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'Scary prospect' of US economic catastrophe
FORBES MAGAZINE'S latest survey of the world's richest individuals puts Microsoft's Bill Gates on top of the list with personal assets of $46.5 billion.
The top ten richest individuals' collective wealth is a staggering $2,200 billion - up from last year's $1,900 billion. So the wealthiest ten individuals on the planet now own more than the total productive wealth (GDP) of Britain which stood at $1,700 billion in 2004.
But all's not well in the capitalist system. Number two in the list - Warren Buffet ($44 billion), the financial wheeler dealer - recently published an article predicting a catastrophe in the US economy.
Buffet is buying foreign currency as a hedge in anticipation of "a significant decline in the value of the dollar" due to America's unsustainable trade deficit.
This now stands at more than 4% of GDP, ie the USA consumes over 4% more than it produces.
What's more, on current trends, with $1.5 billion a day needed to plug the gap, the US will owe foreigners about 47% of its GDP within five years.
The European Central Bank's chief economist, says that a current account adjustment must eventually occur.
According to Buffet this is "a potentially scary prospect", as it could happen suddenly. As the debt pile grows, foreign investors are likely to begin demanding higher interest rates for funding it.
However, a major event that pushes up rates could cause "the whole edifice" to topple over, causing investors to flee the US en masse.
In The Socialist 19 March 2005: