The financial collapse that started in the U.S. banking sector is now emerging as an enormous global economic crisis. Europe is now rapidly joining the U.S. and Japan in the general implosion of world capitalism.

The latest forecasts show manufacturing activity falling by an astonishing 20%, especially affecting auto, machine tools, computers, electronics, etc. Gross domestic product could fall by 10% in Japan as exports are grinding to a halt.

Germany, the powerhouse of Europe’s economy, is now in a serious crisis, while countries like Ireland, Spain, Italy, Greece, Portugal, and Britain risk following Iceland into national bankruptcy. Official unemployment in a number of countries, including the U.S., could reach depression levels – 10% or above – in the next year or so.

A UN study warned that an estimated 50 million jobs would be lost worldwide. Dennis Blair, National Intelligence Director, warned Congress in recent testimony that “instability caused by the global economic crisis had become the biggest security threat facing the United States, outpacing terrorism.” (NY Times, 2/14/09)

This came on the heels of a U.S. Army War College report released in December 2008 that raised the prospect of “widespread civil violence inside the United States” that would make it necessary to call on the military to restore order. The report cryptically suggested that the new Obama administration could face a domestic “strategic shock” within the first eight months in office.

So far, the crisis has swept the smaller and weaker capitalist economies with riots, strikes, and mass demonstrations and created political instability. In December, Greece was engulfed in weeks of youth rioting, mass protests, and general strikes.

In January, there were clashes between police and protesters in Latvia, Lithuania, South Korea, Bulgaria, and Hungary as workers staged protests. In scenes that resembled Argentina in 2002, tens of thousands demonstrated in Iceland by banging pots and pans for weeks against unemployment and inflation until the government fell.

In France, 2 million workers staged mass demonstrations in all major cities on January 29 as eight union federations called a general strike of public and private sector workers against unemployment, low wages, and the conservative government of Nicolas Sarkozy. The militant mood among broad sections of workers and youth in France is shown by demands such as “we don’t want to pay for the crisis of capitalism.”

In Italy, hundreds of thousands of workers took national strike action and 700,000 demonstrated in Rome on February 13, mobilized by the metalworkers union and public sector workers against the government plans to increase the retirement age. This was after a general strike against the government in December.

A national demonstration of an estimated 120,000 workers and their families took place on February 21 in Dublin, Ireland. Led by the striking Waterford workers, and under the impact of mounting mass unemployment and budget cuts affecting pensions, services, and benefits, the demonstrators demanded that ordinary people “should not pay the price for these greedy bastards.” The Times (UK) newspaper described the demonstration as “a swollen river of anger.”

The economic collapse is now having a massive effect in Asia, as the policies of export-led growth are coming to a crushing halt with the onset of the crisis in the U.S. China’s growth fell sharply to almost 7% in the last quarter of 2008 from 11% a year ago. Forecasts for Southeast Asia are for growth in 2009 to be half of what it was in 2008.

In China, over 20 million migrant workers have been laid off in the last six months. They are going back to the countryside, where there are no jobs and the Chinese authorities are worried about protests and “mass incidents” that can spin out of control as the crisis deteriorates, especially in the rural areas where households depended on remittances from migrant workers in the cities.

Hundreds of thousands of migrant workers from the Philippines and Indonesia are being forced to leave jobs that they had in the Persian Gulf and other countries and are returning home to few jobs and no future under capitalism. In a number of countries, like Thailand, there have been demonstrations and political crises, as well as industrial upheaval and strikes “spreading like wildfire” being reported in Vietnam.

World capitalism is in a blind alley. In country after country, from Latin America to Europe, Russia, and Asia the ruling classes and their governments are trying to make the working class and large sections of the middle classes pay for the crisis of their system through unemployment, wage cuts, and mass impoverishment.

This has led to explosions of rage and angry protests. However, across the globe it is clear that a sustained movement and organization is necessary in order to effectively counter the crisis.
Over the next period, capitalism will be increasingly exposed as incapable of raising living standards and condemning millions to unemployment and misery while the planet continues to be destroyed in the pursuit of profit.

As millions of young people and workers across the world begin to fight back against the bosses and the capitalist system, there will be enormous opportunities for the revival of democratic socialist ideas as the only real alternative to the nightmare of capitalism.