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The unpegging debate continues

George Anthony highlights the American dilemma

The Islip Political Newsletter enters its eighteenth year of publication, with some sense of achievement. Now supplemented with a daily newsletter, thanks to the internet.

Through this new feature it has been possible and with some diligence, to read the Financial Times and Observer and then broadcast the global activities of Capitalism and its drive for maximum profit and of their attempts to explain away the rising opposition to their machinations, through the use of fraud, deceit and war.

As for war, the present UK military involvements both in Iraq and Afghanistan, particularly with regard to the latter, shows that Britain refuses to accept that military campaigns in Afghanistan cannot be won. Ignoring the defeats of the Anglo-Afghan wars of 1839-1842 and 1878-1880.

The contradictions of capitalism always get smart bourgeois minds into trouble, as Karl Marx discovered in the British Libraryâs reading room all those years ago, as he read The Economist of the day and parliamentary inspectors reports into conditions of factory life in Britain.

Today, by tracking the conduct of banks and the behaviour of investors in the stock market, (an education in itself) shows that the lessons of economic history have not been learnt either.

For instance, âShort selling-the practice of selling shares you do not own-has long been a dirty word in the world's financial markets. After the 1929 crash, Hoover blamed shorting for the collapse of stock prices. More than 70 years on, short-selling retains the taint of market manipulation, despite acknowledgement by many professionals and regulators that it provides liquidity in the market. It involves the sale of a commodity or security not owned, on the expectation the price will fall and it can be bought back cheaply. The short-seller borrows the stock, usually from a broker or third party. The short seller must put down money (a margin) to secure the borrowing. If the price of the stock rises too far before it must be returned, the short seller receives a margin call and must put up more money. Eventually the stock must be bought back in the open market. If the price has fallen, the short-seller makes a profit. If the price has risen he still has to buy the stock to return to the lender, resulting in a lossâ. Financial Times 03/07/2006

Now, with credit crunch and its consequences, itâs the supporters of âstakeholder capitalismâ (Will Hutton), and âanybody but Ken Livingstoneâ (Philip Stephens), soothsayers both, who have their ideological backs to the wall.

This continuous examination of their opinions by Islip, is a useful exercise. Also practised, by Fidel Castro, Commander in Chief par excellence; in his semi-retirement, as he issues his occasional observations on the modern depredations of globalisation (For instance, his forthright condemnation of bio fuel production, at the expense of food consumption,). Now backed by the Bolivarian revolution, exemplified by the Ãlan and determination of our man in Venezuela, Hugo Chavez: his views are supported by millions in Latin America.

So a new globalisation axis has emerged, with the Asian economies expanding, particularly China on an 8% year-on-year annual growth. The democratic oil and gas abundant economies of Latin America and Russia, with its economy soaring for seven successive years, plus a powerful rival Eurozone, all compounded by a âslowdownâ, turmoil or credit crunch in the USA itself. With the American economy thus facing a challenge on five fronts.

Along with all of that, they face a repeat of the 1970s sharply rising consumer prices and high inflation, known as âstagflationâ, (one foot on the brake, the other on the accelerator). Furthermore, the emerging economies are not as affected by the turmoil in the developed countries, since their fortunes ride on the ever expanding Chinese and Indian economies.

Here is an excellent story on how their come-uppance showed itself on the US Thanksgiving holiday,

The aircraft carrier Kitty Hawk and its attendant fleet and crew, wanted to dock in Hong Kong to allow the crews to meet their families. But China refused, so the fleet sailed away, only to be told later that the Chinese authorities had changed their minds. Too late, since by then, the ships were 300 miles out to sea. With a repeat of the same treatment on December 1^st, for the USS Reuben James.

This is now a growing feature of their general situation. Significantly in the matter of oil and currency reserve amongst the Opec countries, where a seismic shift may soon be under way.

Because the global economies believe they need a reserve currency to peg to, Britain occupied that role because of its imperial power, but it became undermined by the first World War. So America took over after Bretton Woods II, it being characterised by the phrase, âour currency, your problemâ.

As a consequence Saudi Arabia, staunchly defending their links with America, argued that unpegging would mean the decline of the value of their wealth. But not stopping them meeting behind closed doors to debate the change. With Kuwait having reduced their rate of inflation as a result of transferring to a basket of currencies. And Venezuela and Iran, describing their position, as oil being paid for by worthless paper.

Thus the pundits, economic and political, in the Financial Times and the Observer, compounded by the timidity of New Labour and the reactionary incompetence of the Bush administration, are finding it more and more difficult to justify their adherence to the dollar.

In Brown's case cosying up to big business and finding that doesnât work either, the polls, as a result, showing an embarrassing collapse in the support for Labour, to a minus 10% from previous and a 10% plus for Cameron.

All this is highlighted more and more by television and the internet logged on to by millions. Furthermore, making the past and present history of class societies available at the press of a button.

In the meantime, and seemingly oblivious - Christmas spending showing no sign of the credit crunch in the high street â the misled punter continues to be diverted by football, sport generally, gambling, TV trivia and binge drinking. Bringing alcohol related deaths in 2005 to 8,836, a third of whom were women.

That is, until a notice arrives that they must leave their homes because the mortgage is unpaid, that the family car is subject to snatch back, or that a redundancy notice is received because private equity has made a cool million or two in buying their company, leaving them with diminishing prospects, unless it's stacking supermarket shelves for the minimum wage, if theyâre lucky, helping them to realise that capitalism is no longer able to deliver the goods, and that no answers are to be found in the pages of the Sun either.

In conclusion, history as they say repeats itself, and perceptive American commentators seeing the comparison with Rome. Although Rome thrived by conquering economically superior Carthage, by military supremacy, this time around China will see off American hegemony by the superiority of trade, without firing a shot. By some calculations, easily overtaking the US in world production before 2025.

With a little help from the international organised working class and its allies, exemplified by the Stop the War Coalition and Latin American solidarity campaigns, not forgetting the massive opposition to war across the pond.

Together replacing it with a society where the collective spirit, not money prevails, and where war becomes a thing of the past.

In other words, Socialism