ECB pressed to cut rates as euro soars

bon moun sherrynstan at igc.org
Fri May 9 05:29:27 MDT 2003


No one except the most simplistic has said that dollar hegemony is the
sole motive for the invasion of Iraq.  It is an important component of
the conjuncture, however, precisely because it presents so many
insoluble dilemmas.  That is precisely why it should interest us.  No
doubt this war was overdetermined, and we need to see all aspects of
that overdetermination, including plain stupidity from within neocon
ideological blinders.  But the currency issue, which is really a credit
issue, points us at a material limit that cannot remain under the
surface, so to speak, indefinitely.  For example, as the cascade of
disorder progresses, what options will be available to Europe (and
Russia!)?  When the deflationary spiral begins in the US, what can the
holders of US Treasury Bonds do?  They already know the US will not pay
out, because it can't.  And for how long can the US serve as the
consumer of last resort in a world defined by dollar hegemony [that is,
where the US makes dollars, and everyone else has to divert potential
development capital into an export economy to get some of those dollars
to build a firewall against speculators]?  We can not ignore the fact
that a significant joist under this dollar hegemony is that certain key
commodities are now denominated in dollars - and oil ain't no ordinary
commodity.  This rivalry between Europe/Russia and the US will
inevitably break out more and more into the open, and it will force many
very hard decisions.  I watch with great interest, for instance, the
notion of an independent (of NATO) EU military institution as it grows
legs.

At bottom, this is not a currency crisis - as we know.  It is an
accumulation crisis, and - I think - a doozie.  Dangerous as hell to
boot.

I also apologize for my abrupt tone in the earlier post.  Working under
deadlines and underslept, so I've been peevish.





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