This action in support of the euro looks like a swing to interventionism on
a global scale.
Whereas 5 years ago, the US may have been worried by the abnormally low
level of the dollar, there is no immediate US need to intervene decisively
in currency markets now. The unification of euroland makes an action by the
three main central banks easier, although ironically it is the euro that
has to be supported by the action. But the 3 banks could work again easily
for another purpose in the future.
This intervention needs to be seen beside the US decision to release 30
million barrels of oil from stocks. The US has been far less hit by the oil
price rise than has Europe and could have ridden it out more easily than
Europe. Although Bush has opposed this, it is the politics of Gore and
Clintion that are edging ahead and there is an objective basis for this in
terms of the logic of the global economy.
The aftermath of the petrol blockades in Europe have shown that Paul
Krugman was half correct in saying in the interesting article Louis Proyect
forwarded:
>What this says is that what seems to be the defining feature of Western
>political economy at the turn of the millennium — the triumph of
>free-market ideology — is far less complete than some would imagine.
>Ordinary people, when push comes to shove, feel that sometimes the market
>just isn't fair
But this is not new. There have been markets for thousands of years of
human history. People are not anti-market in expecting *regulation* of markets.
What finance ministers of individual countries cannot easily do is to make
substantial adjustments of the tax take if the international oil market
rises substantially. Hence this propels countries to discuss global
management of the oil market. We are moving towards a sort of international
oil cartel of producers and consumers. The US action shows a decision to
use what is presumably the largest pumped reserves of oil as a buffer stock
to stabilise the world oil price an important feature of any commodity
management.
Although the US economy could very well go on enjoying its important
comparative advantage of relative growth, even in a global contraction, it
is in the US interest as well to lead a global management of oil.
These new trends towards global interventionism are given political impetus
by the apparently continual round of impassioned protests against the
global capitalist system every time there is a major global financial
meeting. The international representatives of capital realise that it lacks
a certain credibility.
Laissez-faire free-market neo-liberalism looks on the way out. It can be
seen in retrospect as a temporary aberration relevant as a way of attacking
the social wage in western capitalist countries. What is on the way in,
will be increasing attempts to control the volatile global economic economy.
Capitalism prepares the ground for socialism. But the qualitative shift in
perspective may come through the global route first rather than within the
borders of individual states.
Chris Burford
London
At 19:22 22/09/00 -0700, you wrote:
>[Asian leaders are probably foaming at the mouth over this shit]
>[full article http://www.iht.com/IHT/TODAY/SAT/FPAGE/traders.2.html ]
>
>Paris, Saturday, September 23, 2000
>Banks Catch Traders on Wrong Foot
>The intervention Friday, the biggest concerted action since
>central banks stepped into the markets to rescue the dollar from record lows
>five years ago, caught bankers and investors almost totally by surprise.
