Counterpunch, June 15, 2006 "The Demons of Greed are Loose" Why a Global Economic Deluge Looms
By GABRIEL KOLKO People who know the most about the world financial system are increasingly worried, and for very good reasons. Dire warnings are coming from the most "respectable" sources. Reality has gotten out of hand. The demons of greed are loose. What is that reality? It includes a number of factors. Alone they would be exceedingly serious; combined, they are very likely to be lethal. First of all, the International Monetary Fund (IMF) has been undergoing both a structural and intellectual crisis. Structurally, its outstanding credit and loans have declined dramatically since 2003, from over $70 billion to a little over $20 billion today, leaving it with far less leverage over the economic policies of developing nations--and even less income than its expensive operations require. It is now in deficit.1 A large part of the IMF's problems are due to the doubling in world prices for all commodities since 2003 -- especially petroleum, copper, silver, zinc, nickel, and the like -- that the developing nations traditionally export. While there will be fluctuations in this upsurge, there is also reason to think it may endure because rapid economic growth in China, India, and elsewhere has created a burgeoning demand that did not exist before, when the balance-of-trade systematically favored the rich nations. The U.S. has seen its net foreign asset position fall as Japan, emerging Asia, and oil exporting nations have become far more powerful over the past decade, and have increasingly become creditors to the U.S.2 As the U.S. deficits mount, with its imports being far greater than its exports, the value of the dollar has been declining -- 28 per cent against the euro from 2001 to 2005 alone. full: http://www.counterpunch.org/kolko06152006.html -- www.marxmail.org
