The New Worker
The Weekly paper of the New Communist Party of Britain
Week commencing 18th October 2013
THE UNITED States seems to be poised on the brink of committing suicide as a global economic power but the fall-out threatens many other countries. After two weeks with no official government because the Republican-controlled Senate is refusing to pass the budget, which includes funding for a new comprehensive health insurance system referred to as Obamacare, a deadline is fast approaching for the US to raise its total debt ceiling. And it cannot do this without a government. If it does not it will default on its massive loans and send the global capitalist economy into chaos.
Christine LaGarde of the International Monetary Fund, the United Nations and the Chinese government — which is America’s biggest creditor to the tune of nearly $1.3 trillion in Treasuries, have all urged the American government to get a grip
The US currently owes the rest of the world a massive $16.7 trillion debt and if it defaults there will be pain all around the world. But already confidence in the once almighty dollar is seriously shaken.
China and the European Union have already agreed a very big exchange of currencies so they will be able to trade if the dollar collapses.
The European Central Bank and the People’s Bank of China (PBC) have agreed to start supplying each other with their currencies, avoiding the dollar as an intermediary currency. The currency swap agreement will last for three years and provide a maximum of 350 billion Yuan ($56 billion) to the ECB and €45 billion ($60.8 billion) to the PBC.
And the Chinese are raising the rates of interest it charges on the now very insecure debts from one to three per cent. Last week Xinhua writer Liu Chang has written a challenging article urging that it is “perhaps a good time for the befuddled world to start considering building a de-Americanised world”.
Liu Chang wrote: “With its seemingly unrivalled economic and military might, the United States has declared that it has vital national interests to protect in nearly every corner of the globe, and been habituated to meddling in the business of other countries and regions far away from its shores.
“Meanwhile, the US government has gone to all lengths to appear before the world as the one that claims the moral high ground, yet covertly doing things that are as audacious as torturing prisoners of war, slaying civilians in drone attacks, and spying on world leaders.
“Under what is known as the Pax-Americana, we fail to see a world where the United States is helping to defuse violence and conflicts, reduce poor and displaced population, and bring about real, lasting peace.”
He goes on to say: “Such alarming days when the destinies of others are in the hands of a hypocritical nation have to be terminated, and a new world order should be put in place, according to which all nations, big or small, poor or rich, can have their key interests respected and protected on an equal footing.
“To that end, several corner stones should be laid to underpin a de-Americanised world.”
Liu Chang calls for a thorough rewriting of international law and a re-organisation of the United Nations to give countries better protection against political and military intervention by big powers.
And he calls for a new international reserve currency to replace the dollar.
So the fall of the dollar could be good news in the long run to a lot of developing nations but the instability and chaos in the meantime are serious threat to world peace.
Meanwhile the Republican senators in Washington, who find it hard to grasp that there is a world outside the US, continue to threaten to destroy their own country as a world power.
For the organised working classes of the world the time has come to organise and prepare for sudden dramatic changes — with big dangers and big opportunities. Like the Chinese government we must make ourselves ready for all eventualities.