DEFICITS

The US lives on credit. The rest of the world finances the consumption- and armament orgies of the superpower

By Steffen Boas and Klaus Fischer

[This article published in: Junge Welt 2/23/2007 is translated from the German on the World Wide Web, http://www.jungewelt.de/2007/02-23/024.php?print=1.]




The United States lives on credit. Without scruples Washington bleeds the world white while German politicians and their colleagues from France rejoice over fulfilling the indebtedness criteria of the Maastricht treaty. The obvious evidence for this is the enormous foreign trade deficit. In 2006, according to recently published statistics, the US debt from the international exchange of goods rose to 4 billion. Who is surprised that this is again a negative record?

What can lead to dramatic economic, social and political consequences n other states trickles down to the superpower. Once again its debts are growing – currently billion daily. However the majority view of the government, finance capital and the media in the United States is that the situation is okay. The armament budget in 2007 will be inflated again by more than 0 billion. On the Potomac and in Boston, living at the expense of the world is seen as a prerogative of God’s own country. Hardly anything comes to the average worker or the millions of poor from the blessings of a parasitic economy.

SICKLY SYMBIOSIS

A state showing a balance of trade deficit is not a drama. Normally the capitalist world market simply provides for upgrading national currency. The price of imports is raised, exports are cheapened and framing conditions for balance equalization are created – at whatever cost. In the case of the US, the mechanism is annulled. The dollar is almost continuously devalued over against the euro. Nevertheless the imports of the US have risen for years since North America and China entered into a trade symbiosis that has dramatic consequences.

Unlike the US where a creeping de-industrialization is occurring (only eleven percent of employees work in industry), Asia, above all China, becomes more and more the workbench of the world. China exports much and saves much. Nearly a third of the US balance of trade deficit are debts to the kingdom of the middle (2 billion). This development leads to very dangerous effects for both sides. The US heaps up deficits. China is booming almost uncontrollably – and could double its economic output within a few years at current growth rates (ten percent).

Peking supports the US dollar – to continue exporting unhindered. China’s currency reserves are estimated at over trillion. Since no state stashes away bills, Peking has its currency assets in US government bonds, practically granting a credit.

The rapid upswing of China’s economy was possible because the Chinese currency is coupled to the US dollar. The market cannot upgrade anything because this is prevented by decree. Capitalist market laws cannot be annulled on order. Thus enormous imbalances are built in bilateral and international monetary-, financial- and exchange relations. A crash of the whole global financial system is only one possible scenario as a result of this development.

EVERYTHING IN RED INK

De-industrialization reduces the long-term wealth-formation of broad sectors of the population. An extremely high indebtedness of private households also contributes to the disastrous total deficit of the US. Debts of trillion currently mount up for the states between the Atlantic and the Pacific including trillion in mortgage loans and consumer credits.

For a long time, US leaders persuaded themselves that the shortcoming in trade is not terrible as long as strong inflows continue in direct- and financial investments. However the other US economic balances are moving in a dangerous realm. The balance of payments including the transfer balance and the balance from trade and services is also in deficit.

According to CIA sources, the US ranks 163rd or in last place in a world comparison with a balance of payments deficit of minus 2 billion. Washington practically bleeds white the balance of payments surplus of the world.

Spain ( billion) and Great Britain ( billion) rank ahead of the US. China (plus 9 billion) and Germany (plus 5 billion) are at the other end. The bankers and main debtors of this world are clearly identified.

The fact that the net capital influx broke for the first time in December 2006 is really alarming for the US (minus billion). If this continues, the future will be ominous. The balance of payments will be stuck in red ink. A collapse threatens the US economy. This economy requires a daily capital infusion of three to four billion dollars to function.