URL: http://www.spiegel.de/international/world/0,1518,517060,00.html
WEST WING
A Pearl Harbor without War
By Gabor Steingart in Washington, D.C.
The dollar crisis has politicians alarmed worldwide. The US currency
has lost 24 percent of its value since the introduction of the euro,
and now there is even a chance that China could abandon its policy of
pegging its currency to the dollar -- a problem the United States
should take very seriously.
DPA
Translated into Texan, what the Chinese politely told the Americans
last week simply means: Unless something happens, all hell will break
loose.
What do Brazilian supermodel Gisele Bündchen and the People's
Republic of China have in common? The answer, as of last week, is
that both distrust the dollar.
Patricia Bündchen, the twin sister and manager of the world's top
model, announced that Gisele now prefers to be paid in euros rather
than dollars. Almost simultaneously, the Chinese central bank
predicted that the dollar is likely to lose its status as the world's
leading currency.
One could easily overlook a supermodel's currency preferences, but
China is a different story. It's the beast breathing down America's
neck.
The most important country in the world for the United States isn't
Great Britain, Germany, Saudi Arabia, Russia or Iraq. China holds
that dubious distinction, because it is also the country the US can
least do without. Without its willingness to buy an almost unlimited
supply of US treasury bonds, there would be no American spending
miracle. Without a spending miracle there would be no economic
growth. In other words, without China the US superpower would lose a
significant share of its economic clout.
So far Beijing has behaved like the benevolent shopkeeper who
willingly extends credit to his customers. The Americans receive
shipments of Chinese-made television sets, toys and underwear, but
the Chinese do not import a comparable volume of US goods. The gap
between buying and selling amounts to about $5 billion every week.
The Chinese are satisfied with buying US treasury bonds, partly to
keep their most important customer afloat. The central bank in
Beijing already holds currency reserves of $1.4 trillion.
The Chinese have looked on with great patience as their best customer
has gradually lost its ability to supply goods.
But the men in power in Beijing cannot be indifferent to the dollar's
decline. It devalues their central bank's dollar reserves, the
monetary embodiment of some of the fruits of China's export machine.
For the United States, a Chinese decision to abandon the dollar would
be tantamount to Pearl Harbor without the war. It would represent a
challenge to the world's biggest economy by the world's fastest
growing economy. Millions of people would see their standard of
living suffer as a result, and American self-confidence, already
shaky, would crumble even further. The United States would suffer a
serious blow on its very own turf, the economy.
Americans can hardly blame Beijing for their troubles. The Chinese
aren't exactly kamikaze politicians, concocting some secret plan to
attack the dollar. On the contrary, the preparations are taking place
in full view. Translated into Texan, what the Chinese politely told
the Americans last week simply means: Unless something happens, all
hell will break loose.
For years the US economy has suffered one dramatic setback after
another. A historic trend reversal began with the rise of the Asian
economies -- first Japan, then China and now India. The United
States, a once-proud exporting nation, became the world's biggest
importer. In only 15 years, from 1992 to 2007, the US balance of
trade deficit has surged from $84 billion to $700 billion.
Within a single generation, the world's biggest lender has become its
biggest borrower, a circumstance the United States has made no
serious attempts to change. And what has been Washington's standard
take on the shift? The dollar is our currency, but it's your problem.
Thus, the tone of the US government's callous and thick-skinned
reaction to China's announcement last week came as no surprise. There
was a reason the dollar became the world's reserve currency, US
Treasury Secretary Hank Paulson said in a slightly offended tone.
But the truth is that the United States would be better off if
Paulson and the administration of President George W. Bush would take
decisive action instead of sulking. The US's ability to deliver goods
should be increased and its industrial base should be reinvigorated.
Government and consumer spending, which in reality is doing nothing
but eating away at the country's future, should be curbed. Although
growth would decline as a result, it would be a more sustainable form
of growth.
Last week's remark by a Chinese central bank official should be
interpreted as a warning, not a threat. Indeed, China has no choice
but to respond, given the dollar's ongoing weakness.
For these reasons, an attack on the US economy is probably the most
easily predictable event of the coming years. And if it happens, the
attacker will even be able to justify its actions as self-defense.
What is the difference between the US government in 1941 and the
administration in Washington today? Perhaps there is none. A Japanese
attack on the US Pacific Fleet at Pearl Harbor was unimaginable, even
though US intelligence had picked up clues that it could happen.
Washington, at the time, was convinced that the Japanese wouldn't
dare stage an attack on a target 5,000 miles away, and that they
wouldn't succeed if they did.
The crews on America's ships were sleeping as the Japanese bombers
approached Pearl Harbor.
Translated from the German by Christopher Sultan
----------------------------------------------------------------
This e-mail has been sent via JARING webmail at http://www.jaring.my
No comments:
Post a Comment