The "Argentinisation" of the US
by Pablo Riezni The series of monumental international corporate bankruptcies having as their epicentre the United States, and the Wall Street crash, have opened a new stage of the world crisis. They make it clear that its centre is located in the leading capitalist power. This last weekend the gigantic WorldCom, the second largest long-distance telephone provider in the US, responsible for 50 percent of all Internet traffic in that country and owner of the Latin American telephone conglomerates Embratel (Brazil) and Avantel (Mexico), declared bankruptcy. It is the biggest corporate bankruptcy in the US. The declared assets of WorldCom, as of last March 3, were US$103.8 billion. That represents a huge jump with respect to the US$63.4 billion involved in the fall of Enron, the energy monopoly, which collapsed towards the end of 2001; and quadruples the assets of the principal bankruptcies registered up till then, that of Financial Corp of America and that of Texaco, in 1987 and 1988, respectively. In the first half of the current year, other monopolies have collapsed with assets that far exceed US$100 billion. The list, in any case, is still open, and includes AOL-Time Warner, Xerox, Johnson & Johnson and Squibb Laboratories, only to name the most well-known cases. The most representative European and Japanese conglomerates must also be added. The case of Asia is a good example because it has been in a depression for more than a decade and because the efforts to save the banking system have failed in spite of the Homeric state subsidies, which have taken the Japanese public debt to US$8,000 billion. According to The Economist (4-13-02) the Japanese banks are converting their unrecoverable debts into the stocks of equally bankrupt companies which, in turn, fix up their own accounts by inflating them with stocks... from the insolvent banks; all of which may lead to a kind of Japanese-style "Big Bang". On the other trunk of the capitalist tripod, Europe has its own, beginning with Germany, where "the banking landscape is going through a series of unprecedented storms" (Le Monde, 23-6-02). In the eye of the storm is to be found the powerful Deutsche Bank, whose assets are eight times greater than those of WorldCom — US$800 billion — and whose stocks have fallen 50 percent in 2001. The landscape of bankruptcy extends to England, France, Italy and Spain, where WorldCom-like cases abound. We will save the details because the important thing is that the crisis emanates from the very heart of world capitalism. End of an era The United States was presented until last year as the symbol of a kind of immortal capitalism. In 1999 the stock index on Wall Street reached 10,000 points, quadrupling in value from at the start of the decade, and the gurus were giving a prognosis that it would be triple that in the next period. Three years later, the stock market has crashed to 50 percent of its value, that is, a capital loss of US$6,000 billion. According to the British Guardian (7-18-02) "we are standing at the edge of the precipice". Since the interest rates are at very low levels, the dollar is devaluing and the budget deficit is increasing in order to counteract the recession, the resources of the State are not working against the crisis. When, in 1998, the Russian "default" threatened to wipe out the US capital market, the Federal Reserve came to the rescue with a massive emission of loans at low interest. In 2001, when the recession began, the cost of money went down to hardly 1.75 percent per annum, which permitted the refinancing of debt and stimulated injections of funds into the Stock Market, a new reduction would be irrelevant and might create "panic", as pointed out by the Financial Times commentator (16-7-02). The collapse of the dollar, in turn, reveals that the US has ceased to be an aspirator of resources from the rest of the world. The indebtedness, since the start of the '90s, quadrupled product growth. The depreciation of the dollar means now that capital is leaving the US. And this is only the beginning. The US industrial chambers of commerce welcomed the devaluation of the dollar because it slows imports, stimulates exports and should reduce the enormous deficit of the foreign sector, of US$450 billion. But a greater devaluation would turn the outflow of capital into a stampede. The passing from over-valuation to devaluation has been the dominant sign since the Asian crisis of 1997. But the devaluation of the dollar is the last stop on the line, because it is the paper currency of world-wide reference, since it produces the revaluation of all other currencies and a general deflation of prices, incomes and benefits. A breakdown is on the way Starting with the crisis of the '70s, an enormous drainage of resources from the semi-colonial countries to the imperialist metropolis was put into motion, by means of the payment of the foreign debt; the economies of East Europe were looted, which led to the collapse of the old USSR; there was an increase in the exploitation of the working class in the metropolitan countries (increased flexibility and casual labour; systematic lowering of wages). In spite of this, towards the end of the '80s, the results were miserable in terms of recuperation of capitalist activity. The stock market crashes of the years '87 and '89, the collapse of a part of the US financial system (the savings and loan associations), the recession in Japan and in Germany, showed this. In the '90s, New York became the new Rome of international financial capital. The resulting speculative hypertrophy is now in the midst of exploding. The "corporate bankruptcies" show the "excess" of capacity and of productive forces. In the field of telecommunications, in the automobile industry or steel production, in the great transport or energy services; in the ground- breaking computer or biotechnical industries, in the banking system... wherever you look the scene is always the same: over-accumulation, over- investment, surplus of companies and of capital that can no longer be revalued at a rate of profit compatible with its need for reproduction. A brutal destruction of social riches that take the form of capital, appears as the "remedy" for a capitalist way out that would imply economic and social catastrophes never before seen. This time the US does not get off. This is revealed by the fact that we have passed rapidly from the "financial scandals" to a political crisis. Bush, Vice-President Cheney and other high-ranking officers of the White House begin to look like the Menem of the River Plate, accused of being accomplices and even the authors of the most diverse goings on. The fall of the Yankee colossus poses a vast process of social and political dissolution. And, since the fish begins to rot from the head, the yankee bourgeoisie itself lacks confidence in the government's capacity of dealing with it. In an extraordinary statement, that seems extremely Argentine-like, an economist of the Morgan Bank has just interpreted the Stock Market crash as evidence of "the markets perceiving a crisis of leadership that not only includes the White House but also the corporations and Wall Street itself" (Financial Times, 15-7-02). The corporate and stock market bankruptcies transform the swindle known to Argentine savings account holders into child's play. In Bush's country, 80 million Americans keep their savings in stocks. The pension funds are going broke with the process of bankruptcies. A new stage has opened up in the world crisis. The world economy is "Argentinising".
* * *Prensa Obrera (Workers' Press)