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>
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