[Mb-civic] U.S. dollar's freefall to have global effect

[ean at sbcglobal.net]

http://www.canoe.ca/NewsStand/Columnists/Toronto/Eric_Margol
is/2005/01/02/805674-sun.html
Sun, January 2, 2005 
U.S. dollar's freefall to have global effect
Add China's banking system to the mix, Eric Margolis writes, 
and it's a recipe for disaster
By ERIC MARGOLIS
Here are what will be the big stories of 2005, according to my 
cloudy crystal ball: - The killer tsunami that struck Indonesia, Sri 
Lanka, and India a week ago will cause years of ongoing economic 
damage and human tragedy. Damage to Thailand will be quickly 
repaired. But Indonesia and Sri Lanka, both rent by decade-old 
civil wars, will particularly suffer. 
- The biggest problem the world faces this new year is the 
continuing fall of the U.S. dollar. The Bush administration's 
reckless spending, ruinously expensive wars in Iraq and 
Afghanistan (now costing as much as the Vietnam War), 
America's galloping trade deficit and credit spending frenzy are 
creating the perfect economic storm. 
Japan and China's central banks may give up trying to artificially 
shore up the U.S. dollar by buying U.S. currency and securities. A 
plunging dollar could cause foreign investors to start dumping 
U.S. securities and assets. The result: A potential worldwide 
financial crisis that could collapse the housing bubble, cause 
interest rates to soar, and send securities markets into freefall. 
- China's banking system is a house of cards. Uncontrolled credit 
expansion has fuelled China's property boom and international 
buying spree. Banks are swamped by bad, non-performing loans 
made to huge, money-losing state-owned corporations. Collapse of 
China's insolvent banking system would threaten world financial 
markets. 
- The U.S.-led occupation of Iraq is a disaster for all concerned. 
The war is slowly being lost. The big question in 2005 is if and 
how President George W. Bush will extricate the U.S. from this 
catastrophe, which is costing $6 billion US per month. The 
elections in Iraq four weeks from today won't resolve this huge 
mess. 
- "Terrorism" -- the insurgency against U.S. domination of the 
Muslim world and its resources -- will intensify even after Osama 
bin Laden is killed. He has created a new, powerful ideological 
movement that will continue to shake the Muslim world and 
challenge its corrupt, autocratic rulers and their foreign masters. 
- As the U.S. gets sucked ever deeper into its disastrous crusade 
against the Muslim world, it may -- possibly with Israel -- attack 
Iran's nuclear infrastructure, or invade Syria. An attack on Iran 
would leave the U.S. garrison in Iraq trapped amid a sea of hostile 
Shia -- as well as Sunnis. 
- A real, viable peace between Israel and the Palestinians seems 
unlikely. Israel's PM Ariel Sharon already has everything he wants, 
and, according to U.S. National Security Adviser Brent Scowcroft, 
has "wrapped Bush around his little finger." So why make 
concessions? Palestinians will remain trapped in their giant open-
air prison. 
- Now that Vladimir Putin has crushed all domestic political and 
business opposition, his control over Russia is absolute. Only the 
courageous Chechen mujahadeen have resisted Putin's restoration 
of Kremlin autocracy. Putin is determined to rebuild the old Soviet 
Union. Watch for him to put increasing pressure on Ukraine in the 
wake of last week's election. 
The Bush-Putin alliance will strengthen. By regaining state control 
of Russia's oil industry, Putin is poised to become a kingpin of 
world oil, even an equal to the Saudi royals -- if he can raise 
enough cash to tap his nation's vast but remote deposits. 
- The European Union, for all its growing pains, economic 
doldrums, and bureaucratic obesity, has replaced the United States 
as the world's champion of human rights and support for civilized 
world order. 
By contrast, under Bush, the U.S. has become a reactionary power 
devoted to protecting the status quo in league with Britain, Russia, 
China and India. In short, a re-run of the Holy Alliance of 1815 in 
which Europe's autocrats sought to protect their power and 
privileges, and halt the rise of bourgeois democracy. 
- Look for an increasingly independent-minded Europe and China 
to draw closer strategically as a result of the Bush administration's 
aggressive policies. Russia will play both sides, backing the U.S. 
in its "anti-terror" campaigns, and, discreetly, China, in opposing 
U.S. influence in East Asia. European arms may begin to flow to 
China in 2005. 
- Revolution is under way in Saudi Arabia. The U.S.-backed royal 
family will be increasingly besieged in 2005. As for U.S. claims it 
will promote democracy in the Muslim world, any honest votes 
there will produce pro-Islamic parties advocating opposition to 
Israel, higher oil prices, and eviction of U.S. influence from the 
region. 
So no true democracy, just U.S.-implemented "guided democracy" 
in Iraq, meaning a Vichy regime that keeps U.S. bases, sells oil 
cheap, makes nice to Israel, and allows U.S. firms to exploit Iraq's 
wealth. 



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