavily in sub-primes, thinking they were a judicious investment. After the bankruptcy of Lehman's, the shock was felt immediately in the other major industrialised countries. The threat of other bankruptcies and the announcement of a "domino effect" immediately accompanied the bursting of the housing bubble. In order to prevent the risk of a succession of insolvencies, the states and their central banks, in Europe as the United States, were obliged to put urgent rescue plans in place. In Britain, the government immediately nationalised some banks, notably Northern Rock. In France and Germany, the state decided to inject a colossal amount of liquidity into the coffers of the big banks in order to avoid bankruptcies and the collapse of the world's financial system. But these rescue measures increased state deficits even more, aggravating unemployment and precarious working. The cures of austerity deployed by the ruling class in order to lessen somewhat the state's deficits made themselves rapidly felt in the most vulnerable countries, namely Greece, Portugal, Ireland and, progressively, in every developed country on the planet.

An intense propaganda...

Today, when the threat of new financial storm appears again on the horizon, the media have a launched a devious propaganda around the ten-year anniversary of the collapse of Lehman Brothers. In the name of the "rescue" of the world economy, the states have put the responsibility for this crisis on the "world of finance", embodied in "rogue traders" and "crooked bosses". All this is aimed at absolving the capitalist system as a whole.

By efficiently exploiting nationalism and the role of the central banks in the bailout of those funds threatened by bankruptcy, the bourgeoisie have waged an ideological offensive which presents the state as the regulator of "excesses" of the financial sector and the protector of the small saver. And it's really thanks to the role of the state as "the saviour of the world economy" that governments of all kinds have been partly able to justify the necessity to keep wages down so as to increase the competitiveness of their economies on the world market and reduce their respective national debts.

Contrary to the lies which fed and still feed the official lines of the bourgeoisie, it is not the financial crisis of 2008 which initiated the train of "reforms" which have severely degraded the proletariat's living conditions and undermined so many of its so-called social benefits. If these great "reforms" and the massive attacks against the proletariat's living and working conditions have worsened throughout the world after the dramatic events of 2008, they had already been going on for decades. These attacks were orchestrated by states and governments of the right and left, without of course succeeding in resolving the crisis[1].

This better explains the ideological propaganda unleashed in 2008. It had the aim of giving a fraudulent explanation that tried to pass off the symptoms of the financial crisis for the sickness; that of the historic crisis of the capitalist economy. Since the return of the open crisis of capitalism at the end of the 1960's, more and more profound recessions have punctuated social life. And every time the bourgeoisie has come up with justifications and scapegoats. In 1973, it was put down to the "oil price shock". At the time the troublemakers were the Gulf countries and their princes rolling in money. In 1987, 1998, 2001, and 2008, it was the turn of finance and the banks to be blamed. But never have these ideological attacks been as intense as in 2008. Thus all sorts of fallacious speeches were made on the necessity to cleanse the banking system, to "moralise" the banks by sanctioning shady speculators and "irresponsible" bankers, such as the CEO of Lehman's, who was presented in the media as "the most detested man in America".

... to hide the bankruptcy of capitalism

In the very words of all the bourgeois leaders, of all the economic "specialists", the crisis of 2008 is the most serious that the capitalist system has known since the great depression that began in 1929. However, the explanations that they give do not allow any clear understanding of the real significance of these convulsions and the future that they announce for the whole of society and notably for the working class.

What is obscured today by all these economic specialists is the system’s crisis of the overproduction, its fundamental incapacity to sell the mass of the goods that it produces. Of course there is no overproduction in relation to the needs of humanity (which capitalism is incapable of satisfying), but overproduction in relation to solvent markets, to the buying power of the masses. The official lines of the bourgeoisie focus on the financial crisis, on the weaknesses of the banks alone but the reality of what these bourgeois sycophants call "the real economy" (as opposed to the "fictitious economy") is illustrated by the fact that factory closures, massive job losses and bankrupt businesses are being announced every day.

At the time of the 2008 crisis, the fall of world trade revealed the incapacity of businesses to find buyers to keep their production going. Thus, it wasn't the "financial crisis" (and still less the bankruptcy of Lehman's) which was at the origin of the 2008 open recession; quite the contrary. This financial crisis showed clearly that the amassing of debt as a remedy to overproduction could not be continued indefinitely. Sooner or later the "real economy" has its revenge, i.e., that which is at the basis of the contradictions of capitalism (the impossibility of businesses being able to sell the totality of the goods they produce), comes back to the forefront. The crisis of overproduction is not the simple consequence of a "financial" crisis, as the majority of bourgeois specialists would have us think. It comes from the very inner workings of the capitalist economy as marxism showed a century-and-a-half ago.

As Marx and Engels said in the "Manifesto of the Communist Party" of 1848, society has become too "rich"! Capitalism produces too many goods whereas solvent markets become more and more restricted, as we can see with the bitter commercial war between the United States and Europe, which moreover must confront the competitiveness of Chinese goods.

Capitalism today is being suffocated by the staggering weight of its debt. At the same time it can only keep itself going, artificially, thanks to credit. The only "solution" that capital can come up with is a new advance into a vicious spiral of debt. With the development of speculation, this mode of production which is based on the pursuit of profit, seems more and more like a casino economy. The remedy, which consists of injecting financial liquidity into the coffers of the banks and other major financial institutions, can only, in the real world, make the sickness worse, notably by increasing the sovereign debt of the banks.

Ten years after the seismic events of 2008, despite the urgent rescue plans for the financial system and despite a certain, very fragile "recovery" in the growth rate of 2012-2013, the bourgeoisie is once again becoming restless. Ten years of the austerity cure have changed nothing fundamental. States remain overburdened with debt and the central banks have been force-fed with dubious assets. World growth has again slowed down and all the players are taking more and more risks. Since the middle of 2018, the media and bourgeois economists have sounded the alarm, fearful of a similar or worse situation than that of 2008. By developing these alarmist statements and campaigns around the excesses of the financial world, the bourgeoisie tries to terrorise and paralyse the working class behind the defence of the "saviour state". In order not to obstruct its (illusory) rescue plans for the financial system, proletarians are called upon to tighten their belts even more and accept new sacrifices, new inroads into their incomes.

Faced with this capitalist barbarity, notably shown in 2008 by the scandalous eviction of millions of workers from their houses in the richest country in the world, the proletariat has no other choice but to once again take up the fight for the defence of its living conditions and against the social order of its exploiters. It must understand that far from being a "neutral protector", regulating the speculative excesses of financial traders, the bourgeois state is first and foremost an organisation of repression charged with the maintenance of all the wrongs of capitalism. Insolvent banks and businesses only expose the weakness of the capitalist mode of production which has no future to offer humanity. The only solution to the crisis is the overthrow of this system and the destruction of the state by the class which produces all the riches of society: the international proletariat.

Sonia, November 17 2018