A Crack in the U.S.?

In 2006, God was proclaimed the president of the Republican Party. Whether God was consulted or not is another matter, but what stands is that during the last decades, Republican leaders have taken it upon themselves to speak in the name of God. The Almighty even plays a role in the country’s currency, although God wasn’t even mentioned by the Founding Fathers, who were mostly masons.

Alexander Hamilton was once asked why God wasn’t mentioned in the Constitution, and he responded with, “We don’t need outside help.” However, with the financial crisis the United States is presently facing, it is probably crying out to God for help — and the motto, “In God We Trust,” which appears on its currency, is more pertinent than ever.

The world has been trembling and in disarray, since president Barack Obama announced that the U.S. was on the brink of defaulting on its debt, which amounts to $17 billion and is a burden, even for the most powerful nation in the world.

This situation is reminiscent of the events of October 24, 1929. On that day, the New York Stock Exchange plummeted. The cathedral of finances collapsed. A large number of banks and factories closed, unemployment was rampant, and wages were reduced to nothing. It was a “global financial catastrophe.”

Today, fear is prevalent on Wall Street. Some say the dollar is worthless, so we should find a new currency to rely on. There are others who feel that the dollar will regain its status, but, in reality, not even neo-liberals, who like to pay homage to the dollar on TV, are saying much. They are remaining silent about the future of the empire they support.

The Union of South American Nations (UNASUR) convened its ministers of finance and bankers, so they could put together a defense against an attack that might be coming their way. It is a fact that the U.S. will try to pass on its problems to developing countries. It has always been that way. The poor have to pay the price so that the rich stay rich.

First in Lima and then in Buenos Aires, ministers and bankers decided to spearhead a Latin American reserve fund, using regional currencies, de-dollarizing the exchange, and encouraging inter-regional commerce. It was also agreed that the Andean Development Corporation (CAF) be strengthened and that the [date for] launching of Banco del Sur be moved up.

It was surprising how quickly consensus was reached. Allegedly, the neo-liberal ministers began to revise their positions, given the U.S. crisis and the irreversible process of South American integration that is clearly observable. Ministers and bankers, alike, were in agreement about using the common reserve fund for their own benefit, ceasing to put their funds in the hands of transnational banks that use them to finance international crises, like the one in the U.S.

Is there really a crisis?

When President Obama announced the possibility that the U.S. might default on its debt, the International Monetary Fund (IMF) remained silent. It hasn’t made a sound to this day. If the same thing were to happen in a South American country, its agents would immediately make structural adjustments, sell state-owned corporations, and follow by making credit offers at unaffordable interest rates. They did not give a taste of that bitter medicine to their master.

Analysts suggested that this crisis could be averted by cutting spending on militarism, weapons, immoral wars, and the maintenance of troops and bases abroad. Democrats and Republicans rejected this suggestion and, instead, chose to keep supporting the war and cut spending on education, health, pensions to retirees, and banking interest rates, which will continue to remain high to squeeze the poor.

There are reports indicating that the U.S. pays a net annual interest equivalent to only 1.4 percent of its GDP. Mark Weisbrot, the co-director of the Center for Economic and Policy Research in Washington, D.C., said that “there was never any chance that the U.S. would actually default on its debt (http://www.cepr.net/index.php/op-eds-&-columns/op-eds-&-columns/what-everyone-should-know-about-the-debt-crisis-in-the-us).” He added that the “crisis” was fabricated with Republicans to impose “unpopular” spending cuts that could not be won at the ballot box, because elections, where president Obama will seek reelection, are close at hand,

This bipartisan strategy is a good one. Huge public spending cuts will be undertaken without increasing taxes on the rich and super-rich. The Republican right won this round with the help of president Obama, whose voters were offended by his actions. Of course, he wanted to increase taxes on the rich, but he had to accept the Republican’s extortion. His re-election is in doubt.

This “manufactured debt crisis” turned out to be a weapon of mass distraction that disoriented everyone. These credible lies paint a positive picture of the U.S. economy, even though certain truths remain, such as the existence of 25 million unemployed, imperceptible growth, and a weak economy.

The U.S. financial machinery is formidable and will recover soon with the theft of raw materials from developing countries. Perhaps for that reason, the agreements between Republicans and Democrats will keep the military budget intact, as well as the military bases scattered around the world. By fair means or foul, the poor will be forced to pay for the financial irresponsibility of the U.S. UNASUR’s precautions seem appropriate and worthy of support.