[Marxism] America's benefactors

Marvin Gandall marvgandall at rogers.com
Wed Feb 11 10:30:08 MST 2004

Asian financing of the US economy to keep it afloat as its largest
export market is “the biggest aid programme of all time”, and Europe is
paying the price, writes Martin Wolf in today’s Financial Times.

As is been widely known, Asian central banks – notably in Japan, China,
and Taiwan – have been massively buying US Treasuries and other
securities to keep their own currencies and American interest rates
relatively low, and US demand for their exports correspondingly high.
Any significant falloff in their dollar-denominated purchases would
provoke a free fall in the weakening US currency, a spike in US interest
rates, and a probable recession – or worse – in the American economy.

Wolf reflects the divergent European interest in decrying as
“protectionism” the refusal of the Asian central banks to let FX markets
reprice their “artificially undervalued” low currencies upward. The euro
’s sharp rise against the US and Asian currencies has badly dented
European exports and growth. He dismisses the recent Boca Raton call by
G-7 finance ministers – three of them from Europe – for more Asian
exchange rate “flexibility” as “sound and fury, signifying nothing” in
view of the tacit agreement between the Asian central banks and the US
to govern their trade relationship through what Wolf regards as a de
facto system of partially fixed exchange rates.

FT (sub-only) article available on www.supportingfacts.com

Sorry for any cross-posting.

More information about the Marxism mailing list