[Peace-discuss] Euro vs. Dollar

[C. G. Estabrook]

It does seem clear that the USG has been letting the dollar slide to
improve the massive current-account deficit (roughly, the balance of
trade) by making US goods cheaper and foreign goods more expensive.  
Given that corporate America regards as it greatest enemies neither
Islamist terrorists nor the world proletariat but rather its business
rivals, the EU and northeast Asia (the world's most dynamic economy) --
it's clear that the dollar policy is directed against them (and they know
it).

So there may be a strategy -- a part of the general US strategy of
maintaining its hegemony -- but it's not clear how well it's working.  
The dollar rose to a two-week high today against the euro, apparently on
the anticipation of Fed rate rise (as you suggest) -- but perhaps as you
say only a short-term fix. Nevertheless a column in today's Financial
Times reports a study arguing that the dollar's depreciation over the last
two years may be enough to stabilize the US economy in spite of the
deficit, in part because of US holdings abroad, equal to about 70% of GDP
-- about 70% of that held in foreign currencies.  A dollar devaluation
appreciates those assets, perhaps enough to balance the trade deficit. So
the strategy may work.

What's clear is that it works if at all by the continuous transfer of
wealth from the poor to the rich.  The corporate class internationalizes
its assets -- the real meaning of globalization -- and makes itself more
able to exploit labor worldwide.  It's clear that the role of the World
Bank and the IMF has been imperialist in that respect.  "Structural
adjustment" redounds to the credit of world-wide capital while
impoverishing the citizens of the country so adjusted. Argentina's
declaration of economic independence is a worrisome model for world
capital.

But the extraction of surplus value by US corporations world-wide is
compatible even with a long-term slide of the American economy. There's a
good account of that ("America's Has-Been Economy") at Counterpunch.org
this week by a former Assistant Secretary of the Treasury in the Reagan
administration [sic].

I've thought (tentatively) for a while that Bush 2.2 will shift the focus
of Bush 2's first administration, away from Neocon imperial dreams and
toward enriching what Bush calls "my base" -- very wealthy Americans.
Bush's first administration was about killing, this one is about looting.

Greg Palast argues that that has happened explicitly in a struggle between
the major oil companies and the Neocons (Neocons wanting to privatize
Iraqi oil and bust OPEC, Big Oil saying that they like the present
arrangement), and that the Neocons have lost -- Wolfowitz to the Bank and
Bolton to the UN are exiles.  Maybe...

Regards, Carl

PS -- Doug Henwood of the invaluable Left Business Observer has a piece
coming out in the Nation this week on the situation of he dollar, that
should bear on this argument.


On Mon, 21 Mar 2005, Paul M. King wrote:

> As reported by C.G. Estabrook (see below), the dollar has slid
> against the euro yet again with a rather significant
> devaluation that has surprised even Greenspan. This is bad,
> particularly when exacerbated by disastrous fiscal policies
> such as the dramatic tax cuts. Central banks have been dumping
> the dollar by eschewing American bonds for their euro
> counterpart for several years now (since early 2001, I
> believe), thereby converting large portions of their reserves
> into the euro.
> 
> If we cannot continue selling bonds (due to a poorly
> performing dollar), we cannot continue to service our
> obnoxiously monstrous American debt. Raising interest rates
> will help somewhat in luring international investors back, but
> this seems like a short-term fix and will probably mark the
> beginning of a speedy downward spiral...perhaps the beginning
> of the actual end.
> 
> Given these (somewhat uneducated) speculations, what
> advantages are there for the neocons by appointing Wolfowitz
> to the World Bank? American capital will indeed be in sore
> need of the services offered by the World Bank and it's
> sibling organization, the IMF when our economic house of cards
> collapses. And as such, the infamous structural readjustment
> programs proscribed by the IMF and responsible for
> privatization across the globe could then be fairly levied on
> U.S. citizens on a large scale, impoverishing many - if not
> most - of us. This privitization frenzy would undoubtedly
> greatly enrich the neocon corporatists.
> 
> Are they readying themselves for the inevitable demise of the
> United States of America? Is power ascending like a wisp of
> vapor from the rubble of the nation-state? Geopolitical
> boundaries, after all, seem somewhat obsolescent due to
> well-oiled mechanisms of borderless capital as well as the
> militaristic stalemate of nuclear proliferation.
> 
> Can anyone comment on what the long-term strategy here is? Or
> am I naive in thinking that one exists?
> 
> ..:: Paul King
> 
> 
> -------------------------------------------------------
> 
> The US current account deficit reached a record $665.9bn in
> 2004 -- driven by rising oil imports and consumers' appetite
> for foreign goods ... the deficit as a percentage of the total
> economy also set a record, rising to 5.7% from 4.8% in 2003
> ... the fourth quarter current account deficit had widened by 13%
> 
> The dollar slid against the euro Wednesday on data that
> showed the U.S. current account deficit soaring more than
> expected in the fourth quarter and far exceeding its previous
> record for the full year. Greenspan says, "we were all wrong,"
> about rosy surplus forecasts he used to support Bush's 2001
> tax cuts
> 
> As the FT predicted two weeks ago, Bush names Paul Wolfowitz
> World Bank president; "Wolfowitz told reporters he's
> determined to 'wage war on poverty' [but not] unilaterally.
> Instead, he will seek out a broad coalition of "Europe and
> others" before attacking the world's poor people." He's
> supported by Biden and other NatSecDems -- and by Sen. Leahy