Lula government prepares new attacks on Brazil’s workers and poor

Guilherme Ferreira

Brazil's President Luiz Inácio Lula da Silva [Photo: MMARCELO CAMARGO/AGÊNCIA BRASIL]

The government of President Luiz Inácio Lula da Silva (Workers Party - PT) has begun the second half of its term with rising signs of a mounting economic and social crisis in Brazil. With a challenging domestic and international economic scenario, marked by the trade war unleashed by the US administration of Donald Trump, the Lula government is laying the groundwork for placing the growing weight of this crisis onto the backs of the Brazilian working class.

At the end of last year, the Lula government managed to pass an austerity package which will have a broad impact on the poorest and most oppressed sections of the working class. But it hasn’t stopped there. Members of his economic team are responding to an alleged “heated market” and a prospect of higher inflation this year with actions aimed at slowing down the economy, spending cuts and more austerity measures. Following the mantra of economic orthodoxy, its aim is to suppress wages by raising interest rates to keep corporate profits growing.

In a January 31 interview with Estado de S. Paulo, Lula’s Treasury Secretary, Rogério Ceron, said that “there is an understanding within the government that it is necessary to guarantee a slowdown in the economy in order to avoid inflationary decontrol.” He made clear that this implies “a more contractionary fiscal policy in the first half of the year” and that “if more fiscal measures are needed to guarantee the results sought by the government [a zero deficit target and compliance with the new fiscal framework, which limits social spending], they will be adopted.”

To this end, one of the measures that the Lula government is putting into practice is to raise interest rates even further. In the first two years of his administration, Lula repeatedly criticized the president of the Central Bank (BC) appointed by the fascistic ex-president Jair Bolsonaro, Roberto Campo Neto, for the high interest rates in the country. Last July, Lula called him a “political and ideological adversary of the governance model we are pursuing,” that is, one that supposedly prioritizes productive investment, aiming the “re-industrialization” of the country, over financial capital.

However, now that the vast majority of the Central Bank’s directors and its president, Gabriel Galípolo, are direct appointees of the PT government, what is seen is the continuation of Campo Neto’s monetary policy. Finance Minister Fernando Haddad said in an interview last Friday that “The remedy for correcting inflation is often to raise interest rates to inhibit price rises.” At the end of January, the Central Bank raised the interest rate to 13.25 percent, the highest real rate in the world, and the prospect is that it will reach 15 percent in April.

At the end of January, some economic figures for 2024 were released which, from the Lula government’s class perspective, justify its concern. In 2024, Brazil’s Gross Domestic Product (GDP) grew by 3.6 percent, while this year the government expects it to grow by up to 2.5 percent. There is also the possibility that the Brazilian economy will enter a technical recession (two quarters of falling GDP) in 2025. 

Last year, Brazil saw a 4.8 percent increase in the inflation, driven mainly by higher food prices for the poorest. Household food inflation was 8.2 percent, while food and beverages pushed up inflation for low-income families by 2.3 percentage points, compared to 0.9 percentage points for high-income families.

In the first week of February, the federal and state governments raised fuel prices, with gasoline going up by 2.4 percent and diesel by 4.2 percent. The huge dependence on trucks for food distribution in Brazil will certainly mean that the increase in fuel prices will be transferred to food, further increasing the inflationary perspective. The government expects inflation of 5.51 percent this year.

Any prospect of Lula’s government acting to alleviate the scenario of accelerating degradation of living conditions, especially for the poorest, is an illusion. Ignoring the huge profits of large companies and banks in Brazil last year, which at least partly explains the high food inflation, Lula declared on February 6: “I can’t freeze [prices], ... what we need to do is call the businessmen, talk to the whole sector, and see what we can do to ensure that the basic food basket of the Brazilian people fits within their budget with a certain flexibility.”

The following day, the announcement that the Ministry of Social Development would increase the value of Bolsa Família, one of the largest social assistance programs for people living in extreme poverty, against the rise in food prices was almost immediately denied by the government. In a statement, Minister Wellington Dias was forced to acknowledge that “All the actions of this Ministry are taken in accordance with the guidelines of the federal government, especially with regard to fiscal responsibility.”

The Bolsa Família and the Continuous Cash Benefit (BPC), which pays a minimum wage to elderly and disabled people living in extreme poverty, have been attacked by the Lula government’s austerity package approved in December. With the prospect of a reduction in the number of beneficiaries—being intentionally provoked by the PT’s austerity package—and a smaller increase in the value of these benefits—which are dependent on the increase in the minimum wage, another item targeted by the austerity package—social inequality in one of the world’s most unequal countries will certainly increase.

An article in the newspaper O Globo titled “Misery falls, inequality doesn’t: experts explain why Brazil doesn’t distribute income,” reported in early December that “IBGE [Brazilian Institute of Geography and Statistics] estimates that inequality would have increased by 7.2 percent in 2023” if Bolsa Família and BPC were disregarded. In 2023, even with GDP growing by 3.2 percent, social inequality in Brazil was the same as in 2022, reaching 0.518 according to the Gini index. It is surpassed only by the poorest countries in Africa.

At the same time, the report says that, according to IBGE, the “heated market ... has mainly benefited higher-income groups, since they depend more on wages. In other words, the gains of the labor market were not appropriated by the most vulnerable.” In fact, even after Brazil’s GDP has grown over the last four years, the average income of workers in Brazil is still at the pre-pandemic level.

The impact of the aggravation of social inequality among the active workforce, highly understated by the government and in bourgeois public opinion, is brutal. Although unemployment is formally at its lowest level since 2012, having reached 6.6 percent last year, this statistic disregards underemployed workers—people who work less than they would like or are not looking for a job. Were these numbers considered, the unemployment rate would double. In Brazil’s poorest states, such as Bahia and Pernambuco, official unemployment already exceeds 11 percent.

Those employed face brutal levels of exploitation. Most formal workers in Brazil are in services and commerce, industries in which the so-called 6x1 scale (six days of work, one of rest) predominates, with working hours of 44 hours a week or more. Almost 40 percent of Brazilian workers are in the informal sector, rising to more than 50 percent in the impoverished states of the Northeast.

The Lula government is trying hard to paint the country’s economic and social life in rosy colors that frontally clash with reality. On February 3, at the start of the Brazilian Congress’s legislative year, Lula declared that “In these two years, Brazil has become less poor and less unequal, with rising wages, higher labor income and fairer income distribution.”

But Brazilian workers doesn’t seem to agree. At the end of January, an opinion poll by Quaest showed that for the first time since the start of his term, Lula had negative approval rating. Approval fell from 52 percent in December 2024 to 47 percent in January 2025, driven by the economic difficulties of the Brazilian population due to low wages and high inflation. In the Northeast, where the PT has a significant electoral base mainly among the poorest, Lula’s approval went from 67 percent in December to 59 percent.

Following the PT’s collapse at the polls in last November’s municipal elections, the soaring inflation, the government’s austerity measures and Lula’s broken promises to reverse the pro-corporate reforms implemented by the right-wing Michel Temer (2016-2018) and Bolsonaro administrations, there is growing speculation that this government will pave the way for a return of the far-right to power, as happened in the United States with the reelection of Trump. This has led to growing dissension within the PT and among its allies.  

In December, João Pedro Stédile, leader of the Landless People’s Movement (MST) said in interviews that “the public policies [of the Lula government] are not reaching the poorest among us, in the suburbs and in the countryside”, and that “Land reform has come to an absolute standstill in these two years.”

Before the Lula government approved its austerity package at the end of December, long-time PT leader and former party president José Genuíno told TV Fórum that measures like this are “the path to the PT’s political defeat. I think there’s a climate of apprehension at the ranks of the party, there’s a climate of dissatisfaction.... I think we’re at a certain crossroads.”

Major class battles lie ahead for the Brazilian and Latin American working class. Last year, virtually all sectors of the federal public employees went on months-long strikes against the Lula government’s claim that there is no money for social services in Brazil. 

As the economic and social crisis intensifies, more workers will clash with the PT government, as well as the unions it controls and the Brazilian pseudo-lefts who are doing everything they can to cover up the growing attacks on living conditions.

Philippine Vice President Duterte impeached

John Malvar

Vice President of the Philippines Sara Duterte was impeached on February 5 by a vote of 215 of the 306 members of the House of Representatives. The impeachment will go to trial in the Philippine Senate in the context of the country’s heated midterm elections which are scheduled to be held on May 12.

Philippine Vice President Sara Duterte gestures as she speaks during a press conference in Manila, February 7, 2025. [Photo: Basilio Sepe/WSWS]

This is the first time in Philippine history that a Vice President has been impeached. The office of Vice President in the Philippines is, in the performance of official duties, largely a symbolic position. The primary function of the office is to ensure a constitutional succession of power.

The Vice President works autonomously from the President, has her own substantial budget, and operates a sizeable network of government employees loyal to her office. Historically, during periods of tension between the President and Vice President, who are regularly rivals in Philippine politics, the Vice President wields what amounts to a shadow government waiting to supplant the President.

Three years ago, Marcos and Duterte were elected together on a shared “Uniteam” slate. Among the common positions of their campaign was that they would continue the geopolitical orientation of the outgoing administration of President Rodrigo Duterte, Sara Duterte’s father. President Duterte, during his six years in office, had dramatically reoriented Philippine foreign relations away from the United States toward improved ties with China.

On taking office, facing intense pressure from both the Philippine military and the Biden White House, Marcos abruptly altered his stance, integrating the Philippines into the war plans of Washington. Under his presidency, the US has overseen and coordinated direct confrontations and collisions between Philippine and Chinese Coast Guard and naval vessels, has deployed a medium range Typhon missile system to the northern Philippines targeting China, and has been actively preparing a number of basing facilities to house US forces in the country.

Marcos’ reorientation to the United States drove tensions between his political faction and that of the Vice President. The Dutertes represent sections of the Philippine elite who seek to improve ties with China by distancing the country from the aggressive policies of the United States.

It is the war tensions between the United States and China, and the question of the position of the Philippines in the growing conflict, that is being fought over in the election. The impeachment of Duterte is the extremely aggressive opening salvo.

The decision to impeach Duterte was arrived at abruptly and late. Machinations toward her impeachment had previously been made beginning in August 2023. On several occasions representatives of the Stalinist Makabayan bloc had attempted to file impeachment charges, citing allegations of corruption, her complicity in the murderous ‘war on drugs’ conducted by former President Rodrigo Duterte, and her alleged failure to defend Philippine sovereignty in the South China Sea.

The final charge, regarding the South China Sea, raised by Makabayan and the right-wing Magdalo party, is the political essence of the matter, but it is a flimsy grounds for impeachment. The Vice President is responsible for neither foreign policy nor national defense. By late December 2024, three separate attempts to impeach Duterte had been made, but none succeeded.

With breathtaking rapidity, on February 5, the last day of the Congressional session before it adjourned for the duration of the election, a new set of impeachment charges were brought before the House. The first to sign on the new charges was Congressman Sandro Marcos, son of the President. This was the go signal. A political stampede followed. Some 215 representatives voted in favor, then the House adjourned.

Twelve of the country’s 24 Senate seats are up for election. The Senators will sit as judges at the impeachment trial of Duterte. The outcome of the election will determine the fate of Duterte’s impeachment. Her last-minute impeachment has turned the midterm election into an open battle between the rival factions of Marcos and Duterte, and through this conflict a struggle over the geopolitical orientation of the Philippines.

Why the last minute impeachment? Public tensions between Duterte and Marcos were, if anything, worse in December. Why did the President not greenlight charges then? Why wait until February? The fundamental political difference between two months ago and now is the beginning of the new Trump administration, which with its tariffs and openly imperialist aggression, has destabilized all of world politics. The question of how the Philippines will position itself in this new world, confronting tariffs and the mass return of over 350,000 undocumented Philippine immigrants from the US and economic warfare with China, has become unbearable. The ambiguity and the balancing of rival factions is turning to open political warfare.

Duterte is charged with the misuse of funds, bribery and corruption, plotting to assassinate the President, and committing acts of sedition and insurrection. The charges of insurrection and plotting to assassinate the President stem from angry remarks made by the Vice President in late 2024 claiming that the President was trying to kill her and that she had ordered a contract killer, in the event of her death, to murder the president.

It is not yet certain when the Senate trial will convene. Senate President Francis Escudero stated that it was “almost a sure thing” that the trial would not finish before a new Congress took over on July 28. In other words, half of the Senators voting on the articles of impeachment would be those newly elected. Escudero anticipated convening the trial under the outgoing 19th Congress on June 2, when the legislative session resumes, and continuing it under the incoming 20th Congress.

Senator Tito Sotto stated that uncertainty over rules and conflicting legislative provisions regarding an impeachment trial, in particular whether the trial should be delayed until after the newly elected Senators took office, would likely see the matter raised to the Supreme Court.

The election season is just opening, but early polling showed candidates tied to the Marcos administration leading the Senate race for the so-called Magic 12, the twelve top vote-getters being those who elected to seats in the Senate. Political loyalties are fickle and the race remains close. At least five of the top 14 candidates are likely to defend Duterte.

The administration slate, assembled under the political umbrella Alyansa Para sa Bagong Pilipinas (Alliance for a New Philippines), kicked off its election campaign on February 11 in Ilocos Norte, long the regional base of power for the Marcos family. President Marcos told the rally that the candidates of Alyansa were distinguished from their rivals by their commitment to defend Philippine sovereignty over the West Philippine Sea, the name coined in the last decade for the portion of the South China Sea claimed by the country.

“None of them,” Marcos declared of the administration candidates, “applauded China and was happy when we were fired with water cannons, when the coast guard was hit, when our fishermen were blocked and when their catch was stolen from them.”

Despite the grandstanding, Marcos was openly declaring the fundamental question of the election for the Philippine elite: how the Philippines will position itself in a war with China.

Among those running for reelection on the Alyansa slate is Senate Majority Leader Francis Tolentino, the author of the Philippine Maritimes Zone Law and the Philippine Archipelagic Sea Lanes Law, both of which sought to codify Manila’s claims to the South China Sea against China, and both of which were signed into law by Marcos.

Also running for reelection is Sen. Imee Marcos, the President’s sister, but sharp political tensions over relations with the United States run between the siblings. Sen. Marcos refused a position on the Alyansa slate, criticized the deployment of US Typhon missiles to the Philippines claiming it made the country a target for war with China, and publicly declared her opposition to the impeachment of Duterte.

The precedent for the impeachment of Duterte is the impeachment of Supreme Court Chief Justice Renato Corona in 2012. The impeachment and trial, orchestrated by the Benigno Aquino III administration, sought to remove the Chief Justice on charges of corruption. Corona represented the political interests of the faction of the Philippine elite loyal to former President Gloria Macapagal Arroyo, who had, to an extent, oriented the Philippine foreign policy towards China.

Washington played a critical role in the impeachment of Corona, supplying supposedly incriminating international financial records against Corona to the Anti-Money Laundering Council (AMLC) for use in the trial. There is every indication that this pattern will be repeated in the trial of Vice President Duterte.

Eleven representatives from the lower house were selected to serve as prosecutors of the impeachment charges against Duterte before the Senate. Joel Chua, one of those designated, declared that the prosecution was filing subpoenas for Duterte’s bank records related to supposed “unexplained wealth.” This would be done in coordination with the AMLC.

Pammy Zamora, another of the prosecutors, stated that the collecting of financial evidence against Duterte would involve international assistance. The international assistance in question is without doubt that of Washington.

Worst mass shooting in Swedish history claims 11 lives

Jordan Shilton

People gather at a makeshift memorial near the scene of a shooting on the outskirts of Orebro, Sweden, Wednesday, February 5, 2025. [AP Photo/Sergei Grits]

A 35-year-old lone gunman killed 10 people at the Risbergska community school in the Swedish town of Örebro Tuesday before turning the gun on himself. The worst mass shooting in the country’s history occurred against the backdrop of rapidly growing social inequality, the promotion of militarism and war fever, and ongoing gang violence driven by the deepening social and economic crisis.

The gunman, identified as Rickard Andersson, was unknown to police before the shooting. He has been described in reports as a loner with few social contacts. He lived alone, was heavily involved in online gaming, and had earned no taxable income in recent years. To date, no information has been provided indicating a motive for his murderous outburst. An unconfirmed report suggested that he signed up for, but did not complete, various mathematics courses at the school, which aims to help adults complete their education.

Andersson apparently chose his victims at random. One of the dead was 28-year-old Salim Iskef, a student at the school due to get married in July, according to broadcaster SVT. Some other victims remain to be publicly identified. The gunman also injured numerous people in the shooting, which the police described as “an inferno.” SVT reported that he used a semi-automatic weapon and had licences for five firearms, three of which he had in his possession at the scene. When his body was found, he still had a large supply of unused ammunition.

It cannot be excluded that further information may reveal Andersson to have been influenced by far-right views. However, the currently available information suggests that he was a socially vulnerable, disoriented young man who snapped amid mounting social tensions and non-stop militarist war fever.

While the shock among the population has been palpable and widespread, official statements have failed to go beyond the most banal platitudes. Prime Minister Ulf Kristersson, whose conservative Moderate party-led coalition government relies on the support of the fascistic Sweden Democrats in parliament, sought to project an image of national unity by attending a public memorial in Örebro with the king Wednesday.

Speaking at a press conference, Kristersson described the massacre as “the worst mass shooting in Swedish history,” adding: “It is difficult to comprehend the extent of what has happened today. Darkness hangs this evening over Sweden. … what cannot be allowed to happen has now happened in Sweden.”

Any serious explanation for Andersson’s horrific act must take into account the dramatic deterioration of social conditions in Sweden. Over the past three decades, Sweden has been rapidly transformed from a country with one of the world’s most extensive welfare states into a society riven by social inequality, poverty and unemployment. Once held up by social-democratic politicians as proof that capitalism’s worst excesses could be reformed, Sweden has become a byword for corporate deregulation, anti-immigrant agitation, law-and-order crackdowns and rearmament for war.

This was mostly accomplished by Social Democrat-led governments, which began after the economic crisis of the early 1990s to systematically cut social spending and privatise public services. Sweden’s nationally regulated labour market, based on co-management between the employers and trade unions, was abandoned under the pressure of globalised production. The 1994-2006 Social Democrat-led government, which was also supported by the Greens and ex-Stalinist Left Party, paved the way with its right-wing record for the right-wing Alliance government to start Sweden’s largest-ever wave of privatisations in 2006.

Summing up Sweden’s transformation into a free-market paradise in their 2014 book The Fourth Revolution, former Economist editors John Micklethwait and Adrian Wooldridge observed, “The streets of Stockholm are awash with the blood of sacred cows. The local think tanks are overflowing with fresh ideas about welfare entrepreneurs and lean management. Indeed, Sweden has done most of the things that politicians know they ought to do but seldom have the courage to attempt.”

As public services increasingly fell apart and social inequality grew, the entire political establishment sought scapegoats for the deterioration in economic and social conditions. Sweden’s once open immigration and asylum system was transformed into the most restrictive in Europe by Stefan Löfven’s Social Democratic government from 2014.

All of the major parties blame foreigners for growing unemployment, gang violence and other social ills to divert attention away from the real culprits: political parties that implemented cost-cutting and austerity, and capitalists who reaped profits and grew wealthy by funneling society’s resources from public services into their pockets.

To this end, all the parties facilitated the promotion of the fascistic Sweden Democrats, a party with its roots in the neo-Nazi movement of the 1980s. By adopting many of its anti-immigrant policies, the Social Democrats, their Green and Left Party partners, and traditional right-wing parties like Kristersson’s Moderates helped build up the far right so much that after the 2022 election, the Sweden Democrats were the kingmakers in coalition talks.

The explosive growth of social inequality is extensively documented. The Global Wealth Report 2023 by Credit Suisse and UBS noted that the richest 10 percent of Sweden’s population owns 74.4 percent of the wealth, making Sweden the European country with the most unequal wealth distribution. A major factor in this has been the financialisation of the economy, which disproportionately benefits the very wealthy with access to investments.

According to Stattista, 16 percent of Sweden’s population is at risk of poverty, the highest among all Nordic countries, with others ranging between 8 and 12.7 percent. Oxfam’s global Commitment to Reducing Inequality index placed Sweden in 20th place, the lowest of any Nordic country.

A March 2023 article in the medical journal The Lancet noted, “It is a well-established fact that economic inequality leads to increase in violence, crime, poverty, and health inequalities, all of which can have lasting generational impact.” In this regard, gun violence has dramatically risen in Sweden, which went from having the lowest level of gun violence in Europe in 2000 to the highest rate of gun-related deaths per head of population today.

Although most gun crime is related to gang violence, it impacts the entire population. In 2023, 55 people were killed in 363 shootings in a country of just 10 million people.

Bound up with the dramatic worsening of economic and social conditions for broad swathes of the population are Sweden’s militarisation and the country’s emergence as a frontline state in the imperialist-led war on Russia. Sweden’s long-touted “neutrality” was jettisoned; it is now a NATO member state that provides substantial military support to Ukraine in the US-NATO war on Russia.

Stockholm reinstituted military conscription in 2017 and committed in 2022 to hike its military spending by over 60 percent by 2028. The vast sums of money required for war must be squeezed out of the working class, through the destruction of wages and public services, and attacks on working and living conditions.

In addition to the financial impact of militarisation, the pervasive war fever whipped up by the political and media establishment forces brutal violence into all areas of daily life. The public prominence of the military, with US-led military exercises in Stockholm and open military recruitment efforts, has increased sharply. Last November, the Swedish government sent printed copies of a pamphlet to every household informing readers how to survive for up to a week in the event of war.

Trump tariff war exacerbates financial market fragility

Nick Beams

Media coverage of the effect of US president Trump’s global tariff war has so far focused mainly on issues such as trade balances, global supply chains and the inflationary effect of the hikes.

Trader Michael Gallucci on the floor of the New York Stock Exchange. [AP Photo/Richard Drew]

But there is another aspect which is no less important. That is what its effect will be on fragile global financial markets, bloated by record levels of debt and speculation, where unexpected developments and the uncertainty over what Trump might do next have the potential to set off a crisis.

The global tariff war, which started with the threat of a 25 percent tariff against Mexico and Canada, is being extended almost on a daily basis. Yesterday Trump warned that tariffs could be imposed on its nominal ally Japan and announced that next week he would be unveiling “reciprocal” tariffs against a series of so far unnamed countries. The European Union is directly in the firing line.

The kind of violent movement that can take place has already been seen on Wall Street. Last month’s announcement by the Chinese AI company DeepSeek that it had developed a cheaper way of developing AI caused the US chipmaker Nvidia to lose nearly $600 billion in market capitalisation in a single day—the largest one-day fall by any company in history.

Currency markets, where as much as $7.5 trillion a day is traded, can also be subject to sharp movements. This has been seen in the shifts in the value of the dollar following Trump’s threat to impose a 25 percent tariff on Mexico and Canada and then agreeing to a 30-day delay.

This week the Financial Times (FT) reported that Wall Street analysts have been “bombarding US companies with questions over how they will cope with Donald Trump’s trade wars, in an early sign of how the president’s policies are ripping through corporate America.”

The global banking and financial firm UBS has a Trump Tariff Losers basket of companies. It tracks the performance of companies likely to be impacted either by US tariffs or those that are imposed in retaliation.

According to the FT, Goldman Sachs has said that hedge fund funds have “increasingly shorted” companies in Europe which are exposed to the Trump tariffs including big names in the auto industry such as BMW and Mercedes-Benz. Shorting a stock involves making a bet that its price will fall, bringing a profit. If it unexpectedly moves the other way, then a major loss can be incurred.

There is growing turmoil in the markets, as no one is sure what executive order will be invoked by Trump from one day to the next. It is reflected in a report that trading in so-called zero-day options—contracts that last for just a day and are used to bet on very short-term market moves—hit a record high of $1.4 trillion on January 31.

The uncertainty in currency markets was summed up in comments by Paul McNamara, investments director at the global financial firm GAM.

“The big question is whether [Trump’s] got some master plan which involves taking things to the brink, or whether he’s just making it up as he goes along. Trying to read that man’s mind is just… It’s just incredibly difficult. [You’re] trying to trade on something which could go either way.”

Therein lies the potential for extreme market turbulence if some significant bet goes wrong and sets off a chain reaction.

The growing uncertainty is also reflected in the price of gold which this week hit a new record high of nearly $2,900 per ounce after rising by 26 percent last year. It has already risen by 8 percent so far this year.

John Reade, chief market strategist at the World Gold Council, said the “unprecedented” level of political and economic uncertainty generated by Trump’s policies was leading to increased demand for gold as a safe haven. Central banks have been among the biggest buyers, purchasing more than 1,000 tonnes for each of the past three years.

The increased potential for another financial crisis, triggered at least in part by the tariff war, comes on top of what is an already highly unstable situation in financial markets.

Last month in an interview with the FT, Nick Moakes, the chief investment officer at the large charitable foundation Wellcome Trust warned there were “accidents waiting to happen” because of the flood of money into the private credit market.

This market operates largely outside the regulated banking system—the International Monetary Fund and other global financial bodies have said they have relatively little knowledge of its activities and connections with the broader banking and financial system—and has expanded rapidly since the global financial crisis. In 2008 it was valued at around $2.5 trillion, quadrupling to $10 trillion by 2021 and is expected to reach $15 trillion this year.

“If the world gets a little bit more difficult economically, I think that there are some accidents waiting to happen in the private credit world,” Moakes said. Some “quite high-profile investors,” many of whom had some kind of “systemic importance,” will be “quite badly damaged.”

In an indication of the speed of events, the world has become significantly more difficult economically since mid-January when he gave the interview.

Aside from his tariff war, Trump’s promotion of crypto currencies—he has said he wants to make the US “the bitcoin superpower of the world”—is causing concern in some financial circles, including from among his own supporters.

Last month in an investor note, cited by the FT, the hedge fund Elliott warned that the collapse of crypto could cause “havoc.” Elliott was founded in 1977 by Paul Singer, a longtime Republican supporter who donated $56 million to the party’s election campaign, including $5 million to the political action committee directly backing Trump.

Elliot criticised the Trump administration for its support for crypto assets that have soared in price but have “no substance,” saying the fund had “never seen a market like this.”

The speculative surge in markets was not only due to the increase in the size of crypto but also because of its “perceived proximity to the White House.”

It said the “inevitable collapse” of the bubble “could wreak havoc in ways we cannot yet anticipate.”

The note also questioned why the Trump administration would be promoting crypto, which its backers view as an alternative to the dollar, when the US enjoys “immense advantage” as the world’s reserve currency.

As many economic analysts have pointed out, it is only the dollar’s status which enables the US government to run up massive debts—now of the order of $36 trillion— in a way not possible for any other country.

How the havoc resulting from the collapse of the speculative bubble will play out it is not possible to precisely predict. Nor it is possible to directly ascertain what may trigger it—a crisis flowing from Trump’s tariff war, a series of bad bets in the private equity sector, the collapse of the crypto market or some other, as yet unanticipated, immediate cause. But there is no doubt about the consequences for the working class.

Mozambique opposition parties call off protests, beg for seat in FRELIMO government

David Brown

Mozambique's President-elect, Daniel Chapo, left, and his wife, Gueta Chapo, leave after the presidential inauguration ceremony in Maputo, Mozambique, Wednesday, Jan. 15, 2025 [AP Photo/Carlos Uqueio]

Daniel Chapo was inaugurated as Mozambique’s fifth president on January 15, after the Constitutional Court confirmed the ruling Frente de Libertação de Moçambique (FRELIMO) party's victory in October's election, marred by the usual electoral fraud and “ghost voters.”

It followed months of mass nationwide protests, the largest uprising against FRELIMO in its nearly half-century of rule since Mozambique's independence from Portugal in 1975. Fearing that the movement could spiral beyond their control, the opposition parties urged an end to the demonstrations, abandoned their parliamentary boycott, and are now seeking dialogue with the new FRELIMO administration—under the auspices of the European Union.

Chapo, the candidate of FRELIMO, which has ruled the country since independence in 1975, is the first president not involved in the guerrilla war against Portuguese colonial rule. The various political factions in Mozambique see an opportunity to redivide the spoils from exploiting one of the world’s poorest countries. Mozambique has vast energy wealth that is central to European imperialist strategy amid war with Russia in Ukraine.

The elections were marred by the usual fraud from FRELIMO, which claimed victory with 71 percent of the vote. But this time, the leading opposition candidate, right-wing evangelical preacher Venâncio Mondlane, declared himself the winner, fled the country, and rode a wave of mass protests driven by deteriorating social conditions. Over the past decade in Mozambique, where the median age is just 17, poverty has skyrocketed from 46 to 65 percent.

While Mondlane called for protests against the government, he firmly opposed any attempt to overthrow FRELIMO, repeatedly stating: “We never said we wanted to attempt a coup d’état.” Instead, he sought support from the European powers to intervene and pressure Chapo to step aside.

Following the Constitutional Court’s ruling, Mondlane returned to the country earlier this month, initially calling to boycott the incoming parliament. What has unfolded since then has only exposed the complete bankruptcy of Mozambique’s so-called opposition to the corrupt FRELIMO.

Mozambique’s newly-elected parliament convened on January 13 in what could have been a humiliating moment for FRELIMO. With the opposition boycotting the swearing-in ceremony, only FRELIMO lawmakers were expected to attend, and authorities braced for mass protests by deploying armored vehicles and roadblocks around parliament.

But the anticipated showdown quickly devolved into political theater when PODEMOS—the breakaway faction of FRELIMO that has become the country’s largest opposition party and under whose ticket Mondlane ran—defied his calls for a boycott and took their seats. They undermined his efforts to challenge the election’s legitimacy.

PODEMOS leader Albino Forquilha told reporters: “We fought not to recognize the results, with large national protests, but the results were validated and we abided by the constitutional order.” The Centre for Democracy and Development accused Forquilha of receiving a bribe from FRELIMO to order Podemos deputies to take their seats.

Mondlane’s original party is RENAMO, the second-largest opposition party after PODEMOS. Its origins lie in Mozambique’s civil war (1977–1992), which launched a guerrilla war against FRELIMO after independence and was backed by the white-supremacist regimes of Rhodesia (today Zimbabwe) and then apartheid South Africa. RENAMO initially joined Mondlane’s boycott alongside the opposition Democratic Movement of Mozambique (MDM), but quickly dropped it.

Since then, Mondlane decided to suspend protests for the first 100 days of FRELIMO rule and told the BBC that he was ready to work in Chapo’s government: “Yes if he has a genuine interest to work with me. He’s got a chance to invite me to the table of dialogue.”

Protesters recover from tear gas fired by police in Maputo, Mozambique, Thursday, Nov. 7, 2024 [AP Photo/Carlos Uqueio]

In order “to pacify the country,” and make it safe for foreign investors, Chapo met with opposition party leaders on January 27 to draw up a joint program. Mondlane, who was excluded from the meeting, reacted afterwards by reassuring his readiness to work with the new administration, stating: “I have not yet been contacted [for dialogue…] when I am invited I will present my points of view, I have already passed on this message several times.”

Mondlane’s pleas are backed by the European Union, which insists on a deal between Chapo and Mondlane. “I believe that there is no political solution to this crisis without a dialogue that is truly inclusive and in which Venâncio Mondlane participates,” declared EU mission to Mozambique head Laura Ballarín.

The EU fears protests in Mozambique could jeopardize its huge stakes in Mozambique’s natural resources. European oil companies including TotalEnergies, Eni, and Galp have large stakes in its liquefied natural gas (LNG), with major offshore reserves in the Rovuma Basin. The EU sees Mozambique as a key energy supplier, particularly to diversify its energy sources away from Russian gas.

Major investments are also pouring into the port of Maputo, positioning it as a critical hub in global trade. This aims to accommodate the growing number of container ships rerouted around Africa due to Yemen’s blockade of the Red Sea in response to Israel’s genocide in Gaza. Plans are also underway to construct an LNG terminal linked by pipeline to South Africa.

Several large-scale projects remain stalled, however. Total’s $5 billion hydroelectric dam project is on hold, officially due to the lack of necessary transmission infrastructure. Meanwhile, the $20 billion development of Mozambique’s vast natural gas fields in the north remains suspended due to an ongoing Islamist insurgency that faces a brutal military crackdown by government forces, backed by EU-funded Rwandan troops. Both the insurgents and state security forces have been accused of massacres against civilians in Cabo Delgado.

TotalEnergies is currently under investigation for its role in fueling the violence. So far, the conflict has claimed over 6,000 lives and displaced 2 million people internally.

Last week, to signal to his imperialist backers his willingness to “pacify” Cabo Delgado, Chapo launched a military operation “to identify and dismantle terrorist hideouts, to boost stability in the region.”

There is still substantial popular anger, despite all capitalist parties urging an end to the demonstrations and pushing for a “national unity” government. This effort amounts to little more than a temporary power-sharing deal among Mozambique’s ruling elite, in alliance with imperialism against the masses of workers and oppressed people.

Mozambique’s economic crisis continues to deepen. The International Monetary Fund (IMF) classifies it as at high risk of overall debt distress. It is in the final year of an IMF restructuring program, as international markets demand further “fiscal discipline.” The incoming finance minister estimates economic losses from election protests and their suppression at 3 percent of GDP, while Mozambique’s public debt is fully 93.7 percent of GDP.

The Trump administration’s 90-day pause on all USAID projects pending review has inflamed the crisis. Washington provides approximately $1 billion annually to fund HIV prevention and other healthcare programs in Mozambique—an amount equal to nearly 5 percent of the country’s GDP.

Significantly, the working class is threatening to enter into struggle with its own demands. Civil servants threaten to strike for a traditional New Year Bonus, known as the “13th month.” Denied by the previous government due to budget constraints, President Chapo agreed to pay a bonus in February, 50 percent for most public servants and 100 percent for state pensioners. The Union of Civil Servants rapidly called off the strike, trying to block a broader mobilization of the working class against FRELIMO, claiming they just want to support FRELIMO’s “development goals.”

More rent increases on the horizon in Germany following the merger of 2 major property companies

Markus Salzmann & Tino Jacobson

The enormous rise in rents that has taken place in Germany in recent years has resulted in growing levels of poverty. The latest takeover of Deutsche Wohnen (DW) by the property giant Vonovia is likely to drive up housing prices even further. Despite this, the dire situation confronting hundreds of thousands of households is not an issue in the current federal election.

Listed Deutsche Wohnen housing estate Weiße Stadt in Berlin-Reinickendorf [Photo by Marbot / Wikimedia commons / CC BY-SA 3.0]

In Berlin alone, rents for new properties rose by 26.7 percent in 2023 and by 6.4 percent in 2024. The average asking price rent for newly built flats is €now 20.11 per square metre. Only Munich is more expensive at €25.68. Nationwide, at least 25 percent of households have to spend more than 30 percent of their income on rent. A study conducted by the welfare organisation Paritätischer Wohlfahrtsverband in December 2024 concludes that the poverty rate in Germany is significantly higher when housing costs are taken into account.

The final takeover of DW by Vonovia was approved in January at the Annual General Meetings of the two concerns in Berlin and Bochum. With the approval of the “profit transfer and control agreement,” Deutsche Wohnen is now fully under the control of Vonovia.

The merger of the two groups had already been agreed in 2021. For tax reasons, however, Vonovia only took over 87 percent of DW shares. With this “brazen tax trick,” as experts called the procedure, the group avoided tax payments totaling at least €1 billion.

With the merger now complete, Vonovia is now the largest private housing group in the country and the largest private landlord in the capital city, Berlin, with around half a million flats.

The deal not only increases Vonovia’s portfolio, it also has a favourable effect for the concern on further acquisitions and takeovers. As DW has a significantly lower level of debt than Vonovia, refinancing will most likely be handled via DW in future. Vonovia’s CEO Rolf Buch recently announced that the company would be buying more property in order to further increase its market share.

Vonovia will utilise its monpoly position to drive up rents further in order to provide shareholders with exorbitant returns. Last year, the company had already raised rents on a large scale, in some cases by 15 percent, on occasion without any necessary justification. In addition, tenants were confronted with excessive service charges. Experts and tenant protection organisations assume that extra profits are being made through a heating supplier controlled by the company.

Buch recently declared in the Tagesspiegel daily that the Berlin rent index, which sets the local average rent, had been “faked.” He implicitly linked this to the demand that property companies should be able to set rents and rent increases without restrictions.

In addition, very few new flats were built under the SPD-PDS state government. From 2003 to 2009, the annual number of new-build flats was less than 4,000. In 2010 and 2011, it was around 4,400 each year. At least 15,000 additional flats, mainly social housing, should have been built each year.

As a result, supply almost stagnated between 2001 and 2011. Over the course of 10 years, it only increased from 1,870,000 to 1,903,000 flats. At the same time, demand increased. While it was still just below supply in 2001, the demand for affordable housing in 2011 was 92,000 higher than the existing stock.

The number of social housing units fell by a third in the same period, from 397,000 to 265,000. Since then, the number of social housing units in Berlin has fallen to just under 90,000.

On September 26, 2021, a referendum on the expropriation of large housing companies was held in parallel to the elections for the Bundestag and the Berlin House of Representatives, with 56.4 percent voting in favour. However, as the Sozialistische Gleichheitspartei warned, the Berlin state government made up of the SPD, Greens and Left Party “showed voters the middle finger,” ignored the result and continued to defend the interests of the rent sharks.

Even before the referendum, the SPD-Green-Left Party state government had expressly supported the merger of Vonovia and Deutsche Wohnen. The Senator for Urban Development and Housing, Sebastian Scheel (Left Party), welcomed the merger and described the cooperation between property sharks and the Senate as “progress.” Since 2022, the Senate parties and property companies have been working closely together in the “Alliance for New Housing Construction and Affordable Housing” to line the pockets of the corporations at the expense of tenants.

In the state of Thuringia, where Left Party leader Bodo Ramelow headed the government from 2014 to 2024, it played a similar role. Here, rents exploded during Ramelow’s time in office. Between 2018 and 2022, rents in the state capital Erfurt rose by around 10 percent, more than the national average of 7.25 percent.

In Bremen, the Left Party governs together with the SPD and the Greens. Rents here recently rose by 6.3 percent in just one year, a sharper increase than in Munich or Berlin. Rents have risen by 8.6 percent since 2022.

New Zealand school lunches compared to “dog food” after government cutbacks

Tom Peters

Schoolchildren, parents and staff across New Zealand have spoken out over the past week against new school lunches, which have been compared to dog food and prison meals.

As part of its sweeping austerity measures, designed to make the working class shoulder the burden of the economic recession, the right-wing coalition government led by the National Party has reduced spending on school lunches from $8 to $3 per meal.

Associate education minister David Seymour, leader of the far-right ACT Party, boasted on January 30 that the new program will save $130 million a year and is “setting a precedent for the government working with businesses to achieve better results.”

These savings are at the expense of 242,000 school students from low-income households who are now receiving smaller and often revolting meals. According to the New Zealand Herald, “Auckland Primary Principals’ Association president Kyle Brewerton said kids have been comparing the lunches to ‘dog food’ and refusing to eat it.”

Ōtāhuhu College student Divya Kumar told Radio NZ her meal was “really bland,” with “overcooked pasta, and I don’t think it provides the nutrition we need as students.” Another student, Heremoko, said it was “like prison food,” adding: “Last year we actually knew what we were eating, we could see it. This year we’re questioning what we’re eating.”

New Zealand school lunches, January 2025 [Photo: Reddit / only-on-the-wknd, Hokinanaz]

Photos of the meals have been shared widely. One Reddit post from Auckland displayed a picture of an “unidentifiable pasta ball and lentils.” The lunches were delivered two hours late. “Not one child could stomach the food and so after offers to give food away to [the] local community were declined, all several hundred of these went into the rubbish.”

A parent shared a picture of what was “supposed to be mac and cheese” but “looks and tastes horrible.” They told the Herald: “I normally try to not waste food but when I tasted it, it was just so bland. If I guessed it was a white sauce with not much cheese, couldn’t actually taste the ham, and the veg/mac was so overcooked that they were just soggy.”

One Reddit user commented: “This is what they want. They want the food to go uneaten so they can [say] they’re not being eaten and it’s a waste of money. They don’t want to pay for kids to eat.”

Another suggested that “Parliament should be served the same food as our school children get.”

Due to late lunch deliveries throughout the week, which caterers attributed to “teething problems,” some principals reported that they had to buy food at the supermarket to feed hungry children. Some schools asked parents to send their children to school with extra food as a precaution, according to the Herald.

Last October it was reported that 75 suppliers would lose their contracts under the previous school lunches program, destroying as many as 2,000 jobs. They were replaced by a consortium led by the British-based multinational Compass Group, and also including the NZ businesses Gilmours and Libelle.

Compass is the world’s largest catering company, operating in 45 countries and providing billions of meals each year in healthcare, education, the military and other sectors. It has been involved in several scandals.

In 2015, Compass subsidiary Chartwells settled a lawsuit over school meals in Washington, D.C. A whistleblower alleged that Chartwells had overcharged the school district and there were repeated instances in which “food was delivered late, the number of meals was insufficient or the food was of poor quality or spoiled.”

In 2021, Chartwells was at the centre of a scandal involving food parcels sent to 1.7 million UK children whose schools were closed due to the COVID-19 pandemic. The parcels were extremely meagre, prompting widespread public outrage.

Chartwells/Compass is the largest provider of school lunches in the UK, where meals are frequently criticised for their poor quality and low nutritional value. The BBC reported on March 14, 2024, on complaints that meals at Redbridge Community School in Southampton were getting smaller while prices were rising, and were often undercooked. “Chartwells seem to be unable to bake a potato,” the head teacher said.

The New Zealand government and its defenders in the media have responded to criticism by essentially saying children from poor households should consider themselves lucky to get any food at all.

Minister Seymour told Newstalk ZB the media was highlighting “the worst examples that they can find and the worst comments that they can find.” In response to principals saying “this is not good enough,” Seymour called for a “reality check” and said “this is a government with a $17 billion deficit.”

Far-right blogger Cam Slater posted on X/Twitter that parents unhappy with the lunches their children were getting should “feed them yourselves like you did in the holidays. That is what [is] wrong with this country, too many with their hand out.”

Slater’s comment was shared by billionaire toy company founder Nick Mowbray, New Zealand’s richest man and a major donor to the ACT and National Parties.

The slop now being served at schools is connected to the government’s broader agenda of gutting and privatising the education system and other public services.

The ACT Party is overseeing the reintroduction of privately-run charter schools, with funding provided last year to establish 50 of them. This will divert public funds to private operators, who do not face the same requirements as public schools to follow the curriculum and can set different pay rates for teachers.

In the US and the UK, charter schools or “academies” have played a major role in deregulating education and attacking conditions for school staff. Under the 2008–2017 National Party-ACT government, a trial of charter schools in New Zealand resulted in financial irregularities and dysfunction, forcing one school to be shut down.

The Labour Party has criticised the new school meals, with education spokesperson Jan Tinetti saying “this government chose cost-cutting ahead of quality.” She declared she was “deeply concerned” about “wider impacts on reducing child poverty” and on children’s ability to learn.

This is utterly hypocritical. In its 2023 budget, the last Labour government increased operational funding for schools by just 3.5 percent—about half the 6.7 percent annual inflation rate. Tens of thousands of teachers repeatedly went on strike to protest against frozen wages, although their struggles were suppressed by the union bureaucracy.

The Labour government also oversaw an increase in the number of children living in poverty. Labour campaigned for deeper austerity measures in the October 2023 election, which it lost in a landslide defeat amid a worsening social crisis, paving the way for the current far-right government.