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L'Express, France

The US Is Bankrupt



By Jacques Attali

Translated By Cara Ceriani

11 February 2013

Edited by Lau­ren Gerken


France - L'Express - Original Article (French )

One day we will thank the media and Anglo-Saxon politicians for having, at the beginning of the second decade of the 21st century, talked so much about the euro crisis and the difficulties with the construction of Europe. They will have really helped Europeans take notice and do what they have to do in response. For the last three years the European Union has greatly transformed its governance: putting into place tools (LTRO [long-term refinancing operations], OMT [outright monetary transactions], ESM [European Stability Mechanism]) to respond to attacks against the euro, creating tools to stabilize the banking system and beginning a process of budgetary convergence and even fiscal consolidations. Of course, much remains to be done: to use the fiscal capacity of the eurozone to launch major investments, to finance vocational training for the unemployed and to equip the eurozone with a parliament. All this will come to pass because Europeans are beginning to realize that austerity is not the solution and that growth alone is a democratic response to the debt and unemployment.

Meanwhile, the Anglo-Saxon world does not see that it is approaching bankruptcy: The English, who mock the eurozone, accept a budget deficit of more than 8 percent of the GDP and an out-of-control level of public debt without batting an eye. Americans refuse to see that, on almost all points, their situation is much worse than that of Europeans. It’s the eurozone that has a balance of payments in excess, not the U.S. American unemployment figures (looking at real statistics) are much higher than that of the European Union. Inequality and crime are much higher in the U.S. than in Europe and life expectancy is increasing in Europe, while it is decreasing in the U.S.

While the Anglo-Saxon media is harping on about the eurozone’s debts, the U.S. is having a complete financial breakdown. It’s even in bankruptcy.

Their debt has now reached $16 trillion, or 100 percent of the GDP, exceeding all limits that Congress and the president claim to be imposing. The latest calculations, from figures provided by the U.S. Office of Management and Budget, show that the deficit will be $800 billion in 2014 and more than $590 billion in 2018 if all the promised savings are made and if growth remains (which is very unlikely) over 4 percent per year from 2015. Otherwise, the deficit will grow between $800 billion and $1 trillion each year. In other words, in the best-case scenario, the U.S. national debt will be $20 trillion in 2018 (and more likely close to $22 trillion). Public debt is being financed increasingly by the Federal Reserve, which, in this situation, is the only compensation.

Therefore, their money is worthless to everyone, except those who grant it worth because they need the U.S. to continue to fund their army, healthcare system and administration.

And furthermore, the U.S. balance of payments has known a deficit to the order of $500 billion per year for over more than 10 years.

The U.S. is in a much worse situation than the European Union and even the most indebted countries of the Union. It is bankrupt. And the dollar only holds with those who want to maintain their reserves in that currency.

One day, the Chinese, taken by anti-Japanese frenzy (and by a game of anti-American alliances), or the Gulf (tilting under the control of fundamentalists) will decide to change their money into another currency, or otherwise denominate oil and cause the superpower to collapse. Or they will show their objections with warfare.

It is in nobody’s interest. And we Europeans must provide Americans with the same service that they have done for us: to announce their upcoming bankruptcy, so that they too can take notice and finally decide to act — if there is still time to avoid it. They have the means, provided that they do not believe that it will come naturally as they all would want.

It’s always when they believe themselves to be immortal that the most powerful empires disappear.



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