[The Independent, U.K.]

[Click Here for Jumbo Version]


Magyar Nemzet Konyvek, Hungary

'No Faith Left in America'


"The past month’s political bickering over the debt ceiling resulted in a huge loss of confidence in the United States. ... How long can it continue to cover its debts by printing dollars? Yesterday's market panic reveals that the answer is: not much longer. … It is the end of the debt-based American dream - it's time to wake up."


By Anna Szabó


Translated by Carolyn Yohn


August 2, 2011


Hungary - Magyar Nemzet - Original Article (Hungarian)

A stock trader in Frankfury, Germany, sweats out the worst trading day in years, August 5.  

FINANCIAL TIMES VIDEO: The stock market slump of the last two days shows a crisis of confidence in economic growth and in politicians' ability to do anything about it, Aug. 5, 00:08:30RealVideo

One day before the deadline in Washington, a deal was successfully made to raise the American debt ceiling yet again, allowing for a further $900 billion in borrowing for the budget - but this nothing to celebrate. The agreement appears to have saved America from bankruptcy, but the short-term deal failed to convince the markets. The momentary good mood evaporated quickly and a negative U.S. industrial index sufficed to dominate stock exchanges with panic.


By afternoon, the exchange rate of the Swiss franc, a currency of refuge, was already above 244 forints [about $1.3]. Its rapid appreciation is a central indicator of distrust toward the dollar. The judgment of the market is clear: The past month’s political bickering over the debt ceiling resulted in a huge loss of confidence in the United States. Republicans and Democrats, having found $2.5 trillion in cuts, with the same stroke of a pen will raise the debt limit by another $2.1 trillion. The high-stakes wagering didn't even touch on a long-term solution. Rather, it was all about which party would be able to pass on responsibility for taking tough new austerity measures after the 2012 presidential election. The Republicans won this battle of the war ... not that it will preserve the country's fortune's one iota. The budget cuts were a political loss for the Democrats, impeding President Obama's attempt to raise taxes on the rich. So as of yesterday, America's debt counter can officially continue to spin, as more dollars are circulated to pay it. Sunday's agreement was only meant to win time, but it didn't even survive an afternoon.   



That being said, the U.S. currency absolutely cannot collapse: the foreign exchange reserves in the world's central banks are for the most part in dollars, and the majority are held by America's largest creditors, i.e.: China and Japan, neither of which have any interest in seeing the greenback depreciate. As long as markets only allow oil purchases in dollars, this game can continue. The question is: How long can the U.S. continue to cover its debts by printing dollars? Yesterday's market panic reveals that the answer is: not much longer.


Between 1945 and 1971, the price of the dollar was pegged to gold, so bull or bear, one ounce of gold cost $35. Since the United States unilaterally terminated the gold standard, the continuous depreciation of the dollar has been a weight borne by the entire world - and it will be so for as long as the dollar is considered the global currency. Today, one ounce of gold costs more than $1,600, i.e.: the central bank's dollar reserves are worth less and less every day. Meanwhile, holders of U.S. government debt are barely earning interest. As the world's superpower, the United States has been able to get the rest of the world carry the burden of its debts. Now the U.S. must pick up part of the burden. Since the 2008 economic crisis, it has become clear that not even America's debt limit could be raised indefinitely. The debt ceiling in its present form was introduced in 1939, and since then it has been raised nearly 100 times - 35 times in the last 30 years and most recently last February.


Publico, Spain: Petrodollars to Petro-What?
People's Daily, China: China Still Has No Choice But to Hold Dollar Assets
Guardian, U.K.: S&P Strips U.S. of its AAA Credit Rating
Die Zeit, Germany: Wealthy Americans Get Off 'Scot-Free'
Die Welt, Germany: The Diminishing Power of Money
O Globo, Brazil: Deal on U.S. Debt Ceiling Shows American 'Strength'
Yomiuri Shimbun: For World's Sake, Obama Must 'Provide Leadership'
CRI, China: U.S. Must Consider 'Defects' in its Democratic System
UNT, Sweden: U.S. Must Choose Practical Patriotism Over Party Tactics
FTD, Germany: Take Decisive Action on Debt Ceiling! Do it, Barack!
La Jornada, Mexico: The 'Grand Debt' of U.S. Families
Jornal Do Brasil, Brazil: American Default and the End of 'Zero Risk'
The Telegraph, U.K.: World Needs America to Come to its Senses
El Pais, Spain: Playing Chicken is the World's Newest Sport
Mainichi Shimbun, Japan: U.S. Must Prevent Another 'Made in U.S.' Disaster
Yomiori Shimbun, Japan: U.S. Lawmakers Should 'Stop Playing Political Games'
Yezhednevniy Zhurnal, Russia: The U.S. and Soviets: Pyramid Builders to Raiders
Frankfurter Rundschau, Germany: 'Radical' Republicans Threaten U.S. with Ruin
Tiscali Notizie, Italy: The Fiscal Decline of the 'Apocalypse'
News, Switzerland: Notion: 'Pay Politicians Based on Performance'
Salzburger Nachrichten, Austria: Debt Ceiling Attack By Republicans 'Backfires'
Gazeta, Russia: America's Astonishing 'Battle for the Ceiling'
People's Daily, China: U.S. Game of Chicken Threatens Creditors and Economy
Die Zeit, Germany: U.S. Risks 'Plunging World' Into New Financial Crisis
O Globo, Brazil: Global Economy Hangs on 'Mood' of U.S. Voters
The Telegraph, U.K.: Down on the Fourth of July: The United States of Gloom
Financial Times Deutschland, Germany: For Americans, a Dour Independence Day
Financial Times Deutschland, Germany: Who Cares about the U.S. Economy?
Folha, Brazil: U.S. Conservatives Threaten to Plunge U.S. into 'Lost Decade'

Bookmark and Share


That is why this new credit debt ceiling deal offers no relief to stock markets. No one in America dares address the real economic problem. Profits in the manufacturing sector are being generated in ever-smaller amounts while more and more money is dedicated to pure financial speculation. The economic stimulus package raised the debt by $100 billion, but failed to spark much-anticipated growth. The economy is virtually stagnant, unemployment is slightly lower, and no one knows how $15 trillion in loans will ever be repaid. It is the end of the debt-based American dream - it's time to wake up.



blog comments powered by Disqus










































[Posted by WORLDMEETS.US Aug. 7, 6:25pm]


Bookmark and Share