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4 DISPATCHES FROM
AMERICA Why
Nemesis is at the US's
door By Chalmers Johnson
payments from interest income and
rents to dividends and profits on direct
investments - underwent its fastest ever quarterly
deterioration.
For 2005, the
current-account deficit was $805 billion, 6.4% of
national income. In that year the US trade
deficit, the largest component of the
current-account deficit, soared to an all-time
high of $725.8 billion, the fourth consecutive
year that America's trade debts set records. The
trade deficit with China alone rose to
$201.6 billion, the highest
imbalance ever recorded with any country.
Meanwhile, since mid-2000, the US has lost nearly
3 million manufacturing jobs.
To try to
cope with these imbalances, last March 16,
Congress raised the national debt limit from $8.2
trillion to $8.96 trillion. This was the fourth
time since George W Bush took office that it had
to be raised. The national debt is the total
amount owed by the government and should not be
confused with the federal budget deficit, the
annual amount by which federal spending exceeds
revenue. Had Congress not raised the debt limit,
the US government would not have been able to
borrow more money and would have had to default on
its massive debts.
Among the creditors
that finance these unprecedented sums, the two
largest are the central banks of China (with
$853.7 billion in reserves) and Japan (with
$831.58 billion in reserves), both of which are
the managers of the huge trade surpluses these
countries enjoy with the United States. This helps
explain why America's debt burden has not yet
triggered what standard economic theory would
dictate: a steep decline in the value of the US
dollar followed by a severe contraction of the US
economy when Americans found we could no longer
afford the foreign goods we like so much. So far,
both the Chinese and Japanese governments continue
to be willing to be paid in dollars to sustain US
purchases of their exports.
For the sake
of their own domestic employment, both countries
lend huge amounts to the US Treasury, but there is
no guarantee of how long they will want to, or be
able to do so. Marshall Auerback, an international
financial strategist, says the US has become a
"Blanche Dubois economy" (so named after the
leading character in the Tennessee Williams play
A Streetcar Named Desire) heavily dependent
on "the kindness of strangers". Unfortunately, in
America's case, as in Blanche's, there are ever
fewer strangers willing to support our illusions.
So my own hope is that - if the American
people do not find a way to choose democracy over
empire - at least our imperial venture will end
not with a nuclear bang but a financial whimper.
From the present vantage point, it certainly seems
a daunting challenge for any president (or
Congress) from either party even to begin the task
of dismantling the military-industrial complex,
ending the pall of "national security" secrecy and
the "black budgets" that make public oversight of
what the government does impossible, and bringing
the president's secret army, the CIA, under
democratic control. It's evident that Nemesis - in
Greek mythology the goddess of vengeance, the
punisher of hubris and arrogance - is already a
visitor in the United States, simply biding her
time before she makes her presence known.
Note 1. America Right
or Wrong is reviewed by Jim Lobe in The specter of two
'isms', Asia Times Online, July 9,
2005.
Chalmers Johnson is a
retired professor of Asian studies at the
University of California, San Diego. From 1968
until 1972 he served as a consultant to the Office
of National Estimates of the US Central
Intelligence Agency. Nemesis: The Last Days of
the American Republic, the final volume in his
Blowback Trilogy, is just now being published. In
2006 he appeared in the prize-winning documentary
film Why We Fight.
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