Perfect Storm of Crises

The Covid Pandemic. The country facing default. The banks failing. No doubt the capitalists can now understand what Shakespeare meant, when he wrote in Hamlet, ‘’When sorrows come, they come not single spies but in battalions’’.

Yet the capitalists would appear to be ‘’shouldering their burdens’’ rather well. Faced with financial ruin, an ‘’economic disaster’’, in the form of a Second Great Depression, they have decided upon a course of action that is simplicity itself. They have decided to do absolutely nothing!

In March, Silicon Valley Bank and Signature Bank went broke. The economists are referring to this as ‘’two of the largest bank failures in American history’’. A third large bank, First Republic, was ‘’on the brink’’, but managed to recover. Temporarily!

Then in April, First Republic was once again ‘’in need of financial assistance’’. For that reason, it was ‘’given a capital infusion’’ of $100 Billion by other banks. The Federal Reserve gave it a $70 Billion ‘’line of credit’’, and other banks donated $30 Billion. Perhaps they thought that this was sufficient to‘’prop it up’’. Indeed, this worked, for one whole week!

At the end of that week, the price of a ‘’share of stock’’ in that bank was selling for $3.51, down from a high of $145. As the capitalists see it, the ‘’stocks were down 97 percent’’. Now the FDIC is preparing to ‘’place it in receivership’’. 

The lesson here, is that trying to ‘’prop up’’ a bank that is failing, is like ‘’pouring water into a dry well’’! It does not do a ‘’world of good’’!

Now the capitalists are ‘’expressing concern’’ that the ‘’investors’’, those who ‘’play the stock market’’, may be ‘’getting jittery’’. They are afraid of a ‘’panic’’, a ‘’run on the banks’’, as those with money in those banks, attempt to draw that money out, before the bank fails. Their fears are well grounded! The banks do not have enough money to cover the deposits!

As the economists so politely state, ‘’it is not clear that the central banks can contain the international banking crisis’’. 

News flash! This banking crisis is not limited to America! It is international! So how can the central banks possibly contain an ‘’international banking crisis’’?

But within the country, the ‘’central banks’’, the ‘’chosen few’’, those which are classified as ‘’Too Big To Fail’’, will not be allowed to fail! Even if they cannot ‘’contain the crisis’’! They will be supported, with tax payer money!

On the other hand, as the capitalists phrase it, ‘’there are doubts over the viability of thousands of regional banks’’.

This is their stilted way of saying that ‘’thousands of regional banks’’, which they consider to be ‘’Too Small To Succeed’’, are about to be ‘’thrown under the bus’’, about to go broke!  

This is not something they advertise! Yet the Treasury Secretary, while testifying before a Congressional Committee, ‘’let slip’’ that ‘’community bank customers’’, those with over $250 thousand in those banks, were ‘’not necessarily protected’’. Bear in mind that those deposits total $19 Trillion!

With that in mind, many economists, in the finest tradition of belly crawling, are assuring investors that ‘’all is well’’. The banking industry is absolutely not ‘’teetering on the brink of collapse’’. Although even they are forced to admit, in the interest of ‘’covering all the bases’’, that the ‘’ultimate outcome is difficult to predict’’.

By contrast, one of the more honest economists, has no doubts about the ‘’ultimate outcome’’. He expects a ‘’panic’’, a ‘’run on the banks’’, a ‘’repeat of the stock market crash of 1929’’. He thinks that the ‘’coming week’’, the first week of May, will be ‘’critical’’. He also says that, ‘’ninety days from now, the stock market will look vastly different’’.

Bear in mind that this economist is by no means ‘’Left leaning’’. No one has ever accused him of being a Communist! He is devoted to capitalism, right to the very core of his being. His one and only concern is with making a profit. For that reason, he has made a business of giving advice to other capitalists, concerning the best way to invest their capital.

As I write this, the journalists are reporting that they expect the FDIC to ‘’place the First Republic Bank in receivership’’, on Sunday, preferably ‘’before the Asian markets open’’.

In conclusion, I can only stress that which Lenin pointed out, in Imperialism, the Highest Stage of Capitalism: ‘’Crises of every kind -economic crises more frequently, but not only these- in their turn increase very considerably the tendency towards concentration and monopoly’’.

Now that the capitalists are faced with a ‘’perfect storm’’ of crises, and not ‘’merely’’ financial, the monopolies are about to become far more complete. Thousands of ‘’regional banks’’ are about to ‘’go bust’’. The very few ‘’central banks’’ will be left standing. Financial pillars!

Along with the ‘’regional banks’’, almost all small businesses are about to ‘’bite the dust’’. 

Middle class people, take note! You are about to join the ranks of the proletariat! Very soon!

No doubt, the intellectuals among that class will soon become active, raising the level of awareness of the proletariat. As I have covered that in a previous article, there is no need to repeat it. Equally without doubt, they will take part in the creation of a true Communist Party, one which calls for the Dictatorship of the Proletariat. 

I mention this out of a sense of urgency. We are on the brink of Depression. As well, we are also on the brink of Revolution. No one can predict just when it will break out. Now it is up to us to prepare. With that in mind, may I suggest that the slogans should include:

Dictatorship of the Proletariat!

Workers of the World, Unite!

Scientific Socialism!