Capitalism 2023: The Year of the Global "Wave of Bankruptcies"
By Daniel Campos- La Marx International 8/24/23
The year 2023 has become the year of the "bankruptcy wave" in global capitalism. With
bankruptcies that shake capitalism with its epicenter in the United
States, Europe, and China, the crisis hits mercilessly, and leads to
bankruptcy of Corporations. How did capitalism get to the "bankruptcy wave" of the year 2023?
More than two decades of crisis
Global capitalism has been going through a serious crisis for more than 22 years when the "dot.com" bubble burst on Wall Street, which later suffered a sharp crisis peak when Global Corporations burst between 2008/09. From
the heart attack that global capitalism suffered in those years, the
era of the Salvage began: An operation to rescue capitalism that has
been going on for more than 15 years and demanded more than 60 billion
US$.
From there we can define that capitalism survives through an artificial respirator called Salvatajes. These are technically called QE (in English "Quantitative Easing") , which means that the rules for printing money are "eased" , and allows the Central Banks of the most important capitalist-imperialist countries in the world to print mountains of money to bail out Corporations. capitalists who dominate the global economy.
The first tranche of bailouts was called QE1 in September 2008, and was extended until March 31, 2010. When the world economy again showed signs of recession, the second round of bailouts began on November 3, 2010 called QE2 until June 30, 2011. But it failed to avert the danger of a crisis, which led to a third round of bailouts called QE3, which began on September 13, 2012 until October 29, 2014, when it stopped in the US. but it continued in Europe, where it was developed over the following years to bail out Greece, Italy, Portugal, and the European Global Corporations that were littered with papers from those countries that had gone bankrupt.
The bosses of capitalism believing that "the worst of the crisis is over" began in November 2017 an economic operation called Quantitative Adjustment (QT, Quantitative Tightening) which is an inverse process to QE, instead of printing money the QT withdraws money in circulation restricts the flow of money by raising interest rates . Applied for the first time as QT1, this Salvage withdrawal operation brought capitalism to an explosion when the New York bank replacement market exploded on September 17, 2019, and the Treasury bond market in March 2020, which pushed the big corporations that dominate the world economy again to bankruptcy.
This led to the largest salvage operation in history: The QE4. Implemented as of March 2022, QE4 meant an operation in which the Central Banks had to multiply by 7 the masses of money injected into the Global Corporations. If between the years 2008-2019 they had injected money at an average of 120 billion dollars per month, they went on to inject more than 833 million dollars per month with a total of more than 30 billion US$ in just 2 years between March 2020, and March 2022 to bail out Global Corporations. However, such a large amount of fictitious capital brutally injected into the economy triggered global inflation: price increases exploded on the 5 continents from countries that have lived with chronic inflation for years, to countries that have not known inflation for decades.
With
inflation soaring, a wave of workers' strikes broke out worldwide in
the United States, France, England, Germany, Japan, and developing
countries. To avoid the
inflationary wave, the Heads of capitalism had to withdraw the QE4
bailouts, and implement for the second time an operation to withdraw the
capital masses by raising interest rates, the QT2. But all this frenetic movement from QE4 to QT2 caused a new wave of bankruptcies in the United States, Europe , and China during the year 2023, which is how we got to the "wave of bankruptcies" that we are currently experiencing.
The "wave of bankruptcies" of the year 2023
In the second half of March 2023, world imperialism creaked. A wave of bankruptcies broke out, beginning Silicon Valley Bank, a fall so severe that HSBC bought Silicon Valley Bank's England branch for $1. After it, the Credit Suisse crisis broke out, one of the 10 largest corporations that dominate the global economy based in Switzerland, which received a bailout of US$ 54,000 million, which did not prevent a crisis dynamic on the way to bankruptcy from continuing. . Then the crisis in the United States of the First Republic Bank, of the Signature Bank, broke out, and the authorities announced that 186 banks were in danger. In Europe, the Credit Suisse crisis pushed large Global Corporations like Germany's Deutsche Bank, France's Societe Generale, and HSBC in Europe into crisis.
The dynamics of events opened a sequence of crises that threatened to bankrupt the Global Corporations that dominate the world economy, threatened to drag down Wall Street, and all the world's stock markets. This forced a coordinated intervention by imperialist governments and states to stop the spread of bankruptcies and stop the crisis. On March 19, 2023, a historic agreement was signed between the 6 main Central Banks of the world: The US Federal Reserve (Fed), the Bank of Canada (BofCa), the Bank of England (BofE) , the Bank of Japan (BoJ), the European Central Bank (ECB) and the Swiss National Bank (SNB) signed an agreement to put millions of dollars in the pockets of the owners of Global Corporations with the aim of stopping the wave of bankruptcies.
This agreement of the Central Banks entered into force on March 20, 2023 with the objective of "saving" Global Corporations, a kind of new round of "Rescue" that introduces the "novelty" that it will be carried out of a "daily" nature , that is , from now on, day by day, a mechanism adopted for the implementation of this emergency operation is through the execution of the mechanism that the capitalists call "swap lines".
The "swap lines" is the implementation of a "window" that supplies money 24 hours a day to establish and form a "money security mesh" that provides loans for all the millionaires in the world and their Global Corporations.
Such is the severity of the crisis unleashed in March 2023 that the agreement was held as an emergency on a Sunday afternoon to prevent crack from exploding at the opening of the stock markets on Monday. The agreement of the Central Banks allowed the capitalist governments to advance in the rescue measures, in the first place, with this agreement it was possible to carry out the Credit Suisse Rescue through the mechanism of a merger with the other great Global Corporation of Switzerland , the Union of Swiss Banks (UBS).
The merger of UBS and Credit Suisse was an operation that involved US$3 billion injected by UBS, and US$100 billion from the Central Bank of Switzerland, money injected with the support of the other central banks. The masses of money immersed in the merger operation between UBS and Credit Suisse are obscene, money aimed at saving big businessmen who live in mansions, have luxury cars, yachts, and private islands, millions in the pockets of the oligarchs of the 1% that dominate the world economy in a world where billions of people do not have enough to eat.
However, the agreement of the Central Banks did not solve the problem. A new slump at First Republic Bank began in late April after the bank revealed it had lost $100 billion in deposits as a result of the fallout from Silicon Valley Bank (SVB) and Signature Bank. The bank's shares fell 30% and First Republic's announcement of mass layoffs of between 20% and 25% of its workforce and selling assets did not prevent the collapse. From the $115 price that First Republic shares were worth, they dropped to $5.69, a brutal drop. The bank's share listing had to be halted several times due to the rapidity of the decline.
The Central Banks' document praises the intervention of the Swiss authorities in favor of financial stability, by endorsing the takeover of Credit Suisse by its competitor UBS. "It has been a decisive action to restore order in market conditions and guarantee financial stability." They are courtesy phrases to hide the crisis, because despite the desperate and extreme nature of the actions of the Central Bank officials, the crisis continues and an episode of bankruptcies can be reopened in the United States or Europe at any time. The agreement of the Central Banks is a fraud and a scam against the peoples of the world.
Bankruptcies hit in China
The agreement between the central banks, in addition to precariously resolving the crisis, left an unresolved element: the crisis in China. The Central Bank of China was left out of the agreement because the imperialist countries prioritized the rescue of the big Corporations that dominate the world economy, to then try to solve the crisis of the emerging countries. Evergrande Group, China's largest real estate developer, filed for bankruptcy in a US court on August 17, 2023. The company sought protection under Chapter 15 of the US bankruptcy code that protects non-US companies to face defaults on $330 billion in liabilities, which created a domino effect and resulted in thousands of unfinished homes in all china.
The firm began a restructuring of its debts with the approval of the courts of Hong Kong and the British Virgin Islands, seeking that the authorities of Hong Kong, Cayman Islands and British Virgin Islands, approve the bankruptcy. Evergrande accounts for 40% of Chinese home sales, and its bankruptcy sparked alarm around the world as some analysts feared a collapse that could be China's "Lehman" and the start of another global financial crisis.
However, Evergrande's bankruptcy is agreed with the imperialist authorities of the United States and Europe, to avoid the collapse of global capitalism that could cause the bursting of the real estate bubble in China. Evergrande is a "controlled demolition" , a gradual collapse. Following the Central Bank Agreement, US imperialism has turned to assisting the capitalist government of China to help it prevent the outbreak. Far from the childish legend of "World War III between China and the US" that the global media tries to sell, the reality is that China's economy is totally dependent on imperialism and investments from Global Corporations.the Summits with the United States given the danger of bankruptcy that threatens China.
The backdrop is that the Chinese economy is in a depression, and it went from growing at 14% in 2007 to a collapse of 3% today, a nosedive that puts the Chinese economy on the verge of exploding. . In this framework, capitalism cannot allow any bankruptcy, because this can trigger a global wave of bankruptcies that endangers global capitalism. That is the danger that is now looming in China where a gigantic bubble called "the mother of all bubbles" has formed which, if it were to burst, would hit all the banks, corporations in the world, and Wall Street.
The "China bubble" arose as a result of the huge injection of money carried out by the capitalist government of the Communist Party of China (CPC) in the Chinese Corporations, and banks to save the local bankers and multinationals, and by flooding cheap money to banks, promoted thousands of companies to grant all kinds of housing loans, a business that grew exponentially, and went from the rich sectors to sectors of the working class and the people, which developed a housing purchase boom, taking advantage of low interest rates and the cheap price of the yuan, the national currency.
Home ownership and sale became a business for government and CCP officials who became obscenely rich. But following the laws of capitalism, the spectacular demand for houses, loans, land, construction materials, and bricks triggered inflation. Housing prices, due to the great demand, began to suffer an upward trend, despite government policies to stop the price boom, the brutal rise in prices caused millions of people to stop paying their mortgages, and lose the ability to access their home.
But unlike what happened in the US when the massive defaults occurred, construction companies in China must keep building. The wheel can no longer stop, because if the construction of homes, the pharaonic mega-works of cities, and all the necessary infrastructure are stopped, millions of contracts for construction companies, brick factories, banks, finance companies, cities, and provinces are cancelled. , which could trigger a massive bankruptcy earthquake, liquidating the country's capitalist economy. This is what Evergrande's bankruptcy expresses.
The Chinese government should have come to the rescue of Evergrande, China's top construction company, but the threat continues. The United States began taking steps to seize control of China's economy and avert disaster when on August 26, 2022, the Public Company Accounting Oversight Board (PCAOB), a corporation under the control of the United States Congress , signed a Protocol with the China Securities Regulatory Commission (CSRC), and the Ministry of Finance of the People's Republic of China.
The Protocol allowed access for the PCAOB to inspect, and fully investigate in accordance with US law, the top 250 Chinese companies, and their accounting firms based in mainland China, and Hong Kong. This turned the US-China relationship into something less than colonial.
But even under the supervision of the PCAOB, economic disaster and chaos continued to grip Chinese companies, forcing the direct intervention of the United States Secretary of the Treasury, Janet Yellen, who traveled to Beijing to meet with the first Chinese Minister Li Qiang and Chinese leader Xi Jinping on July 6, 2023. Taking into account that Janet Yellen is, in fact, the Minister of Economy of the world, she began to act directly on political and economic leaders of China such as Prime Minister Li Qiang; the new head of the Chinese Communist Party (CCP) at the People's Bank of China Pan Gongsheng; Finance Minister Liu Kun and Vice Premier He Lifeng.
After Yanet Jellen's departure from China, all stock market speculators discount the start of new bailouts of the People's Bank of China (PBOC) to rescue the disastrous situation of the economy
according to the dictates of US imperialism. The depression of the
Chinese economy has caused a desperate situation of unemployment among
young people, many of whom resort to religious temples to beg for work, a
situation that is accompanied by a deflation of prices, the opposite of
what happens in the rest of the world where there is price inflation.
So serious is the fall into depression that prices suffer deflation, that is, there is no movement in the economy, or it is so low that it does notthere is a level of purchases that stimulates price rises, which accounts for the serious crisis.
We reject the reactionary agreements to stop the "wave of bankruptcies"
The
wave of bankruptcies triggered throughout 2023 has forced the
imperialist countries to celebrate the Central Bank Agreements, and then
the agreements between the United States and China to help prevent the
collapse of the Chinese economy. These
agreements are reactionary, because they imply the rescue of
millionaires, while millions of people are sinking into abysses of
poverty throughout the world, which is why we must reject them and
denounce them.
Obviously, the "multiplication" of summits between the United States and China is another slap in the face of the supporters of the"Decoupling Theory" and the imminent "advent of World War III" , which is being defended by the charlatans of the Progressive International (IP) and the opinion experts from Revista Jacobin. When images of US government officials and the Chinese government collaborating together against the revolutions of the world's peoples appear, all the charlatanism of the march towards a " Multipolar" world collapses. There is no march to any "Multipolar" world,but a greater dominance of the United States and its Corporations over the world economy.
The fall into depression of the Chinese economy with weak growth, and the United States taking control of the Chinese economy to prevent its collapse shows
that there is not the slightest possibility that China disputes the
dominance of capitalism world, as the charlatans of the "Decoupling" affirm. China
not only does not challenge the United States, but its oligarchy is in
such a vulnerable situation that it is asking for help from United
States imperialism, which goes out to "rescue" the oligarchy headed by
Xi Jinping and the CCP .
From La Marx International we reject and denounce the Summits", meetings, and agreements between the imperialist government of Joe Biden and the government of Xi Jinping. All these agreements are lies, they lie to the people's faces, because that money will not guarantee no "financial stability", that money will not go to any home of the millions who suffer from hunger, poverty, and misery in the world. It will go to the pockets of the oligarchs who dominate the world capitalist-imperialist economy, it will go to the pockets of the richest 1% as has always happened. We must repudiate with all our might the irrational immorality that means the agreement of the Central Banks, and the agreements of the United States with China. What we need is to invest those billions of dollars in work, wages, health and education for millions of people in the world who need it.
The insurrections and revolutions that are sweeping the world will destroy the Central Bank Agreement and any other reactionary agreement to defend capitalism. We need to defeat these measures by uniting the struggles of the world, from the National Liberation struggle carried out by the people of Ukraine, through the struggle of the people of France, the strikes of the British, Italian, German workers, as well as the struggle of the people of Iran against the dictatorship of the Ayatollahs, etc. On the way to imposing the fight for Global Socialism, we will put an end to the measures solely designed to defend the rich and millionaires of the world.