DUBIOUS FUTURE OF THE AMERICAN ECONOMY
As the plutocrat rulers of the planet's most deep-in-debt nation,( the U.S.), follow
their warrior inclination to secure world domination for the armaments,
oil and other industries in which they have vested interests, the
currency of their intransigence, the dollar, teeters on the brink of a
great fall - like Humpty Dumpty in the nursery rhyme.When the dollar falls as it will, all the bombs thrown at Afghanistan
and Iraq, and all the clever economists of the plutocrats will not be
able to put it together again.Five sources
1. A Look Under the Surface of U.S. Capitalism
2. An Interview with Dr Kurt Richebächer
3. The End of Empire by Walter Greider
4. Secret Blueprint for U.S. Global Domination
5. Russian Comments on Situation Since 9.11Russian strategic analyst General Leonid Ivashov said that the U.S. has
"come to the climax of her military-power adventures for grabbing power
over the planet" and that the "peak will be crossed in 1 1/2 to 2 years,
after which the USA will retract from its positions as a result of
economic problems."We will then see the rapid disintegration of nation states, world-wide,
1. A LOOK UNDER THE SURFACE OF U.S. CAPITALISM
accompanied by extreme famine, I believe. I have and will continue in future
E-letters to encourage work now for a post-capitalist world, made up of
small to large, rural to city cooperative economies.Debts grew by $2 trillion in the U.S. last year; 2001. That is almost as much
new debt in one year as the total debt of the low and middle income
countries in which 85 percent of the people of the world live. The
growth in the U.S. debt was more than ten times faster than the growth
in national income, at $179 billion.The debt burdened U.S. economy is in serious trouble. True, there has
been a 5.8 percent annual rate growth in economic activity - the GDP -
in the first quarter of 2002; but this is thanks to a big jump in
government spending, on its war on terror and its own planned acts of
terror in the Middle East."Defense outlays are growing at a 20 percent annual rate," according to
The Economist.The real barometer of capitalist virility, corporate profits, is at its
lowest level in the post-war period. In the 1960s, corporate profits
were 9 percent of GDP. At the nadir of the recession in 1991 they had
plummeted to percent. Currently, they are less than 3 percent of GDP,
according to Michael Roberts in an article, US Capitalism: Digging a
Deeper Hole.The bubbles of the New Economy and the stock market burst in millennium
year. In 2002, the bubble of dollar supremacy is also bursting. The
dollar is diving against other currencies as foreign investors stop
buying US companies, shares and bonds. In 2001, net inflows of capital
into US markets equaled $44 billion each month. But in each of the
first three months of this year, only $25 billion came in. Foreigners
own 39.5 percent of the US Treasury bond market and 23.8 percent of the
US corporate bond market. Both levels of ownership are at record highs.
And foreigners also own 12.7 percent of the US stock market.One of the largest sources of dollars was from foreign companies buying
US companies or setting up production facilities in the US. In the
period 1990-95 average annual European dollar flows from mergers and
acquisitions was only $10 billion. But in 2000, Europeans invested over
$600 billion in the US. Taking away US investments in Europe it was a
net $214 billion to the advantage of the US. That alone financed half of
the huge US trade deficit. Now European purchases of US companies has
dropped to just $7 billion. So the dollars dominance over currency
markets is slipping and the trade deficit is starting to spook the
capitalist economists.If the past is any guide, an empire's successes are inevitably followed
by humiliating defeats. Financial progress is always trailed by national
bankruptcy and the destruction of the currency. And the good sense of a
decent people is soon replaced by a malign megalomania, which brings the
whole bunch to complete ruin. A great empire is to the world of
geopolitics what a great bubble is to the world of economics. It looks
omnipotent at the outset, eventually it is a catastrophe.
2. AN INTERVIEW WITH DR KURT RICHEBÄCHER
On the impending collapse of U.S. ruled capitalism and its mighty
dollar, when I received an E-mail from folk singer Maireid Sullivan with
a piece on The Looming Dollar Disaster by Dr Kurt Richebächer, the
respected international banker, economist and author. I want to include
excerpts and do not want to hold up posting the improved E-letter while
I get the source references; if you want that information and/or the
complete piece, please write to Maireid direct - maireid@optusnet.com.auExcerpts that I want to share:
- - - irrespective of the stock market's slide, official mantra and
public opinion in America remain in flat denial of the tremendous
dislocations that the egregious credit excesses of the past several
years have inflicted on the U.S. economy and its financial system.- - - Careful analysis of the potential destructive forces suggests that
when the dollar's plunge develops in earnest, it will - in contrast to its
steep decline in the 1980s - be brutal for the U.S. financial markets,
which have become hostage to massive foreign capital inflows.For a long time, we have been warning that the dollar's strength is pure
bubble strength. Gross illusions about the U.S. economy's health and
strength have for a few years engendered capital inflows of fantastic but
unsustainable scale. Like all bubbles, it is bound to burst. The collapsing
dollar will spell doom for the U.S. financial markets, both bonds and
shares. In fact, such a collapse is the single greatest risk for the world
economy.- - - For us, in fact, the developing bust of the U.S. bubble economy has
only two comparable precedents in history. One is the American
bubble-and-bust experience of the 1920-30s, and the other is Japan's
equivalent experience since the late 1980s.Yet, despite many similarities, there is one difference of supreme
importance between America's present imbroglio and those two earlier
episodes. In the 1920s, America was the world's leading creditor country
running a chronic surplus in its current account, and the very same has been
and remains true for today's Japan. The inherent implication for such
countries is a fundamentally strong currency, warranting full autonomy for
monetary policy.This time, however, the U.S. economy is slumping against the backdrop of
the most adverse external conditions. Today's United States is the world's
greatest debtor country. It runs a preposterous, chronic current-account
deficit from which an ever more preposterous foreign indebtedness accrues.
Intrinsically, the monetary policy of such a country is hostage to the
willingness of foreign investors and lenders to finance its spending
excesses. They may force it to raise interest rates even when the economy is
in depression.Earlier we noted that the chronic U.S. annual trade gap and chronic
current U.S. capital outflows add up to around $900-1,000 billion,
needing accommodation through capital inflows. For us, it is a
compelling conclusion that future capital flows into the United States
are bound to fall considerably short of these outrageous sums. Never
before has a deficit country also sent such massive amounts of capital
abroad for foreign investment. It is an unprecedented experience in
economic history. Manifestly, this is testament for extremely loose
money.Considering all circumstances, we think that an outright dollar
disaster, far worse than the crash in 1985-87, is inevitable.3.THE END OF EMPIRE BY WILLIAM GREIDER
William Greider, a prominent political journalist and author, and former
editor of Rolling Stones and the Washington Post, has written an
important article, The End of Empire, in which he spells out how the
growing trade deficit will lead, inevitably, to the U.S. being stripped
of its imperial delusions.In the article, published in The Nation Magazine September 23 2002 issue,
Greider writes: "The US economy's net foreign indebtedness - the
accumulation of two decades of running larger and larger trade deficits
- will reach nearly 25 percent of US GDP this year, or roughly $2.5
trillion. Fifteen years ago, it was zero. Before America's net balance
of foreign assets turned negative, in 1988, the United States was a
creditor nation itself, investing and lending vast capital to others,
always more than it borrowed. Now the trend line looks most alarming. If
the deficits persist around the current level of $400 billion a year or
grow larger, the total US indebtedness should reach $3.5 trillion in
three years or so. Within a decade, it would total 50 percent of GDP.
Instead of facing this darkening prospect, Bush and team regularly
dismiss the worldviews of these creditor nations and lecture them
condescendingly on our superior qualities. Any profligate debtor who
insults his banker is unwise, to put it mildly."Here is a further excerpt from the article, which can be read in full at
US ambitions to run the world are heavily mortgaged. Like any
debtor who borrows more year after year with no plausible way to reverse the
trend, a nation sinking deeper into debt enters into an adverse power
relationship with its creditors -- greater and greater dependency.- - - For their own reasons, the major trading partners are reluctant to
disrupt the status quo. The current arrangement allows them to have it both
ways -- gaining a greater share of markets under the shadow of US hegemony.
Privately, they recognize that the US economic position is steadily ebbing.
But it seems wiser to let the Americans keep their delusions for now. The
space for self-interested maneuvering is much greater if the United States
carries the burdens and costs alone. Despite occasional whining, Japan and
Germany are not eager to claim a prominent share in global leadership (both
once had a go at running the world and it ended badly). Far better to prop
up the United States financially without forcing awareness of the shifting
power.Their reluctance resembles the American attitude early in the last
century, when it was the ascendant economic power but did not wish to become
a 'Great Power' itself, with responsibility for maintaining world order.
Instead, the United States propped up Britain for many years as the failing
empire sank into unsustainable debt. British power was fundamentally
eclipsed in 1914, but the United States provided the financial nurture to
keep it upright, as a kind of dummy leader in world affairs, until after
World War II. Washington decisively pulled the plug in 1956, when Britain
(along with France and Israel) invaded Egypt to capture the nationalized
Suez Canal. It was the last gasp of British colonialism, and Washington
disapproved. By withholding an IMF loan to London, the United States crashed
the pound, forced Britain to withdraw from war and its prime minister to
resign in disgrace. The Brits were finally relieved of their delusions.- - - The Bush warriors' reckless American unilateralism can only hasten
the day when the creditors' conclude that they must assert their leverage
over us, perhaps in order to defend peace and stability in the world. How
will Americans react when they discover that 'U-S-A' is a lot less muscular
than they were led to believe? - - -4.SECRET BLUEPRINT FOR U.S. GLOBAL DOMINATION
The recklessness of the Bush administration has been long-planned, according
to reporter Neil Mackay in an article in The Sunday Herald (Scotland) on
September 15. He writes:A SECRET blueprint for US global domination reveals that President Bush
and his cabinet were planning a premeditated attack on Iraq to secure
'regime change' even before he took power in January 2001.The blueprint, uncovered by the Sunday Herald, for the creation of a
'global Pax Americana' was drawn up for Dick Cheney (now vice- president),
Donald Rumsfeld (defense secretary), Paul Wolfowitz (Rumsfeld's deputy),
George W Bush's younger brother Jeb and Lewis Libby (Cheney's chief of
staff). The document, entitled Rebuilding America's Defenses: Strategies,
Forces And Resources For A New Century, was written in September 2000
by the neo-conservative think-tank Project for the New American Century (PNAC).The plan shows Bush's cabinet intended to take military control of the
Gulf region whether or not Saddam Hussein was in power. It says: "The United
States has for decades sought to play a more permanent role in Gulf regional
security. While the unresolved conflict with Iraq provides the immediate
justification, the need for a substantial American force presence in the
Gulf transcends the issue of the regime of Saddam Hussein."The PNAC document supports a "blueprint for maintaining global US
pre-eminence, precluding the rise of a great power rival, and shaping the
international security order in line with American principles and interests"
This 'American grand strategy' must be advanced for "as far into the
future as possible", the report says. It also calls for the US to "fight and
decisively win multiple, simultaneous major theatre wars" as a 'core mission
The report describes American armed forces abroad as "the cavalry on the
new American frontier". The PNAC blueprint supports an earlier document
written by Wolfowitz and Libby that said the US must "discourage advanced
industrial nations from challenging our leadership or even aspiring to a
larger regional or global role".5.RUSSIAN COMMENTS ON SITUATION SINCE 9.11
In a recent round table discussion organised by the Russian
intelligence-linked weekly 'Zavtra', the renowned television commentator
Michael Leontyev, who is close to 'Russian oligarch' interests, opined that
the economic and social crises in the U.S. "reminds us of the crisis of the
Soviet Union at the beginning of the 1980s."Leonid Shebarshin, a former high-level KGB official, supported this view. He
thinks the U.S. might "stumble" in its attack on Iraq, and this could be the
beginning of a total collapse. "Everything could disintegrate, just as the
Soviet Union disintegrated, when in just four days, the whole state ceased
to exist."The five men participating in the round table discussion on the world
situation since 9.11 seemed to be agreed, in the words of strategic analyst
General Leonard Ivashov, that "September 11 was an internal operation in the
United States.""It is necessary to recognize two forces operating in the U.S that have two different conceptions on using the military power of the U.S. to create a world empire," General Ivashov argued. "The first... wants the U.S. as a powerful nation. The second, the world financial elite ... considers thatthe U.S. must be subjugated to the world empire, whose time has come.... It is not an accident that many Western commentators speak of Sept 11 as an attempted coup d'etat... The force that gave the order [for the attacks], I believe, is connected with the world financial mafias, having representatives in the power structures of the USA, including the intelligence and special services. It is also no accident, that parallel with the investigation of the Sept. 11 attack, investigations are going on concerning the activities of a number of other structures, including the Mossad, within the U.S.intelligence community.... I believe the ongoing events in the U.S. will develop out of the conflict between these two forces."
"What unites them, is the necessity to use the military power of the U.S.
to crash down the boundaries of sovereign states.... Why the hurry? Because,
firstly, China is growing, secondly, the Arab occident is consolidating
itself, thirdly, a rather powerful development is going on in Southeast
Asia. Russia's position is very unclear...."The present state of Russia satisfies these U.S. interests, but what
will be tomorrow, is not clear.... Thus, the U.S. is now at a transition
point. She has come to the climax of her military-power adventures for
grabbing power over the planet. I think this peak will be crossed in 1 1/2
to 2 years, after which the USA will retract from its positions as a result
of economic problems. I think the attack on Iraq will occur. I think Iran
will be drawn into the confrontation, and it should not be excluded, that
Israel will participate.... After that, U.S. policy will disintegrate under
the influence of the economic and social-political collapse inside the U.S..
One has the feeling, that the financial oligarchy in power on this planet
are not interested in maintaining the U.S. population at its present living
standard." - - -A fuller transcript of the discussion between the Russian commentators can
be had from Angie Carlson - angie1@planetsos.com. See also
http://english.pravda.ru for Russian attitudes to world developments.
* * * * * * * * * * * * * * * * * * * * * * * * *
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