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Economic World War approximating genocidal dimensions

By Franz J. T. Lee
October 06, 2004

The article, published in VHeadline.com: "Venezuela, Iran and Indonesia will follow once Russia moves to the Euro ... it would destroy the US$ as a reserve currency" is most timely, and very clearly portrays immediate future developments on a world scale.

Let us briefly illustrate the background "Economic World War" that determines these Orwellian coming events:

As we know, ever since the 1970s, the Bretton Woods system has collapsed and resulted in the disintegration of fixed exchange rates, and severe upheavals in international currency markets. The current slide of the US$ against the Euro marks a critical phase of the very existence of the world capitalist system, with far-reaching economic, political, social and military consequences that we are experiencing already on a world scale that could lead to a total destructive global war between the great powers.

This catastrophic economic situation was ushered in when, in August 1971, US President Nixon was forced to cancel the guarantee to redeem the dollars circulating in world financial markets. Among other factors, like the US balance of payments deficit that sky-rocketed to trillions, the massive increase of military expenditure and the so-called "world energy crisis," this measure sparked off the progressive deterioration of the relative economic strength of the United States of America.

Since February 1973, a system of floating exchange rates had to be introduced and, for a while, the US economy benefited from the dollar as international currency, approximating its petro-dollar status. As such, the US currency itself became a huge problem for the rest of the world, especially for the oil-producing countries ever since.

What really was happening was that all the tendential laws of motion of capitalist development, as predicted by Marx in "Capital" and by Lenin in "Imperialism, the Latest Stage of Capitalism" (Original Title), were realizing themselves, inter alia, ever-increasing inflation, followed by low profit rates. In spite of Paul Volcker's introduction of a high interest rate regime ... and by high unemployment ... all these accelerated by monopolization, centralization, thus resulting in progressive geometric pauperization on a world scale.

As we always pointed out, the current labor system, the capitalist world order, is in agony, in transition. Production is being eliminated by modes of creativity and creation. However, at the same time, the obsolete system of production is currently showing its real, true, global, fascist grimace, as a mode of global destruction, that could eliminate life on this planet.

Brutally, it blows up "Twin Towers," blaming it on "Arab terrorists." Mercilessly, it massacres innocent Russian children ... heinously, it carries out a genocidal war in Iraq, and nearly the whole world just looks on, does nothing, says nothing.

* In reality, the current "New Wars," the next "World War," concerns the USA and its major competitor "Eurasia," Yes, we have reached Orwellian historic dimensions already.

Volcker caused such a crisis, thus, in September 1985 at the Plaza Hotel in New York, the five major capitalist powers, under the army boot of the USA, had to agree to reduce the value of the US dollar, because of the damage that it caused to the US economy itself.

What followed was an increasingly aggressive US policy against imports, particularly from Japan. Ever since 1985, in fact, it was precisely the competitiveness of the giga-US corporations, backed by the US administration, that benefited most from this measure.

This resulted in higher concentration of the major contradiction in late capitalism; practically Japan was booted out as future competitor. In the early 1990s, the Japanese economy was falling into progressive stagnation, and severe deflation, accompanied by small recoveries now and then.

In April, 1995, the US$ acquired a record low of 79 •en, now Robert Rubin had to devaluate the •en and to increase the value of the US$, resulting in increased equity values and the softening of the pressure on interest rates.

However, on the other hand, what was the result of all this?

The then current US balance of payments deficit of some $500 billion, currently running at around 5% of gross domestic product, resulted in a huge increase of external debt at the rate of $1 million per minute, increasing daily more than ever ad infinitum. Only the Petro-Dollar is still keeping this soap bubble alive.

According to Nick Beams: "It is estimated that the more than 15% rise in the euro against the dollar since December last year is equivalent to the European Central Bank lifting interest rates by one percentage point. Such an increase could possibly be absorbed if it were a one off occurrence. But there are predictions that the euro could soon rise to over $1.20 and even to $1.40 in coming months."

The current "New Wars" of the Bush administration are Economic Wars, directed against the major rivals of the USA. Afghanistan and Iraq ... and in a certain sense, Venezuela ... are just "collateral damage" of the coming military "show-down." Economically, Germany and France are the European Union ... and the European Union is Germany and France.

How this economic world war is taking shape, Beams explained Eurozone companies are already reporting falling profits. Volkswagen said the rise in the euro had cost the company $460 million in the first quarter, with pre-tax profits dropping by 67%. The Financial Times predicts the impact could be even more severe on small and medium-sized export-dependent engineering companies, forced to compete with firms based in China where the currency is linked to the dollar.

Estimates are now being made of the effect of the rising euro on profits. According to Deutsche Bank, a 10% fall in the US$/euro exchange rate, compared to its average level in 2002, will see the continentís 350 largest companies lose an average of 4.7% on their earnings before interest and taxation (Ebit). (ibid.)

Desperately the Bush administration is trying to decelerate the world crisis ... but, by blowing up the Twin Towers, massacring innocent children, conspiracy against Venezuela ... it is merely creating more moribund conditions, even more violent forms of global fascism.

* This is the international context of the current Bolivarian Revolution.

Yes, the Economic World War is already approximating genocidal dimensions.