Debt crisis, debt crisis, debt crisis...but what is a debt crisis? Is it an inability to pay back the debt, inability to pay the interest on the debt, or is it an inability to make enough money to pay either or both?
1. Debt is never a problem to the creditor so long as you can 'service' it,. ie pay the interest. In fact, just the opposite. Interest payers are the perfect customers. The creditors' money 'works' (a nonsense but we just say it all the same ) and this earns the debtor his or her some income. Bigger the debt, the more interest, yum yum.
2. The moment a creditor isn't getting his interest from the debtor, he worries ('loss of confidence') or the moment he suspects he won't, he worries and starts to ask for 'guarantees' , tries to raise the interest rate or demands that the debtor go and find extra cash, eg by borrowing some more..and so on.
3. But why couldn't the debtor pay the interest? What was the problem? The problem was that his income wasn't sufficient.
That is the crisis.
So a bank's debt is caused by people not making enough profits and/or earning enough money to pay back loans. A country's debt is ultimately caused by a government not receiving enough in taxation to service the debt. The taxation comes from people being in work and capitalists' paying their taxes - an enormous amount of which they avoid or dodge (tax havens etc)
4. The idea that there is a solution to this by making poor people poorer or taking away the basic minimum services that people need (hospitals, schools, social services) (note: but not atomic and nuclear weaponry) is either a lie or an illusion. In capitalist terms, all it does is restrict 'demand' ie make people less able to buy stuff that capitalists want to sell. However, there is a strategy that lies behind it: make 'costs' to capitalists so low, that they might start to consider making and distributing things again.
5. So a crisis in capitalism (ie now) is caused by capitalists not able to make sufficiently big profits to pay back the loans. In order to start making profits again, they have to make poor people poorer. This means disaster for millions. That's how business, the economy, capitalism works. It's in its structure, in its workings.
6. We have to decide if that's OK and should just accept that...or fight back where and how we can? And that 'we' isn't just where we live. It's all over the Europe, all over the world: Greece, Spain, Italy, wherever. We shouldn't be paying for the crisis the worldwide super-rich made.
