The crisis that nearly led to the collapse of the Euro underlines the fragility of the economic system. The eurozone states have put up 500 billion euros to bail out crisis-ridden economies.
This shows the deep structural difficulties that exist and equals the biggest bailout since the collapse of Lehman brothers in 2008.
The eurozone states have also asked the IMF for a 250 billion euro loan facility. Headlines across Europe were about rescuing the Greek economy. But there is a much deeper issue—the survival of Europe’s banking system
The Financial Times newspaper says a Greek default on its debt would, “dwarf any sovereign default since 1983”. It goes on to say that such a state default remains a “viable option”.
German and French banks are major holders of Greek debt. One estimate suggests that the German regional banks may have to write off 800 billion euros of worthless debt—equivalent to around a third of Germany’s annual gross domestic product.
When the crisis first hit, the debts of the entire banking system were guaranteed by governments across the world. Now the debts of the weaker states in the eurozone are being guaranteed by stronger states.
And in return, the people at the heart of the crisis—the bankers and speculators—are demanding that governments launch the biggest wave of austerity measures for generations.
That’s the perverse logic of a class-divided society. The parallel will not be the cuts we saw under Margaret Thatcher but the structural adjustment programmes imposed in Latin America, South Asia and Africa since the 1970s.
In Spain, where the government had to step in last week to stop the collapse of a big regional bank, unemployment already stands at 20 percent. The Greek economy is expected to contract by a further 5 percent this year.
And the austerity measures will be extended across the whole of Europe.
But the ruling class has a problem—there are splits and tensions between and within the elites. There is also a nervousness about how far they can go without provoking furious opposition.
A remarkable sign of the lack of popular mandate for cuts is that George Papandreou—the beleaguered Greek prime minister—is slightly more popular than his counterparts in Italy, Spain, Portugal, Ireland and France.
All this points to the potential for resistance. And the Greek revolt offers a point of reference for everyone who wants to fight back.
Our task is to fan every flame of resistance in Britain and build networks of solidarity that can encourage and sustain the much needed fightback.
It is vital that every worker stands in solidarity with the BA cabin crew and every other group of workers in struggle.
That starts with the protests that the Right to Work campaign has called for in every city on 22 June when the austerity budget is announced.
These must be protests that lay down a marker of resistance against the cuts at home, and in solidarity with workers in Greece.