James Meadway

Huge protests in Madrid, brutally repressed, are now matched by another Greek general strike. Three years of the European debt crisis are producing a social and political crisis on an immense scale, with the threat of the break-up of the Spanish state. Just as those in the global South – the great arc of less developed countries across the southern hemisphere, from South America to the Far East – have suffered years of debt crises and IMF-led structural adjustment programs, so now too is southern Europe.

With weary familiarity, Britain’s government deficit — the gap between what it spends, and what it receives from taxes — has been revealed as far worse than anticipated. Last month, the government borrowed £557 million ($846 million). In July last year, it saved £2.5 billion — spending less than it received in taxes. For the financial year since April, its total deficit has risen to £44 bllion, £11.6 billion higher than the same period last year.

George Galloway, running for the anti-war and anti-austerity Respect party, won a sensational victory in the Bradford West by-election on March 29. The scale of Galloway's win, turning a safe Labour seat into a 10,000 vote majority, is without precedent in modern British politics. All those who oppose austerity and war should be walking a little taller. Galloway and Respect fought a campaign on two simple premises: opposition to wars abroad and opposition to austerity at home.

In the space of barely more than a weekend, the deal that was supposed contain the euro crisis has unravelled entirely. The call for a referendum on the so-called rescue package by Greek Prime Minister Georgios Papandreou, later retracted under huge pressure, merely capped its rapid unravelling. The prospect that the European Unions’ principal victims could be asked their opinion of the policies inflicted on them provoked near-hysteria in respectable quarters. EU leaders, Greek politicians, and the financial markets united to denounce the threat of an unseemly democratic intrusion.

In early August, ￡500 billion was wiped off the value of the largest British companies. The United States stock market fell by the largest amount since the early days of the financial crisis in 2008. The panic has now spread to Asian markets. On August 5, British markets continued to slide. The banks, locus of the 2008 calamity, have been worst affected. Barclays, Lloyds Banking Group and RBS stopped trading in their shares after prices collapsed.

Poverty and inequality are at record levels according to a new report. The redistribution of wealth from poor to rich overseen by former prime minister Margaret Thatcher, and continued under Labour, will be accelerated by the huge public spending cuts proposed by the Conservative-Liberal Democrat coalition — unless they are stopped. The Institute of Fiscal Studies’ annual Poverty and Inequality in the UK report released in May makes for bleak reading. Incomes for most households had stagnated for the last seven years under Labour.