Society 359 / 2011

WIRTSCHAFT
KOMMENTAR
Not only did inflation ease and unemployment
increase but the balance of trade
and payments moved ever more markedly
against the United States and in favour of
the Asian Tigers, China and India.
This was not a sudden development. It
matured over about twenty years as I described
in “The Multiple Abyss” (1996) and
“America’s Suicidal Statecraft” (2006).
As the policies matured and Deng’s option
to join “the rich” bore fruit, China
moved from being a relatively backward
economy in the mid-1970s to being the
world’s second largest economy now, with
superpower and space-race ambitions and
promise of becoming the world’s top economy
in the near future. Meantime, the
United States has had its credit rating reduced
by S & P, its approved debt ceiling
raised above the present $14 trillion and its
space enterprise largely suspended.
Is that as far as global rearrangements
are likely to go?
Will stability soon be restored to the
global economy and finance?
Will the dramatic changes of past
decades in the economic, political and
strategic power situation be brought to a
speedy and relatively painless close?
The answer to all three questions seems
to be “no”.
***
A Situation Even More Critical
Since the Lehman collapse of 2008, the
United States has wasted valuable time,
reputation and money turning a disastrous
scenario into a catastrophic reality.
In “America’s Suicidal Statecraft”, I compared
Ben Bernanke’s idea of helicopters
dropping money from the skies to the
1970s practice of the Emperor of the Central
African Republic throwing paper money
to his grateful citizens when he went
walkabout. The gratitude didn’t last. The
Emperor was dethroned, imprisoned and
executed.
The fate of Bernanke and his president
might be more merciful but unpleasant
nevertheless.
Trillions of dollars have been spent for
virtually no result except to make a United
States – and Western recovery – more difficult,
more complex and more long drawn
out than before.
Bearing in mind the “hedonic” features
of American statistics, the United States is
almost certainly in “recession” right now.
The question is not whether the United
States is in a double-dip recession. Rather
it is in continuing recession deriving from
long-lasting, fundamental, uncorrected errors
of policy.
“The economy is nothing without
labour. Labour makes the
stuff; it delivers the stuff; and
it consumes the stuff.”
JAMES CUMES
“It is not possible to construct
a real economic and financial
recovery while this casino philosophy
and practice continue
to rule.”
JAMES CUMES
What is terrifying is that the situation
is even more critical than three years ago.
During those three years, the problems
confronting the United States have become
bigger and more menacing than
ever.
Not only bigger and more menacing but
even less well identified than ever and
more subject to pointing fingers at others
rather than accepting responsibility for
putting their own house in order and helping
others so as to promote global stability
and peaceful change.
The United States has recently tended,
for example, to highlight the sovereign
debt of the Eurozone countries as the central
threat to global stability. That may be
planned to distract attention from its own
massive debt and deficit, and from the
highly unstable speculative financial system
which still operates in the United
States itself.
***
The Economy Is “Toast”
Alessio Rastani’s view that it is not governments
but “Goldman and Sachs [that]
rules the world” is not funny. Not at all, because
it reflects what many see as an everyday
reality.
“The market,” Rastani says, “is toast.” After
all the years spent in adoration of the
market, it might seem a sacrilege to express
such a thought – even think it; but it
too reflects everyday reality. Moreover, it is
not just the little day-trader who characterises
today’s “market”. The whole community
- the bankers, the hedge-fund managers,
the ordinary Joe and Josephine in
the street – swings the levers of the global
poker machines now, not so much in expectation
of becoming rich as in hope of
grabbing at financial survival.
Everyone has been caught up in the addiction
to gambling on the stock markets,
foreign exchange and commodity markets
– wherever a prospect exists of making or
saving a fast buck.
It is not possible to construct a real economic
and financial recovery while this casino
philosophy and practice continue to rule.
But its reform – or more accurately its
replacement - will not be easy to achieve
and cannot be done quickly.
It will take several years at least to return
to rational economic policies for domestic
and global economies. That is if – at
last – we begin right now to do the right
things.
What are the “right things”?
The quote from 1973 said “we need to
do two things?”
What are they?
***
Two Things To Do
The first is to acknowledge that we are
dealing with a new economic and financial
situation. We must make fundamental
changes, not just tinker with details at the
margin. In this context a solution to Greek
debt will not solve the problem of global
debt – sovereign, commercial and personal.
Nor will it correct the range of financial
and economic policies which caused the
perilous and ultimately devastating accumulation
of financial disequilibria.
The second thing we must do is to look
again at our broad macroeconomic policies
so that they deliver full employment
and stable growth within the sort of society
that Keynes and others envisaged. At
BOOKS BY THE AUTHOR
“America’s Suicidal Statecraft” and “The Multiple Abyss”
are available on Amazon in print and kindle editions.
www.authorsden.com/jameswcumes
America’s Suicidal Statecraft
– The self-destruction
of a superpower
James Cumes
Cresscourt Publishing
Always a critic of mainstream
interest-rate and
credit policies, James Cumes
shows in this book how the
United States fecklessly drained away its economic strength
and endangered its political and strategic position as the
world’s single superpower.
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