The longer that U.S. stock markets continue to rise, the more nervous become the investors and all the financial analysts.
On Friday, Aug. 23, the Dow Jones Industrial Average dropped by over 600 points after proclamations by Donald Trump that his trade war with China would intensify, putting higher tariffs on Chinese imports.
What he and the big business media failed to mention is that his tariffs are the equivalent of taxing the people in the U.S. who buy these imported items. In other words, Trump has just raised taxes on the U.S. working class, who make up the bulk of the consumers of lower-cost Chinese goods.
He is raising taxes even as the U.S. government budget deficit keeps rising, largely due to enormous expenditures on the war machine, even when no wars have been declared. The last time Congress declared war was in 1942. How many undeclared wars has the Pentagon waged since then, during both Democratic and Republican administrations?
The Congressional Budget Office estimates that the annual government deficit will for the first time exceed the astronomical sum of one TRILLION dollars by next year. That’s the deficit for just one year. The total amount owed by the federal government is already up to $22 trillion, which amounts to 70 percent of the entire annual gross domestic product of the United States.
The banks and other institutions that lend this money to the government may be growing fatter and fatter on the interest they get, but it is obvious that everything is heading toward a crisis in which the workers will be the ones to really suffer.
Trump and China
On Aug. 26, the Monday following the big Dow Jones decline, the markets began to partially recover after Trump claimed that China had since “blinked” and a “deal” was in the making. Regardless of who really blinked, the U.S. stock markets’ reaction showed how important People’s China has become to U.S. capitalists as a market for their products.
It also showed how flimsy the investors’ hopes are and how easily they are manipulated by Trump’s demagogy. The markets perked up on Monday because Trump, while in Europe for a meeting of the G-7 imperialist countries, had told the press the night before that “China called last night” and “we’ll be getting back to the table.”
Who from China called? No matter. Don’t ask questions. Up go the stock prices.
However, Editor-in-Chief Hu Xijin of Global Times replied in a tweet that negotiators from both countries did NOT talk on the phone and that “China won’t cave to U.S. pressure.” (CNBC, Aug. 26)
Fear of recession
Gyrations of the stock markets may make investors richer or poorer day by day, but the fear of recession remains a constant for a much more basic reason.
Overproduction is a cyclical feature built into capitalism. In their constant competition for a larger share of the market, the owners of capital must expand production while trying to reduce the cost of each item. This leads to rapid technological change and an increase in constant capital (equipment, plants, etc.) while reducing variable capital (labor).
It also leads to a glut of commodities on the market, and eventually a collapse, with millions losing their jobs. Karl Marx meticulously explained how this boom-and-bust feature of capitalism functions in his monumental work, “Capital.” In such a collapse, workers may not only lose their jobs but also their pension funds, which are invested in the system.
The antics of Donald Trump may shake up many owners of capital because of his unpredictability, his exaggerations and outright, easily disputed lies, plus his disinterest in even trying to cover up his ignorance of facts. He is trounced daily by many media outlets loyal to the capitalist system because they’re afraid of the damage he is doing to the stability of their system.
But progressives have better reasons to fight the Trump regime. Trump and his followers are openly racist, misogynist and bigoted. They make scapegoats of im/migrants and poor people. They cover up the crimes of the system with poisonous words and deeds meant to divide the multinational and global working class. Capitalism is the enemy, and Trump is but one of its many faces.