The Guardian September 19, 2001


The economics behind the war talk

It did not take long following the attack on the World Trade Centre and 
the Pentagon before the Bush administration declared war on an unnamed 
enemy. The tragedy is being used by the US to carry out a military agenda 
that had been in the making for some time. For the Bush administration it 
could not have come at a better time. The "economic miracle" that has seen 
ten years or more of growth in the US economy had come to an end.

The period of expansion was no miracle. It was funded by debt, by foreign 
investment, by an inflated stock market, an over-valued dollar, parasitic 
investment and speculation, low wages and mass sackings.

The current account deficit of the US (the difference between the value of 
exports and imports and monetary transfers) had increased from US$47.7 
billion in 1992 to US$420 billion by the end of 2000 and is still 

Household savings as a percentage of disposable income had shrunk from 
eight per cent ten years ago to -0.8 per cent. The "new economy" as 
measured by the NASDAQ index (the high tech sector of the economy) has 
shrunk by more than 50 per cent this year.

During the 1980s and 1990s the incomes of the poorest 60 per cent of 
Americans declined, while a small minority became richer than ever and 
profits boomed. A stream of foreign investors pushed up the stock market 
and value of the US dollar with it.

But this year, the business cycle turned downwards. "We have gone from boom 
to bust faster than anytime since the oil shock", said Steven Roach, the 
chief economist of Morgan Stanley, a New York investment bank. "When you 
screech to a halt like that, it feels like being thrown through a wind 
shield." Nearly one million jobs were wiped out in August alone across all 
sectors of the economy.

The Bush Government also had problems with growing dissent to its cuts in 
social security, attacks on worker's, women's and minorities' rights, and 
other extreme right policies.

The US cannot rely on trade and foreign investment to pull up the economy. 
There is a worldwide crisis of over production in commodities. At the same 
time there are millions of people who go hungry, are homeless, do not have 
basic sanitation or safe drinking water.

The US has failed to conquer and dominate the whole world through economic 
means and its agencies, the World Trade Organisation (WTO), the 
International Monetary Fund (IMF) and the World Bank.

Developing countries have again united to stand up for their rights and 
protect their interests against those of US and European transnational 
corporations. People's movements around the world are on the rise against 
the World Bank, the IMF, the WTO and the big European and US transnational 
corporations (TNCs). Internationally the US has faced a number of 
humiliating defeats and faces increasing opposition.

Consequently, the US and its allies are resorting more and more to coercion 
and force and now need a war to further the interests of the transnational 

The US drive for global domination has thus set the scene for a conflict on 
a massive scale that could endanger the whole world. The horrendous attack 
on the World Trade Centre and the Pentagon is being unscrupulously used to 
swing public opinion from discontent and opposition to a government that 
does not have any answer to unemployment, inadequate health care and 
education facilities either in the US or abroad, to support for military 
attacks against a number of countries in the name of fighting terrorism.

By establishing bases in strategic positions in the Middle East, 
Afghanistan and elsewhere the US leaders hope to be able to further the 
interests of its TNCs in taking over the oil and other resources of the 
Middle East and smashing the further development of the struggles against 
the IMF, the World Bank and the economic rationalist policies which have 
caused such poverty and suffering throughout the world.

The hope for peace lies in the clear-headed resistance of the ordinary 
people and organisations of all countries who will be the ones to pay for, 
suffer and die if the US leaders succeed in manipulating the world into 
their planned aggression.
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