marxistindia
news from the cpi(m)
Reflections by comrade Fidel
BELLS ARE TOLLING FOR THE DOLLAR
Empire has ruled the world through economy and deceit rather than
force. At the end of WWII, it had attained the privilege of minting the
convertible hard currency, the monopoly over the nuclear weapon and the
possession of most of the gold in the world while it was the only
large-scale producer of manufactured equipment, consumer goods, food and
services worldwide. However, there was a limit to the printing of paper
money: the gold standard at a regular price of 35 dollars a troy ounce.
This was the situation for over 25 years, until August 15, 1971, when an
executive order issued by President Richard Nixon led the United States
to unilaterally call off that international arrangement thus defrauding
the world. I'll never tire out of repeating it. That was how it threw on
the world economy its military buildup and war adventure expenses,
especially the Vietnam War, which according to conservative estimates
cost no less than 200 billion dollars and the lives of over 45 thousand
American youths.
More bombs were dropped on that small Third World nation than were used
in the latest world war. Millions of people were killed or maimed. The
suspension of the gold standard turned the US dollar into a hard
currency that could be printed at will by the US government without the
backing of a regular value.
The Treasury bonds and bills continued to circulate as convertible hard
currencies. The states' reserves continued feeding on that paper money
that, on the one hand, could be used to buy raw material, properties,
goods and services anywhere in the world while on the other favored
American exports with respect to the rest of the economies of the world.
Both, politicians and academics repeatedly mention the true cost of that
genocidal war admirably portrayed in Oliver Stone's film. Sometimes in
their calculations people tend to overlook the fact that the millions of
dollars of 1971 are not the same as the millions of dollars of 2009.
One million of dollars today, when the price of gold –a metal whose
value has been the most stable through centuries-- exceeds one thousand
dollars a troy ounce, is worth about 30 times its value when Nixon
suspended the convertibility. Therefore, 200 billion dollars of 1971
amount to 6 trillion dollars of 2009. If this is not taken into account
the new generations will not have an idea of the imperialist barbarity.
Likewise, when reference is made to the 20 billion dollars invested in
Europe after the end of WWII --through the Marshall Plan to rebuild and
control the economies of the main European powers which had the
necessary labor force and technical culture for a fast development of
production and services—people usually do not take notice of the fact
that the real value of what the empire invested at that time amounts to
600 billion dollars at the current international value. They don't
realize that 20 billion dollars would hardly cover today the
construction of three large oil refineries with a capacity of 800
thousand barrels of gasoline a day, in addition to other oil
by-products.
The consumer societies and the absurd and whimsical waste of energy and
natural resources that today threaten the survival of the human species
could not be explained in such a short historical period without knowing
the irresponsible way in which developed capitalism, in its highest
stage, has governed the destiny of the world.
Such amazing waste explains why the debt of the two most industrialized
countries in the world, the United States of America and Japan, amounts
to approximately 20 trillion dollars.
Of course, the US economy is reaching an annual Gross Domestic Product
of 15 trillion dollars. The capitalist crises are cyclical as the
history of the system unequivocally shows but this time it is something
else: it is a structural crisis, as Professor Jorge Giordani, Venezuelan
minister of Planning and Development, explained last night to Walter
Martinez in his Telesur program.
The press dispatches released today, Friday October 9, bring some
additional irrefutable data. An AFP dispatch from Washington indicates
that the US budget deficit for fiscal year 2009 amounts to 1.4 trillion
dollars, that is, 9.9% of the GDP, "something unseen since 1945, after
World War II," it added.
In the year 2007, the deficit had already been one-third of that figure,
and high deficits are expected in 2010, 2011 and 2012. That huge deficit
has practically been mandated by the US Congress and government to
bailout that country's large banks, to prevent unemployment from rising
beyond 10% and to release the United States from the recession. It is
only natural that if they inundate the nation with dollars, the big
stores will sell more goods, the industries will increase their outputs,
less people will lose their housing, the wave of unemployment will
subside and the Wall Street stocks will see their value grow. It was the
classical way to solve the crisis. But, the world will never be the
same. Paul Krugman, a celebrated Nobel laureate in Economics, has just
said that international commerce has sustained its worst fall, worse
even than that of the Great Depression, and expressed his doubts of a
speedy recovery.
It is not possible to also inundate the world with dollars and believe
that the paper money without a gold backing can retain its value. Other
sounder economies have emerged. The US dollar is no longer the hard
currency reserve of every state; actually, those who still have it wish
to distance from it albeit trying, as much as possible, to prevent its
devaluation before they can get rid of it.
The European Union Euro, the Chinese Yuan, the Suisse Franc, the
Japanese Yen –despite this country's debt—and even the Pound Sterling
and other hard currencies have come to take the place of the US dollar
in international commerce. Once again the metal gold is becoming a
significant international reserve currency.
This is not a whimsical personal opinion, nor do I wish to slander that
currency.
Another Nobel laureate in Economics, Joseph Stiglitz, has said
--according to a press dispatch-- that it is most likely that the green
bill continues to be downcast, that politicians do not determine the
exchange rates neither do speeches. He said this on October 6, at the
IMF and World Bank Joint Annual Assembly held in Istanbul. The meeting
was received with smashed shop windows and fires caused by Molotov
cocktails.
Other news related that the European countries were afraid of the
negative effect of the dollar's weakness with respect to the Euro and
its consequences for the European exports. The US secretary of the
Treasury said that his country was interested in a strong dollar.
Stiglitz laughed at the official statement and said --according to EFE--
that in the case of the United States the money has been wasted and the
reason has been the multimillion bailout of banks and wars like that of
Afghanistan. Again according this press agency, the Nobel Laureate
insisted that instead of investing 700 billion to help the bankers, the
US could have used part of that money to help the developing countries
and this would have encouraged global demand.
The president of the World Bank, Robert Zoellick, had sounded an alarm a
few days before and warned that the dollar would not be able to
endlessly preserve its status as the reserve currency.
An outstanding professor of Economics at Harvard University, Kenneth
Rogoff, has said that the next big financial crisis will be that of the
public deficits.
The World Bank has stated that the International Monetary Fund (IMF) had
showed that the world central banks had accumulated fewer dollars during
the second semester of 2009 than at any other time during the past ten
years while increasing the amount of Euros.
On October 6, the AFP published that gold had reached the record figure
of 1,045 dollars for one ounce due to the weakening of the dollar and
fear of inflation.
The London daily Independent reported that a group of oil-producing
countries were considering the replacement of the dollar in commercial
transactions by a pool of hard currencies including the Yen, Yuan, Euro,
gold and a future common currency.
The news, either leaked or deduced with impressive logic, was denied by
some of the countries supposedly interested in that protective measure.
They do not want it to collapse, but they neither want to continue to
accumulate a currency that has lost 30 times its value in less than
three decades.
I cannot avoid mentioning a dispatch from EFE, that cannot be accused of
being anti-imperialist press agency and that in the present
circumstances carries especially interesting opinions:
"Experts in economics and finances agreed in New York today that the
worst crisis since the Great Depression has resulted in a less
significant role for that country in world economy."
"Recession has changed the way in which the world looks at the US. Now
our country is less significant than before and this is something we
should admit, said David Rubenstein, president and founder of the
Carlyle Group, the largest risk capital firm in the world, in his
address to the World Business Forum."
"The financial world will be less focused in the US. (…) New York will
never again be the financial capital of the world, a role it will have
to share with London, Shanghai, Dubai, Sao Paulo and other cities, he
said."
"…he described the problems the US will face once it leaves behind a
major recession that will still be around for a couple of months."
"…the huge public debt, inflation, unemployment, the dollar's loss of
value as a reserve hard currency, the energy prices…"
"The government should reduce public expenses to cope with the debt
problem and do something it does not like much: raise taxes."
"Columbia University economist and special UN advisor Jeffrey Sachs has
agreed with Rubenstein that the US economic and financial predominance
is fading."
"We have left a system focused on the United States for one which is
multilateral…"
"…twenty years of irresponsibility, first by Bill Clinton's
administration and then by George W. Bush's, caved in to Wall Street
pressures…"
"…the banks negotiated with 'toxic assets' to obtain easy money, Sachs
explained."
"What is important now is to recognize the unprecedented challenge of
achieving a sustainable economic development that is consistent with the
basic rules of physics and biology on this planet…"
On the other hand, the reports coming directly from our delegation in
Bangkok, capital of Thailand, were absolutely not encouraging:
Our ministry of Foreign Affairs literally reported that "what was under
discussion was basically whether or not to ratify the concept of common
but differentiated responsibilities among the industrial nations and the
so-called emerging economies, essentially China, Brazil, India and South
Africa, and the underdeveloped countries.
"China, Brazil, India, South Africa, Egypt, Bangladesh, Pakistan and the
ALBA countries are the most active. In general, most nations in the
Group of 77 are holding correct and firm positions.
"The figures of carbon emissions reductions under discussion do not
correspond with those scientifically calculated to keep the rise in
temperature under 2 degrees Celsius, 25-40%. At the moment, the
negotiation is moving around a reduction of 11-18%.
"The United States is not making any real effort but accepting just a 4%
reduction with respect to the year 1990."
In the morning of this Friday 9, the world woke up to the news that "the
good Obama" of the riddle –as explained by Bolivarian President Hugo
Chavez Frias at the United Nations—had been awarded the Nobel Peace
Prize. I do not always agree with the positions of that institution but
I must admit that, at this moment it was, in my view, a positive action.
It compensates the setback sustained by Obama in Copenhagen when Rio de
Janeiro, and not Chicago, was chosen as the venue of the 2016 Olympics,
a choice that elicited heated attacks from his right-wing adversaries.
Many will feel that he has yet to earn the right to receive such an
award. Rather than a prize to the President of the United States, we
choose to see that decision as a criticism of the genocidal policy
pursued by more than a few presidents of that country who took that
nation to the crossroads where it is today. That is, as a call for peace
and for the pursuit of solutions conducive to the survival of the
species.
Fidel Castro Ruz
October 9, 2009
6:11 PM
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