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Tariff and commercial war
Few economists know that a war begins with a commercial clash, goes on a monetary skirmish, is complicated by political and diplomatic altercations, and degenerates into a military clash.
The economist Nick Beams observes: “US President Donald Trump has taken an important step towards the starting of an international trade war by imposing a tariff of 25% on imports of steel and 10% on aluminum. These measures are reminiscent of the Smoot-Hawley Act of June 1930, which played an important role in the economic and ultimately military conflicts of the following decade” (1). A few days later, the President delivers and threatens to impose countervailing duties of 22% on Canadian newsprint, a product that the United States produces less and less (2). A few more days and the “possessed” of the White House threatens China, its main competitor, its main supplier, and its main creditor, with “punitive” tariffs (3). The Nick Beams’ observation allows us to understand the meaning of these threats decried by his competitors and his allies.
These bellicose announcements follow the opening of several free trade agreements that far from showing any isolationist attempts to press for the renegotiation of these treaties to the advantage of US capital as we emphasized in our last publication (here). Concretely, Donald Trump, a good capital butler, will sign more trade agreements than its predecessors, because it is the survival of America. (4)
Let’s analyze some statements aimed at justifying this commercial blackmail. The US President says, “When we come to a point where our country can no longer produce aluminum and steel, then we have practically more countries“. Trump is right to complain about the fate of the US industry, but is steel production the role of financial capital in the globalization process?
Previously Trump had stressed that “in war we can not buy our steel from the country against which we fight“, which is correct and this constitutes an unsolicited warlike confession. Should we conclude, like Nick Beams, that the Pentagon is preparing for the world war following the unveiling of its new military doctrine? (5) We will come back to this.
Will the rising tariffs stop the deindustrialization in America? Nothing is less certain in the opinion of the CEO of an industrial trust who states: “Massive increases in tariffs will increase costs for key US industries – automotive, machinery, construction, energy and many others. These are important sectors, and the negative effect will far outweigh the benefits. Another industry magnate adds, “The US industrial sector, and in particular the downstream companies that use steel and aluminum, employs far more Americans than the steel industry and they will be directly affected“. Following these announcements the American Stock Exchange reacted: “the Dow Jones Industrial Average Index
dropped 420 points – the third consecutive day that there was a decline of more than 300 points – as well as noticeable falls in other indexes, wiping out virtually all earnings for the year“.
The effects of globalization on the accumulation of capital.
In the seventies and eighties, before the most recent wave of globalization, the accounting for international capital flows was established on a national basis (country by country). To “get rich,” the “national” big capital had to try to reduce its imports and to increase its exports since the exchange of goods, services and assets went from one company to another, implying a transfer of capital – of “wealth” or value (added value or surplus value) -. Globalization and the relocation of businesses, meeting the imperatives of productivity and profitability, have made this national accounting obsolete.
Since the nineties, the capitalists calculate in terms of “value chain“. Thus, the geographic location of a production-processing plant or a service company is no longer important since the exchange of goods does not necessarily mean the transfer of “wealth” (capital, value added or surplus value) from a company to another, but rather from a subsidiary to another.
Most of the exchanges occur from a subsidiary to another in the “value chain” of reproduction-capital appreciation of a large multinational (trust) or horizontal (monopoly) enterprise for which the national laws and jurisdictions are obstacles that it seeks to abolish or pervert (corruption, tax havens). It is here that the mission of the politicians falls to solve all the constraints to the circulation of the capital. For the investor, holder of ten million shares of the firm Apple or Amazon it matters little whether its 10 percent investment dividend originates from the Chinese subsidiary, from Bangladesh, from France, or from the parent company in California if this relocation is the condition for this return. If the action of Apple or Amazon values of 10% on the stock exchange the shareholder will not be able to say that “nation” is responsible for what portion of this valuation. Clearly, the business accounting is now the only one that accounts for the accumulation of wealth under globalization. (6)
In this “unipolar” capitalist world, because globalized, the SMEs, the financial agents, and the “protectionist-nationalist-isolationist” politicians must understand that the interdependent national entities are subject to international trade flows, and have no other choice if they give up an alliance (a banner would say a merchant) that to dock with another alliance (another block or another banner) not to be excluded from the chain of productivity and internationalized profitability. That’s why the countries of Eastern Europe joined the European Union without delaying after the collapse of the Soviet Union.
The cyclical and systemic economic crisis
The question is not which bloc or alliance a country adheres to, nor even the height of the “drawback” that the national adherent sacrifices to its banner, the contemporary drama is that all the banners collapse because they are all interrelated, all based on the same convoluted financial model, all based on the same moribund mode of production.
If we look at the graphs of global cumulative debt, the Dow Jones index , the gold and government bonds, we see that the “soft madness” (the use of printing money to revive the economy) began to captivate the economy in the 1990s -5, with curves that climb vertically at a breathtaking speed”.
The World debt was $ 30 trillion in 1994; today it stands at 250,000 billion dollars. The GDP of real economy is the only graph who crawls miserably down too slowly. So it smacks of chaos and the collapse of future actions»(7).
“The world’s debt thus amounts to 250,000 billion dollars; unfunded commitments in company balance sheets represent an equivalent amount; As for the derivatives of the banks in the world, they reach a staggering amount of 1,500,000 billion dollars, a global liability of 2 million billion US dollars. With global GDP (assets) of $ 80 trillion, the global liabilities represent 2.500% of international GDP»(8).
The speculative market for derivatives
More gigantic than in 2008, the derivatives market today represents 1,070 times the value of gold held by all the central banks in the world, or 1,400 billion dollars. The own funds of Deutsche Bank, JP Morgan Chase and Citibank represent respectively only 0.15%, 0.6% and 0.5% of their derivatives market commitments. (9)
Who can imagine for a moment that this cumulative liability can one day be repaid or lighten up to let emerge the expected economic recovery?
Petroyuan against petrodollar
Here different economic powers (companies and governments, indifferently) seek a way out before the apocalypse. For ten years Iran has been under pressure from the United States not for its opposition to Israel, as claimed by the “jewish” geo-strategists, but because it was the first country to negotiate out of the petrodollar scam. . However, Iran did not have the power to undermine the dollar monopoly on the world market. Iraq and Libya have paid a heavy price for their temerity. The France and Saudi Arabia – other countries having juggled this eventuality – quickly became disillusioned and joined the ranks of the countries submitted. But here is China reviving the project of alternative currencies for international trade. It should be known that the value of the dollar largely depends on its use as a means of settling oil. When that will disappears, we will see a devaluation of the dollar.
Oil is the most important and strategic commodity market. As Figure 1 shows, oil eclipses all other raw materials.
Back in 2015, during the last of China’s attempts to dislodge the petrodollar. Gazprom Neft, the third largest Russian oil producer has decided to follow suit. The Iran followed the same year, using the yuan and other currencies to sell its oil. In the same year, China put forward the Silk Road, while the yuan began to take hold in the European and US markets following the US trade deficit (Figure 2).
But in 2015 the petrodollar could still resist because China’s oil imports were modest. (10) The oil market is so huge that it serves as a reference for international trade. If the countries are already using the dollar to buy their oil, it is easy for them to use the dollar for other international trade. In addition to oil sales, the US dollar is used in 80% of international transactions. This gives to the United States an unparalleled economic leverage. They can sanction or exclude virtually any country from the US dollar-based financial system. By extension, they can also isolate any country from the majority of international trade. This is the tactics that America uses against Russia which disturbs Moscow more than the war in the Ukrainian Donbas, the war in Syria or the genocidal war in Yemen.
However, things are changing in the wrong direction for the White House. As long as America generated from 40% to 50% of international trade, it was well positioned to impose its currency on suppliers and customers. Since 2015 China has become the world’s largest consumer of oil, a combined consequence of its economic growth and the self-sufficiency measures planned by America to free itself from the influence of its suppliers (Figure 3). (11) China is already the largest producer of steel, aluminum, and a host of other essential products in an industrial economy. Finally, the Chinese capitalists are the first traders in the world. All this places China in the ability to impose the currency of choice for its transactions. Especially as the setbacks of the US economy in disarray portends a devaluation of the dollar. The devaluation of the dollar will mean that all petrodollars will be cheated and their fortunes will evaporate, so many are trying to get rid of them.
Therefore, Donald Trump understands that if he hampers the world trade not only does not improve the America’s trade balance, but it precipitates the devaluation of the dollar. But is not it the mission he received? Now you understand why he surrounds himself with hawks and wars and why he threatens his competitors and his allies to intimidate them.
The final round
As we predicted in our recent book “Democracy in the United States“, Donald Trump was placed behind the oval office to realize what “popette” Obama was unable to accomplish, raise interest rates and throw millions of over-indebted Americans onto the pavement. Now, Jay Powell (President of the Fed) has just increased interest rates in the United States by 0.25% and plans to increase them three more times in 2018. Yet “The household debt is excessive compared to their income and the expensive real estate market is just another bubble. The purchasing power of American households is even 6 to 7% lower than in 2008. (12) Because the Fed has no choice, if it wants to repatriate capital to the country and avoid overheating the economy it will have to raise the “prime rate”. If it does not, it is the American economy that collapses and if it does, it is the American economy that collapses … So that’s the way of things in the unstoppable laws of capitalist political economy.
- http://www.les7duquebec.com/7-dailleurs-2-2/le-krach-aura-lieu-des-cygnes-noirs-de-partout/and http://www.les7duquebec.com/7-de -garde-2 / the-next-crisis-systemic-is-already-the /
- “Even so, despite a resolutely protectionist drive, the chronically deficit of trade in goods and services with the rest of the world reached $ 566 billion in 2017, an increase of 12.1% year-on-year. under the effect of the appetite of American consumers, fond of cheap goods from abroad”.
- Robert Bibeau. Democracy in the United States (the electoral masquerades)(2018).
- http://www.les7duquebec.com/7-au-front/the-new-military-policy-of-the-states-a-danger-attention/and http://www.les7duquebec.com/7-de-garde -2 / the war-commercial-prior-to-the-war military /
- http://lesakerfrancophone.fr/petrodollar-changement-de-donneand http://www.les7duquebec.com/actualites-des-7/la-chine-detronera-le-petrodollar/
Robert Bibeau is a journalist, specialist in Marxist political economy and proletarian activist for 40 years.
Traduction by Claudio Buttinelli. Roma
Democracy in the United States
The electoral masquerades
17 € • 156 pages
Taking for example the endless United States electoral campaign of 2016, we demonstrate, supporting facts, that the bourgeois “democratic” elections – no matter that they are orchestrated and treated discreetly or obviously – are fundamentally anti-labor and aim only at strengthening “the Welfare state” for the rich. They aim only at disarming and at compromising the proletarian class and at inciting him to put back its fate in the hands of the fetish State, the central top management of the big capital. We shall see that the bourgeois democracy is a delusion to distract the proletarian class of its historic mission.
ENGLISH DEMOCRACY IN THE UNITED STATES DOWNLOAD FREE HERE Democracy in the United States (1)
Robert Bibeau was militant in left groups in the 70s-80s, then union activist in the 90s. Now he is the publisher of the international webmagazine http://www.les7duquebec.com and published several works among which National Question and proletarian revolution under the modern imperialism (Harmattan, 2017). Dowload National Question free here: http://www.les7duquebec.com/wp-content/uploads/2017/05/bon-NATIONAL-QUESTION-AND-PROLETARIAN-REVOLUTION-UNDER-THE-MODERN-IMPERIALISM-revision.doc
CHAPTER 1 AMERICA, A DECLINING CONTINENT- COUNTRY
CHAPTER 2 ELECTORAL MASQUERADES IN THE COUNTRY OF YANKEES
CHAPTER 3 A NEW AMERICAN “REVOLUTION”?
CHAPTER 4 HOW TO “EXPLOIT” A CAPITALIST FIGUREHEAD?
CHAPTER 5 AN ORDINARY PRESIDENT, DONALD WARMONGER
CHAPTER 6 “AMERICA COMES FIRST AGAIN!” EVENTUALITY OR UTOPIA?
CHAPTER 7 THE CONTROVERSIAL SWEARING OF DONALD TRUMP!
CHAPTER 8 HOW TO IMPOSE THE WAR ON WHO DOES NOT WANT TO DO IT?
EPILOGUE. THE FIRST ROUND OF THE FRENCH ELECTORAL CIRCUS IS TERMINATED : WHAT CONCLUSIONS CAN BE DRAWN FROM IT?
You can order this book directly to your usual bookseller or on our web site: http://www.editions-harmattan.fr/index.asp?navig=catalogue&obj=livre&no=59199
An electoral campaign for the US presidential election officially begins in February of the election year while the ballot takes place in November. An electoral fair always begins with the preparation of the electorate by the electoral machinery of the main candidates, the third parties serving to assert or repel. An electoral campaign is not about letting voters choose a candidate, but about telling voters what candidate they want. To achieve this, an impressive arsenal of propaganda is set in motion in which several hundred million dollars are squandered. No one will be surprised to learn that “A Gallup poll realized in February 2016 indicated that 76% of US people are dissatisfied for the way in which the policy is going in their country“, euphemism for describing the convulsive resentment of Americans as well the nutty bourgeois class; the impoverished petty bourgeoisie; the precarious proletarian class; as well as the poor and disadvantaged sections of society. (…) Be despoiled by a prosperous master who drops it out of his charity table some crumbs to be shared – it can always be tolerated -, but to be expropriated by an indebted, pretentious, arrogant and incompetent banker, this is too much. The former allies distance themselves more and more openly and strike the pose that suits them, that of claiming the quarry. Here is drawing on the horizon the displayed or hidden defection of allies. The Trump militarist clique is supposed to sort out the mess. (…) What remain to discover to these proletarian of the misery is that if inadvertently one of those admirers of the establishment reached the nirvana of the presidency at the White House, in the Oval Office, he could not change anything, or to solve not the systemic problems of the bankrupt capitalism. Indeed, the problems of America and the capitalist world are not caused by bad governance of a Democratic team compared to a Republican team, or Social Democrat (Bernie Sanders), Socialist or even Communist (!) as demonstrated by so many rigged elections in other countries. (…) The Democratic Party’s establishment took no risks and the organizers rigged the results of the primaries in favor of their favorite. It was on the right flank of the electoral circus that the fight occurred. A so called atypical candidate acts his own way and threatens to seize the presidential post office, without being submitted to the Executive Board of the Republican faction – the other face of the electoral alternation farce -. This star candidate had run the Primaries marathon without having obtained the approval of the majority of his peers. (…) The average observer had not be fooled by the media campaign or by the screams of the pathetic go-left and feminists in service, these useful idiots whose mission was precisely to accredit this nonsense in order to provide the candidate with the maximum support of all those who hate the bureaucracy of Washington and the bourgeois state. Donald Trump continued his drive toward the Republican nomination because a whole reactionary and militarist faction of the capitalist class granted him a conditional support. Donald Trump has never been isolated, contrary to what intellectuals and accredited journalists suggested. (…)
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