Trade wars, shooting wars and the dropping dollar
By Milt Neidenberg
Is the good old almighty dollar on a slippery
slope? Losing its clout in the global markets? Is the recent
25-percent drop in the value of the dollar a sign of weakness
that will lead to further devaluation?
Gold, the absolute arbiter of all currency, has begun to
attract the big investors. They smell economic and political
turmoil ahead. "Weak Dollar and Tense Times Spurs a Rise Toward
$400 an Ounce," was the headline on a Nov. 27 New York Times
article, which observed that the price of gold "has risen over
50 percent since April 2001."
The next day, "The dollar plunged to a new record low
against the euro ... on the back of aggressive
speculator-driven selling." (Wall Street Journal, Nov. 28) If
the dollar continues to fall, foreign investors will see their
gains erode and could pull out of U.S. markets. And head for
gold or other safer investments.
Asian central banks alone now own almost $700 billion in
U.S. Treasury notes. They recently suffered a paper loss of
almost $200 billion from the dollar devaluation. Continued
lending to the U.S. depends on whether or not the dollar
continues to decline. U.S. paper currency and debt is flooding
the global markets.
The U.S. National Debt Clock reports that the debt has
reached $7 TRILLION, and has been growing at the rate of $2.64
billion a day since Sept. 30, 2003. How about that!
A week earlier, the Treasury Depart ment, which cranks out
tons of paper currency, admitted that "the ballooning
current-account deficit requires an increasing amount of
financing from abroad to keep the dollar from falling."
However, it was reported that there had been a big pullout in
foreign investment in Treasury bills and in the stock market.
(Wall Street Journal, Nov. 19)
Felix Rohatyn, former managing director of Lazard Freres, a
giant international banking corporation, recently expressed
deep concern over paper wealth becoming the new standard and
the astounding concentration of wealth at the upper end of the
income scale. Corporate profits, he said, had jumped 11.6
percent to over a trillion dollars and the rate of growth of
the Gross Domestic Product hit a 20-year high.
Rohatyn continued: "Keep in mind that foreigners own about
$2 trillion or about 20 percent of all listed stocks in the
U.S. ... To service [just] our foreign debt of $3 trillion
requires an inflow from abroad of $1.5 billion daily. ... A
breakup of the transatlantic partnership would have serious
economic consequences for the U.S.; Europe and the U.S. are
each other's most important trade partners and investors. No
other economic relationship comes near." (Wall Street Journal,
Nov. 11)
Alan Greenspan, chairperson of the Federal Reserve Board,
the Wall Street bankers' bank, issued a warning about new
quotas that had been set on selected Chinese textiles: "The
clouds of emerging protectionism raised new risks for the
global economy ... the current account deficits are at record
levels and are unsustainable." (New York Times, Nov. 21)
Since then, tariffs have been applied to Chinese-made
television sets. The Bush administration is expected to lift
quotas on steel imports, but that will only anger the
protectionist wing of the capitalist class.
While Greenspan, a master of double-talk, preaches concern
for creeping protectionism and record-level debt, the FRB has
kept its interest rates at a historic low of 1 percent. This
has triggered an unpre cedented level of borrowing and lending
by banks and other financial institutions. It profits them but
weakens the dollar.
Trade wars and shooting wars
The cheaper dollar has infuriated their imperialist trading
partners. It has given U.S. exports a competitive edge abroad.
But it hurts workers here, who have to pay more for foreign
products when there's a devaluated dollar. The truth is, the
U.S. is edging closer to a trade war with its major trading
partners.
Can the U.S. superpower sustain glo bal domination as its
monumental problems grow? Bush's unilateral empire building and
preemptive war have stretched the government's resources to the
limit militarily and economically. As guerrilla attacks in Iraq
intensify, as the war seems endless and the wounded and dead
come home, doubts are mounting in Wall Street about the
direction in which Bush and his sycophants are taking the
ruling class.
The issue for the workers is not Democrats versus
Republicans, but a general crisis looming within the capitalist
system. Volatility, scandals, fraud and corruption in the stock
exchange and mutual funds, as with Enron and WorldCom, have
become more and more public, dampening the mood of Wall
Street.
The "jobless recovery" has begun to instill anger in the
workers, the poor and the oppressed nationalities. Some 9
million workers are still unemployed, health care is out of
reach for millions of adults and children, and personal
bankruptcies are at an all-time high. Black, Latino and other
people of color, along with growing numbers of whites, are
economically marginalized by the Bush administration's drastic
cuts in social services.
Corporations continue to downsize wages and benefits. It's
called the "Wal-Martization of labor," a race to the bottom
that is the hallmark of the largest non-union, low-wage
retailer in the world. The workers are paying the price for an
unprecedented conjunction of two wars going badly--Iraq and
Afghanistan--and a capitalist economy that has revealed deep
flaws. All of this is debilitating the superpower.
A fightback is bubbling up from below with strikes and other
forms of struggle. Many are isolated and out of sight. But the
splendid resistance of grocery workers in the United Food and
Commercial Workers union in Southern California has received
national media attention. These low-paid workers, so many of
them women and/or from oppressed nationalities, need the
support of the powerful anti-war, anti-imperialist
movement.
It is beginning to happen in the California
strike/lockout--a significant development that could spread.
The class war is heating up at home.
The merger of these forces will strengthen class-wide unity
in preparing for the critical struggles that lie ahead.
Reprinted from the Dec. 11, 2003, issue of
Workers World newspaper
This article is copyright under a Creative
Commons License.
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