(OPE-L) Wallerstein: "2003 - The Year of Bush"

From: gerald_a_levy (gerald_a_levy@MSN.COM)
Date: Fri Jan 02 2004 - 06:43:20 EST

Excerpts from Wallerstein's  commentary on 2003 below.  Note
claim concerning the role of a weak US dollar and how the US is
economically "dependent"  on  China, Japan, and S. Korea because
of  their role in buying US Treasury notes./ In solidarity, Jerry

> http://fbc.binghamton.edu/commentr.htm
> Commentary No. 128, Jan. 1, 2004
> "2003 - The Year of Bush"
> The year 2003 is the year in which George W. Bush left his mark on
> the world. As the 2004 New Year began, he was probably celebrating
> it. But in actuality it was a disastrous year - for Bush, for the
> United States, and for the world. What Bush sought to demonstrate was
> that the United States could and would assert its power unilaterally
> in the world, succeed militarily in doing so, and thereby strengthen
> its political and economic position in the world. The U.S. would show
> it was the superpower, if not one that was respected, then at least
> one that was feared - by friend and foe alike. Has he succeeded? I
> think not. <snip, JL>
> How did Bush fare on the world economic and political front?
> Economically, the war brought about the so-called Baghdad boost,
> allowing for a spurt of economic growth worldwide. This was in large
> part the result of U.S. military Keynesianism. But there are two
> downsides to be noticed. The economic growth has largely benefited
> the wealthy. It did not result in a reduction in unemployment, either
> in the United States or elsewhere, or in an increase in real income
> for the working strata. So the longer-term impact on effective demand
> is in doubt. And, even more important, the dollar has been careening
> downward.
> The downward slide of the dollar is to be sure an economic plus in
> the very short run for Bush (that is, in the electoral year of 2004).
> It permits an increase in U.S. exports and a reduction in real terms
> of the external debt. It may have stanched a further boost in
> unemployment. But a strong dollar is in the end a powerful political
> and economic tool, and the U.S. cannot afford to have a weak dollar
> for very long. But can it do anything to reverse the downslide? To
> cover the external accounts deficit, the U.S. borrows money by
> selling its bonds each month. Up to 2003, it was able to sell enough
> to cover its increasing deficit, and hence make possible the
> incredible financial transfers to U.S. corporations and its
> wealthiest citizens.
> But, as the dollar began to lost significant value, the rest of the
> world began to hesitate to throw good money after bad by continuing
> to buy bonds whose value was plummeting. The U.S. deficit is no
> longer being covered by dollar inflow, which poses dilemmas for the
> U.S. Treasury. And the situation is kept from total immediate
> disaster only by the decision of East Asian governments (and
> particularly China) to continue to buy U.S. Treasury notes. China
> (and Japan and South Korea) do this out of self-interest of course.
> But their investment in dollars puts them at risk as well, and they
> may soon decide that the advantages are outweighed by the dangers to
> their own resources. In any case, the United States is now dependent
> on them for its continuing economic health, not vice versa, which is
> hardly a position of economic strength. And meanwhile, the U.S. is up
> for sale to outside investors, the inverse of what the U.S. would
> like the situation to be. <snip, JL>

This archive was generated by hypermail 2.1.5 : Sat Jan 03 2004 - 00:00:01 EST