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From The Socialist newspaper, 19 March 2005

'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.

Dave Carr

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.

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The coronavirus crisis has laid bare the class character of society in numerous ways. It is making clear to many that it is the working class that keeps society running, not the CEOs of major corporations.

The results of austerity have been graphically demonstrated as public services strain to cope with the crisis.

The government has now ripped up its 'austerity' mantra and turned to policies that not long ago were denounced as socialist. But after the corona crisis, it will try to make the working class pay for it, by trying to claw back what has been given.

  • The Socialist Party's material is more vital than ever, so we can continue to report from workers who are fighting for better health and safety measures, against layoffs, for adequate staffing levels, etc.
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In The Socialist 19 March 2005:

Blair's pensions climbdown

Pensions attacks: United action can win

Pensions - the socialist future

Why we voted to strike to defend pensions

Anger turns to action over pensions

Fight for a better future

What is socialism?

Iraq: troops out now

Iraq: occupation and the resistance

Bush and the 'democratic revolutions'

'Scary prospect' of US economic catastrophe

Massive strike in France

'Third World Debt' - who gains from Brown's plans?

Oppose Clarke's 'hideous experiment'

Good result for Roger Bannister

Building a new NUT leadership


 

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